U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30,1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 0-25518
SOBIESKI BANCORP, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 35-1942803_________
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2930 W. Cleveland Road, South Bend, Indiana 46628
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (219) 271-8300
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes[X] No [ ]
As of November 9, 1999, there were 725,462 shares of the
registrant's common stock issued and outstanding.
SOBIESKI BANCORP, INC.
AND SUBSIDIARY
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Financial Condition 1
Condensed Consolidated Statements of Income 2
Condensed Consolidated Statements of Cash Flows 3
Notes to Condensed Consolidated Financial Statements 4-6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
i
PART I. Financial Information
Item 1. Financial Statements
Sobieski Bancorp, Inc. And Subsidiary
Condensed Consolidated Statements Of Financial Condition
September 30,1999 and June 30,1999
<TABLE>
<CAPTION>
September 30, June 30,
ASSETS 1999 1999
(Unaudited)
<S> <C> <C>
Cash, including interest-bearing
deposits in other financial
institutions of $411,192 and
$ 165,940, respectively $ 1,462,967 $ 939,604
Investment securities,
available-for-sale (amortized
cost of $2,592,722 and
$2,593,252, respectively) 2,540,532 2,558,128
Investment securities,
held-to-maturity (market value
of approximately $189,000 and
$190,700, respectively) 200,000 200,000
Mortgage-backed securities,
available-for-sale (amortized
cost of $454,565 and $473,166,
respectively) 441,603 462,199
Mortgage-backed securities,
held-to-maturity (market value of
approximately $6,907,800 and
$7,397,500, respectively) 7,025,455 7,484,493
Loans, net 93,710,893 87,899,960
Federal Home Loan Bank stock,
at cost 1,325,800 1,325,800
Property and equipment, net 1,919,987 1,887,169
Other assets 948,138 940,588
Total assets $ 109,575,375 $ 103,697,941
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 68,814,805 $ 64,231,053
Federal Funds purchased 1,750,000 1,000,000
Federal Home Loan Bank advances 25,250,000 25,250,000
Advances from borrowers for
taxes and insurance 621,582 292,291
Accrued income taxes 3,327 7,141
Accrued interest and other
expenses 501,036 345,173
Total liabilities 96,940,750 91,125,658
Stockholders' equity:
Preferred stock, $.01 par
value: 500,000 shares
authorized; none issued - -
Common stock, $.01 par value:
3,500,000 shares authorized;
966,000 shares issued 9,660 9,660
Additional paid-in capital 9,248,572 9,250,990
Retained earnings,
substantially restricted 7,429,200 7,318,955
Net unrealized depreciation
of available-for-sale securities ( 43,000) ( 30,420)
16,644,432 16,549,185
Less: Treasury stock, at cost,
253,552 and 251,198 shares,
respectively, 3,578,044 3,545,139
Unallocated Employee Stock
Ownership Plan shares;
43,176 shares 431,763 431,763
Total stockholders' equity 12,634,625 12,572,283
Total liabilities and
stockholders' equity $ 109,575,375 $ 103,697,941
</TABLE>
See accompanying notes to condensed consolidated financial statements.
1
Sobieski Bancorp, Inc. And Subsidiary
Condensed Consolidated Statements Of Income
for the three months ended September 30,1999 and 1998
<TABLE>
<CAPTION>
Three Months
Ended September 30,
1999 1998
(Unaudited)
<S> <C> <C>
Interest Income:
Loans $ 1,742,726 $ 1,567,780
Mortgage-backed securities 104,590 141,131
Investment securities 61,724 47,046
Interest-bearing deposits 9,980 6,405
Total interest income 1,919,020 1,762,362
Interest expense:
Interest on deposits 761,049 748,623
Interest on borrowings 345,175 294,675
Total interest expense 1,106,224 1,043,298
Net interest income 812,796 719,064
Provision for loan losses 35,000 15,000
Net interest income after provision
for loan losses 777,796 704,064
Non-interest income:
Fees and service charges 53,811 39,369
Other income 47 48
Total non-interest income 53,858 39,417
Non-interest expenses:
Compensation and benefits 287,792 282,986
Occupancy and equipment 87,267 73,666
Federal deposit insurance premiums 9,829 9,184
Advertising and promotion 8,958 9,872
Service bureau expense 52,201 37,751
Other operating expenses 99,023 68,450
Total non-interest expenses 545,070 481,909
Income before income taxes 286,584 261,572
Provision for income taxes 118,200 109,400
Net income 168,384 152,172
Other comprehensive income,
net of tax: Unrealized appreciation
(depreciation)of available-for-sale
securities ( 12,580) 97
Total comprehensive income $ 155,804 152,269
Basic earnings per common share $ 0.25 $ 0.21
Diluted earnings per common share $ 0.25 $ 0.21
Dividends per common share $ 0.08 $ 0.08
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
Sobieski Bancorp, Inc. And Subsidiary
Condensed Consolidated Statements Of Cash Flows
for the three months ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
Three Months
Ended September 30,
1999 1998
(Unaudited)
<S> <C> <C>
Cash flows provided by (used in)
operating activities:
Net income $ 168,384 $ 152,172
Adjustments to reconcile net income
to net cash provided
by operating activities:
Depreciation of property and equipment 27,166 26,254
Provision for loan losses 35,000 15,000
Contribution to Employee Stock
Ownership Plan 22,755 29,553
Contribution to Recognition and
Retention Plan 16,375 20,856
Amortization of premiums and
accretion of discounts, net 27,480 25,247
Deferral of loan fees 19,039 8,706
Increase in other assets (1,069) (41,865)
Decrease in accrued income taxes (3,738) (105,619)
Increase in accrued interest and
other expenses 136,058 93,220
Net cash provided by operating
activities 447,450 223,525
Cash flows provided by (used in)
investing activities:
Purchase of investment securities ( 9,884) -
Proceeds from maturities of
investment securities - 100,000
Principal reductions of
mortgage-backed securities 460,573 631,243
Net increase in loans made to
customers and principal
collections on loans (5,864,972) (4,533,816)
Purchase of Federal Home
Loan Bank stock - (240,000)
Purchase of property and equipment (59,984) (38,465)
Net cash used in investing activities ( 5,474,267) (4,081,038)
Cash flows provided by (used in)
financing activities:
Net increase in deposits 4,583,752 4,445,159
Increases in advances from
borrowers for taxes and insurance 329,291 225,804
Federal funds purchased 750,000 -
Federal Home Loan Bank advances - 10,400,000
Repayment of Federal Home Loan
Bank advances - (5,600,000)
Purchase of treasury stock (54,724) -
Cash dividends (58,139) (62,568)
Net cash provided by financing
activities 5,550,180 9,408,395
Increase in cash and cash equivalents 523,363 5,550,882
Cash and cash equivalents,
beginning of period 939,604 1,291,426
Cash and cash equivalents, end of
period $ 1,462,967 $ 6,842,308
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
Sobieski Bancorp, Inc. And Subsidiary
Notes To Condensed Consolidated Financial Statements
A. GENERAL.
The accompanying condensed consolidated financial statements include
the accounts of Sobieski Bancorp, Inc. (the "Company") and its wholly
owned subsidiary, Sobieski Federal Savings and Loan Association of
South Bend (the "Association").
The condensed consolidated financial statements included herein have
been prepared by the registrant pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
the registrant believes that the disclosures are adequate to make the
information presented not misleading. In the opinion of management,
the accompanying unaudited condensed consolidated financial statements
contain all adjustments, consisting only of normal recurring accruals,
necessary for a fair presentation of the Company's consolidated
financial position, results of operations and cash flows for the
interim periods presented. The consolidated results of operations
for the interim periods presented are not necessarily indicative of
the results that may be expected for the full year. The accompanying
unaudited condensed consolidated financial statements should be read
in conjunction with the Company's consolidated financial statements
included in the Company's Annual Report on Form 10-KSB for the year
ended June 30, 1999.
The Company cautions that any forward looking statements contained in
this report, in a report incorporated by reference to this report or
made by management of the Company involve risks and uncertainties and
are subject to change based on various factors. Actual results could
differ materially from those expressed or implied.
B. CONVERSION TO STOCK SAVINGS LOAN ASSOCIATION
On October 4, 1994, the Board of Directors of the Association adopted
a plan of conversion to convert the Association from a federally
chartered mutual savings and loan association to a federally chartered
stock savings and loan association (the "Conversion"). The Association
obtained the required regulatory approval for the Conversion in
February 1995 and on March 22, 1995 the plan of conversion was
approved by a majority of the votes eligible to be cast by the
members of the Association.
The Company was organized as a Delaware corporation in December 1994
for the purpose of acquiring all of the issued and outstanding capital
stock of the Association issued in the Conversion.
At the time of Conversion, the Association established a liquidation
account in an amount equal to the Association's retained earnings as
of September 30, 1994. The liquidation account will be maintained for
the benefit of depositors, as of the eligibility record date and
supplemental eligibility record date, who continue to maintain their
deposits with the Association after the Conversion. In the event of a
complete liquidation (and only in such event), each eligible depositor
will be entitled to receive a liquidation distribution from the
liquidation account, in the proportionate amount of the then current
adjusted balance for deposits then held, before any liquidation
distribution may be made with respect to the stockholders.
4
Sobieski Bancorp, Inc. And Subsidiary
Notes To Condensed Consolidated Financial Statements, Continued
Current regulations allow the Company to pay cash dividends on its stock
if its regulatory capital would not thereby be reduced below the amount
then required for the aforementioned liquidation account. Also, capital
distribution regulations limit the Company's ability to make capital
distributions which include dividends, stock redemptions, repurchases
and other transactions charged to the capital account based on its
capital level and supervisory condition.
C. ACCOUNTING POLICIES.
Securities
Securities that may be sold as part of the Association's asset/liability
or liquidity management or in response to or in anticipation of changes
in interest rates and resulting prepayment risk, or for other similar
factors, are classified as available-for-sale and carried at fair market
value. Unrealized holding gains and losses on securities classified as
available-for-sale are reported net of related deferred income taxes as
a separate component of stockholders' equity. Securities that the
Association has the ability and positive intent to hold to maturity are
classified as held-to-maturity and carried at amortized cost. Trading
securities are carried at fair market value with unrealized holding
gains and losses included in earnings. Gains and losses on all securities
transactions are recognized when sold as determined by the identified
certificate method. The Association had no trading securities at
September 30, 1999.
Allowance For Loan Losses
The allowance for loan losses is established through a provision for
loan losses based on management's evaluation of the risks inherent in
the Company's loan portfolio and changes in the nature and volume of
its loan activity, including those loans which are being specifically
monitored by management. Such evaluation, which includes a review of
loans for which full collectibility may not be reasonably assured,
considers among other matters, loan classification, the estimated fair
value of the underlying collateral, economic conditions, historical
loan loss experience, the amount of loans outstanding and other factors
that warrant recognition in providing for an adequate allowance for
loan losses. A significant factor considered in the Company's allowance
is its historically low level of loans other than one-to-four family
real estate loans. The Company's allowance for loan losses and
nonaccrual loans at September 30,1999 aggregated $345,000 and $124,000,
respectively.
Earnings Per Common Share
Basic earnings per share are computed by dividing net income by the
weighted average number of shares of common stock outstanding. For
the three month period ended September 30, 1999, the weighted average
number of common shares used in the computation of basic earnings per
share was 669,922. The weighted average number of common shares for
the same period in 1998 was 715,150.
5
Sobieski Bancorp, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements, Concluded
Diluted earnings per share are computed by dividing net income by
the weighted average number of shares of common stock outstanding plus
the dilutive effect of outstanding stock options and nonvested shares
awarded under the RRP. For the three month period ended
September 30,1999, the weighted average number of common shares used
in the computation of diluted earnings per share was 671,704. The
weighted average number of common shares for the same period in 1998
was 724,445.
The Company accounts for the shares of common stock acquired by its
Employee Stock Ownership Plan ("ESOP") and the restricted shares
awarded under its Recognition and Retention Plan ("RRP") in accordance
with the American Institute of Certified Public Accountants Statement
of Position 93-6, "Employers' Accounting For Employee Stock Ownership
Plans", which prescribes that shares held by the ESOP and the restricted
shares awarded under the RRP are not considered in the weighted average
number of shares outstanding until such shares are released for
allocation to an ESOP participant's individual account or vested, in
the case of the RRP.
Comprehensive Income
The Company adopted Statement of Financial Accounting Standards
(SFAS) No. 130, "Reporting Comprehensive Income," effective
July 1, 1998. SFAS No. 130 establishes standards for the reporting
and disclosure of comprehensive income and its components in a full
year set of general purpose financial statements. Presently, the only
component of comprehensive income not already included in net income is
unrealized appreciation or depreciation on available-for-sale investment
securities.
Non-Qualified Supplemental Benefit Plans
Effective July 1, 1998, the Company established non-qualified
supplemental benefit plans for certain of its officers and directors.
These plans generally provide for the payment of supplemental retirement
benefits over a period of ten (10) years, beginning with the later of
(a) the officers's or director's attainment of a specified retirement
age; or (b) upon termination of the officer's employment with the Company
or the director's termination as a member of the Company's Board of
Directors. The estimated aggregate present value of these future benefits
are being accrued over the average remaining service life of the officer
and director group commencing July 1, 1998. The Company also maintains
life insurance contracts on the officers and directors to provide funding
for the retirement obligations. Compensation expense associated with these
agreements aggregated $9,800 and $12,100 for the three-month periods
ended September 30, 1999 and 1998, respectively.
6
Item 2. Management's Discussion And Analysis of Financial
Condition And Results of Operations
Forward-Looking Statements
When used in this Form 10-QSB and in future filings by the Company
with the Securities and Exchange Commission (the "SEC"), in the
Company's press releases or other public or shareholder communications,
and in oral statements made with the approval of an authorized executive
officer, the words or phrases "will likely result," "are expected to,"
"will continue," "is anticipated," "estimate," "project", "believe" or
similar expressions are intended to identify "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements are subject to certain risks and uncertainties,
including, among other things, changes in economic conditions in the
Company's market area, changes in policies by regulatory agencies,
fluctuations in interest rates, demand for loans in the Company's
market area and competition, that could cause actual results to differ
materially from historical earnings and those presently anticipated or
projected. The Company wishes to caution readers not to place undue
reliance on any such forward-looking statements, which speak only as of
the date made. The Company wishes to advise readers that the factors
noted above could affect the Company's financial performance and could
cause the Company's actual results for future periods to differ
materially from those anticipated or projected.
The Company does not undertake and specifically disclaims any obligation
to publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the
date of such statements or to reflect the occurrence of anticipated or
unanticipated events.
Financial Condition
The Company's total assets increased $5.9 million during the three
months ended September 30, 1999 to $109.6 million from $103.7 million
at June 30, 1999. This increase was mainly due to increases in net
loans of $5.8 million and interest-bearing demand deposits in other
financial institutions of $0.5 million, offset by a decrease of
$0.5 million in the securities portfolio. The increase in loans was a
result of purchasing participation interests in commercial loans, and
increased originations for commercial, home equity and mortgage loans.
The Company's total liabilities increased $5.8 million from $91.1 million
at June 30, 1999 to $96.9 million at September 30, 1999. The increase
was from deposit growth and Federal Funds purchased and was primarily
used to fund the increase in new originated loans and purchases of
participation interests in commercial loans. Deposits increased
$4.6 million from $64.2 million at June 30, 1999 to $68.8 million at
September 30, 1999. The deposit increase was the result of continued
competitive market pricing of our deposits.
Stockholders' equity increased by $62,000 to $12.63 million at
September 30, 1999 from $12.57 million at June 30, 1999, principally
the result of $168,000 of net income, offset by cash dividends paid,
treasury stock purchases and increased unrealized losses on
available-for-sale securities.
7
Item 2. Management's Discussion And Analysis of Financial
Condition And Results of Operations, Continued.
Results of Operations
General. The Company recorded net income for the three months ended
September 30, 1999 of $168,000 which is an increase of $16,000, or
10.5%, over net income of $152,000 for the same period in 1998. The
increase in net income for the current three-month period was primarily
from additional interest on higher average earning assets and increased
fees offset by higher loss provisions, non-interest expenses and income
taxes.
Net Interest Income. The Company's net income is primarily dependent
upon net interest income. Net interest income was $813,000 for the
three-month period ended September 30, 1999 as compared to $719,000 for
the same period in the prior year. The increase of $94,000 was
primarily a result of increased income earned on loans offset in part
by increases in interest paid on deposits, FHLB advances and other
borrowings.
Interest income increased $157,000 to $1.92 million for the three-month
period ended September 30, 1999 from $1.76 million for the comparable
1998 period. Average earning assets for the three-month period ended
September 30, 1999, increased $10.53 million adding volume generated
interest earnings of $210,000 offset by yield declines of $53,000.
The yield on earning assets decreased 16 basis points to 7.37% for the
1999 period from 7.53% for the comparable 1998 period.
Interest expense for the three-month period ended September 30, 1999
was $1.11 million, as compared to $1.04 million for the comparable
period in the prior year. The increase in interest expense of $63,000
was primarily due to a $10.3 million average deposit and borrowing
levels over the prior 1998 period. The higher borrowing levels added
increase in $124,000 to interest expense and were offset by $61,000
due to lower rates. Funding cost declined to 4.65% or 28 basis points
for the 1999 period from 4.93% for the 1998 period.
Provisions for Loan Losses. During the three months ended
September 30, 1999, the Company had provisions of $35,000, with
provisions of $15,000 for the comparable period in the prior year.
At September 30, 1999, the Company's allowance for loan losses
totaled $345,000 or .37% of net loans and 191% of total non-performing
loans.
Although management believes that it uses the best information available
to determine the allowance, unforeseen market conditions could result in
adjustments and net income could be significantly affected if
circumstances differ substantially from the assumptions used in making
the final determination. Future additions to the Company's allowance
for loan losses will be the result of periodic loan, property
and collateral reviews and thus cannot be predicted in advance. In
addition, federal regulatory agencies, as an integral part of
their oversight process, periodically review the Company's allowance
for loan losses. Such agencies may require the Company to recognize
additions to the allowance based upon their judgment of the information
available to them at the time of their examination.
Non-Interest Income. Non-interest income consists primarily of fees
and service charges on deposit accounts and other income. Non-interest
income increased $15,000 to $54,000 for the three months ended
September 30, 1999 as compared to $39,000 for the same period last
year. These increases were due primarily to increased fee income
and service charges on customer accounts along with added letter of
credit fee income.
8
Item 2. Management's Discussion And Analysis of Financial
Condition And Results of Operations, Continued
Non-Interest Expenses. Non-interest expenses were $545,000 for the
three-month period ended September 30, 1999, compared to $482,000 for
the same period last year. The increase of $63,000 for the three-month
period ended September 30,1999 compared to the same period last year
was due to higher occupancy, service bureau Year 2000 costs, professional
services, and other administrative expense. Other expenses remaining
relatively the same were compensation and benefits, FDIC insurance and
advertising.
Income Taxes. Income taxes for the three months ended September 30, 1999
were $118,200 on pre-tax income of $287,000, an effective tax rate of
41.2%. For the three months ended September 30, 1998, income taxes were
$109,000 on pre-tax income of $262,000, an effective tax rate of 41.6%
Liquidity and Capital Resources
The Company's principal sources of funds are deposits and principal
and interest payments on loans and investments. While scheduled loan
repayments and maturing investments are relatively predictable, deposit
flows and early loan prepayments are more influenced by interest rates,
general economic conditions and competition. Additionally, the Company
may borrow funds from the Federal Home Loan Bank of Indianapolis ("FHLB")
or utilize other borrowings of funds based on need, comparative costs
and availability at the time.
Federal regulations require the Company to maintain minimum levels of
liquid assets. The required percentage has varied from time to time based
upon the economic conditions and savings flows and is currently 4% of net
withdrawable savings deposits and borrowings payable on demand or in one
year or less during the preceding calendar month. Liquid assets for
purposes of this ratio include cash, certain time deposits, U.S. Government
obligations, government agency and other securities and obligations
generally having remaining maturities of less than five years. The
Company has maintained its liquidity ratio at levels in excess of those
required. At September 30,1999, the Company's liquidity ratio was 14.8%.
At September 30, 1999, the Company had $25.3 million in outstanding
advances from the FHLB used primarily to fund purchases of
participation interests in commercial loans, internally originated
loans and other investments.
The Company uses its liquidity resources principally to meet ongoing
commitments to fund maturing certificates of deposit and deposit
withdrawals and to meet operating expenses. At September 30,1999, the
Company had outstanding commitments to extend credit which amounted to
$9.7 million (including $3.7 million in available home equity lines of
credit). Management believes that loan repayments and other sources of
funds will be adequate to meet the Company's foreseeable liquidity needs.
At September 30,1999, the Association had tangible capital of $9.4 million
or 8.7% of adjusted total assets which was $7.8 million above the minimum
capital requirement of $1.6 million or 1.5% of adjusted total assets.
At September 30,1999, the Association had core capital of $9.4 million
or 8.7% of adjusted total assets which was $6.2 million above the
minimum capital requirement of $3.2 million or 3.0% of adjusted total
assets.
9
Item 2. Management's Discussion And Analysis of Financial
Condition And Results of Operations, Continued
At September 30, 1999, the Association had total risk-based capital
of $9.7 million and risk-weighted assets of $58.9 million or total
risk-based capital of 16.5% of risk-weighted assets. This amount was
$5.0 million above the minimum regulatory risk-based capital requirement
of $4.7 million, or 8.0% of risk-weighted assets.
Financial Accounting Developments
In June 1998, the Financial Accounting Standards Board (FASB) issued
SFAS No. 133, Accounting for Derivatives Instruments and Hedging
Activities. SFAS No. 133, as modified by SFAS No. 137 in July 1999,
is effective for all fiscal quarters of all fiscal years beginning after
June 15, 2000. SFAS No. 133 requires that all derivative instruments be
recorded on the balance sheet at their fair value. Changes in the fair
value of derivatives are recorded each period in current earnings or
other comprehensive income, depending on whether a derivative is designated
as part of a hedge transaction and, if it is, the type of hedge
transaction. Due to the Company currently having no derivative
instruments, the adoption of SFAS No. 133 is not expected to have
any significant effect on the Company's results of operations or
financial position.
10
Item 2. Management's Discussion And Analysis of Financial
Condition And Results of Operations, Continued
Year 2000 Computer Issues
The Company is aware of the current concerns by consumers and the business
community of reliance upon computer software programs that do not properly
recognize the year 2000 in date formats, often referred to as the
"Year 2000 Problem''. The Year 2000 Problem is the result of software
being written using two digits rather than four digits to define the
application year (i.e., "98'' rather than "1998''). The Company is highly
dependent on computer systems because of significant transaction volumes
and date dependency for interest calculations on financial instruments
such as loans and deposits. A failure of the Company's computer systems
could result in disruptions of operations, including among other things,
temporary inability to process transactions, send statements or otherwise
engage in routine business transactions on a daily basis.
The Company has developed a plan to prepare for the Year 2000. Started
in 1997, the plan includes an inventory of software applications,
communication with third-party vendors and suppliers and the obtaining
of certification of compliance with third-party providers. The Company
has a comprehensive, written plan, which is regularly updated and
monitored by management and the Board of Directors. Plan status is
regularly reviewed by management of the Company and reported at least
quarterly to the Board as of September 30, 1999.
The Company has completed testing of all its mission critical systems
and applications and has not encountered any material difficulties during
the testing process.
In April of 1998, the Company budgeted $60,000 to remediate Year 2000
issues through December 31, 1999. These costs primarily will consist
of renovation and upgrading of its computer systems and testing of
equipment and programs for Year 2000 compliance. The Company is investing
in new or upgraded technology that has definable value lasting beyond the
Year 2000. In these instances, where Year 2000 compliance is merely
ancillary, the Company may capitalize and depreciate such an asset over
its estimated useful life.
In addition to reviewing its own computer operating systems and
applications, the Company has initiated formal communications with
its significant suppliers to determine the extent to which the Company's
interface systems are vulnerable to those third parties' failure to
resolve their own Year 2000 issues. There can be no assurance that the
systems of other companies on which the Company's systems rely will be
timely converted. If such modifications and conversions are not made, or
are not completed timely, the Year 2000 issue could have a material adverse
impact on the operations of the Company. Therefore, the Company is in
the process of developing a contingency plan as to not disrupt operations
should its suppliers not be timely converted.
11
Item 2. Management's Discussion And Analysis of Financial
Condition And Results of Operations, Concluded
Contingency planning is one of the most important steps in Year 2000
readiness. It provides a systematic basis for addressing an unexpected
business interruption due to a Year 2000 issue triggered by internal or
third party system failures or by external infrastructure failures. A
thorough contingency plan is prudent to reduce risk and potential impact
of Year 2000 induced interruptions or failures of critical business
functions.
The Company has followed the FFIEC guidance, as published in a series of
interagency statements, on requirements on year 2000 readiness. Sobieski
has completed the five phases identified: awareness, assessment,
renovation, validation and implementation for mission critical systems
including third-party providers. Sobieski has extensively tested the
critical processes in a Year 2000 environment and their tests revealed
no material Year 2000 problems.
The Sobieski Federal Business Resumption Contingency Plan facilitates
the identification of potential problems, dissemination of information,
resolution of issues and decision-making process during the identified
Year 2000 timeframe. The Sobieski management team will be fully
deployed during this time period and should a Year 2000 issue be
detected, the contingency plan will be immediately enacted to address
the problem and not interrupt customer service.
The Company's significant suppliers are an online computer services
firm (provides data processing services), the Federal Home Loan Bank
of Indianapolis and utility services. The representations from these
suppliers are that they are all making efforts to become Year 2000
compliant by December 31, 1998 and to test and validate their systems
during 1999. The Company continues to monitor the progress of these
suppliers by requesting regular updates of the suppliers' progress and
believes that these suppliers will be Year 2000 compliant before
December 31, 1999. The management of the Company does know of
alternative suppliers for the services provided by these entities, but
believes a conversion to these suppliers of the Company's data
processing capabilities during 1999 will be very difficult to accomplish
before the Year 2000.
The Company currently has several significant borrowers for which
the Company has made direct loans or holds a participation interest.
Management of the Company is communicating with these borrowers about
Year 2000 issues and does not expect any Year 2000 problems of these
borrowers will have a material adverse effect on the Company.
The costs of the project and the date on which the Company believes it
will complete the Year 2000 modifications are based on management's best
estimates. There can be no guarantee that these estimates will be
achieved and actual results could differ from those anticipated. Specific
factors that might cause differences include, but are not limited to, the
ability of other companies on which the Company's systems rely to modify
or convert their systems to be year 2000 compliant, and/or the ability to
locate and correct all relevant computer codes.
Sobieski cautions that the Year 2000 readiness disclosure includes
certain "forward-looking statements". Refer to Part 1, Item 2:
Forward-Looking Statements.
12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
a) On October 19, 1999, the Company held its Annual Meeting of
Stockholders.
b) At that meeting, Thomas F. Gruber and Joseph F. Nagy were elected
Directors for terms to expire in 2002
c) Stockholders voted on the following matters:
(i) The election of the following Directors of the Company,
Votes Broker
For Withheld Non-Votes
Thomas F. Gruber 591,623 48,462 85,747
Joseph F. Nagy 591,421 48,664 85,747
(ii) The ratification of the appointment of PricewaterhouseCoopers LLP
as independent auditors of the Company for the fiscal year
ending June 30, 2000.
Votes Broker
For Against Abstain Non-Votes
639,497 588 -0- 85,747
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10(a) Sobieski Bancorp, Inc. Fee Continuation Plan For Retired Directors
10(b) Sobieski Federal Savings and Loan Association Fee Continuation Plan
For Retired Directors
10(c) Sobieski Federal Savings and Loan Association Supplemental Executive
Retirement Plan
27 Financial Data Schedule
(b) Reports on Form 8-K
None
13
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Sobieski Bancorp, Inc.
(Registrant)
Date: November 10, 1999 By: ______________
Thomas F. Gruber
President and Chief Executive Officer
Date: November 10, 1999 By: ________
Arthur Skale
Chief Financial Officer
14
SOBIESKI BANCORP, INC.
AMENDED AND RESTATED FEE CONTINUATION PLAN
FOR RETIRED DIRECTORS
(EFFECTIVE JUNE 29, 1998)
ARTICLE I
DEFINITIONS
Section 1.01. Administrator. The term "Administrator" means Sobieski,
which shall have the authority to manage and control the operation of
this Plan.
Section 1.02. Sobieski. The term "Sobieski" means Sobieski Bancorp, Inc.
Section 1.03. Director. The term "Director" means any member of the
Board of Directors of Sobieski ("Board") on the Vesting Date, or any
future member of the Board who serves for five (5) full consecutive
years. Any future member of the Board who has not served five (5) full
consecutive years shall not be considered a "Director. " A "full year"
begins on the date the Director is elected to the Board or on an a
nniversary date thereof and ends each three hundred sixty-four (364)
days later. As an example, if a director is elected on June 14, 1999,
then that director will have served one full year on June 13, 2000.
The director will become a "Director" (and therefore be entitled to
benefits under this Plan) on June 13, 2004.
Section 1.04. Director's Fee. The term "Director's Fee" means
Four Thousand Dollars ($4,000) per year, paid in monthly installments
of Three Hundred Thirty-three and 33/100 Dollars ($333.33), or such
other amount as determined appropriate by a majority of the Board at
a meeting of Directors or by written consent. If the Board determines
that the Director's Fee should be altered, the adjusted amount shall be
automatically incorporated into this Plan without the requirement of
further action other than the statement of the new Director's Fee in
the applicable corporate minutes or written consent to action.
Section 1.05. Vesting Date. The term "Vesting Date" means July 1, 1998
Section 1.06. Plan. The term "Plan" means the plan embodied by this
instrument as now in effect or hereafter amended.
Section 1.07. Payment Event. The term "Payment Event" shall mean the
later of: (a) the Director's attainment of age seventy (70); or (b)
upon the termination of the Director as a member of the Board.
2
ARTICLE II
BENEFITS
Section 2.01. Payment of Benefits. A Director shall be entitled to
begin receiving payment of the Director's Fee upon occurrence of the
Payment Event. The Director's Fee shall be paid for ten (10) years and
shall be paid monthly beginning on the first day of the month following
the Payment Event. As an example, if the Payment Event occurs on
January 20, 1999, the Director will receive $333.33 per month beginning
on February 1, 1999.
Section 2.02. Death Benefits. If a Director's death occurs before
commencement of the payments described in Section 2.01 of this Plan,
or while those payments are being made to the Director, then the
Director's spouse shall be entitled to receive these benefits as if the
Director were alive. If the Director has no spouse, all benefits under
this Plan shall terminate.
ARTICLE III
ADMINISTRATION
Section 3.01. Administration of Plan. Sobieski shall have the complete
responsibility tor the administration of this Plan. Sobieski shall have
full power and authority to adopt rules and regulations for the
administration of this Plan; provided, however, that such rules and
regulations are not inconsistent with the provisions of this Plan.
Section 3.02. Delegation of Responsibility. Sobieski may delegate
duties involved in the administration of this Plan to such person or
persons whose services are deemed by it to be necessary or convenient.
Section 3.03. Payment of Benefits. The amounts payable as benefits under
this Plan shall be paid solely from the general assets of Sobieski. No
Director shall have any interest in any specific assets of Sobieski
under the terms of this Plan. This Plan shall not be considered to create
an escrow account, trust fund or other funding arrangement of any kind or
a fiduciary relationship between any Director and Sobieski. Sobieski's
obligations under this Plan are purely contractual and shall not be
funded or secured in any way.
Section 3.04. Construction of Plan and Effective Date. This Plan is
intended for a select group of managerial or highly compensated
individuals, and shall be effective as of June 29, 1998. Sobieski
shall have the power to construe this Plan and to determine all
questions of fact or law arising under it. It may correct any defect,
supply any omission or reconcile any inconsistency in this Plan in such
manner and to such extent as it may deem appropriate.
Section 3.05. Claims Procedure. A Director may deliver a claim for
benefits under this Plan to the Secretary of Sobieski. Claims must be
made in writing. The Secretary shall notify the Director within
sixty (60) days of the approval or denial of the claim. A Director
may appeal the denial of a claim to the Board of Directors. The
decision of a majority of the Board shall be final.
3
ARTICLE IV
AMENDMENT OR TERMINATION OF PLAN
Section 4.01. Termination. Sobieski may at any time terminate this Plan.
Sobieski shall treat all Directors as if they had ceased being a Director
on the effective date of the termination of this Plan and shall pay to
each such Director monthly amounts determined in accordance with
Article II and the rate of Director fees in effect on the date on which
this Plan is terminated.
Section 4.02. Amendment. Sobieski may amend the provisions of this Plan
at any time; provided, however, that no amendment shall adversely affect
the rights of Directors with respect to the amounts payable had this Plan
terminated immediately prior to the amendment.
ARTICLE V
MISCELLANEOUS
Section 5.01. Successors. This Plan shall be binding upon the successors
of Sobieski.
Section 5.02. Duration. Subject to Section 4.01 of this Plan, this Plan
shall terminate on the date on which each Director's benefits have been
distributed in full pursuant to the terms of this Plan.
Section 5.03. Choice of Law. This Plan shall be construed and
interpreted pursuant to, and in accordance with, the laws of the
State of Indiana.
Section 5.04. Non-Alienation. No Director or Director's spouse shall
have any right to anticipate, pledge, alienate or assign any of his
rights under this Plan, and any effort to do so shall be null and void.
The benefits payable under this Plan shall be exempt from the claims of
creditors or other claimants and from all orders, decrees, levies and
executions and any other legal process to the fullest extent that may
be permitted by law.
Section 5.05. Gender and Number. Words in one gender shall be construed
to include the other genders where appropriate; words in the singular or
plural shall be construed as being in the plural or singular where
appropriate.
Section 5.06. Headings. The headings in this Plan are solely for
convenience of reference and shall not affect its interpretation.
Section 5.07. Disclaimer. Sobieski makes no representations or
assurances and assumes no responsibility as to the performance by any
parties, solvency, compliance with state and federal securities
regulation or state and federal tax consequences of this Plan or
participation therein. It shall be the responsibility of the respective
Directors to determine such issues or any other pertinent issues to their
own satisfaction.
4
Section 5.08. Purpose. This Plan is intended to provide retirement
benefits to the Directors and to take advantage of the deferral of
taxes for the Directors and not for purposes of investment. This Plan
has been executed to be effective as of June 29, 1998.
SOBIESKI BANCORP, INC.
By: Thomas F. Gruber
Its: President/CEO
sobieski/supplemental retirement plan
4.27.99
* * *
I acknowledge receipt of a copy of the Plan. I understand that Sobieski
has established the Plan for the benefit of its directors and Sobieski
makes no representation or assurance and assumes no responsibility as to
the federal tax consequences of the Plan.
Robert J. Urbanski
6-29-98
Date
ACCEPTED:
SOBIESKI BANCORP, INC.
By: Thomas F. Gruber
Its: President
Kenneth P. Fedder
Witness
__________________________
Signed
6-29-98
Date
* * *
I acknowledge receipt of a copy of the Plan. I understand that Sobieski
has established the Plan for the benefit of its directors and Sobieski
makes no representation or assurance and assumes no responsibility as to
the federal tax consequences of the Plan.
Joseph F. Nagy
6-29-98
Date
ACCEPTED:
SOBIESKI BANCORP, INC.
By: Thomas F. Gruber
Its: President
Kenneth P. Fedder
Witness
__________________________
Signed
6-29-98
Date
* * *
I acknowledge receipt of a copy of the Plan. I understand that
Sobieski has established the Plan for the benefit of its directors
and Sobieski makes no representation or assurance and assumes no
responsibility as to the federal tax consequences of the Plan.
Thomas F. Gruber
6-29-98
Date
ACCEPTED:
SOBIESKI BANCORP, INC.
By: Robert J. Urbanski
Its: Chairman of the Board
Kenneth P. Fedder
Witness
__________________________
Signed
6-29-98
Date
* * *
I acknowledge receipt of a copy of the Plan. I understand that Sobieski
has established the Plan for the benefit of its directors and Sobieski
makes no representation or assurance and assumes no responsibility as to
the federal tax consequences of the Plan.
George J. Aranowski
6-29-98
Date
ACCEPTED:
SOBIESKI BANCORP, INC.
By: Thomas F. Gruber
Its: President
Kenneth P. Fedder
Witness
__________________________
Signed
6-29-98
Date
* * *
I acknowledge receipt of a copy of the Plan. I understand that
Sobieski has established the Plan for the benefit of its directors
and Sobieski makes no representation or assurance and assumes no
responsibility as to the federal tax consequences of the Plan.
Leonard J. Dobosiewicz
6-29-98
Date
ACCEPTED:
SOBIESKI BANCORP, INC.
By: Thomas F. Gruber
Its: President
Kenneth P. Fedder
Witness
__________________________
Signed
6-29-98
Date
* * *
I acknowledge receipt of a copy of the Plan. I understand that Sobieski
has established the Plan for the benefit of its directors and Sobieski
makes no representation or assurance and assumes no responsibility as to
the federal tax consequences of the Plan.
Joseph A. Gorny
6-29-98
Date
ACCEPTED:
SOBIESKI BANCORP, INC.
By: Thomas F. Gruber
Its: President
Kenneth P. Fedder
Witness
__________________________
Signed
6-29-98
Date
CONSENT TO REVISE FEE CONTINUATION PLAN
Sobieski Bancorp, Inc. ("Corporation") has created a Fee Continuation
Plan for the benefit of its directors (the "Plan"). In establishing the
Plan, it was intended that no director vest in the Plan until the
beginning of the 1998-99 fiscal year. However, because of a scrivener's
error, the Plan allowed vesting as of June 30, 1998, which is the last
day of the 1997-98 fiscal year. In order to conform the Plan to its
intended vesting schedule, the undersigned, being all of the members of
the board of directors of the Corporation, consent to the revision of the
Plan such that the current directors vest as of July l, 1998.
Dated to be effective the/~ r/J day of August 1998.
Robert J. Urbanski Thomas F. Gruber
Joseph F. Nagy George J. Aranowski
Leonard J. Dobosiewicz Joseph A. Gorny
WRITTEN CONSENT TO ACTION
BY
BOARD OF DIRECTORS
OF
SOBIESKI BANCORP, INC.
Applicable law provides that the board of directors ("Board") may take
action without a meeting if written consent signifying approval of such
action is given by all Board members and this consent is included with
the minutes.
Additionally, the Fee Continuation Plan for Retired Directors ("Plan")
of Sobieski Bancorp, Inc. ("Corporation"), in Section 4.02, allows the
Board to amend the provisions of the Plan at any time.
The Plan is now amended as follows:
Section 1.07 is deleted in its entirety and replaced as follows:
Section 1.07. Payment Event. The term "Payment Event" shall mean the
later of: (a) the Director's attainment of age seventy (70); or (b) the
termination of the Director as a member of the Board.
Robert J. Urbanski as Chairman of the Board is hereby authorized to take
any and all further actions to implement the above resolutions.
CONSENT
The undersigned being all of the members of the Board now each consent
in writing to the foregoing action, both as directors and individually
as beneficiaries of the Plan. This consent shall be included in the
Corporation's record book as a part of the minutes.
Dated to be effective the 29th day of October, 1998.
Robert J. Urbanski Thomas F. Gruber
Joseph F. Nagy George J. Aranowski
Leonard J. Dobosiewicz Joseph A, Gorny
sobieski/consent.98
CONSENT TO AMENDMENT
OF
THE FEE CONTINUATION PLAN
FOR
RETIRED DIRECTORS
OF
SOBIESKI BANCORP, INC.
AND
SOBIESKI FEDERAL SAVINGS AND LOAN ASSOCIATION
The undersigned each is a beneficiary of the Fee Continuation Plans for
Retired Directors ("Plans") of Sobieski Bancorp, Inc. ("Corporation") and
Sobieski Federal Savings and Loan Association ("Association"), originally
effective on June 29, 1998. The Board of Directors of both the Corporation
and the Association voted on March 17, 1999 to amend the Plans. By signing
below, each individual consents to the amendment of both Plans in his
capacity as a beneficiary of the Plans and not as a director of the
Corporation or the Association. Each of the undersigned has already
approved the amendment to the Plan in his capacity as a director of the
Corporation.
Dated to be effective the 28th day of April, 1999.
Robert J. Urbanski Thomas F. Gruber
Joseph F. Nagy George J. Aranowski
Leonard J. Dobosiewicz Joseph A. Gomy
Richard Cullar
SOBIESKI FEDERAL SAVINGS AND LOAN ASSOCIATION
AMENDED AND RESTATED FEE CONTINUATION PLAN
FOR RETIRED DIRECTORS
(EFFECTIVE JUNE 29, 1998)
ARTICLE I
DEFINITIONS
Section 1.01. Administrator. The term "Administrator" means
Sobieski, which shall have the authority to manage and control
the operation of this Plan.
Section 1.02. Sobieski. The term "Sobieski" means Sobieski Federal
Savings and Loan Association.
Section 1.03. Director. The term "Director" means any member of
the Board of Directors of Sobieski ("Board") on the Vesting Date,
or any future member of the Board who serves for five (5) full
consecutive years. Any future member of the Board who has not served
five (5) full consecutive years shall not be considered a
"Director. " A "full year" begins on the date the Director is
elected to the Board or on an anniversary date thereof and ends
each three hundred sixty-four (364) days later. As an example, if
a director is elected on June 14, 1999, then that director will
have served one full year on June 13, 2000. The director will become
a "Director" (and therefore be entitled to benefits under this Plan)
on June 13, 2004.
Section 1.04. Director's Fee. The term "Director's Fee" means
Four Thousand Dollars ($4,000) per year, paid in monthly
installments of Three Hundred Thirty-three and 33/100 Dollars
($333.33), or such other amount as determined appropriate by a
majority of the Board at a meeting of Directors or by written
consent. If the Board determines that the Director's Fee should
be altered, the adjusted amount shall be automatically incorporated
into this Plan without the requirement of further action other than
the statement of the new Director's Fee in the applicable corporate
minutes or written consent to action.
Section 1.05. Vesting Date. The term "Vesting Date" means
July 1, 1998.
Section 1.06. Plan. The term "Plan" means the plan embodied by
this instrument as now in effect or hereafter amended.
Section 1.07. Payment Event. The term "Payment Event" shall mean
the later of: (a) the Director's attainment of age seventy (70);
or (b) upon the termination of the Director as a member of the
Board.
2
ARTICLE II
BENEFITS
Section 2.01. Payment of Benefits. A Director shall be entitled
to begin receiving payment of the Director's Fee upon occurrence
of the Payment Event. The Director's Fee shall be paid for ten (10)
years and shall be paid monthly beginning on the first day of the
month following the Payment Event. As an example, if the Payment
Event occurs on January 20, 1999, the Director will receive $333.33
per month beginning on February 1, 1999.
Section 2.02. Death Benefits. If a Director's death occurs before
commencement of the payments described in Section 2.01 of this Plan,
or while those payments are being made to the Director, then the
Director's spouse shall be entitled to receive these benefits as
if the Director were alive. If the Director has no spouse, all
benefits under this Plan shall terminate.
ARTICLE III
A1)MINISTRATION
Section 3.01. Administration of Plan. Sobieski shall have the
complete responsibility for the administration of this Plan.
Sobieski shall have full power and authority to adopt rules and
regulations for the administration of this Plan; provided, however,
that such rules and regulations are not inconsistent with the
provisions of this Plan.
Section 3.02. Delegation of Responsibility. Sobieski may delegate
duties involved in the administration of this Plan to such person
or persons whose services are deemed by it to be necessary or
convenient.
Section 3.03. Payment of Benefits. The amounts payable as benefits
under this Plan shall be paid solely from the general assets of
Sobieski. No Director shall have any interest in any specific assets
of Sobieski under the terms of this Plan. This Plan shall not be
considered to create an escrow account, trust fund or other funding
arrangement of any kind or a fiduciary relationship between any
Director and Sobieski. Sobieski's obligations under this Plan are
purely contractual and shall not be funded or secured in any way.
Section 3.04. Construction of Plan and Effective Date. This Plan is
intended for a select group of managerial or highly compensated
individuals, and shall be effective as of June 29, 1998. Sobieski
shall have the power to construe this Plan and to determine all
questions of fact or law arising under it. It may correct any defect,
supply any omission or reconcile any inconsistency in this Plan in
such manner and to such extent as it may deem appropriate.
Section 3.05. Claims Procedure. A Director may deliver a claim for
benefits under this Plan to the Secretary of Sobieski. Claims must
be made in writing. The Secretary shall notify the Director within
sixty(60) days of the approval or denial of the claim. A Director
may appeal the denial of a claim to the Board of Directors. The
decision of a majority of the Board shall be final.
ARTICLE IV
AMENDMENT OR TERMINATION OF PLAN
Section 4.01. Termination. Sobieski may at any time terminate this
Plan. Sobieski shall treat all Directors as if they had ceased being
a Director on the effective date of the termination of this Plan and
shall pay to each such Director monthly amounts determined in
accordance with Article II and the rate of Director fees in effect
on the date on which this Plan is terminated.
Section 4.02. Amendment. Sobieski may amend the provisions of this
Plan at any time; provided, however, that no amendment shall
adversely affect the rights of Directors with respect to the
amounts payable had this Plan terminated immediately prior to the
amendment.
ARTICLE V
MISCELLANEOUS
Section 5.01. Successors. This Plan shall be binding upon the
successors of Sobieski.
Section 5.02. Duration. Subject to Section 4.01 of this Plan, this
Plan shall terminate on the date on which each Director's benefits
have been distributed in full pursuant to the terms of this Plan.
Section 5.03. Choice of Law. This Plan shall be construed and
interpreted pursuant to, and in accordance with, the laws of the
State of Indiana.
Section 5.04. Non-Alienation. No Director or Director's spouse shall
have any right to anticipate, pledge, alienate or assign any of his
rights under this Plan, and any effort to do so shall be null and
void. The benefits payable under this Plan shall be exempt from the
claims of creditors or other claimants and from all orders, decrees,
levies and executions and any other legal process to the fullest
extent that may be permitted by law.
Section 5.05. Gender and Number. Words in one gender shall be
construed to include the other genders where appropriate; words
in the singular or plural shall be construed as being in the plural
or singular where appropriate.
Section 5.06. Headings. The headings in this Plan are solely for
convenience of reference and shall not affect its interpretation.
Section 5.07. Disclaimer. Sobieski makes no representations or
assurances and assumes no responsibility as to the performance by
any parties, solvency, compliance with state and federal securities
regulation or state and federal tax consequences of this Plan or
participation therein. It shall be the responsibilit,of the
respective Directors to determine such issues or any other
pertinent issues to their own satisfaction.
Section 5.08. Purpose. This Plan is intended to provide retirement
benefits to the Directors and to take advantage of the deferral of
taxes for the Directors and not for purposes of investment.
This Plan has been executed to be effective as of June 29, 1998.
SOBIESKI FEDERAL SAVINGS AND
LOAN ASSOCIATION
By: Thomas F. Gruber
Its: President/CEO
Sobieski/supplemental retirement plan 2
4.27.99
* * *
I acknowledge receipt of a copy of the Plan. I understand that
Sobieski has established the Plan for the benefit of its directors
and Sobieski makes no representation or assurance and assumes no
responsibility as to the federal tax consequences of the Plan.
Robert J. Urbanski
Date
ACCEPTED:
SOBIESKI FEDERAL SAVINGS AND LOAN ASSOCIATION
By : Thomas F. Gruber
Its: President
Kenneth P. Fedder
Witness
________________________________
Signed
6-29-98
Date
* * *
I acknowledge receipt of a copy of the Plan. I understand that Sobieski
has established the Plan for the benefit of its directors and Sobieski
makes no representation or assurance and assumes no responsibility as
to the federal tax consequences of the Plan.
Joseph F. Nagy
6-29-98
ACCEPTED:
SOBIESKI FEDERAL SAVINGS AND LOAN ASSOCIATION
By: Thomas F. Gruber
Its: President
Kenneth P. Fedder
Witness
_____________________
Signed
6-29-98
Date
* * *
I acknowledge receipt of a copy of the Plan. I understand that Sobieski
has established the Plan for the benefit of its directors and Sobieski
makes no representation or assurance and assumes no responsibility as
to the federal tax consequences of the Plan.
Thomas F. Gruber
6-29-99
Date
ACCEPTED:
SOBIESKI FEDERAL SAVINGS AND LOAN ASSOCIATION
By: Robert J. Urbanski
Its: Chairman of the Board
Kenneth P. Fedder
Witness
________________________
Signed
6-29-98
Date
* * *
I acknowledge receipt of a copy of the Plan. I understand that Sobieski
has established the Plan for the benefit of its directors and Sobieski
makes no representation or assurance and assumes no responsibility as
to the federal tax consequences of the Plan.
George J. Aranowski
6-9-98
Date
ACCEPTED:
SOBIESKI FEDERAL SAVINGS AND
LOAN ASSOCIATION
By:Thomas F. Gruber
Its: President
Kenneth P. Fedder
Witness
________________________
Signed
6-29-98
Date
* * *
I acknowledge receipt of a copy of the Plan. I understand that Sobieski
has established the Plan for the benefit of its directors and Sobieski
makes no representation or assurance and assumes no responsibility as
to the federal tax consequences of the Plan.
Leonard J. Dobosiewicz
6-29-98
Date
ACCEPTED:
SOBIESKI FEDERAL SAVINGS AND
LOAN ASSOCIATION
By:Thomas F. Gruber
Its: President
Kenneth P. Fedder
Witness
________________________
Signed
6-29-98
Date
* * *
I acknowledge receipt of a copy of the Plan. I understand that Sobieski
has established the Plan for the benefit of its directors and Sobieski
makes no representation or assurance and assumes no responsibility as
to the federal tax consequences of the Plan.
Joseph A. Gorny
6-29-98
Date
ACCEPTED:
SOBIESKI FEDERAL SAVINGS AND
LOAN ASSOCIATION
By: Thomas F. Gruber
Its: President
Kenneth P. Fedder
Witness
________________________
Signed
6-29-98
Date
CONSENT TO REVISE FEE CONTINUATION PLAN
Sobieski Federal Savings and Loan Association ("Sobieski") has created
a Fee Continuation Plan for the benefit of its directors (the "Plan").
In establishing the Plan, it was intended that no director vest in the
Plan until the beginning of the 1998-99 fiscal year. However, because
of a scrivener's error, the Plan allowed vesting as of June 30, 1998,
which is the last day of the 1997-98 fiscal year. In order to conform
the Plan to its intended vesting schedule, the undersigned, being all
of the members of the board of directors of Sobieski, consent to the
revision of the Plan such that the current directors vest as of
July 1, 1998.
Dated to be effective the 10th day of August, 1998.
Robert J. Urbanski Thomas F. Gruber
Joseph F. Nagy George J. Aranowski
Leonard J. Dobosiewicz Joseph A. Gorny
WRITTEN CONSENT TO ACTION
BY
BOARD OF DIRECTORS
OF
SOBIESKI FEDERAL SAVINGS AND LOAN ASSOCIATION
Applicable law provides that the board of directors ("Board") may take
action without a meeting if written consent signifying approval of such
action is given by all Board members and this consent is included with
the minutes.
Additionally, the Fee Continuation Plan for Retired Directors ("Plan")
of Sobieski Federal Savings and Loan Association ("Sobieski"), in
Section 4.02, allows the Board to amend the provisions of the Plan at
any time.
The Plan is now amended as follows:
Section 1.07 is deleted in its entirety and replaced as follows:
Section 1.07. Payment Event. The term "Payment Event" shall
mean the later of: (a) the Director's attainment of age seventy (70); or
(b) the termination of the Director as a member of the Board.
Robert J. Urbanski as Chairman of the Board is hereby authorized to
take any and all further actions to implement the above resolutions.
CONSENT
The undersigned being all of the members of the Board now each consent
in writing to the foregoing action, both as directors and individually
as beneficiaries of the Plan. This consent shall be included in
Sobieski's record book as a part of the minutes.
Dated to be effective the 29th day of October, 1998.
Robert J. Urbanski Thomas F. Gruber
Joseph F. Nagy George J. Aranowski
Leonard J. Dobosiewica Joseph A. Gorny
sobieski/consent.98. 1
CONSENT TO AMENDMENT
OF
THE FEE CONTINUATION PLAN
FOR
RETIRED DIRECTORS
OF
SOBIESKI BANCORP, INC.
AND
SOBIESKI FEDERAL SAVINGS AND LOAN ASSOCIATION
The undersigned each is a beneficiary of the Fee Continuation Plans
for Retired Directors ("Plans") of Sobieski Bancorp, Inc. ("Corporation")
and Sobieski Federal Savings and Loan Association ("Association"),
originally effective on June 29, 1998. The Board of Directors of both
the Corporation and the Association voted on March 17, 1999 to amend
the Plans. By signing below, each individual consents to the amendment
of both Plans in his capacity as a beneficiary of the Plans and not as
a director of the Corporation or the Association. Each of the undersigned
has already approved the amendment to the Plan in his capacity as a
director of the Corporation.
Dated to be effective the 28th day of April, 1999.
Robert J. Urbanski Thomas F. Gruber
Joseph F. Nagy George J. Aranowski
Leonard J. Dobosiewicz Joseph A. Gomy
Richard Cullar
AMENDED AND RESTATED
SOBIESKI FEDERAL SAVINGS AND LOAN ASSOCIATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(EFFECTIVE JUNE 30, 1998)
ARTICLE I
DEFINITIONS
Section 1.01. Administrator. The term "Administrator" means Sobieski,
which shall have the authority to manage and control the operation of
this Plan.
Section 1.02. Sobieski. The term "Sobieski" means Sobieski Federal
Savings and Loan Association.
Section 1.03. Executive. "Executive" shall refer to the President of
Sobieski.
Section 1.04. Benefit. The term "Benefit" shall mean an amount equal to
two percent (2%) of the Executive's base annual salary in effect on the
date of termination of his employment as President, multiplied by the
number of full years the Executive was employed as President of Sobieski,
beginning on the Effective Date and ending on the effective date of
termination. No credit will be given in calculating the Benefit for
employment prior to the Effective Date. A full year of employment begins
on June 30, 1998 and each subsequent June 30 and ends each following
June 29. As an example, if the Executive became President on
May 1, 1994, and was terminated as President on September 1, 2014,
then the Executive would have 16 years full years of service, from
June 30, 1998 to September 1, 2014. If the Executive had a base
annual salary of $100,000 in effect on the date of termination, then
the Benefit would be $32,000. This figure is reached by multiplying the
sixteen (16) full years of service following the Effective Date by
$2,000 (which is 2% of the annual salary of $100,000 in effect at
termination).
Section 1.05. Effective Date. The term "Effective Date" means
June 30, 1998.
Section 1.06. Plan. The term "Plan" means the plan embodied by this
instrument as now in effect or hereafter amended.
Section 1.07. Payment Event. The term "Payment Event" shall mean the
later of: (a) the Executive's attainment of age sixty-five (65); or
(b) upon the termination of the Executive as President.
ARTICLE II
BENEFITS
Section 2.01. Payment of Benefits. Subject to the provisions of
Sections 2.03 and 2.04, the Executive shall be entitled to begin
receiving payment of the Benefit upon the occurrence of the Payment
Event. The Benefit shall be paid for each of the ten (10) years
following the Payment Event and shall be paid monthly beginning on the
first day of the month following the Payment Event. As an example, if
the Benefit is $32,000 and the Payment Event occurs on January 20, 2015
, the Executive will receive $2,667 per month beginning on
February 1, 2015 and ending January 1, 2025.
Section 2.02 Death Benefits. If the Executive dies before commencement
of payment of the Benefit, or while the Benefit is being paid, then the
Executive's spouse shall be entitled to receive these payments as if
the Executive were alive. If the Executive has no spouse, the payment
of the Benefit shall terminate.
Section 2.03. Vesting. The Executive shall be eligible for the Benefit
only if the Executive serves as President of Sobieski for a period of
five consecutive years, beginning with the Effective Date and ending
on June 29, 2003. However, once the Executive is vested, the Benefit
will be calculated beginning with the Effective Date.
Section 2.04. Cancellation of Benefits. Notwithstanding any other
provision of this Plan, if the Executive is terminated for Cause, then
the Executive shall immediately forfeit any rights tO the Benefit, and
any obligation on behalf of Sobieski to pay the Benefit shall also be
immediately cancelled. For the purposes of this Section 2.04, "Cause"
shall be defined as gross misconduct or insubordination, theft of
Sobieski assets, conviction of a felony, fraud or other similar conduct.
ARTICLE III
ADMINISTRATION
Section 3.01. Administration of Plan. Sobieski shall have the complete
responsibility for the administration of this Plan. Sobieski shall have
full power and authority to adopt rules and regulations for the
administration of this Plan; provided, however, that such rules and
regulations are not inconsistent with the provisions of this Plan.
Section 3.02. Delegation of Responsibility. Sobieski may delegate duties
involved in the administration of this Plan to such person or persons
whose services are deemed by it to be necessary or convenient.
Section 3.03. Payment of Benefits. The amounts payable as benefits under
this Plan shall be paid solely from the general assets of Sobieski. The
Executive shall not have any interest in any specific assets of Sobieski
under the terms of this Plan. This Plan shall not be considered to create
an escrow account, trust fund or other funding arrangement of any kind or
a fiduciary relationship between the Executive and Sobieski. Sobieski's
obligations under this Plan are purely contractual and shall not be
funded or secured in any way.
Section 3.04. Construction of Plan. This Plan is intended only for the
Executive, who is a member of a select group of managerial or highly
compensated employees. Sobieski shall have the power to construe this
Plan and to determine all questions of fact or law arising under it.
It may correct any defect, supply any omission or reconcile any
inconsistency in this Plan in such manner and to such extent as it may
deem appropriate.
Section 3.05. Claims Procedure. The Executive may deliver a claim for
benefits under this Plan to the Secretary of Sobieski. Claims must be
made in writing. The Secretary shall notify the Executive within
sixty (60) days of the approval or denial of the claim. The Executive
may appeal the denial of a claim to the Board of Directors ("Board").
The decision of a majority of the Board shall be final.
ARTICLE IV
AMENDMENT OR TERMINATION OF PLAN
Section 4.01. Termination. Sobieski may at any time terminate this Plan.
Sobieski shall treat the Executive as if he had ceased being President on
the effective date of the termination of this Plan and shall pay to the
Executive such amounts determined in accordance with Article II.
Section 4.02. Amendment. Sobieski may amend the provisions of this Plan
at any time; provided, however, that no amendment shall adversely affect
the rights of the Executive with respect to the amounts payable had this
Plan terminated immediately prior to the amendment.
ARTICLE V
MISCELLANEOUS
Section 5.01. Successors. This Plan shall be binding upon the successors
of Sobieski.
Section 5.02. Duration. Subject to Section 4.01 of this Plan, this Plan
shall terminate on the date on which the Executive's Benefits have been
distributed in full pursuant to the terms of this Plan.
Section 5.03. Choice of Law. This Plan shall be construed and interpreted
pursuant to, and in accordance with, the laws of the State of Indiana.
Section 5.04. Non-Alienation. Neither the Executive nor the Executive's
spouse shall have any right to anticipate, pledge, alienate or assign
any of the rights under this Plan, and any effort to do so shall be null
and void. The benefits payable under this Plan shall be exempt from the
claims of creditors or other claimants and from all orders, decrees,
levies and executions and any other legal process to the fullest extent
that may be permitted by law.
Section 5.05. Gender and Number. Words in one gender shall be construed
to include the other genders where appropriate; words in the singular or
plural shall be construed as being in the plural or singular where
appropriate.
Section 5.06. Headings. The headings in this Plan are solely for
convenience of reference and shall not affect its interpretation.
Section 5.07. Disclaimer. Sobieski makes no representations or assurances
and assumes no responsibility as to the performance by any parties,
solvency, compliance with state and federal securities regulation or
state and federal tax consequences of this Plan or participation therein.
It shall be the responsibility of the Executive to determine such issues
or any other pertinent issues to his own satisfaction.
Section 5.08. Purpose. This Plan is intended to provide supplemental
retirement benefits and to take advantage of the ability to defer income
taxes for the Executive and not for purposes of investment.
This Plan has been amended and restated this 18th day of February, 1999,
but shall be effective as of June 30, 1998.
SOBIESKI FEDERAL SAVINGS AND LOAN ASSOCIATION
By: Robert J. Urbanski
Its: Chairman of the Board of Directors
sobieski/executive serp 1
2. 18.99
I acknowledge receipt of a copy of the Plan. I understand that Sobieski
has established the Plan for my benefit and Sobieski makes no
representation or assurance and assumes no responsibility as to the
federal tax consequences of the Plan.
Thomas F. Gruber
4-28-99
Date
ACCEPTED:
Kenneth P. Fedder
Witness
SOBIESKI FEDERAL SAVINGS AND LOAN ASSOCIATION
____________________
Signed
By: Robert J. Urbanski
Its: Chairman of the Board of Directors
4-28-99
Date
AMENDED AND RESTATED
SOBIESKI FEDERAL SAVINGS AND LOAN ASSOCIATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(EFFECTIVE JUNE 30, 1998)
ARTICLE I
DEFINITIONS
Section 1.01. Administrator. The term "Administrator" means Sobieski,
which shall have the authority to manage and control the operation of
this Plan.
Section 1.02. Sobieski. The term "Sobieski" means Sobieski Federal Savings
and Loan Association.
Section 1.03. Executive. "Executive" shall refer to the
Chief Operations Officer ("COO") of Sobieski.
Section 1.04. Benefit. The term "Benefit" shall mean an amount equal
to one and one-third percent (1 1/3%) of the Executive's base annual
salary in effect on the date of termination of his employment as COO,
multiplied by the number of full years the Executive was employed as
COO of Sobieski, beginning on the Effective Date and ending on the
effective date of termination. No credit will be given in calculating
the Benefit for employment prior to the Effective Date. A full year of
employment begins on June 30, 1998 and each subsequent June 30 and ends
each following June 29. As an example, if the Executive became COO on
May 1, 1994, was terminated as COO on September 1, 2014, then the
Executive would have 16 full years of service, from June 30, 1998 to
September 1, 2014. If the Executive had a base annual salary of
$100,000 in effect on the date of termination, then the Benefit would
be $21,328. This figure is reached by multiplying the sixteen (16) full
years of service following the Effective Date by $1,333 (which is 1 1/3%
of the annual salary of $100,000 in effect at termination).
Section 1.05. Effective Date. The term "Effective Date" means
June 30, 1998.
Section 1.06. P . The term "Plan" means the plan embodied by this
instrument as now in effect or hereafter amended.
Section 1.07. Payment Event. The term "Payment Event" shall mean the
later of: (a) the Executive's attainment of age sixty-five (65); or
(b) upon the termination of the Executive as COO.
ARTICLE II
BENEFITS
Section 2.01. Payment of Benefits. Subject to the provisions of
Sections 2.03 and 2.04, the Executive shall be entitled to begin
receiving payment of the Benefit upon the occurrence of the Payment
Event. The Benefit shall be paid for each of the ten (10) years following
the Payment Event and shall be paid monthly beginning on the first day of
the month following the Payment Event. As an example, if the Benefit is
$21,328 and the Payment Event occurs on January 20, 2015, the Executive
will receive $1,777 per month beginning on February 1, 2015 and ending on
January 1, 2025.
Section 2.02. Death Benefits. If the Executive dies before commencement of
payment of the Benefit, or while the Benefit is being paid, then the
Executive's spouse shall be entitled to receive these payments as if the
Executive were alive. If the Executive has no spouse, the payment of the
Benefit shall terminate.
Section 2.03. Vesting. The Executive shall be eligible for the Benefit
only if the Executive serves as COO of Sobieski for a period of five
consecutive years, beginning with the Effective Date and ending on
June 29, 2003. However, once the Executive is vested, the Benefit will
be calculated beginning with the Effective Date.
Section 2.04. Cancellation of Benefits. Notwithstanding any other
provision of this Plan, if the Executive is terminated for Cause, then
the Executive shall immediately forfeit any rights to the Benefit, and
any obligation on behalf of Sobieski to pay the Benefit shall also be
immediately cancelled. For the purposes of this Section 2.04, "Cause"
shall be defined as gross misconduct or insubordination, theft of
Sobieski assets, conviction of a felony, fraud or other similar conduct.
ARTICLE III
ADMINISTRATION
Section 3.01. Administration of Plan. Sobieski shall have the complete
responsibility for the administration of this Plan. Sobieski shall have
full power and authority to adopt rules and regulations for the
administration of this Plan; provided, however, that such rules and
regulations are not inconsistent with the provisions of this Plan.
Section 3.02. Delegation of Responsibility. Sobieski may delegate
duties involved in the administration of this Plan to such person or
persons whose services are deemed by it to be necessary or convenient.
Section 3.03. Payment of Benefits. The amounts payable as benefits
under this Plan shall be paid solely from the general assets of Sobieski.
The Executive shall not have any interest in any specific assets of
Sobieski under the terms of this Plan. This Plan shall not be considered
to create an escrow account, trust fund or other funding arrangement of
any kind or a fiduciary relationship between the Executive and Sobieski.
Sobieski's obligations under this Plan are purely contractual and shall
not be funded or secured in any way.
Section 3.04. Construction of Plan. This Plan is intended only for the
Executive, who is a member of a select group of managerial or highly
compensated employees. Sobieski shall have the power to construe
this Plan and to determine all questions of fact or law arising under
it. It may correct any defect, supply any omission or reconcile any
inconsistency in this Plan in such manner and to such extent as it may
deem appropriate.
Section 3.05. Claims Procedure. The Executive may deliver a claim for
benefits under this Plan to the Secretary of Sobieski. Claims must be
made in writing. The Secretary shall notify the Executive within sixty
(60) days of the approval or denial of the claim. The Executive may
appeal the denial of a claim to the Board of Directors ("Board"). The
decision of a majority of the Board shall be final.
ARTICLE IV
AMENDMENT OR TERMINATION OF PLAN
Section 4.01. Termination. Sobieski may at any time terminate this Plan.
Sobieski shall treat the Executive as if he had ceased being COO on the
effective date of the termination of this Plan and shall pay to the
Executive such amounts determined in accordance with Article II.
Section 4.02. Amendment. Sobieski may amend the provisions of this
Plan at any time; provided, however, that no amendment shall adversely
affect the rights of the Executive with respect to the amounts payable
had this Plan terminated immediately prior to the amendment.
ARTICLE V
MISCELLANEOUS
Section 5.01. Successors. This Plan shall be binding upon the successors
of Sobieski.
Section 5.02. Duration. Subject to Section 4.01 of this Plan, this Plan
shall terminate on the date on which the Executive's Benefits have been
distributed in full pursuant to the terms of this Plan.
Section 5.03. Choice of Law. This Plan shall be construed and interpreted
pursuant to, and in accordance with, the laws of the State of Indiana.
Section 5.04. Non-Alienation. Neither the Executive nor the Executive's
spouse shall have any right to anticipate, pledge, alienate or assign
any of the rights under this Plan, and any effort to do so shall be
null and void. The benefits payable under this Plan shall be exempt
from the claims of creditors or other claimants and from all orders,
decrees, levies and executions and any other legal process to the
fullest extent that may be permitted by law.
Section 5.05. Gender and Number. Words in one gender shall be
construed to include the other genders where appropriate; words
in the singular or plural shall be construed as being in the plural
or singular where appropriate.
Section 5.06. Headings. The headings in this Plan are solely for
convenience of reference and shall not affect its interpretation.
Section 5.07. Disclaimer. Sobieski makes no representations or
assurances and assumes no responsibility as to the performance by
any parties, solvency, compliance with state and federal securities
regulation or state and federal tax consequences of this Plan or
participation therein. It shall be the responsibility of the Executive
to determine such issues or any other pertinent issues to his own
satisfaction.
Section 5.08. Purpose. This Plan is intended to provide supplemental
retirement benefits and to take advantage of the ability to defer
income taxes for the Executive and not for purposes of investment.
This Plan has been executed on this 18th day of February, 1998, but
shall be effective as of June 30, 1998.
SOBIESKI FEDERAL SAVINGS AND LOAN ASSOCIATION
By: Thomas F. Gruber
Its: President
sobieski/executive serp 3
2. 18.99
I acknowledge receipt of a copy of the Plan. I understand that Sobieski
has established the Plan for my benefit and Sobieski makes no
representation or assurance and assumes no responsibility as to the
federal tax consequences of the Plan.
Gregory J. Matthews
4-28-99
Date
ACCEPTED:
Kenneth P. Fedder
Witness
SOBIESKI FEDERAL SAVINGS AND LOAN ASSOCIATION
_______________________
Signed
By: Thomas F. Gruber
Its: President
4-28-99
Date
AMENDED AND RESTATED
SOBIESKI FEDERAL SAVINGS AND LOAN ASSOCIATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(EFFECTIVE JUNE 30, 1998)
ARTICLE I
DEFINITIONS
Section 1.01. Administrator. The term "Administrator" means Sobieski,
which shall have the authority to manage and control the operation of
this Plan.
Section 1.02. Sobieski. The term "Sobieski" means Sobieski Federal Savings
and Loan Association.
Section 1.03. Executive. "Executive" shall refer to the Chief Financial
Officer ("CFO") of Sobieski.
Section 1.04. Benefit. The term "Benefit" shall mean an amount equal
to one and one-third percent (1 1/3%) of the Executive's base annual
salary in effect on the date of termination of his employment as CFO,
multiplied by the number of full years the Executive was employed as
CFO of Sobieski, beginning on the Effective Date and ending on the
effective date of termination. No credit will be given in calculating
the Benefit for employment prior to the Effective Date. A full year of
employment begins on June 30, 1998 and each subsequent June 30 and ends
each following June 29. As an example, if the Executive became CFO on
May 1, 1994, was terminated as CFO on September 1, 2014, then the
Executive would have 16 full years of service, from June 30, 1998 to
September 1, 2014. If the Executive had a base annual salary of $100,000
in effect on the date of termination, then the Benefit would be $21,328.
This figure is reached by multiplying the sixteen (16) full years of
service following the Effective Date by $1,333 (which is 1 1/3% of the
annual salary of $100,000 in effect at termination).
Section 1.05. Effective Date. The term "Effective Date" means
June 30, 1998.
Section 1.06. P . The term "Plan" means the plan embodied by this
instrument as now in effect or hereafter amended.
Section 1.07. Payment Event. The term "Payment Event" shall mean the
later of: (a) the Executive's attainment of age sixty-five (65); or
(b) upon the termination of the Executive as CFO.
ARTICLE II
BENEFITS
Section 2.01. Payment of Benefits. Subject to the provisions of
Sections 2.03 and 2.04, the Executive shall be entitled to begin
receiving payment of the Benefit upon the occurrence of the Payment
Event. The Benefit shall be paid for each of the ten (10) years following
the Payment Event and shall be paid monthly beginning on the first day of
the month following the Payment Event. As an example, if the Benefit is
$21,328 and the Payment Event occurs on January 20, 2015, the Executive
will receive $1,777 per month beginning on February 1, 2015 and ending on
January 1, 2025.
Section 2.02. Death Benefits. If the Executive dies before commencement
of payment of the Benefit, or while the Benefit is being paid, then the
Executive's spouse shall be entitled to receive these payments as if the
Executive were alive. If the Executive has no spouse, the payment of the
Benefit shall terminate.
Section 2.03. Vesting. The Executive shall be eligible for the Benefit
only if the Executive serves as CFO of Sobieski for a period of five
consecutive years, beginning with the Effective Date and ending on
June 29, 2003. However, once the Executive is vested, the Benefit will
be calculated beginning with the Effective Date.
Section 2.04. Cancellation of Benefits. Notwithstanding any other
provision of this Plan, if the Executive is terminated for Cause, then
the Executive shall immediately forfeit any rights to the Benefit, and
any obligation on behalf of Sobieski to pay the Benefit shall also be
immediately cancelled. For the purposes of this Section 2.04, "Cause"
shall be defined as gross misconduct or insubordination, theft of Sobieski
assets, conviction of a felony, fraud or other similar conduct.
ARTICLE III
ADMINISTRATION
Section 3.01. Administration of Plan. Sobieski shall have the complete
responsibility for the administration of this Plan. Sobieski shall have
full power and authority to adopt rules and regulations for the
administration of this Plan; provided, however, that such rules and
regulations are not inconsistent with the provisions of this Plan.
Section 3.02. Delegation of Responsibility. Sobieski may delegate duties
involved in the administration of this Plan to such person or persons
whose services are deemed by it to be necessary or convenient.
Section 3.03. Payment of Benefits. The amounts payable as benefits under
this Plan shall be paid solely from the general assets of Sobieski. The
Executive shall not have any interest in any specific assets of Sobieski
under the terms of this Plan. This Plan shall not be considered to create
an escrow account, trust fund or other funding arrangement of any kind or
a fiduciary relationship between the Executive and Sobieski. Sobieski's
obligations under this Plan are purely contractual and shall not be
funded or secured in any way.
Section 3.04. Construction of Plan. This Plan is intended only for the
Executive, who is a member of a select group of managerial or highly
compensated employees. Sobieski shall have the power to construe
this Plan and to determine all questions of fact or law arising under it.
It may correct any defect, supply any omission or reconcile any
inconsistency in this Plan in such manner and to such extent as it may
deem appropriate.
Section 3.05. Claims Procedure. The Executive may deliver a claim for
benefits under this Plan to the Secretary of Sobieski. Claims must be
made in writing. The Secretary shall notify the Executive within sixty
(60) days of the approval or denial of the claim. The Executive may appeal
the denial of a claim to the Board of Directors ("Board"). The decision of
a majority of the Board shall be final.
ARTICLE IV
AMENDMENT OR TERMINATION OF PLAN
Section 4.01. Termination. Sobieski may at any time terminate this Plan.
Sobieski shall treat the Executive as if he had ceased being CFO on the
effective date of the termination of this Plan and shall pay to the
Executive such amounts determined in accordance with Article II.
Section 4.02. Amendment. Sobieski may amend the provisions of this Plan
at any time; provided, however, that no amendment shall adversely affect
the rights of the Executive with respect to the amounts payable had this
Plan terminated immediately prior to the amendment.
ARTICLE V
MISCELLANEOUS
Section 5.01. Successors. This Plan shall be binding upon the successors
of Sobieski.
Section 5.02. Duration. Subject to Section 4.01 of this Plan, this Plan
shall terminate on the date on which the Executive's Benefits have been
distributed in full pursuant to the terms of this Plan.
Section 5.03. Choice of Law. This Plan shall be construed and interpreted
pursuant to, and in accordance with, the laws of the State of Indiana.
Section 5.04. Non-Alienation. Neither the Executive nor the Executive's
spouse shall have any right to anticipate, pledge, alienate or assign
any of the rights under this Plan, and any effort to do so shall be null
and void. The benefits payable under this Plan shall be exempt from the
claims of creditors or other claimants and from all orders, decrees,
levies and executions and any other legal process to the fullest extent
that may be permitted by law.
Section 5.05. Gender and Number. Words in one gender shall be construed
to include the other genders where appropriate; words in the singular or
plural shall be construed as being in the plural or singular where
appropriate.
Section 5.06. Headings. The headings in this Plan are solely for
convenience of reference and shall not affect its interpretation.
Section 5.07. Disclaimer. Sobieski makes no representations or assurances
and assumes no responsibility as to the performance by any parties,
solvency, compliance with state and federal securities regulation or
state and federal tax consequences of this Plan or participation therein.
It shall be the responsibility of the Executive to determine such issues
or any other pertinent issues to his own satisfaction.
Section 5.08. Purpose. This Plan is intended to provide supplemental
retirement benefits and to take advantage of the ability to defer income
taxes for the Executive and not for purposes of investment.
This Plan has been executed on this 18th day of February, 1998, but
shall be effective as of June 30, 1998.
SOBIESKI FEDERAL SAVINGS AND LOAN ASSOCIATION
By: Thomas F. Gruber
Its: President
sobieski/executive serp 2
2. 18.99
I acknowledge receipt of a copy of the Plan. I understand that Sobieski
has established the Plan for my benefit and Sobieski makes no
representation or assurance and assumes no responsibility as to the
federal tax consequences of the Plan.
Arthur Skale
4-28-99
Date
ACCPETED:
Kenneth P. Fedder
Witness
SOBIESKI FEDERAL SAVINGS AND LOAN ASSOCIATION
_______________________
Signed
By: Thomas F. Gruber
Its: President
4-28-99
Date
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MO
[FISCAL-YEAR-END] JUN-30-2000
[PERIOD-END] SEP-31-1999
[CASH] 1,462,967
[SECURITIES] 11,533,390
[RECEIVABLES] 94,055,893
[ALLOWANCES] 345,000
[CURRENT-ASSETS] 948,138
[PP&E] 2,576,739
[DEPRECIATION] 656,752
[TOTAL-ASSETS] 109,575,375
[CURRENT-LIABILITIES] 68,814,805
[PREFERRED-MANDATORY] -0-
[PREFERRED] -0-
[COMMON] 9,660
[OTHER-SE] 12,624,965
<TTOTAL-LIABILITIES-AND-EQUITY> 109,575,375
<TOTAL-REVENUTS> 1,972,878
[OTHER-EXPENSES] 545,070
[LOSS-PROVISION] 35,000
[INTEREST-EXPENSE] 1,106,224
[INCOME-PRETAX] 286,584
[INCOME-TAX] 118,200
[DISCONTINUED] -0-
[EXTRAORDINARY] -0-
[CHANGES] -0-
[NET-INCOME] 168,384
[EPS-BASIC] .25
[EPS-DILUTED] .25
</TABLE>
