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
[X] Definitive Proxy Statement by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
GFSB BANCORP, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (set forth the amount on
which the filing fee is calculated and state how it was
determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[GFSB BANCORP, INC. LETTERHEAD]
September 28, 2001
Dear Stockholder:
On behalf of the Board of Directors and management of GFSB Bancorp,
Inc. (the "Company"), I cordially invite you to attend the Annual Meeting of
Stockholders to be held at Gallup Federal Savings Bank's Loan Center located at
214 West Aztec Avenue, Gallup, New Mexico, on October 26, 2001, at 10:00 a.m.,
local time. The attached Notice of Annual Meeting and Proxy Statement describe
the formal business to be transacted at the Annual Meeting. During the Annual
Meeting, I will report on the operations of the Company. Directors and officers
of the Company will be present to respond to any questions you may have.
You will be asked to elect two directors and to ratify the appointment
of Neff & Ricci LLP as the Company's independent public accountants for the
fiscal year ending 2002. The Board of Directors has approved each of these
proposals and recommends that you vote FOR them.
Your vote is important, regardless of the number of shares you own and
regardless of whether you plan to attend the Annual Meeting. I encourage you to
read the enclosed proxy statement carefully and sign and return your enclosed
proxy card as promptly as possible, because a failure to do so could cause a
delay in the Annual Meeting and additional expense to the Company. A
postage-paid return envelope is provided for your convenience. This will not
prevent you from voting in person, but it will assure that your vote will be
counted if you are unable to attend the Annual Meeting. If you do decide to
attend the Annual Meeting and feel for whatever reason that you want to change
your vote at that time, you will be able to do so. If you are planning to attend
the Annual Meeting, please let us know by marking the appropriate box on the
proxy card.
Sincerely,
/s/James Nechero, Jr.
--------------------------------
James Nechero, Jr.
President
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GFSB BANCORP, INC.
221 WEST AZTEC AVENUE
GALLUP, NEW MEXICO 87301
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 26, 2001
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of GFSB Bancorp, Inc. (the "Company"), will be held at Gallup Federal Savings
Bank's Loan Center located 214 West Aztec Avenue, Gallup, New Mexico, on October
26, 2001, at 10:00 a.m., local time, for the following purposes:
1. To elect two directors of the Company; and
2. To ratify the appointment of Neff & Ricci LLP as independent public
accountants of the Company for the fiscal year ending June 30, 2002;
all as set forth in the Proxy Statement accompanying this notice, and to
transact such other business as may properly come before the Meeting and any
adjournments. The Board of Directors is not aware of any other business to come
before the Meeting. Stockholders of record at the close of business on September
14, 2001 are the stockholders entitled to vote at the Meeting and any
adjournments thereof.
A copy of the Company's Annual Report for the year ended June 30, 2001
is enclosed.
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU
OWN. WE ENCOURAGE YOU TO VOTE BY PROXY SO THAT YOUR SHARES WILL BE REPRESENTED
AND VOTED AT THE MEETING EVEN IF YOU CANNOT ATTEND. ALL STOCKHOLDERS OF RECORD
CAN VOTE BY WRITTEN PROXY CARD. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES
ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER TO VOTE PERSONALLY AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/George S. Perce
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George S. Perce
Secretary
Gallup, New Mexico
September 28, 2001
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
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PROXY STATEMENT
OF
GFSB BANCORP, INC.
221 WEST AZTEC AVENUE
GALLUP, NEW MEXICO 87301
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ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 26, 2001
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GENERAL
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This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of GFSB Bancorp, Inc. (the "Company") to be
used at the Annual Meeting of Stockholders which will be held at Gallup Federal
Savings Bank's Loan Center located at 214 West Aztec Avenue, Gallup, New Mexico,
on October 26, 2001, at 10:00 a.m., local time (the "Meeting"). The accompanying
Notice of Annual Meeting of Stockholders and this Proxy Statement are being
first mailed to stockholders on or about September 28, 2001.
All properly executed written proxies that are delivered pursuant to
this Proxy Statement will be voted on all matters that properly come before the
Meeting for a vote. If your signed proxy specifies instructions with respect to
matters being voted upon, your shares will be voted in accordance with your
instructions. If no instructions are specified, your shares will be voted (a)
FOR the election of directors named in Proposal 1; (b) FOR Proposal 2
(ratification of the appointment of independent public accountants); and (c) in
the discretion of the proxy holders, as to any other matters that may properly
come before the Meeting. Your proxy may be revoked at any time prior to being
voted by: (i) filing with the Secretary of the Company (George S. Perce, at 221
West Aztec Avenue, Gallup, New Mexico 87301) written notice of such revocation,
(ii) submitting a duly executed proxy bearing a later date, or (iii) attending
the Meeting and giving the Secretary notice of your intention to vote in person.
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VOTING STOCK AND VOTE REQUIRED
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The Board of Directors has fixed the close of business on September 14,
2001 as the record date for the determination of stockholders who are entitled
to notice of, and to vote at, the Meeting. On the record date, there were
1,150,106 shares of the Company's common stock outstanding (the "Common Stock").
The number of shares of Common Stock and all tables throughout this proxy
statement reflect a 25% stock dividend paid on December 15, 2000. Additionally,
each stockholder of record on the record date is entitled to one vote for each
share held.
The certificate of incorporation of the Company (the "Certificate of
Incorporation") provides that in no event shall any record owner of any
outstanding Common Stock which is beneficially owned, directly or indirectly, by
a person who beneficially owns in excess of 10% of the then outstanding shares
of Common Stock (the "Limit") be entitled or permitted to any vote with respect
to the shares held in excess of the Limit. Beneficial ownership is determined
pursuant to the definition in the Certificate of Incorporation and includes
shares beneficially owned by such person or any of his or her affiliates or
associates (as such terms are defined in the Certificate of Incorporation), or
which such person or any of his or her affiliates or associates have the right
to acquire upon the exercise of conversion rights or options
and shares as to which such person or any of his or her affiliates or associates
have or share investment or voting power, but neither any employee stock
ownership or similar plan of the Company or any subsidiary, nor any trustee with
respect thereto or any affiliate of such trustee (solely by reason of such
capacity of such trustee), shall be deemed, for purposes of the Certificate of
Incorporation, to beneficially own any Common Stock held under any such plan.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit) is necessary to constitute a quorum at the
Meeting. With respect to any matter, any shares for which a broker indicates on
the proxy that it does not have discretionary authority as to such shares to
vote on such matter (the "Broker Non- Votes") will not be considered present for
purposes of determining whether a quorum is present. In the event there are not
sufficient votes for a quorum or to ratify any proposals at the time of the
Meeting, the Meeting may be adjourned in order to permit the further
solicitation of proxies.
As to the election of directors, the proxy being provided by the Board
of Directors enables a stockholder to vote for the election of the nominees
proposed by the Board of Directors, as submitted as Proposal 1, or to withhold
authority to vote for the nominees being proposed. Directors are elected by a
plurality of votes of the shares present in person or represented by proxy at a
meeting and entitled to vote in the election of directors.
As to the ratification of the appointment of independent public
accountants, which is submitted as Proposal 2, a stockholder may: (i) vote "FOR"
the ratification; (ii) vote "AGAINST" the ratification; or (iii) "ABSTAIN" with
respect to the ratification. Unless otherwise required by law, Proposal 2 and
all other matters shall be determined by a majority of votes cast affirmatively
or negatively without regard to (a) Broker Non-Votes, or (b) proxies marked
"ABSTAIN" as to that matter.
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PRINCIPAL HOLDERS
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Persons and groups owning in excess of 5% of the Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"). The following
table sets forth, as of the record date, persons or groups who own more than 5%
of the Common Stock and the ownership of all executive officers and directors of
the Company as a group. Other than as noted below, management knows of no person
or group that owns more than 5% of the outstanding shares of Common Stock at the
record date.
-2-
Percent of Shares of
Amount and Nature of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding(%)
------------------------------------ ---------------------- ---------------
Gallup Federal Savings Bank Employee Stock
Ownership Plan (the "ESOP")
221 West Aztec Avenue, Gallup, New Mexico 96,896(1) 8.4
Lance S. Gad
1250 Fence Raw Drive
Fairfield, Connecticut 06430 82,126(2) 7.1
Charles L. Parker, Jr.
221 West Aztec Avenue
Gallup, New Mexico 87,429(3) 7.5
Richard C. Kauzlaric
221 West Aztec Avenue
Gallup, New Mexico 129,476(3) 11.2
George S. Perce
221 West Aztec Avenue
Gallup, New Mexico 87,693(3) 7.6
All Directors and Named Executive Officers
as a Group (10 persons) 534,078(3) 42.9
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(1) The ESOP purchased such shares for the exclusive benefit of ESOP
participants with funds borrowed from the Company. These shares are
held in a suspense account and are allocated among ESOP participants
annually on the basis of compensation as the ESOP debt is repaid. The
ESOP Trustee must vote all shares allocated to participant accounts
under the ESOP as directed by participants. Unallocated shares and
shares for which no timely voting directors is received will be voted
by the ESOP Trustee as directed by the ESOP Committee. As of the record
date, 40,710 shares have been allocated under the ESOP to participant
accounts.
(2) Based on a schedule 13G filed on February 10, 1998.
(3) See "Proposal 1 - Election of Directors".
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the 1934 Act requires the Company's directors and
executive officers to file reports of ownership and changes in ownership of
their equity securities of the Company with the Securities and Exchange
Commission and to furnish the Company with copies of such reports. To the best
of the Company's knowledge, all of the filings by the Company's directors and
executive officers were made on a timely basis during the 2001 fiscal year. The
Company is not aware of other beneficial owners of more than ten percent of its
Common Stock.
-3-
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PROPOSAL 1 - ELECTION OF DIRECTORS
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The Certificate of Incorporation requires that directors be divided
into three classes, as nearly equal in number as possible, each class to serve
for a three year period, with approximately one-third of the directors elected
each year. The Board of Directors currently consists of seven members, each of
whom also serves as a director of Gallup Federal Savings Bank (the "Bank"). Two
directors will be elected at the Meeting, to serve for a three-year term or
until his successor has been elected and qualified.
Wallace R. Phillips and Richard C. Kauzlaric have been nominated by the
Board of Directors to serve as a directors. Messrs. Phillips and Kauzlaric are
currently members of the Board of Directors and have been nominated for
three-year terms to expire in 2004.
The persons named as proxies in the enclosed proxy card intend to vote
for the election of the persons listed below, unless the proxy card is marked to
indicate that such authorization is expressly withheld. Should Messrs. Phillips
and Kauzlaric withdraw or be unable to serve (which the Board of Directors does
not expect) or should any other vacancy occur in the Board of Directors, it is
the intention of the persons named in the enclosed proxy card to vote for the
election of such persons as may be recommended to the Board of Directors by the
Nominating Committee of the Board. If there are no substitute nominees, the size
of the Board of Directors may be reduced.
The following table sets forth information with respect to the nominees
and the other sitting directors, including for each their name, age, the year
they first became a director of the Company or the Bank, the expiration date of
their current term as a director, and the number and percentage of shares of the
Common Stock beneficially owned. Beneficial ownership of executive officers and
directors of the Company, as a group, is set forth under the caption "Principal
Holders".
-4-
Shares of
Common
Stock
Beneficially
Year First Current Owned as of
Elected or Term to September 14, Percent
Name and Position(s) Age(1) Appointed(2) Expire 2001(3) Owned(%)
-------------------- ------ ------------ ------- ------- --------
BOARD NOMINEES FOR TERM TO EXPIRE IN 2004
Richard C. Kauzlaric 63 1983 2001 129,476 11.2
Director
Wallace R. Phillips, D.D.S. 79 1971 2001 39,082(4) 3.4
Chairman of the Board
DIRECTORS CONTINUING IN OFFICE
Vernon I. Hamilton 71 1990 2002 55,907 4.8
Director
James Nechero, Jr. 67 1976 2002 49,883 4.3
Director
Michael P. Mataya 51 1994 2003 29,579 2.6
Director and Treasurer
Charles L. Parker, Jr. 39 1994 2003 87,429(4) 7.5
Director
George S. Perce 62 1990 2003 87,693(4) 7.6
Director and Secretary
NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Richard P. Gallegos 50 -- -- 9,715 *
Vice President and
President of the Bank
Jerry R. Spurlin 59 -- -- 42,814 3.7
Chief Financial Officer, Treasurer,
and Assistant Secretary
Leonard C. Scalzi 53 -- -- 2,500 *
Senior Vice President
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(1) At June 30, 2001.
(2) Refers to the year the individual first became a director of the
Company or the Bank. All such directors became directors of the Company
when the Company was incorporated in March 1995.
(3) Includes the following number of shares that may be acquired within 60
days of the record date by the exercise of options: Kauzlaric - 10,181;
Phillips - 9,096; Hamilton - 9,096; Nechero - 9,487; Mataya - 8,706;
Parker - 9,381; Perce - 9,228; Gallegos - 5,000; Spurlin - 10,687; and
Scalzi - 750.
(4) Excludes 56,186 unallocated shares of Common Stock held under the ESOP
for which such individual serves as either an ESOP Trustee or as a
member of the ESOP Committee. Beneficial ownership is disclaimed with
respect to such ESOP shares held in a fiduciary capacity.
* Less than 1% of the common stock outstanding.
-5-
Biographical Information
Set forth below is certain information with respect to the directors,
including director nominees and executive officers of the Company. Executive
officers receive compensation from the Bank. See "-- Executive Compensation."
All directors and executive officers have held their present positions for five
years unless otherwise stated.
Nominees for Directors:
Richard C. Kauzlaric is President of Bubany Insurance Agency, Inc. He
is President of Western New Mexico Gallup Foundation, past Regent of Western New
Mexico University, Past President of New Mexico Amigos, and a sustaining member
of the Amigos. Mr. Kauzlaric has been instrumental in the redevelopment of
downtown Gallup. Mr. Kauzlaric served as Chairman of the Board of the Bank from
1989 to 2000.
Wallace R. Phillips, D.D.S. is a retired dentist. He currently serves
as Commissioner of the Gallup Municipal Airport.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
ABOVE NOMINEES FOR DIRECTORS.
Continuing Directors:
Vernon I. Hamilton is President of V.I. Hamilton Construction Co., Inc.
Mr. Hamilton is a member of the United Methodist Church, the Elks, the Masons,
and the Community Concert Association.
James Nechero, Jr. was appointed President of the Company in 2000. Mr.
Nechero is the President of Eagle Energy, Inc., a real estate investment company
and is a member of the New Mexico Amigos.
Michael P. Mataya is President and Chief Executive Officer of Indian
Capital Distributing Co., a wholesale gasoline marketer. Mr. Mataya is Director
of the New Mexico Petroleum Marketers Association and serves on the Board of
Directors for Los Angeles Crippled Children's Hospital.
Charles L. Parker, Jr., is President of Sanders Trading Corp. and Twin
Lakes Trading Corp.
George S. Perce is the owner of Perce Engineering, a professional
engineering and surveying company, and Perce Farms of Deming, a producing pecan
grove.
Named Executive Officers Who Are Not Directors:
Richard P. Gallegos joined the Bank as its President on November 16,
1998 and was appointed Vice President of the Company in 2000. Previously Mr.
Gallegos was a President and Vice President of a financial institution in
Gallup, New Mexico and Albuquerque, New Mexico. Mr. Gallegos is Treasurer of the
Gallup-McKinley County Chamber of Commerce, a committee member of the
McKinley/Cibola/San Juan Counties Enterprise Loan Fund and a member of the
Gallup Rotary Club. Previously, Mr. Gallegos served on the board of Consumer
Credit Counseling of New Mexico.
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Jerry R. Spurlin has been with the Bank since September of 1990 and
served as President from February 1991 to November 1998. Mr. Spurlin currently
serves as Chief Financial Officer, Treasurer and Assistant Secretary of the
Company and is a member of the Board of Directors of the Bank. Previously, he
was an Executive Vice President, Senior Vice President and Vice President at a
financial institution in Alamogordo, New Mexico. He has served twice as
President of the Gallup-McKinley County Chamber of Commerce, and is the Chairman
of the Administrative Council for the First United Methodist Church of Gallup.
Mr. Spurlin is Secretary/ Treasurer of New Mexico Western University Gallup
Foundation, a former director of the Gallup Downtown Development Group and a
member of the Gallup Rotary Club. He is the Treasurer and a director of the
Navajo Partnership for Housing and President of Habitat For Humanity of Gallup.
Leonard C. Scalzi, joined the Company on May 1, 2000 as Senior Vice
President and was also appointed Senior Vice President - Commercial Lending of
the Bank. Previously, Mr. Scalzi served as a senior lender for two New Mexico
financial institutions. He is a member of the New Mexico Amigos, a director for
Childhaven, and a former president and director of the San Juan Country Club.
Other Executive Officers Who Are Not Directors:
William W. Head, Jr., age 61, joined the Bank as Chief Lending Officer
on November 1, 1995. Prior to that, Mr. Head was a lawyer in private practice
for 30 years, with emphasis the last 20 years in banking, commercial, real
estate and probate law. He has been a member of the Board of Directors and
President of the Inter-Tribal Indian Ceremonial Association. Mr. Head is a
director of the Housing Authority of the City of Gallup.
Meetings and Committees of the Board of Directors
During the fiscal year ended June 30, 2001, the Board of Directors of
the Company held a total of 18 meetings. No director, attended fewer than 75% of
the total meetings of the Board of Directors and committees during the period of
his service. In addition to other committees, the Company has a Nominating
Committee, a Personnel and Compensation Committee, and an Audit Committee.
The Nominating Committee consists of the Board of Directors of the
Company. Nominations to the Board of Directors made by stockholders must be made
in writing to the Secretary and received by the Company not less than 60 days
prior to the anniversary date of the immediately preceding annual meeting of
stockholders of the Company. Notice to the Company of such nominations must
include certain information required pursuant to the Certificate of
Incorporation. The Nominating Committee, which is not a standing committee, met
once during the 2001 fiscal year.
The Personnel and Compensation Committee is comprised of Directors
Hamilton, Mataya, Perce, Phillips, and Mr. Gallegos. This standing committee
meets as needed to review all personnel matters. As a member of the Committee,
Mr. Gallegos does not act on matters related to his compensation. The Committee
met three times during the 2001 fiscal year.
The Audit Committee is comprised of Directors Kauzlaric, Mataya, Parker
and Perce. The Board of Directors has determined that each of the members of the
Audit Committee is independent in accordance with the listing requirements for
Nasdaq SmallCap market issuers. The Board of Directors has adopted a written
audit committee charter. The Audit Committee is a standing committee and reports
to the Board of Directors. Its primary function is to assist the board in
fulfilling its responsibility to stockholders related to financial accounting
and reporting, the system of internal controls established by management and the
-7-
adequacy of auditing relative to these activities. The Audit Committee met four
during the 2001 fiscal year.
Audit Committee Report
Review of Audited Financial Statements with Management.
The Audit Committee reviewed and discussed the audited financial
statement for the year ended June 30, 2001 with the management of the Company.
Review of Financial Statements and Other Matters with Independent
Accountant.
The Audit Committee discussed with Neff & Ricci LLP ("Neff & Ricci"),
the Company's independent public accountants, the matters required to be
discussed by the statement on Auditing Standards No. 61 (Communications with
Audit Committees), as may be modified or supplemented. The Audit Committee has
received the written disclosures and the letter from Neff & Ricci required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), as may be modified or supplemented, and has discussed with Neff &
Ricci its independence.
Recommendation that Financial Statements be Included in Annual Report.
Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-KSB for the
year ended June 30, 2001, for filing with the Securities and Exchange
Commission.
Audit Committee:
George S. Perce, Chairman
Richard Kauzlaric
Michael P. Mataya
Charles L. Parker, Jr.
Audit Fees
The aggregate fees billed by Neff & Ricci for professional services
rendered for the audit of the Company's consolidated annual financial statements
for the 2001 fiscal year and the reviews of the financial statements included in
the Company's Forms 10-QSB were $25,500.
Financial Information Systems Design and Implementation Fees
For the 2001 fiscal year, Neff & Ricci did not render to the Company or
its consolidated subsidiary any professional services for financial information
systems design and implementation. Accordingly, there were no fees billed for
fiscal 2001 by Neff & Ricci to the Company or its consolidated subsidiary.
-8-
All Other Fees
The aggregate fees billed by Neff & Ricci to the Company and its
consolidated subsidiary for all other services other than those covered under
"Audit Fees" for the 2001 fiscal year were $5,400.
The Audit Committee considered whether the provision of the non-audit
services listed under "All Other Fees" above is compatible with maintaining Neff
& Ricci's independence.
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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
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Director Compensation
Each member of the Board of Directors of the Company receives an annual
retainer of $1,200 plus $100 per regular or special board meeting attended. Each
member of the Board of Directors of the Bank who attends a minimum of ten
regular meetings receives an annual fee of $12,000. The Chairman of the Board of
the Bank receives an additional fee of $6,000. Committee members receive fees of
$100 per meeting attended. Except for Mr. Nechero, no board or committee fees
are paid to board members who are also employees. During the fiscal year ended
June 30, 2001, the Company paid a total of $120,300 in director fees.
Executive Compensation
Summary Compensation Table. The following table sets forth information
concerning the compensation for services in all capacities for the fiscal years
provided below of those persons who were, at June 30, 2001, (a) our chief
executive officer and (b) our other most highly compensated officers
(collectively, the "named executive officers"). No other executive officer of
the Company or the Bank received cash compensation (salary and bonus) in excess
of $100,000 for the year ended June 30, 2001.
Long Term Compensation
Annual Compensation Awards
------------------------------------------- ----------------------------
Securities
Restricted Underlying
Name and Other Annual Stock Options/ All Other
Principal Position Year Salary($) Bonus($) Compensation($)(1) Awards($) SARs(#) Compensation($)
------------------- ---- --------- -------- ------------------ --------- -------- ---------------
James Nechero, Jr. 2001 -- -- 17,600 -- -- --
President of the 2000 -- -- 17,510 -- 1,833(3) --
Company 1999 -- -- 16,400 -- -- --
Richard P. Gallegos 2001 114,000 28,000 -- -- -- 7,144(5)
Senior Vice President 2000 108,000 35,000 -- -- -- --
and President of the 1999 68,555 20,250 -- 81,750(2) 12,500(3) --
Bank
Jerry R. Spurlin 2001 83,883 25,000 -- --(4) --(4) 13,963(6)
Chief Financial 2000 79,683 24,000 -- -- -- 12,241
Officer 1999 75,483 22,500 -- -- -- 12,361
Leonard C. Scalzi 2001 70,000 50,000 -- -- -- --
Senior Vice President 2000 12,115(7) 5,000(7) -- 41,250(8) 8,750(3) --
(footnotes on next page)
-9-
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(1) Represents directors fees.
(2) Represents awards of 7,500 shares of Common Stock under the MSBP based upon
the value of such stock of $10.90 per share as of the date of such award.
Such stock awards become non-forfeitable at the rate of 1,200 shares per
year commencing on November 16, 1999. Dividend rights associated with such
stock are accrued and held in arrears to be paid at the time that such
stock becomes non-forfeitable. At June 30, 2001, 4,500 shares with a market
value of $57,420 at such date (based on the closing price of Common Stock
$12.76 at such date) remain unvested.
(3) For Messrs. Nechero, Gallegos, and Scalzi represents awards of 1,833,
12,500, and 8,750 option shares, respectively, on November 16, 1998, April
28, 2000 and May 1, 2000. See "-- Stock Awards."
(4) Mr. Spurlin was awarded in 1996, 5,625 shares under the MSBP and 10,687
shares under the 1995 Stock Option Plan. Dividend rights associated with
the MSBP are accrued and held in arrears to be paid at the that such stock
becomes non-forfeitable. All awards under the MSBP and the 1995 Stock
Option Plan are fully vested. See "-- Stock Awards".
(5) Mr. Gallegos became a participant of the ESOP as of January 1, 2000.
Includes an allocation of 1,340 shares of Common Stock (at $5.33) under the
ESOP. As of June 30, 2001, the market value of the ESOP shares was $17,098.
(6) Includes $1,779 of health insurance and an allocation of 2,286 shares of
Common Stock (at $5.33) under the ESOP. As of June 30, 2001, the market
value of the ESOP shares was $29,169.
(7) Mr. Scalzi commenced employment on May 1, 2000.
(8) Represents awards of 3,750 shares of Common Stock under the MSBP based upon
the value of such stock of $11.00 per shares as of the date of such award.
Such stock awards become non-forfeitable at the of 750 shares per year
commencing on May 1, 2001. Dividend rights associated with such stock are
accrued and held in arrears to be paid at the time that such stock becomes
non- fortfeitable. At June 30, 2001, 3,000 shares with a market value of
$38,280 at such date (based on the closing price of $12.76 at such date)
remain unvested.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
--------------------------------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options in-the-Money Options
Acquired on Value at Fiscal Year-End at Fiscal Year-End
Exercise Realized (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
--------------------------------------------------------------------------------------------------------
Richard P. Gallegos -- -- 5,000/ 7,500 9,300/ 13,950 (1)
James Nechero, Jr. -- -- 9,456/ -- 44,085/ -- (2)(3)
Jerry R. Spurlin -- -- 10,687/ -- 57,282/ -- (4)
Leonard C. Scalzi -- -- 1,750/ 7,000 3,080/ 12,320 (5)
---------------------------------
(1) Based upon an exercise price of $10.90 per share and a closing price of
$12.76 at June 30, 2001.
(2) Based upon an exercise price of $7.40 per share for 7,623 exercisable
shares and a closing price of $12.76 at June 30, 2001.
(3) Based upon an exercise price of $11.09 for 1,833 exercisable shares and a
closing price of $12.76 at June 30, 2001.
(4) Based upon an exercise price of $7.25 per share and a closing price of
$12.76 at June 30, 2001.
(5) Based upon an exercise price of $11.00 per share and a closing price of
$12.76 at June 30, 2001.
Change in Control Agreement. The Bank entered into an employment
agreement with Mr. Gallegos for a term of three years. The agreement is
terminable by the Bank at its sole discretion. If the Bank terminates Mr.
Gallegos absent a Change in Control of the Bank, he will not be entitled to any
severance payments. In the event of the termination of employment in connection
with any change in control of the Bank or the Company, Mr. Gallegos will be paid
a lump sum amount equal to 200% times the base annual salary in effect as of the
end of the calendar year prior to the date of termination of employment. If a
payment had been made under the agreement as of June 30, 2001, the payment would
have equaled approximately $228,000.
-10-
--------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------------------------------
The Bank, like many financial institutions, grants loans to its
officers and directors. All loans by the Bank to its directors and executive
officers are subject to OTS regulations restricting loans and other transactions
with affiliated persons of the Company. Savings institutions are permitted to
make loans to executive officers, directors and principal shareholders
("insiders") on preferential terms, provided the extension of credit is made
pursuant to a benefit or compensation program of the Bank that is widely
available to employees of the Bank or its affiliates and does not give
preference to any insider over other employees of the Bank or affiliate. As part
of the Bank's compensation program, the Bank sets the interest rate for loans
approved for full-time employees, officers and directors for personal,
non-business purposes at a rate which is 1% lower than the rate for
non-employees for the same type of loan, as long as the resulting interest rate
is not lower than the Bank's cost of funds. Such rates are only effective while
such persons are employees, officers, or directors of the Bank. Upon
termination, resignation or retirement, the rate reverts to the market rate that
existed at the time the loan is granted. All other loans to insiders have been
made in the ordinary course of business, and on substantially the same terms and
conditions, including interest rates and collateral, as those prevailing at the
time for comparable transactions with the Bank's other customers, and do not
involve more than the normal risk of collectibility, nor present other
unfavorable features.
Set forth below is certain information relating to loans made on
preferential terms to executive officers and directors of the Company and the
Bank whose total aggregate loan balances on preferential terms exceeded $60,000
at any time during the year ended June 30, 2001.
Prevailing
Original Rate at Unpaid
Name of Officer or Date Loan Time of Employee Balance
Director Type of Loan Originated Amount ($) Loan (%) Rate (%) 06/30/01 ($)
--------------------- --------------- ------------ ----------- -------- ---------- ------------
James Nechero, Jr. Home Mortgage 03/12/98 112,000 6.63 5.63 107,032
Michael P. Mataya
Revocable Trust Home Mortgage 09/06/99 260,000 7.75 6.75 242,276
Michael Mataya Airplane 12/19/97 28,500 12.00 11.00 9,512
Michael P. Mataya Automobile 02/02/00 42,558 12.00 11.00 42,558
Jerry R. Spurlin Automobile 06/11/99 19,750 8.00 7.00 12,459
Jerry R. Spurlin Home Mortgage 08/07/98 129,000 6.63 5.63 110,206
William W. Head Home Mortgage 10/18/99 132,000 7.75 6.75 129,183
Charles L. Parker, Jr. Home Mortgage 03/07/01 400,000 7.38 6.38 397,329
--------------------------------------------------------------------------------
PROPOSAL 2 -- RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------
Neff & Ricci was the Company's independent public accountants for the
fiscal year ended June 30, 2001. The Board of Directors has approved the
selection of Neff & Ricci to be its accountants for the fiscal year ending June
30, 2002, subject to ratification by the Company's stockholders.
-11-
RATIFICATION OF THE APPOINTMENT OF THE ACCOUNTANTS REQUIRES THE
APPROVAL OF A MAJORITY OF THE VOTES CAST BY THE STOCKHOLDERS OF THE COMPANY AT
THE MEETING. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF NEFF & RICCI AS THE COMPANY'S ACCOUNTANTS FOR
THE FISCAL YEAR ENDING JUNE 30, 2002.
--------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
--------------------------------------------------------------------------------
In order to be considered for inclusion in the Company's proxy
statement for the annual meeting of stockholders to be held in 2002, all
stockholder proposals must be submitted to the Secretary at the Company's
office, 221 West Aztec Avenue, Gallup, New Mexico 87301, on or before May 30,
2002. Under the Certificate of Incorporation, in order to be considered for
possible action by stockholders at the 2002 annual meeting of stockholders,
stockholder nominations for director and stockholder proposals not included in
the Company's proxy statement must be submitted to the Secretary of the Company,
at the address set forth above, no later than August 26, 2002.
--------------------------------------------------------------------------------
OTHER MATTERS
--------------------------------------------------------------------------------
The Board of Directors does not know of any other matters that are
likely to be brought before the Meeting. If any other matters, not now known,
properly come before the Meeting or any adjournments, the persons named in the
enclosed proxy card, or their substitutes, will vote the proxy in accordance
with their judgment on such matters.
The cost of soliciting proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers, and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
--------------------------------------------------------------------------------
FORM 10-KSB
--------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
JUNE 30, 2001 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD
DATE UPON WRITTEN REQUEST TO THE SECRETARY, GFSB BANCORP, INC., 221 WEST AZTEC
AVENUE, GALLUP, NEW MEXICO 87301.
BY ORDER OF THE BOARD OF DIRECTORS
/s/George S. Perce
----------------------------------
George S. Perce
Secretary
Gallup, New Mexico
September 28, 2001
-12-
Appendix A
----------
--------------------------------------------------------------------------------
GFSB BANCORP, INC.
221 WEST AZTEC AVENUE
GALLUP, NEW MEXICO 87301
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 26, 2001
--------------------------------------------------------------------------------
The undersigned hereby appoints the Board of Directors of GFSB Bancorp,
Inc. (the "Company"), or its designee, with full powers of substitution, to act
as attorneys and proxies for the undersigned, to vote all shares of Common Stock
of the Company which the undersigned is entitled to vote at the Annual Meeting
of Stockholders (the "Meeting"), to be held at Gallup Federal Savings Bank's
Loan Center located at 214 West Aztec Avenue, Gallup, New Mexico, on October 26,
2001, at 10:00 a.m., local time and at any and all adjournments thereof, in the
following manner:
FOR WITHHELD
--- --------
1. To elect two directors as set forth
below (except as marked to the contrary): |_| |_|
Wallace R. Phillips
Richard C. Kauzlaric
(Instruction: to withhold authority to vote
for any individual nominee, write that nominee's
name on the space provided below)
---------------------------------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
2. To ratify appointment of Neff & Ricci LLP,
as independent public accountants of the Company
for the fiscal year ending June 30, 2002. |_| |_| |_|
The Board of Directors recommends a vote "FOR" the above listed
propositions.
--------------------------------------------------------------------------------
THIS SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS SIGNED PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED. IF ANY
OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS SIGNED 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.
--------------------------------------------------------------------------------
A-1
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting, or
at any adjournments thereof, and after notification to the Secretary of the
Company at the Meeting of the Stockholder's decision to terminate this Proxy,
the power of said attorneys and proxies shall be deemed terminated and of no
further force and effect. The undersigned may also revoke this Proxy by filing a
subsequently dated Proxy or by written notification to the Secretary of the
Company of his or her decision to terminate this Proxy.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders, a Proxy
Statement dated September 28, 2001 and the 2001 Annual Report.
Dated: , 2001
-----------------------------
Please check this box if you are planning on attending the Meeting. |_|
------------------------------------ ----------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
------------------------------------ ----------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this Proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.
--------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
--------------------------------------------------------------------------------
A-2