SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant /x/
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to ss. 240a-12
WELLS FINANCIAL CORP.
(Name of Registrant as Specified in Its Charter)
FINANCIAL EDGE FUND, LP
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee as provided by Exchange Act Rule
0-11(a)(2) and identify for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration No.:
(3) Filing Party:
(4) Date Filed:
WELLS FINANCIAL CORP.
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
APRIL 18, 2001
- --------------------------------------------------------------------------------
PROXY STATEMENT OF THE PL CAPITAL GROUP
- --------------------------------------------------------------------------------
IN OPPOSITION TO
THE MANAGEMENT OF WELLS FINANCIAL CORP.
- --------------------------------------------------------------------------------
WHY YOU WERE SENT THIS PROXY STATEMENT
This proxy statement and the accompanying WHITE proxy card are being furnished
to holders of the common stock of Wells Financial Corp. ("Wells Financial" or
the "Company") in connection with the solicitation of proxies by the PL Capital
Group. The PL Capital Group seeks to elect one candidate, Mr. Gary Pihlstrom, to
Wells Financial's Board of Directors, in opposition to the directors nominated
for election by the Company.
The PL Capital Group also plans to solicit your support for, and proxy to vote
in favor of, the following non-binding proposal to be presented at the Wells
Financial 2001 Annual Meeting:
RESOLVED, that stockholders of Wells Financial hereby inform the
Board of Directors of Wells Financial that: (1) the management
and Board of Wells Financial should solicit offers to acquire, or
merge with, Wells Financial, from all potentially interested
parties, in a fair and open process; (2) the Company should
publicly disclose to stockholders the results of that process;
and (3) the stockholders of Wells Financial should be presented
with an opportunity to vote on the definitive offer with the
highest value, regardless of whether the Wells Board or
management feels such offer is sufficient.
The PL Capital Group consists of various investment entities and individuals
that beneficially own an aggregate of 103,910 shares, approximately 8.3% of
Wells Financial's outstanding common stock ("Common Stock"). The PL Capital
Group consists of PL Capital, LLC ("PL Capital"), Financial Edge Fund, LP
("Financial Edge"), Financial Edge/Strategic Fund, LP ("Financial
Edge/Strategic"), John Palmer, Richard Lashley and Gary Pihlstrom. This proxy
statement sometimes refers to the PL Capital Group as the "Group," "we," "us,"
"our" and variants of those words.
The PL Capital Group is soliciting proxies to be used at the Annual Meeting of
Stockholders (the "Annual Meeting") of Wells Financial. The Annual Meeting is
scheduled to be held on April 18, 2001 at Wells Financial's headquarters (53
First Street, Wells, MN) at ____ p.m. (CST).
WE ARE CONCERNED ABOUT WELLS FINANCIAL'S PROSPECTS
Wells Federal is a small savings bank holding company with $221 million in
assets and $163 million in deposits. It operates eight retail branches in a
rural market area of southwest Minnesota. The Company, although historically
profitable, has shown limited ability to grow its franchise. From December 31,
1995, the end of the first year after it converted to a publicly owned company,
through December 31, 2000, the Company's assets only grew at a compounded annual
rate of approximately 2.5%. During the same 5-year period, its deposits only
grew at a compounded annual rate of approximately 2%. Excluding the retention of
interest credited on deposits, deposits actually declined. The Company's
stockholder's equity decreased from $28.8 million at December 31, 1995 to $22.3
million at December 31, 2000. During that same 5-year period, the Company's
tangible book value per share increased at a compounded annual rate of only 6%.
The Company's return on equity (ROE) was only 7.5% in 2000, a relatively slight
improvement from 1995, the year it converted to a publicly owned company. The
Company's stock price at December 31, 2000, $15.94, was approximately 28% below
its peak price of $22.00 reached in 1998.
We believe that Wells Financial's past history of limited growth is a clear
indicator of its diminished prospects for the future, particularly since we
believe that the Company operates in a market area with limited growth
opportunities. We believe that small savings banks, such as Wells, can better
serve their stockholders, as well as their banking customers and local
communities, by merging with or being acquired by larger commercial banks that
offer a wider range of products and services. In our opinion, Wells Financial's
employees would also benefit from the opportunities offered by a larger
financial institution.
WE ARE CONCERNED THAT WELLS FINANCIAL'S BOARD AND MANAGEMENT HAVE REJECTED TWO
ATTEMPTS BY POTENTIAL ACQUIRERS TO ACQUIRE WELLS FINANCIAL
We are aware that Wells Financial rejected two separate potential suitors during
2000. In the first instance, current and former members of the Group expressed
to Wells management on several occasions (starting in July 2000), an interest in
pursuing an acquisition of Wells Financial at a significant premium to Wells'
then-current stock price. The details of those offers are documented in the PL
Capital Group's various Schedule 13D filings with respect to the stock of Wells
Financial, which were publicly filed with the United States Securities and
Exchange Commission (the "SEC") and are available at the SEC's web site,
www.sec.gov. Despite several such attempts at entering into meaningful
negotiations and conducting due diligence, our indications of interest were
consistently discouraged and ultimately rejected by the Company's Board of
Directors and management.
In the second instance that we are aware of, it was reported in the minutes of
the regular meeting of the Board of Directors of Wells Financial on December 19,
2000, that at that same meeting, the Board of Wells Financial rejected an
indication of interest from an out of state financial institution.
We believe that the management and Board of Directors of Wells Financial should
have more aggressively pursued these indications of interest and that the
stockholders of the Company deserve the opportunity to be informed whenever such
proposals are received. Given that we believe that Wells Financial has limited
opportunities to grow its franchise if it remains independent, we believe Wells
Financial's stockholders should support an acquisition of Wells Financial versus
a strategy of remaining independent.
OUR CANDIDATE, IF ELECTED, WILL ENCOURAGE THE BOARD OF DIRECTORS OF WELLS
FINANCIAL TO SOLICIT BIDS FROM ALL POTENTIAL ACQUIRERS
Our candidate, if elected, will encourage the Board of Wells Financial to
solicit bids from all potential acquirers, not just the current and former
members of the PL Capital Group. As stockholders, we strongly
2
support the sale of Wells Financial to another entity, beside ourselves, if such
a sale would produce superior value to Wells Financial's stockholders. The Board
of Wells should also not prevent the sale of Wells by establishing an
artificially high minimum price derived by imputing a hypothetical value based
upon other transactions in other market areas and for different franchises. The
fair market value of Wells can only be discovered through a fair and open
process, based upon what real buyers are willing to pay. Fair market value is
not based upon a theoretical value that cannot be achieved in a real
transaction.
However, if the Board and management of Wells feel the values generated by a
fair and open process do not reflect the intrinsic value of Wells Financial, we
encourage the Board and management to pool their resources (and raise their own
financing, as needed) to acquire Wells Financial if their bid is superior to
those of third parties.
The Group also believes this is an opportune time to seek the sale of Wells
Financial. The economy has been strong for five years straight, reducing
potential credit quality concerns. There are indications this favorable economy
may not last. The current interest rate environment is also more favorable for
thrifts such as Wells Financial than at any time since 1998. This may not last
either. We do not want to see Wells Financial miss an opportunity to maximize
the value of its franchise while its value is unimpaired by the economy.
OUR BOARD NOMINEES, IF ELECTED, INTEND TO ENCOURAGE WELLS FINANCIAL'S BOARD AND
MANAGEMENT TO AGGRESSIVELY PURSUE ALL POTENTIAL MERGER OPPORTUNITIES, AND
ATTEMPT TO GIVE WELLS FINANCIAL'S STOCKHOLDERS AN OPPORTUNITY TO VOTE ON ANY
BONA FIDE MERGER OR ACQUISITION PROPOSAL THAT WELLS FINANCIAL RECEIVES
Therefore, we are soliciting your support and proxy for the following
stockholder proposal:
RESOLVED, that stockholders of Wells Financial hereby inform the
Board of Directors of Wells Financial that: (1) the management
and Board of Wells Financial should solicit offers to acquire, or
merge with, Wells Financial, from all potentially interested
parties, in a fair and open process; (2) the Company should
publicly disclose to stockholders the results of that process;
and (3) the stockholders of Wells Financial should be presented
with an opportunity to vote on the definitive offer with the
highest value, regardless of whether Wells Board or management
feels such offer is sufficient.
We believe that the stockholders of Wells, in their collective judgment, are
capable of deciding for themselves whether any offer to acquire Wells is
attractive enough to accept. While if the stockholders of the Company approved
our stockholder proposal, the Board of Directors would not be legally required
to follow the stockholder's instructions, we believe that the approval of our
proposal by the stockholders would send a strong signal to the Board of
Directors of the wishes of the stockholders of Wells Financial.
THE PL CAPITAL GROUP'S PREVIOUS EXPERIENCE IN MAXIMIZING STOCKHOLDER VALUE
Members of the PL Capital Group believe they have previously been successful in
maximizing the value of banks and thrifts in which they invested. Since
inception in 1996, Financial Edge has accumulated ownership positions greater
than 5% in four other savings institutions which have subsequently been sold.
The other four are: Haven Bancorp in Westbury, NY; Cameron Financial in Cameron,
MO; SuburbFed Financial in Flossmoor, IL and MidConn Bank in Kensington, CT. All
four were acquired within 18 months of the dates that PL Capital initially filed
Schedule 13D's on each institution. In all of these instances, PL Capital's
public filings stated that PL Capital intended to encourage management of each
institution to seek ways to maximize stockholder value, including, but not
limited to, sale of the institution.
3
o On June 27, 2000 Haven Bancorp, a $3 billion asset thrift in New York,
announced the sale of Haven to Queens County Bancorp (now called New York
Community Bancorp (Nasdaq: NYCB)) at 1.04 common shares of New York
Community Bancorp for each Haven common share. In that instance, two of PL
Capital's designees were on Haven's Board of Directors. PL Capital filed
its initial Schedule 13D on August 25, 1999 at which time Haven's (Nasdaq:
HAVN), stock was trading at $16.43 per share. Upon completion of the
transaction with New Community Bancorp on November 30, 2000, Haven's share
price was $32.06, an increase of 95%. As of February 13, 2001, this value
equated to $43.74 (NYCB closed at $42.06 X 1.04 exchange factor) for each
common share of Haven, an increase in value of 166% from the date of PL
Capital's initial Schedule 13D filing.
o On June 1, 2000, PL Capital filed its initial Schedule 13D on Cameron
Financial Corporation (Nasdaq: CMRN). At that time Cameron's common stock
traded at $12.00 per share. On October 6, 2000, Cameron Financial announced
the sale of Cameron to Dickinson Financial for $20.75 per share in cash, a
73% premium to Cameron's common stock price when PL Capital filed its
initial Schedule 13D.
o On December 27, 1997 SuburbFed Financial (Nasdaq: SFSB) announced a sale to
CFS Bancorp, (Nasdaq: CITZ) in a transaction valued at $47.50 per share, a
106% premium to SuburbFed's common stock price of $23.00 on the day PL
Capital filed its initial Schedule 13D on April 16, 1997.
o On January 28, 1997 MidConn Bank (Nasdaq: MIDC) announced they were being
acquired by Eagle Financial, in a transaction valued at $25.00 per share, a
67% premium to MidConn's stock price of $15.00 on May 1, 1996 when PL
Capital filed its initial Schedule 13D filing.
PL Capital was actively involved in encouraging managements of each of these
companies to maximize earnings and pursue the sale of the company.
Additionally, the PL Capital Group has filed Schedule 13Ds on Security Financial
Bancorp, Inc. ("Security Financial" (Nasdaq: SFBI)), Franklin Bank, National
Association ("Franklin Bank" (Nasdaq: FSVB)) and Equitable Bank (Nasdaq: EQSB).
o PL Capital filed its initial Schedule 13D on Security Financial on March
14, 2000. On that date the common stock of Security Financial closed at
$10.87. Subsequent to this filing Mr. Palmer and Mr. Lashley were named to
the Board of Directors of the Company. On February 13, 2001 the common
stock of Security Financial closed at $16.37, an increase of 51% from the
date of the filing of the original Schedule 13D.
o PL Capital filed an initial Schedule 13D on Franklin Bank on December 11,
2000. The common stock of Franklin Bank closed at $9.87 on that date. On
February 13, 2001 the common stock of Franklin Bank closed at $12.62, an
increase of 28% from its original Schedule 13D filing date.
o PL Capital filed an initial Schedule 13D on Equitable Bank on January 8,
2001. On that date the common stock of Equitable Bank closed at $15.37. On
February 13, 2001 the common stock of Equitable Bank closed at $19.75, an
increase of 28% from the date of the original Schedule 13D filing.
The principals of PL Capital, John Palmer and Richard Lashley, have significant
experience in the investment management and investment banking business, with a
specialty in the banking industry. PL Capital currently manages several
investment partnerships and separate accounts focused exclusively on the banking
industry, with collective total assets under management of approximately $40
million. The principals of PL Capital also have significant experience as
financial advisors to banks and thrifts, having
4
served as financial advisors in bank and thrift merger transactions with a total
value of over $1.0 billion since 1992. Messrs. Lashley and Palmer are both
Certified Public Accountants.
OUR NOMINEE FOR DIRECTOR
Wells Financial's Board currently consists of six members. Two seats on the
board of directors are up for election at the Annual Meeting.
At the Annual Meeting, the PL Capital Group will seek to elect Mr. Gary
Pihlstrom to fill one of the two open director seats, in opposition to the
Company's nominees. The election of Mr. Pihlstrom requires the affirmative vote
of a plurality of the votes cast. If elected, Mr. Pihlstrom would be entitled to
serve a three-year term.
Mr. Pihlstrom, a Minnesota resident, is an attorney with significant experience
in the banking industry. We believe he would be a strong addition to Wells
Financial's Board of Directors.
MR. GARY PIHLSTROM
Gary Pihlstrom, age 45, is the sole officer, director and stockholder of Gary D.
Pihlstrom, P. A., a law firm emphasizing the representation of financial
institutions and small businesses. This firm was originally established in 1992
in partnership with Mike Hatch's law firm, Hatch & Eiden Chartered. Mike Hatch
is the former State of Minnesota Banking and Commerce Commissioner and current
Minnesota State Attorney General. Mr. Pihlstrom has substantial professional and
advisory experience in the banking industry including experience with bank
creation, merger and acquisition work. His legal career began in 1981 and
started with the representation of banks in the Twin Cities area. In the past he
has worked as an Executive Vice President of and General Counsel to Metropolitan
Bank Group, Inc., a bank holding company; a Director of and General Counsel to
St. Croix Valley Bank (now known as Central Bank), a Minnesota bank; General
Counsel to Bank of Montana System; General Counsel to Rocky Mountain Bankshares,
Inc. and Barron Investments, Inc., both bank holding companies. In addition to
currently providing legal services to banks as part of his law practice, Mr.
Pihlstrom now also sits on the Board of Directors of Eastbank, a Minnesota
banking corporation. Mr. Pihlstrom graduated with a bachelor's degree summa cum
laude from Gustavus Adolphus College and graduated cum laude from the University
of Minnesota law school.
Mr. Pihlstrom has consented to being named in this proxy and to serve, if
elected, however, if he is unable to serve as a director, PL Capital, named as
proxy on the attached WHITE card, will vote for the election of another nominee
as may be proposed by the Group.
WHO CAN VOTE AT THE ANNUAL MEETING
The record date for determining stockholders entitled to notice of and to vote
at the Annual Meeting (the "Record Date") is March 2, 2001. Stockholders of the
Company as of the Record Date are entitled to one vote at the Annual Meeting for
each share of Common Stock of the Company, $.01 par value per share, held on the
Record Date. We anticipate that the proxy statement that will be filed by the
Company will state the number of shares issued and outstanding on the Record
Date.
HOW TO VOTE BY PROXY
To elect the PL Capital Group's nominee to the Board, promptly complete, sign,
date and mail the enclosed WHITE proxy card in the enclosed postage-paid
envelope. Whether you plan to attend the Annual Meeting or not, we urge you to
complete and return the enclosed WHITE proxy card.
Properly executed proxies will be voted in accordance with the directions
indicated thereon. If you sign the WHITE proxy card but do not make any specific
choices, your proxy will vote your shares as follows:
5
o "FOR" the election of our nominee, Mr. Gary Pihlstrom, to the Board of
Directors.
o "FOR" the following stockholder proposal:
RESOLVED, that stockholders of Wells Financial hereby inform the Board of
Directors of Wells Financial that: (1) the management and Board of Wells
Financial should solicit offers to acquire, or merge with, Wells Financial,
from all potentially interested parties, in a fair and open process; (2)
the Company should publicly disclose to stockholders the results of that
process, and (3) the stockholders of Wells Financial should be presented
with an opportunity to vote on the definitive offer with the highest value,
regardless of whether Wells Board or management feels such offer is
sufficient.
o "FOR" the ratification of the appointment of McGladrey & Pullen, LLP as the
auditors of the Company for the fiscal year ending December 31, 2001.
If any other matters are presented at the Annual Meeting, your proxy will vote
in accordance with the best judgment of the PL Capital Group, as discussed in
the "Other Matters To Be Considered At The Annual Meeting" section. At the time
this Proxy Statement was mailed, we knew of no matters which were to be acted on
at the Annual Meeting, other than those discussed in this Proxy Statement.
If any of your shares are held in the name of a brokerage firm, bank, bank
nominee or other institution on the record date, only that entity can vote your
shares and only upon its receipt of your specific instructions. Accordingly,
please contact the person responsible for your account at such entity and
instruct that person to execute and return the WHITE proxy card on your behalf.
You should also sign, date and mail the voting instruction form your broker or
banker sends you when you receive it. Please do this for each account you
maintain to ensure that all of your shares are voted.
OTHER MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
Other than as described herein, the PL Capital Group is not aware of any other
proposals to be brought before the Annual Meeting. If other proposals or matters
are brought before the Annual Meeting, PL Capital will abstain from voting on
such proposals unless such proposals adversely affect the interests of the PL
Capital Group or the program of the PL Capital Group outlined in this Proxy
Statement, as determined by the PL Capital Group in its sole discretion. If that
occurs, the PL Capital Group will vote on such proposals at their discretion.
VOTING AND PROXY PROCEDURES
The Board of Directors of Wells Financial is divided into three classes of
directors having staggered terms of three years. Stockholders of Wells Financial
are not permitted to cumulate their votes for the election of directors. If
elected, Mr. Pihlstrom would serve for a three-year term expiring in 2004.
Since the PL Capital Group is only proposing one nominee for the Board of
Directors, even if the PL Capital Group nominee is elected, one of the Company's
nominees with the highest number of shares voted in his or her favor will also
be elected. If Mr. Pihlstrom is elected, this would represent only a minority
interest on the Company's Board of Directors (i.e. one of six seats).
The presence of a majority of all of the shares of Common Stock entitled to vote
at the Annual Meeting, present in person or by proxy, will constitute a quorum.
Abstentions are counted for purposes of determining a quorum; proxies marked to
abstain with respect to a proposal have the same effect as votes against the
proposal. Proxies relating to "street name" shares that are voted by brokers on
some but not all
6
of the matters before stockholders at the Annual Meeting will be treated as
shares present for purposes of determining the presence of a quorum on all
matters, but will not be entitled to vote at the Annual Meeting on those matters
as to which authority to vote is withheld by the broker ("broker non-votes").
Accordingly, broker non-votes will not affect the outcome of the election.
Election of Mr. Pihlstrom requires the affirmative vote of a plurality of the
votes present in person or represented by proxy at the Annual Meeting. Approval
of the PL Capital Group's stockholder proposal requires the affirmative vote of
a majority of votes cast at the Annual Meeting. Ratification of McGladrey &
Pullen, LLP as the Company's independent auditors requires the affirmative vote
of a majority of the votes cast at the Annual Meeting.
THE PL CAPITAL GROUP URGES YOU TO VOTE FOR THE ELECTION OF MR. PIHLSTROM AS
DIRECTOR OF WELLS FINANCIAL AND FOR OUR STOCKHOLDER PROPOSAL BY SIGNING, DATING,
AND RETURNING THE ENCLOSED WHITE PROXY CARD AS SOON AS POSSIBLE. PROXIES
SOLICITED BY THIS PROXY STATEMENT MAY BE EXERCISED ONLY AT THE ANNUAL MEETING
(AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF) IN ACCORDANCE WITH YOUR
INSTRUCTIONS AND WILL NOT BE USED FOR ANY OTHER MEETING.
Any proxy may be revoked by you at any time prior to the time a vote is taken by
delivering to the Secretary of Wells Financial a notice of revocation bearing a
later date, by delivering a duly executed proxy bearing a later date or by
attending the Annual Meeting and voting in person (but attendance at the Annual
Meeting will not by itself constitute revocation of a prior-delivered proxy).
This proxy is first being mailed to stockholders on or about March ___, 2001.
Only holders of record as of the close of business on the Record Date will be
entitled to vote at the Annual Meeting. If you were a stockholder of record on
the Record Date, you will retain your voting rights for the Annual Meeting even
if you sell your shares after the Record Date. Accordingly, it is important that
you vote the shares held by you on the Record Date, or grant a proxy to vote
such shares, even if you sell such shares after the Record Date.
If you own any shares of the Common Stock which are held in the name of a
brokerage firm, bank, bank nominee or other institution on the Record Date, only
it can vote such shares and only upon receipt of your specific instructions.
Accordingly, please contact the person responsible for your account and instruct
that person to execute and return on your behalf the WHITE proxy card. You
should also sign, date and mail the proxy form your broker or bank sends you
when you receive it. Please do this for each account you maintain to ensure that
all of your shares are voted.
If you wish to support Mr. Pihlstrom and the stockholder proposal, please sign,
date and return only the WHITE proxy card. If you later vote on management's
proxy card (even if it is to withhold authority to vote for management's
nominees) you will revoke your previous vote for Mr. Pihlstrom and the
stockholder proposal.
ALTHOUGH YOU MAY VOTE MORE THAN ONCE, ONLY ONE PROXY WILL BE COUNTED AT THE
ANNUAL MEETING, AND THAT WILL BE YOUR LATEST-DATED, VALIDLY EXECUTED PROXY.
If you have already sent a proxy to management of the Company, you can revoke
that proxy by signing, dating and mailing the WHITE proxy card or by voting in
person at the Annual Meeting.
IF YOU HAVE SIGNED THE WHITE PROXY CARD AND NO MARKING IS MADE, YOU WILL BE
DEEMED TO HAVE GIVEN A DIRECTION TO VOTE THE WELLS FINANCIAL COMMON STOCK
REPRESENTED BY THE WHITE PROXY CARD FOR THE ELECTION OF
7
MR. PIHLSTROM, FOR OUR STOCKHOLDER PROPOSAL AND FOR THE RATIFICATION OF
MCGLADERY & PULLEN, LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
SOLICITATION OF PROXIES; EXPENSES
The entire expense of preparing and mailing this Proxy Statement and any other
soliciting material and the total expenditures relating to the solicitation of
proxies (including, without limitation, costs, if any, related to advertising,
printing, fees of attorneys, financial advisors, solicitors, accountants, public
relations, transportation and litigation) will be borne by the PL Capital Group.
In addition to the use of the mails, proxies may be solicited by the PL Capital
Group, other Participants (as defined below) and/or their employees by
telephone, telegram, and personal solicitation, for which no additional
compensation will be paid to those persons engaged in such solicitation. Banks,
brokerage houses, and other custodians, nominees, and fiduciaries will be
requested to forward solicitation material to the beneficial owners of the
Common Stock that such institutions hold, and PL Capital Group will reimburse
such institutions for their reasonable out-of-pocket expenses.
The PL Capital Group has retained MalCon Proxy Advisors, Inc., a proxy
solicitation firm, to assist in the solicitation of proxies at a fee estimated
not to exceed $______ plus reimbursement of reasonable out-of-pocket expenses.
That firm will utilize approximately ___ persons in its solicitation efforts.
The PL Capital Group estimates that its total expenditures relating to the
solicitation of proxies will be approximately $______ (including, without
limitation, costs, if any, related to advertising, printing, fees of attorneys,
financial advisors, solicitors, accountants, public relations, transportation,
and litigation). Total cash expenditures to date relating to this solicitation
have been approximately $______.S
The PL Capital Group intends to seek reimbursement from the Company for its
actual expenses in connection with this solicitation. If elected, the PL Capital
Group and its nominee will submit the matter to a vote of the Company's Board of
Directors. The Company's Board of Directors may vote to submit the matter to a
vote of the Company's stockholders. If elected to the Company's Board of
Directors, Mr. Pihlstrom intends to vote in favor of reimbursing the PL Capital
Group and if necessary, submitting the matter to a vote of the Company's
stockholders. If the matter is submitted to a vote of the Company's
stockholders, the PL Capital Group will vote its shares in favor of such
reimbursement and will accept the results of such stockholder vote.
CERTAIN INFORMATION REGARDING THE PARTICIPANTS
PL Capital is a Delaware limited liability company. The principal business of PL
Capital is serving as general partner of Financial Edge Fund, LP, a Delaware
limited partnership, and Financial Edge/Strategic Fund, LP, a Delaware limited
partnership. Both limited partnerships invest primarily in equity securities
issued by publicly traded companies, with emphasis on investments in banks and
thrifts. The managing members of PL Capital are Richard J. Lashley and John Wm.
Palmer. PL Capital, Mr. Lashley, Mr. Palmer and Mr. Pihlstrom each are a
participant in the solicitation conducted with this Proxy Statement. Each of
them is referred to in this Proxy Statement as a "Participant" and collectively
they are the "Participants."
Exhibit A lists certain information regarding ownership of the Common Stock by
the Participants and transactions in the Common Stock made by the Participants
during the last two years. The PL Capital Group beneficially owns approximately
8.3% of the outstanding shares of Wells Financial's Common Stock, and currently
intends to maintain that approximate level of ownership. The PL Capital Group
may, however, change or alter its investment strategy at any time to increase or
decrease its holdings in Wells Financial.
Except as set forth herein, no Participant is now, or within the past year has
been, a party to any contract, arrangement or understanding with any person with
respect to any securities of the Company (including,
8
but not limited to, joint ventures, loan or option arrangements, puts or calls,
guarantees against loss or guarantees of profit, division of losses or profits,
or the giving or withholding of proxies). PL Capital, as General Partner of
Financial Edge and Financial Edge/Strategic is entitled to: (1) a management fee
based upon a percentage of partners' capital and (2) an allocation of profits
and income.
There are no material proceedings to which any Participant or any associate of
any Participant is a party adverse to the Company or any of its subsidiaries or
has a material interest adverse to the Company or any of its subsidiaries.
Except as described herein, no Participant and no associate of any Participant
has any interest in the matters to be voted upon at the Annual Meeting, other
than an interest, if any, as a stockholder of the Company.
Except as described herein or in Exhibit A, neither any Participant nor any
associate of any Participant (1) has engaged in or has a direct or indirect
interest in any transaction or series of transactions since the beginning of the
Company's last fiscal year, or in any currently proposed transaction, to which
the Company or any of its subsidiaries is a party where the amount involved was
in excess of $60,000; (2) has been indebted to the Company or any of its
subsidiaries; (3) has borrowed any funds for the purpose of acquiring or holding
any securities of the Company, or is presently, or has been within the past
year, a party to any contract, arrangement or understanding with any person with
respect to either any securities of the Company, any future employment by the
Company or its affiliates, or any future transaction to which the Company or any
of its affiliates will or may be a party; or (4) is the beneficial or record
owner of any securities of the Company or any parent or subsidiary thereof.
No member of the PL Capital Group has paid any compensation to Mr. Pihlstrom in
connection with his becoming a nominee of the PL Capital Group for election to
the Board of the Company at the Annual Meeting. The PL Capital Group has agreed
to reimburse Mr. Pihlstrom for any expenses he incurs in connection with the
Annual Meeting but has no other arrangements or understandings with him other
than as set forth herein. Mr. Pihlstrom has agreed to become a nominee of the PL
Capital Group in order to further the goals of the PL Capital Group, as set
forth in this Proxy Statement.
OTHER MATTERS
The PL Capital Group anticipates that the Company's proxy statement will contain
information regarding (1) securities ownership of 5% or more beneficial
ownership and management; (2) the committees of the Company's Board of
Directors; (3) the meetings of the Company's Board of Directors and all
committees thereof; (4) the background of the nominees of the Company's Board of
Directors; (5) the compensation and remuneration paid and payable to the
Company's directors and management; (6) stock price performance; and (7) the
submission of stockholder proposals at the Company's 2002 annual meeting of
stockholders. The PL Capital Group has no knowledge of the accuracy of the
Company's disclosures in its proxy materials.
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN WE ARE SEEKING YOUR SUPPORT. PLEASE
VOTE FOR MR. PIHLSTROM AND THE GROUP'S STOCKHOLDER PROPOSAL BY SIGNING, DATING,
AND MAILING IN THE ENCLOSED POSTAGE-PAID ENVELOPE THE ENCLOSED WHITE PROXY CARD
AS SOON AS POSSIBLE. ONLY YOUR LATEST DATED PROXY COUNTS. EVEN IF YOU HAVE
ALREADY RETURNED A PROXY TO THE COMPANY'S BOARD OF DIRECTORS, YOU HAVE EVERY
LEGAL RIGHT TO REVOKE IT BY SIGNING, DATING, AND MAILING THE ENCLOSED WHITE
PROXY CARD OR BY VOTING IN PERSON AT THE ANNUAL MEETING.
WHOM YOU CAN CALL IF YOU HAVE QUESTIONS
9
If you have any questions or require any assistance, please contact MalCon Proxy
Advisors, Inc., proxy solicitors for the PL Capital Group, at the following
address and telephone number:
MalCon Proxy Advisors, Inc.
130 Williams Street
New York, NY 10038
Toll Free: 1-800-475-4565
Please also feel free to contact the PL Capital Group:
Mr. Richard Lashley, Principal
Mr. John Palmer, Principal
PL Capital, LLC
2015 Spring Road
Suite 290
Oak Brook, IL 60523
(630) 928-0231
(630) 928-0232 (fax)
IT IS IMPORTANT THAT YOU SIGN AND DATE YOUR WHITE PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE TO AVOID UNNECESSARY EXPENSE AND DELAY. NO
POSTAGE IS NECESSARY.
Sincerely,
/s/ Richard Lashley /s/ John Palmer
Richard Lashley John Palmer
The PL Capital Group The PL Capital Group
February 15, 2001
10
Exhibit A
Additional Information Regarding Members of the PL Capital Group
The following table sets forth information regarding holdings of Common Stock by
members of the PL Capital Group (who together constitute a "group" as that term
is used in Section 13(d)(3) of the Securities Exchange Act of 1934):
- --------------------------------- ------------ -------- ---------------
Shares Held By
Participant & Address Shares Held Percent Non-Participant
Beneficially of Class Associates
- --------------------------------- ------------ -------- ---------------
Richard Lashley 103,910 8.3% 0
2015 Spring Road, Suite 290
Oak Brook, Illinois 60523
- --------------------------------- ------------ -------- ---------------
John Palmer 103,910 8.3% 0
2015 Spring Road, Suite 290
Oak Brook, Illinois 60523
- --------------------------------- ------------ -------- ---------------
PL Capital, LLC 103,910 8.3% 0
2015 Spring Road, Suite 290
Oak Brook, Illinois 60523
- --------------------------------- ------------ -------- ---------------
Financial Edge Fund, LP 103,910 8.3% 0
2015 Spring Road, Suite 290
Oak Brook, Illinois 60523
- --------------------------------- ------------ -------- ---------------
Financial Edge/Strategic Fund, LP 103,910 8.3% 0
2015 Spring Road, Suite 290
Oak Brook, Illinois 60523
- --------------------------------- ------------ -------- ---------------
Gary Pihlstrom 103,910 8.3% 0
1907 Hunter Lane
Mendota Heights, MN 55118
- --------------------------------- ------------ -------- ---------------
No member of the PL Capital Group owns any shares of the Common Stock of record
but not beneficially.
11
Transactions in the Common Stock
Transactions In Stock of the Corporation
The following transactions are the only transactions during the past two years
with regard to any Participant.
PL Capital:
- -------------- --------------------
Date Number of Shares
Purchased/(Sold)
- -------------- --------------------
6/29/00 70,000
- -------------- --------------------
7/5/00 (40,910)
- -------------- --------------------
Gary Pihlstrom:
- -------------- --------------------
Date Number of Shares
- -------------- --------------------
2/13/01 100
- -------------- --------------------
Financial Edge:
- -------------- --------------------
Date Number of Shares
- -------------- --------------------
6/14/00 2,000
- -------------- --------------------
6/15/00 4,600
- -------------- --------------------
6/16/00 6,620
- -------------- --------------------
6/30/00 2,000
- -------------- --------------------
7/10/00 500
- -------------- --------------------
1/29/01 51,000
- -------------- --------------------
Financial Edge/Strategic:
- -------------- --------------------
Date Number of Shares
- -------------- --------------------
6/16/00 8,000
- -------------- --------------------
The total number of shares held by the Group is 103,910, approximately 8.3% of
the Company's total shares outstanding.
The amount of funds expended to date by PL Capital to acquire the 29,090 shares
of Common Stock it holds in its name is $364,697. Such funds were provided from
PL Capital's available capital and from time to time, by margin loans from
McDonald Investments ("McDonald Investments").
The amount of funds expended to date by Mr. Pihlstrom to acquire the 100 shares
he holds in his name is $1,725. Such funds were provided from Mr. Pihlstrom's
personal funds.
The amount of funds expended to date by Financial Edge to acquire the 66,720
shares of Common Stock it holds in its name is $919,191. Such funds were
provided in part from Financial Edge's available capital and, from time to time,
in part by margin account loans from subsidiaries of The Bear Stearns Companies,
Inc. ("Bear Stearns"), extended in the ordinary course of business.
The amount of funds expended to date by Financial Edge/Strategic to acquire the
8,000 shares of Common Stock it holds in its name is $90,240. Such funds were
provided in part from Financial Edge/Strategic's available capital and, from
time to time, in part by margin account loans from subsidiaries of Donaldson,
Lufkin, Jenrette Securities Corp. ("DLJ"), extended in the ordinary course of
business.
12
All purchases of Common Stock made by members of the Group using funds borrowed
from Bear Stearns, DLJ and McDonald Investments, if any, were made in margin
transactions on those firms usual terms and conditions. All or part of the
shares of Common Stock owned by members of the Group may from time to time be
pledged with one or more banking institutions or brokerage firms as collateral
for loans made by such entities to members of the Group. Such loans generally
bear interest at a rate based upon the broker's call rate from time to time in
effect. Such indebtedness, if any, may be refinanced with other banks or
broker-dealers.
None of Mr. Lashley, Mr. Palmer nor Mr. Pihlstrom is required to file reports
under Section 16 of the Securities Exchange Act of 1934, as amended, with
respect to the Common Stock.
13
PROXY
THIS PROXY IS SOLICITED BY THE PL CAPITAL GROUP IN OPPOSITION
TO THE BOARD OF DIRECTORS OF WELLS FINANCIAL CORP.
ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints the PL Capital Group, with full power of
substitution, as proxy for the undersigned, to vote all shares of common stock,
par value $.01 per share, of Wells Financial Corp. (the "Company"), which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
on April 18, 2001, at ___:00 pm (CST) or any adjournments thereof (the "Annual
Meeting"), as follows:
1. ELECTION OF DIRECTORS - To elect GARY PIHLSTROM:
/ / FOR / / WITHHOLD
To withhold authority to vote for the election of any nominee(s), write the
name(s) of such nominee(s) in the following space. (You can withhold authority
for Mr. Gary Pihlstrom by writing his name in the following space below or by
marking an X next to the WITHHOLD box above):
The PL Capital Group intends to use this proxy to vote for persons who have been
nominated by the Company to serve as Director, other than the Company Nominee
noted below. You should refer to the Company's proxy statement and form of proxy
distributed by the Company for the names, backgrounds, qualifications and other
information concerning the Company's Nominees. The PL Capital Group is NOT
seeking authority to vote for and will NOT exercise any authority for Mr.
________________, one of the Company's Nominees. You may withhold authority to
vote for one or more additional Company Nominees, by writing the name of the
Company Nominee(s) in the following space below:
2. RESOLUTION OF THE STOCKHOLDERS:
RESOLVED, that stockholders of Wells Financial hereby inform the
Board of Directors of Wells Financial that: (1) the management
and Board of Wells Financial should solicit offers to acquire, or
merge with, Wells Financial, from all potentially interested
parties, in a fair and open process; (2) the Company should
publicly disclose to stockholders the results of that process,
and (3) the stockholders of Wells Financial should be presented
with an opportunity to vote on the definitive offer with the
highest value, regardless of whether Wells Board or management
feels such offer is sufficient.
/ / FOR / / AGAINST / / ABSTAIN
14
3. APPOINTMENT OF McGLADERY & PULLEN, LLP AS THE COMPANY'S INDEPENDENT AUDITOR
FOR THE YEAR ENDED DECEMBER 31, 2001:
/ / FOR / / AGAINST / / ABSTAIN
IMPORTANT: PLEASE SIGN AND DATE ON THE REVERSE SIDE.
15
This proxy, when properly executed , will be voted in the manner directed herein
by the undersigned Stockholder. Unless otherwise specified, this proxy will be
voted "FOR" the election of the PL Capital Group's Nominee as Director, "FOR"
the Stockholder Proposal and "FOR" the appointment of McGladery & Pullen, LLP as
the Company's independent auditor. This proxy revokes all prior proxies given by
the undersigned.
In his discretion, the Proxy is authorized to vote upon such other business that
may properly come before the Annual Meeting, as provided in the proxy statement
provided herewith.
Dated:________________________________________________________
Signature:____________________________________________________
Signature (if held jointly):__________________________________
Title:________________________________________________________
Please sign exactly as your name(s) appear on the proxy cards previously sent to
you. When shares are held by joint tenants, both should sign. When signing as an
attorney, executor, administrator, trustee, or guardian, please give full title
as such. If a corporation, please sign in full corporation name by the President
or other duly authorized officer. If a partnership, please sign in partnership
name by authorized person. This proxy card votes all shares held in all
capacities.
PLEASE SIGN, DATE, AND MAIL THIS PROXY CARD TODAY
16