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 Rule 14a-11(c) or Rule 14a-12
SOBIESKI BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- ------------------------------------------------------------------------------
(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:
(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 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(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.
<PAGE>
(1) Amount Previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
SOBIESKI BANCORP, INC.
September 17, 1997
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Sobieski Bancorp,
Inc., I cordially invite you to attend the Annual Meeting of Stockholders. The
meeting will be held at 2:00 p.m., local time, on October 27, 1997 at the
Company's main office located at 2930 W. Cleveland Road, South Bend, Indiana.
An important aspect of the meeting process is the stockholder vote on
corporate business items. I urge you to exercise your rights as a stockholder to
vote and participate in this process. Stockholders are being asked to elect two
directors, ratify the appointment of Coopers & Lybrand, L.L.P. as the Company's
auditors and vote upon a resolution proposed by a stockholder of the Company.
The Board of Directors recommends that you vote FOR the Board's nominees for
election as directors and FOR the ratification of the appointment of Coopers &
Lybrand, L.L.P. as the Company's auditors. The Board of Directors recommends
that you vote AGAINST the stockholder proposal.
In addition to the stockholder vote on corporate business items, the
meeting will include management's report to you on Sobieski Bancorp, Inc.'s 1997
financial and operating performance.
I encourage you to attend the meeting in person. Whether or not you
attend the meeting, please read the enclosed Proxy Statement and then complete,
sign and date the enclosed proxy card and return it in the postage prepaid
envelope provided. This will save Sobieski Bancorp, Inc. additional expense in
soliciting proxies and will ensure that your shares are represented. Please note
that you may vote in person at the meeting even if you have previously returned
the proxy.
Thank you for your attention to this important matter.
Sincerely,
/s/Thomas F. Gruber
-------------------
Thomas F. Gruber
President and Chief Executive Officer
<PAGE>
SOBIESKI BANCORP, INC.
2930 W. Cleveland Road
South Bend, Indiana 46628
(219) 271-8300
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on October 27, 1997
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Sobieski Bancorp, Inc. (the "Company") will be held at the
Company's main office, located at 2930 W. Cleveland Road, South Bend, Indiana at
2:00 p.m., South Bend, Indiana time, on October 27, 1997.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. the election of two directors of the Company;
2. the ratification of the appointment of Coopers & Lybrand, L.L.P.
as the auditors of the Company for the fiscal year ending June
30, 1998;
3. a proposal by a stockholder of the Company for the appointment of
a special committee of the Board of Directors;
and such other matters as may properly come before the Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on
the date specified above, or on any date or dates to which the Meeting may be
adjourned. Stockholders of record at the close of business on September 9, 1997
are the stockholders entitled to vote at the Meeting and any adjournments
thereof.
You are requested to complete and sign the enclosed form of proxy,
which is solicited on behalf of the Board of Directors, and to mail it promptly
in the enclosed envelope. The proxy will not be used if you attend and vote at
the Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Thomas F. Gruber
-------------------
Thomas F. Gruber
President and Chief Executive Officer
South Bend, Indiana
September 17, 1997
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF
MAILED WITHIN THE UNITED STATES.
<PAGE>
PROXY STATEMENT
Sobieski Bancorp, Inc.
2930 W. Cleveland Road
South Bend, Indiana 46628
(219) 271-8300
ANNUAL MEETING OF STOCKHOLDERS
October 27, 1997
This Proxy Statement is furnished in connection with the solicitation
on behalf of the Board of Directors of Sobieski Bancorp, Inc. (the "Company"),
the parent company of Sobieski Federal Savings and Loan Association of South
Bend ("Sobieski Federal" or the "Association"), of proxies to be used at the
Annual Meeting of Stockholders of the Company (the "Meeting") which will be held
at the Company's main office, located at 2930 W. Cleveland Road, South Bend,
Indiana on October 27, 1997, at 2:00 p.m., South Bend, Indiana time, and all
adjournments or postponements of the Meeting. The accompanying Notice of Annual
Meeting, this Proxy Statement and the enclosed form of proxy are first being
mailed to stockholders on or about September 17, 1997.
At the Meeting, stockholders of the Company are being asked to consider
and vote upon (i) the election of two directors, (ii) the appointment of Coopers
& Lybrand, L.L.P. as auditors for the Company and (iii) a proposal by a
stockholder, described elsewhere herein (the "Stockholder Proposal").
Vote Required and Proxy Information
All shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting, and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the director nominees and
the appointment of Coopers & Lybrand L.L.P. as auditors for the Company and
against the Stockholder Proposal. The Company does not know of any matters,
other than as described in the Notice of Annual Meeting, that are to come before
the Meeting. If any other matters are properly presented at the Meeting for
action, the persons named in the enclosed form of proxy and acting thereunder
will have the discretion to vote on such matters in accordance with their best
judgment.
Directors shall be elected by a plurality of the votes cast. The
ratification of the appointment of Coopers & Lybrand, L.L.P. as auditors and the
approval of the Stockholder Proposal each require the affirmative vote of a
majority of the votes cast on the matter. Proxies marked to abstain with respect
to a proposal have the same effect as votes against the proposal. Votes withheld
(for the election of directors) and broker non-votes will have no effect on the
vote. One-third of the shares of the Common Stock, present in person or
represented by proxy, shall constitute a quorum for purposes of the Meeting.
Abstentions and broker non-votes are counted for purposes of determining a
quorum.
<PAGE>
A proxy given pursuant to the solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy, (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Meeting, or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a proxy should be delivered to Marsha
Nafrady, Secretary, Sobieski Bancorp, Inc., 2930 W. Cleveland Road, South Bend,
Indiana 46628.
Voting Securities and Certain Holders Thereof
Stockholders of record as of the close of business on September 9, 1997
will be entitled to one vote for each share of Common Stock then held. As of
that date, there were 759,652 shares of Common Stock issued and outstanding. The
following table sets forth, as of September 9, 1997, information regarding share
ownership of (i) those persons or entities known by management to beneficially
own more than five percent of the Common Stock, (ii) Thomas F. Gruber, the
Company's and the Association's current President and Chief Executive Officer
and Gerald R. Gadacz, who retired as the Company's and the Association's
President and Chief Executive Officer in July 1996; and (iii) all directors and
executive officers of the Company and the Association as a group. For
information regarding the beneficial ownership of Common Stock by directors of
the Company, see "Proposal I. Election of Directors."
<TABLE>
<CAPTION>
Shares
Beneficially Percent
Beneficial Owner Owned of Class
---------------- ----- --------
<S> <C> <C>
Sobieski Bancorp, Inc. Employee Stock Ownership Plan(1) 57,935 7.63%
2930 W. Cleveland Road
South Bend, Indiana 46628
Thomas F. Gruber 16,042(2)(3) 2.09
President and Chief Executive Officer
Gerald R. Gadacz 10,000(2) 1.32
Retired President and Chief Executive Officer
Directors and executive officers of the Company 98,272(4) 12.60
and the Association, as a group (8 persons)
- ------------------------
(1) The amount reported represents shares held by the Association's Employee
Stock Ownership Plan ("ESOP"), which have not yet been allocated to the
accounts of participants. As of September 9, 1997, 19,345 of the 77,280
shares held in the aggregate by the ESOP had been allocated to accounts of
participants. First Source Bank, South Bend, Indiana, the trustee of the
ESOP, may be deemed to beneficially own the shares held by the ESOP which
have not been allocated to accounts of participants. Participants in the
ESOP are entitled to instruct the trustee as to the voting of shares
allocated to their accounts under the ESOP. Unallocated shares held in the
ESOP's suspense account are voted by the trustee in the same proportion as
allocated shares voted by participants.
<PAGE>
(2) Amount includes shares held directly, as well as shares held jointly with
family members, shares held in retirement accounts, shares held in a
fiduciary capacity or by certain family members, with respect to which
Messrs. Gruber and Gadacz may be deemed to have sole or shared voting
and/or investment powers.
(3) Amount includes 5,796 shares which Mr. Gruber currently has the right to
acquire or will have the right to acquire within 60 days of September 9,
1997 pursuant to stock options granted under the Company's 1995 Stock
Option and Incentive Plan (the "Stock Option Plan") and 2,320 shares
awarded as restricted stock under the Company's Recognition and Retention
Plan (the "RRP") which have vested or will vest within 60 days of September
9, 1997 (and which have or will become free of all restrictions originally
placed thereon).
(4) Amount includes shares held directly, as well as shares held jointly with
family members, shares held in retirement accounts, shares held in a
fiduciary capacity or by certain family members, with respect to which the
group members may be deemed to have sole or shared voting and/or investment
powers. Amount also includes 16,256 shares subject to options granted under
the Stock Option Plan currently exercisable or which will become
exercisable within 60 days of September 9, 1997 and 6,590 shares awarded as
restricted shares under the Company's Recognition and Retention Plan (the
"RRP") that have vested or will vest within 60 days of September 9, 1997
(and which have or will become free of all restrictions originally placed
thereon). Amount excludes all shares held by Mr. Gadacz.
</TABLE>
PROPOSAL I - ELECTION OF DIRECTORS
The Company's Board of Directors is presently composed of six members,
each of whom is also a director of the Association. The Directors are divided
into three classes. Directors of the Company are generally elected to serve for
three-year terms which are staggered to provide for the election of
approximately one-third of the directors each year.
<PAGE>
The following table sets forth certain information regarding the
Company's Board of Directors, including their terms of office and nominees for
election as directors. It is intended that the proxies solicited on behalf of
the Board of Directors (other than proxies in which the vote is withheld as to
the nominee) will be voted at the Meeting for the election of the nominees
identified in the following table. If any nominee is unable to serve, the shares
represented by all such proxies will be voted for the election of such
substitute as the Board of Directors may recommend. At this time, the Board of
Directors knows of no reason why any nominee might be unable to serve, if
elected. Except as described herein, there are no arrangements or understandings
between any director or nominee and any other person pursuant to which such
director or nominee was selected.
<TABLE>
<CAPTION>
Shares of Common
Age at Term Stock Beneficially Percent
June 30, Director to Owned at of
Name 1997 Position(s) Held Since(1) Expire September 9, 1997(2) Class
---- ---- ---------------- -------- ------ -------------------- -----
<S> <C> <C> <C> <C> <C> <C>
NOMINEES
George J. Aranowski 66 Director 1973 2000 12,706 1.67%
Robert J. Urbanski 45 Chairman of the Board 1991 2000 22,706 2.98
DIRECTORS CONTINUING IN OFFICE
Leonard J. Dobosiewicz 56 Director 1977 1998 9,706 1.27
Joseph A. Gorny 54 Director 1993 1998 22,706 2.98
Thomas F. Gruber 55 President and Chief Executive 1981 1999 16,042 2.09
Officer
Joseph F. Nagy 49 Vice Chairman and Director 1985 1999 10,206 1.34
- -------------------------------
(1) Includes service as a director of the Association.
(2) Includes shares held directly, as well as shares held in retirement
accounts, held by certain members of the named individuals' families, or
held by trusts of which the named individual is a trustee or substantial
beneficiary, with respect to which shares the named individuals may be
deemed to have sole or shared voting and/or investment powers. Also
includes 1,932, 1,932, 1,932, 1,932, 5,796 and 1,932 shares which Messrs.
Aranowski, Urbanski, Dobosiewicz, Gorny, Gruber and Nagy, respectively,
currently or will within 60 days of September 9, 1997 have the right to
acquire pursuant to stock options granted under the Stock Option Plan and
774, 774, 774, 774, 2,320 and 774 shares awarded as restricted stock under
the RRP to Messrs. Aranowski, Urbanski, Dobosiewicz, Gorny, Gruber and
Nagy, respectively, which have vested or will vest within 60 days of
September 9, 1997 (and which have or will become free of all restrictions
originally placed thereon).
</TABLE>
<PAGE>
The business experience of each director and director nominee is set
forth below. All directors and director nominees have held their present
positions for at least the past five years, except as otherwise indicated.
George J. Aranowski. Mr. Aranowski is a Certified Public Accountant
with his own accounting practice.
Robert J. Urbanski. Mr. Urbanski is President and 50% owner of
Trans-Tech Electric Co., an electrical contractor in South Bend.
Leonard J. Dobosiewicz. Mr. Dobosiewicz has been in the maintenance
profession at local schools.
Joseph A. Gorny. Mr. Gorny is in the real estate business and is also
the owner of a liquor store.
Thomas F. Gruber. Mr. Gruber became the President and Chief Executive
Officer of the Company and the Association in September 1996 after the
retirement of Gerald R. Gadacz. Prior to being named President and Chief
Executive Officer, Mr. Gruber was the State Editor of the South Bend Tribune.
Joseph F. Nagy. Mr. Nagy is the Auditor of St. Joseph County.
Board of Directors' Meetings and Committees
Board and Committee Meetings of the Company. Meetings of the Company's
Board of Directors are held on at least a quarterly basis. The Board of
Directors met 12 times during the fiscal year ended June 30, 1997. During fiscal
1997, no incumbent director of the Company attended fewer than 75% of the total
number of Board Meetings and the total number of meetings held by the committees
of the Board of Directors on which he served.
The Board of Directors of the Company has standing Audit and
Compensation Committees.
The Audit Committee recommends independent auditors to the Board and
reviews the results of the auditors' services. The members of the Audit
Committee are Directors Nagy, Aranowski and Urbanski. During fiscal 1997, this
committee met 3 times.
The Compensation Committee is currently composed of Directors
Aranowski, Nagy and Urbanski. Thomas F. Gruber, President and Chief Executive
Officer of the Company, served on the Compensation Committee prior to becoming
President and Chief Executive Officer, from March 1996 to September 1996. The
Compensation Committee is responsible for administering the Stock Option Plan
and the RRP. The Compensation Committee met four times during fiscal 1997.
The entire Board of Directors acts as a nominating committee for
selecting nominees for election as directors. Nominations of persons for
election to the Board of Directors may be made only by or at the direction of
the Board of Directors or by any shareholder entitled to vote for the election
of directors who complies with the notice procedures set forth in the Bylaws of
the Corporation. Pursuant to the Corporation's Bylaws, nominations by
shareholders must be delivered in writing to the Secretary of the Corporation at
least 90 days prior to the date of the annual meeting.
<PAGE>
Board and Committee Meetings of the Association. Meetings of the
Association's Board of Directors are generally held on a monthly basis. The
Board of Directors of the Association held 12 meetings during the year ended
June 30, 1997. No incumbent director attended fewer than 75% of the total number
of meetings held by the Board of Directors and by all committees of the Board of
Directors on which he served during the year.
Director Compensation
Directors of the Company are paid $500 per month for service on the
Company's Board of Directors. Directors of the Association are paid fees of $350
per meeting attended. Directors of the Association also receive compensation for
participation on committees in the amount of $100 for each meeting attended. In
addition, during fiscal 1997, Mr. Urbanski received $400 per month for service
as Chairman of the Board of Directors of the Company and Mr. Nagy received $200
per month for service as Vice Chairman of the Board of Directors of the Company.
Executive Compensation
The Company has not paid any compensation to its executive officers
since its formation. However, the Company does reimburse the Association for
services performed on behalf of the Company by its officers. The Company does
not presently anticipate paying any compensation to such persons until it
becomes actively involved in the operation or acquisition of businesses other
than the Association.
The following table sets forth information concerning the compensation
paid or accrued by the Association for services rendered by Thomas F. Gruber,
the Company's and the Association's current Chief Executive Officer, and Gerald
R. Gadacz, who retired as the Company's and the Association's Chief Executive
Officer in July 1996. See "Retirement Agreement." No executive officer of the
Company or the Association was paid in excess of $100,000 during fiscal 1997.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term Compensation
Annual Compensation Awards
--------------------------------- -------------------------
Other Annual Restricted All Other
Fiscal Salary Bonus Compensation Stock Options/ Compensation
Name and Principal Position Year ($) ($) ($) Award ($) SARs (#) ($)
--------------------------- ---- --- --- --- --------- -------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas F. Gruber, President 1997 $63,370(2) --- --- $98,532(3) 19,320(4) $ ---
and Chief Executive Officer(1) 1996 --- --- --- --- --- ---
1995 --- --- --- --- --- ---
Gerald R. Gadacz, Retired 1997 4,400 --- --- --- --- ---
President and Chief Executive 1996 73,579(5) --- --- 40,250(6) 5,000(6) 14,743(7)
Officer 1995 69,375(5) --- --- --- --- 5,286(7)
- --------
(1) Mr. Gruber became President and Chief Executive Officer of the Company
and the Association in October 1996. Prior to that time, he was a
director of the Company and the Association but did not serve as an
executive officer of the Company or the Association.
<PAGE>
(2) Includes $18,380 in fees for service as a director of the Company and
the Association during fiscal year 1997. For his service as a director
of the Company in fiscal years 1996 and 1995, Mr. Gruber received fees
of $22,865 and $17,425, respectively.
(3) Based on the $12.75 average of the closing bid and ask price per share
of the Common Stock on September 30, 1996, the date of grant. The 7,728
shares of restricted stock granted on September 30, 1996 are scheduled
to vest in five equal annual installments, commencing September 30,
1997. While a director of the Company, Mr. Gruber was awarded on
October 25, 1995, 1,932 shares of restricted stock (the value of which,
on the date of grant (based on the $12.625 average of the closing bid
and ask price per share of the Common Stock on the date of grant) was
$24,392). Twenty percent of the 1,932 restricted shares vested on
October 25, 1996, and the remaining shares are scheduled to vest in
equal annual installments on October 25, 1997, 1998, 1999 and 2000,
respectively. Dividends are paid on the restricted shares held by Mr.
Gruber to the same extent and on the same date as dividends are paid on
all other outstanding shares of the Common Stock. Based on the average
of the closing bid and ask prices per share of the Common Stock on June
30, 1997 ($14.75), the 9,274 restricted shares held by Mr. Gruber had
an aggregate market value of $136,792.
(4) Mr. Gruber was also granted an option to purchase 4,830 shares of
Common Stock in fiscal 1996.
(5) Includes $16,345 and $13,150 in fees for service as a director in
fiscal 1996 and 1995, respectively.
(6) Mr. Gadacz forfeited all options and restricted stock upon his
retirement from the Company in July 1996. See "Retirement Agreement."
(7) Represents employer contributions under the Association's 401(k) plan
and allocations to Mr. Gadacz' ESOP account for 1996 and 1995, as
follows: 1996 - 401(k): $715, ESOP: $14,028; 1995 - 401(k): $875, ESOP:
$4,411.
</TABLE>
Retirement Agreement
On July 10, 1996, the Association and the Company entered into a
retirement agreement with Gerald R. Gadacz pursuant to which Mr. Gadacz retired
as President and Chief Executive Officer of the Association and the Company. He
also retired from the Board of Directors of both the Association and the Company
and agreed to the cancellation of his employment agreement. In consideration for
the foregoing, the Company agreed to pay Mr. Gadacz $80,000 per year over a
two-year period. In addition, the company agreed to provide to Mr. Gadacz with
health benefits for a period of two years and other benefits up to $10,000.
<PAGE>
The following table sets forth certain information concerning grants of
stock options pursuant to the Stock Option Plan to Mr. Gruber during fiscal
1997. No stock options were granted to Mr. Gadacz in fiscal 1997. No stock
appreciation rights ("SARs") were granted to Mr. Gruber or Mr. Gadacz in fiscal
1997.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
Number of % of Total
Shares Options
Underlying Granted to Per Share
Options Employees in Exercise Expiration
Granted Fiscal Year Price Date
------- ----------- ----- ----
<S> <C> <C> <C> <C>
Thomas F. Gruber 19,320(1) 100% $12.75 09/30/06
- ----------------
(1) The option is scheduled to vest annually in 20% increments beginning
September 30, 1997.
</TABLE>
The following table sets forth information regarding stock options
exercised by Messrs. Gruber and Gadacz during fiscal 1997 and the number and
value of unexercised stock options held by such individuals at June 30, 1997. No
stock options were exercised by Mr. Gruber or Mr. Gadacz during fiscal 1997. All
options granted will expire ten years from the date of grant and have exercise
prices per share equal to the market value per share of the Common Stock on the
date of grant.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares --------------------------- ----------------------------
Acquired
on Value
Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- --- --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas F. Gruber --- --- 966 23,184 $ 2,048(1) $38,640(1)
Gerald R. Gadacz(2) --- --- --- --- $ --- $ ---
- -------------
(1) Represents the difference between the aggregate fair market value of
the options as of June 30, 1997 and the aggregate exercise price.
(2) Mr. Gadacz forfeited all options upon his retirement from the Company
in July 1996.
</TABLE>
<PAGE>
Employment Agreement
On September 30, 1996, the Association entered into an employment
agreement with Mr. Gruber providing for an initial term of three years (the
"Employment Agreement"). The Employment Agreement provides for an annual salary
in an amount not less than Mr. Gruber's salary as of the date on which the
Employment Agreement was executed and provides for an annual extension of the
term of the Employment Agreement by one year, subject to the performance of an
annual formal evaluation by disinterested members of the Board of Directors of
the Association. The Employment Agreement also provides for termination in the
event of Mr. Gruber's death, for cause or in certain events specified by the
regulations of the Office of Thrift Supervision. The Employment Agreement is
also terminable by Mr. Gruber upon 90 days' notice to the Association.
The Employment Agreement provides for payment to Mr. Gruber of an
amount equal to 299% of his five-year average base compensation, if his
employment is involuntarily terminated in connection with a "change in control"
of the Association or the Company or within twelve months thereafter. For
purposes of the Employment Agreement, a "change in control" is defined as any
event which would require the filing of an application for acquisition of
control or notice of change in control pursuant to 12 C.F.R. ss. 574.3 or 4.
Such events are generally triggered prior to the acquisition of control of 10%
of the Common Stock. If the employment of Mr. Gruber had been terminated as of
June 30, 1997 under circumstances entitling him to severance pay as described
above, he would have been entitled to receive a lump sum cash payment of
approximately $205,243.
Certain Transactions
The Association has followed a policy of granting loans to eligible
directors, officers, employees and members of their immediate families for the
financing of their personal residences. All such loans to directors and
executive officers are required to be made in the ordinary course of business
and on the same terms, including collateral and interest rates, as those
prevailing at the time for comparable transactions and do not involve more than
the normal risk of collectibility. The Association's loans to directors,
executive officers, employees and members of their immediate families totaled
$678,000 at June 30, 1997, which was 5.49% of the Company's stockholders' equity
at that date. There were no loans outstanding to any director, executive officer
or their affiliates at preferential rates or terms which in the aggregate
exceeded $60,000 during the two years ended June 30, 1997. All loans to
directors and officers were performing in accordance with their terms at June
30, 1997.
PROPOSAL II - RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Coopers & Lybrand,
L.L.P., independent accountants, to be the Company's auditors for the fiscal
year ending June 30, 1998. Representatives of Coopers & Lybrand, L.L.P. are
expected to attend the Meeting to respond to appropriate questions and to make a
statement if they so desire.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND, L.L.P. AS THE COMPANY'S
AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30, 1998.
<PAGE>
PROPOSAL III - STOCKHOLDER PROPOSAL
The Company has received from a stockholder for consideration at the
Meeting the proposal set forth below. The name and address and number of shares
owned by the stockholder submitting the Stockholder Proposal will be furnished
by the Company to any person either orally or in writing as requested, promptly
upon the receipt of any oral or written request therefor.
Proposal
"RESOLVED, that the shareholders of Sobieski Bancorp, Inc. (the
"Company") hereby recommend that the board of directors appoint a special
committee, consisting of all directors except those who are current or former
officers of the Company, for the purpose of soliciting, reviewing and
negotiating offers to acquire the Company on terms that are fair and in the best
interests of the shareholders of the Company. If the committee determines that
an offer is financially fair to the shareholders of the Company and would
receive required regulatory approvals, the committee shall recommend to the
board of directors that it consider and act on the offer in accordance with
applicable law.
RESOLVED FURTHER, that these resolutions shall not be altered, amended,
modified or repealed except by the shareholders of the Company."
Statement in Support of Proposal
Proponent believes the Company has performed poorly and management has
failed to generate a reasonable return on shareholders' equity and assets.
Proponent believes management has unduly risked the shareholders' capital for
all of the following reasons:
1. Mr. Gruber, the President and CEO of the Company, lacks experience both
in running a savings and loan and in running a public company. Prior to
becoming President and CEO of the Company, Mr. Gruber was the State
Editor of the South Bend Tribune.
2. In an effort to increase profits, management has engaged in commercial
loan transactions without having adequate experience or expertise.
Management has hired a commercial loan officer to handle these
transaction, but has inadequate experience or expertise to oversee the
loan officer's activities.
3. Management has failed to disseminate information to shareholders on a
timely basis. The Company released no information when the CFO resigned
approximately one month ago. The Company released no information when
the CEO resigned in July 1996, and only released that information when
the CEO resigned in July 1996, and only released that information with
the Company's annual report, which was disseminated at least two months
later.
4. Proponent believes management has little or no incentive to change its
policies because it owns less than 10% of the outstanding shares of the
Company and has attempted to entrench itself through charter and by-law
provisions.
<PAGE>
5. Proponent believes management lacks an ability to produce satisfactory
operating profits from traditional lending activities. Proponent fears
that management's ill-advised policies place the Company's capital at
significant risk, therefore threatening the continued viability of the
Company in the event of an economic downturn.
As more financial institutions are acquired, and due to the maturity of
the business cycle, Proponent believes that now is the time to actively explore
an acquisition so that the Company can be sold as soon as legally permissible.
Proponent believes the creation of a committee of independent directors to carry
out this effort is the best method of enhancing and maximizing shareholder value
and serving the interests of shareholders. Shareholders should vote "FOR" the
proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THE STOCKHOLDER
PROPOSAL FOR THE FOLLOWING REASONS.
The Board of Directors recognizes as its primary duty the maximization
of stockholder value. The Board of Directors has successfully managed and
believes it has positioned the Company for the long-term benefit of all
stockholders. The Board believes the Proponent's suggestion to enhance
shareholder value represents an effort to reap short-term gains at the expense
of the long-term interests of all stockholders. Furthermore, the Proposal is
supported by a statement the Board believes to be erroneous and misleading.
It should be clear after reviewing the favorable operating results of
the Company, as well as the steps taken by the Board of Directors to increase
management strength and stockholder communications, that the Company has made
substantial progress over the past year. This progress should not be cut short
by an ill-conceived stockholder proposal that seeks to take away from
stockholders, the Company's employees, and the communities in which the Company
has offices, the opportunities for growth in stockholder value, and service to
its customers.
Proponent suggests that Mr. Gruber lacks experience in operating a
savings association and a public company. Proponent has failed, however, to
mention that Mr. Gruber had served as a director of the Association for 15 years
prior to becoming President and Chief Executive Officer of the Company in 1996.
Nor has Proponent mentioned that Mr. Gruber has served on committees of the
Association's and the Company's Boards of Directors that are involved in all
aspects of the respective organizations' operations, including, among other
things, loans, audit, compensation, executive administration and investment.
Thus, contrary to Proponent's assertions, Mr. Gruber is intimately familiar with
and has experience in the operations of a savings association.
Proponent notes that prior to becoming President and Chief Executive
Officer of the Company, Mr. Gruber was State Editor of the South Bend Tribune.
At the South Bend Tribune, Mr. Gruber's responsibilities were similar to many of
those faced by corporate executives, namely, budget, personnel development,
marketing and strategic planning and various other administrative duties. Mr.
Gruber's position with the South Bend Tribune facilitated his active involvement
in numerous local civic organizations. Mr. Gruber is well-known in the Company's
core market area, an essential attribute for the chief executive officer of a
company attempting to succeed as a community banking organization. Mr. Gruber
was recently recognized with listing in the Indianapolis Star's annual report on
Indiana's top business executives.
<PAGE>
Proponent notes that the Company has commenced a commercial lending
program. The commercial lending program was implemented in response to customer
interest and in an attempt to improve the Company's interest rate spread. One
year after initiating this program, the Company had approximately $4.2 million
in commercial loans, representing approximately 6% of the total loan portfolio
at June 30, 1997. The Company's commercial lending program emphasizes local,
commercial real estate loans and lines of credit, plus participations through
1st Source Bank, a commercial bank located in South Bend. The Company views Mr.
Gruber's strong ties to the community as a tremendous asset to the commercial
lending program. As of June 30, 1997, the Company had experienced no losses on
these commercial loans. The Company has reviewed its loan loss reserves in light
of its new lending policies and believes it has adequate reserves.
Proponent suggests that the Company's management has engaged in
commercial loan transactions without having adequate experience. In March 1997,
the Company hired Dean A. Dolph as a commercial loan officer. Mr. Dolph has 11
years experience in commercial lending. Prior to joining the Company, Mr. Dolph
was assistant vice president in charge of residential and commercial lending at
Indiana Lawrence Bank, Rochester Indiana. Contrary to Proponent's assertions,
the Company is well-equipped to oversee Mr. Dolph's activities. The
Association's commercial loan policy was recently revised to require prior Board
approval of all loans in excess of $250,000. Loans of less than $250,000 require
review of the Chief Executive Officer and Chief Financial Officer.
Proponent suggests that management has failed to disseminate
information to stockholders on a timely basis. Since the commencement of Mr.
Gruber's employment with the Company, management's dissemination of material
information has improved markedly. The number of press releases and other public
disclosures regarding dividends, quarterly earnings and other business
developments have increased substantially. Mr. Gruber also started a quarterly
newsletter mailed to every stockholder that summarizes the Company's Quarterly
Report on Form 10-QSB filed with the Securities and Exchange Commission and
other important information about the Company. The newsletter is not required by
any law or regulation, but is provided in order to ensure prompt disclosure of
material information about the Company to stockholders.
The Board of Directors disagrees with Proponent's assertion that, as
holders of slightly under 10% of the Common Stock, management has little
incentive to implement new strategies designed to enhance stockholder value. The
members of the Board of Directors presently own 77,680 shares, or just under 10%
of the Common Stock currently outstanding. Furthermore, as of June 30, 1997, the
Company's directors and officers held in the aggregate options to acquire 50,300
shares of Common Stock and 18,648 shares of restricted stock. Particularly with
respect to their stock options, management has a substantial incentive to
increase the value of the Common Stock.
The Board of Directors also disagrees with Proponent's suggestion that
management has sought to entrench itself through provisions in the Company's
Certificate of Incorporation and Bylaws. Such provisions were included not in
order to entrench management, but to provide the Board of Directors with maximum
flexibility in conducting the business of the Company in a manner consistent
with the best interests of the stockholders.
<PAGE>
In 1996, management embarked on a three-year plan designed to serve the
best interests of stockholders by improving earnings-per-share and return on
equity. Toward this end, the Company has expanded its residential lending
operations through staff reorganization, aggressive marketing, an expansion of
its lending area and the hiring of a commercial loan officer with 11 years
experience and a chief financial officer with 17 years experience in the bank
and thrift industries. Over the last year, the Company's mortgage portfolio
increased from $53.1 million at June 30, 1996 to $61.3 million at June 30, 1997
and net interest income increased by $214,000. Net income after taxes, as
adjusted from the one-time assessment to recapitalize the Savings Association
Insurance Fund, increased by 48.4% during fiscal 1997, from $335,000 at June 30,
1996 to $497,000 at June 30, 1997. These increases were achieved without
sacrificing asset quality, and demonstrate management's ability to produce
satisfactory operating results.
Even more telling of management's ability to enhance stockholder value
is the increase in the price of the Common stock from $10.00 per share at the
time of the initial public offering in March 1995 to $16.50 per share at July
31, 1997, a 65% gain. In addition, management implemented a quarterly cash
dividend policy in January 1997. Dividend payments have increased by 14.3% since
the implementation of this policy, from $.07 per share at January 1997 to $.08
per share at July 30, 1997.
As more fully detailed in the Chairman's Letter to Stockholders in the
accompanying 1997 Annual Report to Stockholders, the key components of
management's plan to enhance stockholder value are as follows:
o increase net interest margin through the gradual shift in the
composition of the loan portfolio toward one typically held by a
community bank;
o retain deposits though special short-term and long-term certificate of
deposit promotions;
o increase non-interest income through a restructuring of the loan fee
schedule (currently below the Association's market average in the
Association's market area) and promotion and cross-selling of
transaction accounts;
o explore the continued use of stock repurchases and increased dividends;
o additional leveraging of capital through growth in one- to four-family
residential mortgage products and originations of commercial loan
products, purchases of investment securities and mortgage-backed
securities, participations in commercial lending with other financial
institutions, and purchases of whole loans;
o increase fee income and control expenses; and
o adopt new technology to enhance operations and attract and retain
customers.
<PAGE>
The Board of Directors continues to evaluate strategic alternatives
with the assistance of its advisers and has determined that the adoption of the
Stockholder Proposal would not be in the best interests of the stockholders. In
the exercise of its fiduciary duties, the Board of Directors will carefully
consider, as it has done with the Stockholder Proposal, all options to increase
stockholder value.
FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"AGAINST" THE STOCKHOLDER PROPOSAL.
STOCKHOLDER PROPOSALS--1998 ANNUAL MEETING
In order to be eligible for inclusion in the Company's proxy materials
for the next annual meeting of stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's office located at 2930
W. Cleveland Road, South Bend, Indiana 46628, no later than May 20, 1998. Any
such proposal shall be subject to the requirements of the proxy rules adopted
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons owning more than 10% of a registered class of the
Company's equity securities, to file periodic reports of ownership and changes
in ownership with the Securities and Exchange Commission and to provide the
Company with copies of such reports. Based solely upon information provided to
the Company by the directors and officers subject to Section 16(a), all Section
16(a) filing requirements applicable to such persons were complied with during
fiscal 1997, except for the inadvertent failure to timely file a Form 3 Initial
Statement of Beneficial Ownership by Arthur Skale, the Vice President of Finance
and Chief Financial Officer of the Company. Mr. Skale subsequently filed the
required form with the Securities and Exchange Commission.
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 matter should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
The cost of solicitation of 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 solicitation by mail,
directors, officers and regular employees of the Company and the Association may
solicit proxies personally or by telegraph or telephone without additional
compensation. The Company has retained Regan & Associates to assist in the
solicitation of proxies for a fee of $5,000, plus reasonable out-of-pocket
expenses.
<PAGE>
REVOCABLE PROXY
SOBIESKI BANCORP, INC.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
October 27, 1997
The undersigned hereby appoints the Board of Directors of SobieskiBancorp,
Inc. (the "Company"), with full powers of substitution, to act as attorneys and
proxies for the undersigned to vote all shares of capital stock of the Company
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
(the"Meeting") to be held at the main office of the Company, located at 2930 W.
Cleveland Road, SouthBend, Indiana on October 27, 1997 at 2:00 p.m. and at any
and all adjournments and postponements thereof.
The Board of Directors recommends a vote "FOR" the election of the nominees
listed in Item 1 and "FOR" the ratification of the appointment of auditors named
in Item 2.
1. The election as directors of all nominees listed below (except as marked to
the contrary):
GEORGE J. ARANOWSKI ROBERT J. URBANSKI
[ ] For [ ] Withold [ ] Except
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
2. The ratification of the appointment of Coopers &Lybrand, L.L.P. as auditors
for the Company for the fiscal year ending June 30, 1998.
[ ] For [ ] Against [ ] Abstain
The Board of Directors recommends a vote "AGAINST"
the proposal set forth in Item 3 below.
3. A proposal by a stockholder of the Company for the appointment of a special
committee of the Board of Directors.
[ ] For [ ] Against [ ] Abstain
<PAGE>
Please be sure to sign and date this Proxy in the box below.
_________________________________________
Date
_________________________________________
Stockholder sign above
_________________________________________
Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
SOBIESKI BANCORP, INC.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE NOMINEES FOR ELECTION AS DIRECTORS LISTED IN
ITEM 1 ABOVE AND FOR THE RATIFICATION OF THE APPOINTMENT OF AUDITORS NAMED IN
ITEM 2 ABOVE AND AGAINST THE PROPOSAL SET FORTH IN ITEM 3 ABOVE. IF ANY OTHER
BUSINESS IS PRESENTED AT THEMEETING, 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.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
This Proxy may be revoked at any time before it is voted by: (i) filing with
the Secretary of the Company at or before the Meeting a written notice of
revocation bearing a later date than this Proxy; (ii) duly executing a
subsequent proxy relating to the same shares and delivering it to the Secretary
of the Company at or before the Meeting; or (iii) attending the Meeting and
voting in person (although attendance at the Meeting will not in and of itself
constitute revocation of this Proxy). If this Proxy is properly revoked as
described above, then the power of such attorneys and proxies shall be deemed
terminated and of no further force and effect.
The above signed acknowledges receipt from the Company, prior to the execution
of this proxy, of notice of the Meeting, a Proxy Statement and an Annual Report
to Stockholders.
Please sign exactly as your name(s) appear(s) on this proxy card. When signing
as attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
