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
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
NORTH BANCSHARES, INC.
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(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
March 15, 2001
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of North Bancshares,
Inc. (the "Company"), I cordially invite you to attend the Company's Annual
Meeting of Stockholders (the "Meeting"). The Meeting will be held at 10:00 a.m.,
local time, on April 25, 2001 at the Chicago Historical Society, located at 1601
N. Clark Street, Chicago, Illinois.
At the Meeting, stockholders are being asked to elect two directors and
to ratify the appointment of Crowe, Chizek and Company LLP as the Company's
independent auditors for the fiscal year ending December 31, 2001. Your Board of
Directors unanimously recommends that you vote FOR the director nominees named
herein and FOR the ratification of the appointment of independent auditors.
Whether or not you plan to attend, PLEASE READ THE ENCLOSED PROXY
STATEMENT AND THEN COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT
IN THE ACCOMPANYING POSTPAID RETURN ENVELOPE AS PROMPTLY AS POSSIBLE. If your
shares are held with a bank or broker, check your proxy card to see if you can
also vote by telephone or through the internet. Voting as early as possible will
save the Company additional expense in soliciting proxies and will ensure that
your shares are represented at the Meeting.
Thank you for your attention to this important matter.
Very truly yours,
Mary Ann Hass
Chairman of the Board
NORTH BANCSHARES, INC.
100 West North Avenue
Chicago, Illinois 60610-1399
(312) 664-4320
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on April 25, 2001
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of North Bancshares, Inc. ("North Bancshares" or the "Company") will
be held at the Chicago Historical Society, located at 1601 North Clark Street,
Chicago, Illinois at 10:00 a.m., local time, on April 25, 2001.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Company;
2. The ratification of the appointment of Crowe, Chizek and Company LLP as
independent auditors for the Company for the fiscal year ending
December 31, 2001;
and such other matters as may properly come before the Meeting, or any
adjournments or postponements thereof. The Board of Directors is not aware of
any other business to properly come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on
the date specified above, or on any date or dates to which the Meeting may be
adjourned or postponed. Stockholders of record as of the close of business on
March 1, 2001 are the stockholders entitled to vote at the Meeting, and any
adjournments or postponements thereof.
You are requested to complete and sign the enclosed proxy card, which
is solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. If you hold your shares with a bank or broker, check your
proxy card to see whether you can also vote by telephone or through the
internet. Your proxy will not be used if you attend and vote at the Meeting in
person.
By Order of the Board of Directors
Victor E. Caputo
Corporate Secretary
Chicago, Illinois
March 15, 2001
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED WITHIN THE UNITED STATES.
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PROXY STATEMENT
NORTH BANCSHARES, INC.
100 West North Avenue
Chicago, Illinois 60610-1399
(312) 664-4320
ANNUAL MEETING OF STOCKHOLDERS
April 25, 2001
This Proxy Statement is furnished in connection with the solicitation
on behalf of the Board of Directors of North Bancshares, Inc. ("North
Bancshares" or the "Company") of proxies to be used at the Annual Meeting of
Stockholders of the Company (the "Meeting") which will be held at the Chicago
Historical Society, located at 1601 North Clark Street, Chicago, Illinois, on
April 25, 2000, at 10:00 a.m., local time, and all adjournments and
postponements of the Meeting. The accompanying Notice of Meeting and form of
proxy and this Proxy Statement are first being mailed to stockholders on or
about March 15, 2001. Certain of the information provided herein relates to
North Federal Savings Bank ("North Federal" or the "Bank"), a wholly owned
subsidiary of the Company.
At the Meeting, stockholders of the Company are being asked to consider
and vote upon (i) the election of two directors of the Company and (ii) a
proposal to ratify the appointment of Crowe, Chizek and Company LLP as the
Company's independent auditors for the fiscal year ending December 31, 2001.
VOTE REQUIRED AND PROXY INFORMATION
All shares of the Company's common stock, par value $.01 per share
("Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting, and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted FOR the election of the
director nominees named in this Proxy Statement and FOR the ratification of the
appointment of the independent auditors. The Company does not know of any other
matters that may properly come before the Meeting. If any other matters should
properly come before the Meeting or any adjournment or postponement thereof, the
holders of proxies acting thereunder will have the discretion to vote on such
matters in accordance with their best judgment.
Directors will be elected by a plurality of the votes cast in person or
by proxy at the Meeting. The ratification of the appointment of Crowe, Chizek
and Company LLP as the Company's auditors requires the affirmative vote of a
majority of the votes cast on the matter. In the election of directors,
stockholders may either vote "FOR" both nominees for election or withhold their
votes from either nominee or both nominees for election. Votes that are withheld
and shares held by a broker, as nominee, that are not voted (so-called "broker
non-votes") in the election of directors will not be included in determining the
number of votes cast. For the proposal to ratify the appointment of the
independent auditors, stockholders may vote "FOR," "AGAINST" or "ABSTAIN" with
respect to this proposal. Proxies marked to abstain will have the same effect as
votes against the proposal, and broker non- votes will have no effect on the
proposal. One-third of the outstanding shares of the Common Stock, present in
person or represented by proxy, will constitute a quorum for purposes of the
Meeting. Abstentions and broker non-votes are counted for purposes of
determining a quorum.
A proxy given pursuant to this solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy; (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Meeting; or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a proxy should be delivered to Victor E.
Caputo, Secretary, North Bancshares, Inc., 100 West North Avenue, Chicago,
Illinois 60610-1399.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Stockholders of record as of the close of business on March 1, 2001
will be entitled to one vote for each share then held. As of that date, the
Company had 1,173,253 shares of Common Stock issued and outstanding. The
following table sets forth information regarding share ownership of: (i) those
persons or entities known by management to beneficially own more than five
percent of the Company's Common Stock, including Joseph A. Graber, President and
Chief Executive Officer of the Company and the Bank; (ii) Victor E. Caputo,
Executive Vice President and Secretary of the Company and the Bank; and (iii)
all directors and officers of the Company and the Bank as a group. The address
for each holder listed below is: c/o North Bancshares, Inc., 100 West North
Avenue, Chicago, Illinois 60610-1399. For information regarding individual share
ownership by the directors of the Company, see "Election of Directors."
Beneficial Shares Beneficially Percent of
Owner Owned Class
---------- ------------------- ----------
North Bancshares, Inc.(1) 132,001 11.25%
Employee Stock Ownership Plan
Mary Ann Hass/Elmer L. Hass(2) 106,922 9.11
Robert H. Rusher(3) 89,194 7.50
Joseph A. Graber(4) 82,446 6.95
President and Chief Executive Officer
Victor E. Caputo(5) 21,526 1.82
Vice President and Secretary
Directors and executive officers 379,618 30.83
of the Company and the Bank as a
group (11 persons)(6)
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(1) The amount reported represents shares held by the Company's Employee Stock
Ownership Plan ("ESOP"), 103,749 of which have been allocated to accounts
of participants. John P. Koch, the trustee of the ESOP, may be deemed to
beneficially own the shares held by the ESOP which have not been allocated
to the accounts of participants. Pursuant to the terms of the ESOP,
participants have the right to direct the voting of shares allocated to
their accounts. Unallocated shares held by the ESOP are voted by the plan
trustee in the same proportion that participants direct the allocated
shares to be voted.
(2) The Hasses are husband and wife. Mr. and Mrs. Hass are deemed to
beneficially own all shares held either directly or indirectly by either
individual.
(3) Includes shares held directly and jointly with his spouse, as well as
16,458 shares subject to options granted under the 1993 Stock Option and
Incentive Plan ("Stock Option Plan") which are currently exercisable. Also
includes 11,100 shares held by family members as to which beneficial
ownership is disclaimed.
(4) Includes shares held directly and jointly with family members, as well as
12,251 shares subject to options granted under the Stock Option Plan which
are currently exercisable.
(5) Includes 10,500 shares subject to options granted under the Stock Option
Plan which are currently exercisable.
(6) Includes shares held directly, as well as jointly with family members, and
shares held in retirement accounts, allocated to ESOP accounts, held in a
fiduciary capacity or by certain family members, with respect to which
shares the group members may be deemed to have sole or shared voting and/or
investment power. This amount includes 58,121 shares in the aggregate
subject to options granted under the Stock Option Plan which are currently
exercisable.
2
I. ELECTION OF DIRECTORS
GENERAL
The Company's Board of Directors currently consists of seven members.
The Board is divided into three classes, each of which contains approximately
one-third of the members of the Board. Approximately one-third of the directors
are elected annually. Directors are elected to serve for a three-year period or
until their respective successors are elected and qualified.
The table below sets forth certain information regarding the
composition of the Company's Board of Directors, including each director's term
of office. The Board of Directors acting as the nominating committee has
recommended and approved the nominees identified in the following table. It is
intended that the proxies solicited on behalf of the Board of Directors (other
than proxies in which the vote is withheld as to a nominee) will be voted at the
Meeting FOR the election of the nominees identified below. If any nominee is
unable to serve, the shares represented by all valid proxies will be voted for
the election of such substitute nominee as the Board of Directors may recommend.
At this time, the Board of Directors knows of no reason why any nominee may be
unable to serve, if elected. Except as disclosed herein, there are no
arrangements or understandings between the nominees and any other person
pursuant to which the nominees were selected.
SHARES OF
COMMON STOCK
BENEFICIALLY PERCENT
POSITION(S) HELD DIRECTOR TERM TO OWNED AT OF
NAME AGE(1) IN THE COMPANY SINCE(2) EXPIRE MARCH 1, 2001(3) CLASS
- ---------------- -------- ----------------------- -------- -------- ---------------- -------
NOMINEES
Mary Ann Hass 68 Chairman of the Board 1962 2004 106,922(4) 9.11
Joseph A. Graber 50 Director, President and 1993 2004 82,446 6.95
Chief Executive Officer
DIRECTORS CONTINUING IN OFFICE
Robert H. Rusher 72 Director 1993 2002 89,194 7.50
Elmer L. Hass 72 Director 1968 2002 106,922(4) 9.11
Frank J. Donati 48 Director 1998 2002 4,100 0.35
James L. Ferstel 73 Director 1983 2003 37,229 3.15
Gregory W. Rose 41 Director 1997 2003 5,450 0.46
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(1) At December 31, 2000.
(2) Includes service as a director of the Bank.
(3) Amounts include shares held directly and jointly with family members, as
well as shares held in retirement accounts, allocated to the ESOP accounts
of the named individuals, held by certain members of the named individuals'
families, or held by trusts of which the named individual is a trustee or
substantial beneficiary, with respect to which shares the respective
directors may be deemed to have sole or shared voting and/or investment
power. Amounts also include 12,251, 16,458, 2,500,10,414 and 3,750 and
shares subject to options granted to Messrs. Graber, Rusher, Donati,
Ferstel and Rose, respectively, all of which are currently exercisable.
3
(4) Mr. and Mrs. Hass are husband and wife and may be deemed to beneficially
own all shares held directly or indirectly by each other.
The business experience of each director of the Company is set forth
below. All directors have held their present position for at least five years
unless otherwise indicated.
MARY ANN HASS - Mrs. Hass has served as Chairman of the Board of the
Company since its incorporation in 1993, and as Chairman of the Board of the
Bank since 1968. She served as Chief Executive Officer of the Company from its
incorporation in 1993 until her retirement in July 1998, and as Chief Executive
Officer of the Bank from 1968 until July 1998. She has served in various
capacities since beginning her career with the Bank in 1950. Mrs. Hass has
served on the Board of Directors of the Illinois League of Financial
Institutions; the Board of Trustees of the Latin School of Chicago; the Board of
Directors of the New City YMCA, formerly known as ISHAM YMCA. She is also a past
Chairman and Director of the Chicagoland Association of Savings Institutions;
past President and Director of the Federal Savings and Loan Council of Illinois;
and past President and Director of the Lincoln Park Chamber of Commerce. She
also has served on the Board of Directors and the Supervisory Committee of the
Norwood Park Catholic Credit Union. Mrs. Hass served on the Resource Development
Committee of the Neighborhood Housing Services of Chicago, Inc. and is a member
of The Economic Club of Chicago. Mrs. Hass has also served on the Publications
Committee and the Housing Finance Development Committees of the International
Union of Housing Finance Institutions. Mrs. Hass is the wife of Director Elmer
L. Hass and sister-in-law of Director Robert H. Rusher.
JOSEPH A. GRABER - Mr. Graber was appointed Chief Executive Officer of
the Company and the Bank in August 1998, following Mrs. Hass' retirement from
these positions. Mr. Graber was appointed President of the Company and the Bank
in 1995 after serving as Executive Vice President and Corporate Secretary of the
Company since its formation in 1993, and Executive Vice President, Corporate
Secretary and Advisory Director of the Bank since 1992. Mr. Graber also has
served as Assistant Controller, Branch Manager, Vice President and Senior Vice
President during his tenure with the Bank, which began in 1972. Mr. Graber is
Secretary and serves on the Board of Directors of the Chicagoland Association of
Financial Institutions. He also serves on the Board of Directors of the Lincoln
Park Chamber of Commerce, and on the Citizens Advisory Council for the Community
Area Resident Economic Center. Mr. Graber is a member of the Executives' Club of
Chicago and a past President of the Wilmette Kiwanis Club and has served on the
Board of Directors of the Wilmette Chamber of Commerce and the Friends of the
Near North Library. He was also Trustee of the Chicago Savings and Trust Forum
and Chairman of the Lincoln Park Unit of the American Cancer Society.
ROBERT H. RUSHER - Mr. Rusher retired in 1995 after serving as
President and Chief Operating Officer of the Company since its formation in
1993, and President and Chief Operating Officer of the Bank since 1992. He was
elected to the Board of Directors in 1960 while serving as attorney to the Bank,
and was appointed an Advisory Director in 1979. Before beginning his career with
the Bank, Mr. Rusher was an associate with the law firm of Koch & Koch and a
partner in the firm of Eley, Rusher and Koch. Mr. Rusher also served on the
Board of Directors of Chicagoland Association of Savings Institutions and the
Lincoln Park Conservation Association. Mr. Rusher is the brother-in-law of Mrs.
Hass.
ELMER L. HASS - Mr. Hass was employed as a foreman by Cragin Metal
Products, Inc. from 1955 until his retirement on November 30, 1993. Mr. Hass is
Mrs. Hass' husband.
FRANK J. DONATI - Mr. Donati has served as President of Donati
Financial Services, Inc., a consulting firm to financial institutions and
corporations, since 1997. From 1991 to 1996, Mr. Donati was Senior Vice
President of Finance at Bell Bancorp, Inc., the $1.9 billion holding company of
Bell Federal Savings, Chicago, Illinois. He has also held the position of Senior
Vice President, Chief Financial Officer and Treasurer at United Savings of
America and was a senior audit manager at KPMG LLP. Mr. Donati is a graduate of
DePaul University and a member of the Illinois CPA Society and the American
Institute of Certified Public Accountants.
JAMES L. FERSTEL - Mr. Ferstel has been a practicing attorney in the
Chicago area since 1952.
GREGORY W. ROSE - Mr. Rose is an owner, director and managing partner
of Monarch Tool and Die Company and STAG Real Estate Holdings.
4
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES OF THE COMPANY'S BOARD OF DIRECTORS. The
Company's Board of Directors meets as needed upon the written request of the
Chairman of the Board or at least three directors. The Board of Directors met
eleven times during fiscal 2000. During fiscal 2000, no incumbent director of
the Company attended fewer than 75% of the total number of Board meetings held
while he or she was a director and the total number of meetings held by the
committees of the Board of Directors on which he or she served during the period
that he or she served.
The Board of Directors of the Company has standing Audit, Compensation
and Allocation and Executive Committees.
The Audit Committee recommends independent auditors to the Board,
reviews the results of the auditors' services, reviews with management the
systems of internal control and internal audit reports and ensures that the
books and records of the Company are kept in accordance with applicable
accounting principles and standards. The members of the Audit Committee are
Messrs. Donati, Rusher, Ferstel and Rose. This committee met two times during
the fiscal year ended December 31, 2000. For additional information regarding
the Audit Committee, see "Audit Committee Matters" below.
The Compensation and Allocation Committee is composed of Messrs.
Ferstel, Hass, Rose and Donati. This committee administers the Company's Stock
Option Plan and the Recognition and Retention Plan, and reviews compensation and
benefit matters. This committee did not meet during the fiscal year ended
December 31, 2000.
The Executive Committee is composed of Mrs. Hass and Messrs. Graber and
Rusher. To the extent authorized by the Board of Directors and the Company's
Bylaws, this committee exercises all of the authority of the Board of Directors
between Board Meetings. Specifically, the committee works with senior management
to accomplish the goals and objectives of the Company, and to formulate future
business strategies. The Executive Committee did not meet during the fiscal year
ended December 31, 2000.
The Nominating Committee is composed of Messrs. Hass, Rusher and Donati
and is responsible for selecting nominees for election as directors. The
Nominating Committee met once during fiscal 2000. While the nominating committee
will consider nominees recommended by stockholders, the Nominating Committee has
not actively solicited such recommendations.
MEETINGS AND COMMITTEES OF THE BANK'S BOARD OF DIRECTORS. The Bank's
Board of Directors meets monthly and may have additional special meetings upon
the written request of the Chairman of the Board or at least three directors.
The Bank's Board of Directors met 13 times during the year ended December 31,
2000. During fiscal 2000, no incumbent director of the Bank attended fewer than
75% of the total number of Board meetings held while he or she was a director
and the total number of meetings held by the committees of the Board of
Directors on which he or she served during the period he or she served.
The Bank has standing Asset-Liability Risk Management, Compensation and
Allocation, Community Reinvestment Act ("CRA"), Executive, Interest Rate and
Loan Committees.
The Asset-Liability Risk Management Committee evaluates the Bank's
assets and liabilities and identifies problem assets. The committee also
considers investment recommendations and determines actions to be taken thereon.
The current members of this committee are Mr. Graber, Mr. Caputo, Martin W.
Trofimuk, Vice President and Treasurer of the Company and the Bank, Joseph M.
Perri, Senior Vice President of the Bank and D. Robert Harless, Assistant Vice
President and Controller of the Bank. This committee held four meetings during
the year ended December 31, 2000.
The Compensation and Allocation Committee establishes the salaries of
Bank personnel and reviews other compensation and benefit matters. Messrs.
Ferstel, Hass, Rose and Donati are the current members of the Compensation and
Allocation Committee. This committee met twice during fiscal 2000.
5
The CRA Committee reviews the Bank's CRA Statement and the Bank's
general overall compliance with the requirements of the CRA and makes
recommendations to the Board on changes to the CRA Statement. During fiscal
2000, the CRA Committee was comprised of Mr. Graber, Joseph M. Perri, Senior
Vice President of the Bank and Warren Rife, Assistant Vice President of the
Bank. This committee met twice during fiscal 2000.
The Bank's Executive Committee exercises the powers of the full Board
of Directors between Board meetings, except that this committee does not have
the authority of the Board to amend the charter or bylaws, adopt a plan of
merger, consolidation, dissolution, or provide for the disposition of all or
substantially all of the property and assets of the Bank. The Executive
Committee is composed of Mrs. Hass and Messrs. Graber and Rose. The Executive
Committee did not meet during the fiscal year ended December 31, 2000.
The Interest Rate Committee manages the Bank's interest rate risk and
sets the interest rates paid by the Bank. The committee consists of Messrs.
Graber, Caputo, Trofimuk and Ms. Karla Lauer, Vice President of the Bank, and
meets once per week.
The Loan Committee reviews and evaluates loans and approves loans and
loan commitments, within the guidelines established by the Board. The current
members of this committee are Messrs. Graber, Caputo, Perri and Harless. The
Loan Committee met as necessary to approve loan applications, review loan
policies and set interest rates during the year ended December 31, 2000.
AUDIT COMMITTEE MATTERS
AUDIT COMMITTEE REPORT. The Audit Committee of the Company's Board of
Directors has taken the following actions with respect to the audited financial
statements of the Company for the fiscal year ended December 31, 2000.
o The Audit Committee has reviewed and discussed with the Company's
management the Company's fiscal 2000 audited financial statements;
o The Audit Committee has discussed with the independent auditors of the
Company's fiscal 2000 financial statements (KPMG LLP) the matters
required to be discussed by Statement on Auditing Standards No. 61;
o The Audit Committee has received the written disclosures and letter
from the independent auditors required by Independence Standards Board
No. 1 (which relates to the auditors' independence from the Company and
its related entities) and has discussed with the auditors their
independence from the Company; and
o Based on the review and discussion referred to in the three items
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 fiscal year ended December 31, 2000.
The Audit Committee of the Company's Board of Directors:
Frank J. Donati, Chairman
Robert H. Rusher
James L. Ferstel
Gregory W. Rose
INDEPENDENCE OF MEMBERS AND AUDIT COMMITTEE CHARTER. Each member of the
Audit Committee is "independent" under the definition of independence contained
in the National Association of Securities Dealers' listing standards for the
Nasdaq Stock Market except for Robert H. Rusher. Mr. Rusher is not considered
independent because Mary Ann Hass, who was employed as the Company's Chief
Executive Officer during a portion of the three- year period ended December 31,
2000, is Mr. Rusher's sister-in-law.
The Company has adopted a written audit committee charter. A copy of
the charter is attached as Appendix A to this proxy statement.
6
DIRECTOR COMPENSATION
The Bank's directors and advisory directors were each paid an annual
retainer fee of $10,000 and an additional fee of $300 for each meeting of the
Bank's Board of Directors attended during fiscal 2000. The Company's directors
are paid a fee of $250 for each meeting of the Company's Board attended unless
such meeting is held immediately following a meeting of the Bank's Board of
Directors, in which case no fee is paid for the Company Board meeting. No fees
are paid for attending Board committee meetings.
EXECUTIVE COMPENSATION
The Company has not paid any compensation to its executive officers
since its formation. The Company does not presently anticipate paying any
compensation to such persons unless and until it becomes actively involved in
the operation or acquisition of businesses other than the Bank.
The following table sets forth information regarding compensation for
fiscal 2000 paid by the Bank to Joseph A. Graber, the Company's and the Bank's
President and Chief Executive Officer, and Victor E. Caputo, the Company's and
the Bank's Executive Vice President and Secretary. No other executive officer
earned a salary and bonus for fiscal 2000 in excess of $100,000.
========================================================================================================================
SUMMARY COMPENSATION TABLE
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LONG TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
- --------------------------------------------------------------------------------------------------------
RESTRICTED
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
POSITION YEAR ($)(1) ($) ($)(2) ($) (#) ($) ($)(3)
- ------------------------------------------------------------------------------------------------------------------------
Joseph A. Graber 2000 $148,150 $ -- $ -- $ -- -- -- $25,687
President and Chief
Executive Officer 1999 139,150 -- -- -- 1,747 -- 26,529
1998 119,167 -- -- -- 7,000 -- 31,377
- ------------------------------------------------------------------------------------------------------------------------
Victor E. Caputo 2000 $101,000 -- -- -- -- -- $19,083
Executive Vice
President and 1999 92,700 -- -- -- -- -- 17,072
Secretary
1998 83,125 -- -- -- 3,000 -- 22,600
========================================================================================================================
(1) For Mr. Graber, includes director's fees of $14,150, $14,150 and $13,750
for fiscal 2000, 1999 and 1998, respectively.
(2) Does not include perquisites which did not exceed the lesser of $50,000 or
10% of salary and bonus.
(3) Represents the dollar amount of term life insurance premiums paid by the
Bank on behalf of the officer and the dollar value, as of December 31,
2000, of contributions to the officer's ESOP account, as follows: for Mr.
Graber (i) 2000 - $414 and $25,273, (ii) 1999 - $270 and $26,259, and (iii)
1998 - $502 and $30,875; for Mr. Caputo (i) 2000 - $774 and $18,309, (ii)
1999 - $697 and $16,375, and (iii) 1998 - $669 and $21,931.
7
The following table provides information for Messrs. Graber and Caputo
as to stock options exercised during fiscal 2000 and the value of options held
as of December 31, 2000. No options were granted to Mr. Graber or Mr. Caputo
during fiscal 2000.
============================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION VALUES
- ------------------------------------------------------------------------------------------------------------
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END (#) FY-END ($)(2)
SHARES VALUE --------------------------------------------------------
NAME ACQUIRED REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
ON EXERCISE (#) ($) (#) (#) ($) ($)
- ------------------------------------------------------------------------------------------------------------
Joseph A. Graber 4,496 $9,936(1) 12,251 -- $5,250 $ --
- ------------------------------------------------------------------------------------------------------------
Victor E. Caputo None None 10,500 -- $8,925 $ --
============================================================================================================
(1) Represents the difference between the market value of the shares acquired
at the time of exercise ($8.88 per share) and the exercise price ($6.67 per
share).
(2) Represents the aggregate value (market price of the Common Stock less the
exercise price) of the in-the-money options held based upon the option
exercise prices of $6.67 per share for 1,000 shares, $7.75 per share for
2,504 shares, $14.56 per share for 7,000 shares and $11.69 for 1,747 shares
for Mr. Graber and $7.75 per share for 7,500 shares and $14.56 per share
for 3,000 shares for Mr. Caputo, and the closing price per share of the
Common Stock on December 31, 2000 of $8.94, as reported on the Nasdaq
National Market. An option is in-the-money if the market value per share of
the Common Stock exceeds the exercise price of the option. Accordingly, as
of December 31, 2000, 8,747 of Mr. Graber's options were not in-the-money
and 3,000 of Mr. Caputo's options were not in-the-money.
EMPLOYMENT AGREEMENTS
The Bank has entered into employment agreements with Messrs. Graber,
Caputo, Perri and Trofimuk. The employment agreements are designed to assist the
Bank and the Company in maintaining a stable and competent management base. The
continued success of the Bank and the Company depends significantly on the
skills and competence of their officers. The employment agreements provide for
an annual base salary in an amount not less than the employee's then current
salary and an initial term of three years with respect to Messrs. Graber and
Caputo, and one year with respect to Messrs. Perri and Trofimuk. The agreements
provide for an extension of one year, in addition to the then-remaining term
under the agreement, on each anniversary of the effective date of the
agreements, subject to a performance evaluation performed by disinterested
members of the Board of Directors of the Bank. The agreements provide for
termination upon the employee's death, for cause or in certain events specified
by Office of Thrift Supervision regulations. The employment agreements are also
terminable by the employee upon 90 days notice to the Bank.
The employment agreements provide for payment to the employee of his
salary for the remainder of the term of the agreement, plus up to 299% of the
employee's base compensation with respect to Messrs. Graber and Caputo, and up
to 100% of base compensation with respect to Messrs. Perri and Trofimuk, in the
event there is a change in control of the Bank where employment terminates
involuntarily in connection with such change in control or within 12 months
thereafter. This termination payment is subject to reduction by the amount of
all other compensation to the employee deemed for purposes of the Internal
Revenue Code of 1986, as amended, to be contingent on a change in control, and
may not exceed three times the employee's average annual compensation over the
most recent five year period or be non-deductible by the Bank for federal income
tax purposes. For the purposes of the employment agreements, a "change in
control" is defined as any event which would require the filing of an
application for acquisition of control or notice of change in control pursuant
to 12 C.F.R. ss. 574.3 or 4. Such events are generally
8
triggered prior to the acquisition or control of 10% of the Company's Common
Stock. The agreements guarantee participation in an equitable manner in employee
benefits applicable to executive personnel.
Based on their current salaries, if the employment of Messrs. Graber,
Caputo and Trofimuk had been terminated as of December 31, 2000, under
circumstances entitling them to severance pay as described above, they would
have been entitled to receive lump sum cash payments of approximately $405,000,
$303,000 and $61,500, respectively. Because Mr. Perri's employment contract
became effective January 1, 2001, he would not have been entitled to severance
as of December 31, 2000.
CERTAIN TRANSACTIONS
The Bank has followed a policy of granting consumer loans and loans
secured by the borrower's personal residence to officers, directors and
employees. All loans to executive officers and directors are made in the
ordinary course of business and on the same terms and conditions as those of
comparable transactions prevailing at the time, in accordance with the Bank's
underwriting guidelines, and do not involve more than the normal risk of
collectibility or present other unfavorable features. Loans to executive
officers and directors must be approved by a majority of the disinterested
directors and loans to other officers and employees must be approved by the
Bank's Loan Committee. All loans by the Bank to its directors and executive
officers are subject to OTS regulations restricting loan and other transactions
with affiliated persons of the Bank. Federal law currently requires that all
loans to directors and executive officers be made on terms and conditions
comparable to those for similar transactions with non-affiliates. As required
under Federal law, all loans to executive officers and directors are made in the
ordinary course of business and on the same terms and conditions as those of
comparable transactions prevailing at the time, in accordance with the Company's
underwriting guidelines, and do not involve more than the normal risk of
collectibility or present other unfavorable features.
The Bank has made several loans to its directors and officers, or
certain family members or affiliates thereof, in the ordinary course of business
and on the same terms, including collateral and interest rates, as those
prevailing at the time for comparable transactions with other persons and which
did not involve more than the normal risk of collectibility or present other
unfavorable features or which complied with applicable rules concerning loans to
such persons in effect at the time when the loans were made.
II. RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors has appointed Crowe, Chizek and Company LLP to
be the Company's auditors for the 2001 fiscal year, subject to the ratification
of the appointment by the Company's stockholders at the Meeting. A
representative of Crowe, Chizek and Company LLP is expected to attend the
Meeting and will respond to appropriate questions and have an opportunity to
make a statement if he so desires. A representative of KPMG LLP, the Company's
auditors for the fiscal year 2000, will be given the opportunity to attend the
Meeting to respond to appropriate questions and to make a statement if he so
desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF CROWE, CHIZEK AND COMPANY LLP AS THE
COMPANY'S AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2001.
In October 2000, the Company's Board of Directors replaced KPMG LLP
with Crowe, Chizek and Company LLP as the Company's independent auditors for the
fiscal year 2001. The decision to engage new auditors was recommended by the
Company's Audit Committee and approved by the Board of Directors based upon a
review of accounting and tax service providers.
The reports of KPMG LLP on the Company's consolidated financial
statements for the years ended December 31, 2000 and December 31, 1999 did not
contain an adverse opinion or disclaimer of opinion, and the reports were not
qualified or modified as to uncertainty, audit scope or accounting principles.
In connection with the audits of the Company's financial statements for each of
the fiscal years ended December 31, 2000 and December 31, 1999, there were no
disagreements with KPMG LLP on any matter of accounting principles or practices,
financial statement disclosure
9
or auditing scope or procedure which, if not resolved to the satisfaction of
KPMG LLP would cause KPMG LLP to make reference to the matter in their report.
During the fiscal years ended December 31, 2000 and December 31, 1999,
the Company did not consult with Crowe, Chizek and Company LLP regarding any
matter that was either the subject of disagreement or a reportable event, nor
did the Company consult Crowe, Chizek and Company LLP regarding the application
of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the Company's
financial statements and no written report or oral advice was provided which was
an important factor considered in reaching a decision as to any accounting,
auditing or financial reporting issue.
During the fiscal year ended December 31, 2000, KPMG LLP provided
various audit and non-audit services to the Company. Set forth below are the
aggregate fees billed for these services:
(a) Audit Fees: Aggregate fees billed for professional services
rendered for the audit of the Company's fiscal 2000 annual
financial statements and review of financial statements
included in the Company's Quarterly Reports on Form 10-QSB:
$68,500.
(b) Financial Information Systems Design and Implementation Fees:
$0.
(c) All other fees: $36,650.
The Audit Committee of the Company's Board of Directors determined that
the provision of services covered by item (c) above was compatible with
maintaining the independence of KPMG LLP.
DATE OF SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's next
annual meeting must be received by the Company's Secretary at the Company's main
office, located at 100 West North Avenue, Chicago, Illinois 60610- 1399, no
later than November 15, 2001 to be eligible for inclusion in the Company's proxy
statement and form of proxy relating to the next annual meeting. Any such
proposal will be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934, as amended, and as with any stockholder
proposal (regardless of whether included in the Company's proxy materials), the
Company's certificate of incorporation and bylaws and Delaware law.
To be considered for presentation at the next annual meeting, but not
for inclusion in the Company's proxy statement and form of proxy for that
meeting, proposals must be received by the Company by the Deadline. The
"Deadline" means the date that is 30 days prior to the date of the next annual
meeting; however, in the event that less than 40 days' notice of the date of
such meeting is given or made to stockholders, the "Deadline" means the close of
business on the tenth day following the day on which notice of the date of the
meeting was mailed. If a stockholder proposal that is received by the Company
after the Deadline is raised at the next annual meeting, the holders of the
proxies for that meeting will have the discretion to vote on the proposal in
accordance with their best judgment and discretion, without any discussion of
the proposal in the Company's proxy statement for the next annual meeting.
10
OTHER MATTERS
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitation by mail,
directors, officers and employees of the Company or the Bank may solicit proxies
personally or by telegraph or telephone without additional compensation. The
Company has retained Morrow & Company to assist in the solicitation of proxies
for a fee of $3,500, plus reasonable out-of-pocket expenses.
BY ORDER OF THE BOARD OF DIRECTORS
Victor E. Caputo
Corporate Secretary
Chicago, Illinois
March 15, 2001
11
APPENDIX A
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF NORTH BANCSHARES,
INC.
I. AUDIT COMMITTEE PURPOSE
The Audit Committee is appointed by the Board of Directors to assist
the Board in Fulfilling its oversight responsibilities. The Audit Committee's
primary duties and responsibilities are to:
o Monitor the integrity of the Company's financial reporting
process and systems of internal controls regarding finance and
accounting.
o Monitor the independence and performance of the Company's
independent auditors and monitor the performance of the
accounting department.
o Provide an avenue of communication among the independent
auditors, management, the accounting department, and the Board
of Directors.
The Audit committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to the
independent auditors as well as anyone in the organization. The Audit Committee
has the ability to retain, at the Company's expense, special legal, accounting,
or other consultants or experts it deems necessary in the performance of its
duties.
II. AUDIT COMMITTEE COMPOSITION AND MEETINGS
Audit Committee members shall meet the requirements of the NASD/AMEX
Stock Exchange. The Audit Committee shall be comprised of three or more
directors as determined by the Board, each of whom shall be independent
non-executive directors, free from any relationship that would interfere with
the exercise of his or her independent judgement. All members of the committee
shall have a basic understanding of finance and accounting and be able to read
and understand fundamental financial statements, and at least one member of the
Committee shall have accounting or related financial management expertise.
Audit Committee members shall be appointed by the Board on
recommendation of the Nominating Committee. If an Audit Committee Chair is not
designated or present, the members of the Committee may designate a Chair by
majority vote of the Committee membership.
The Committee shall meet at least two times a year, or more frequently
as circumstances dictate. The Audit Committee Chair shall prepare and/or approve
an agenda in advance of each meeting. The committee should meet privately in
executive session at least annually with management, the manager of the internal
accounting department, the independent auditors, and as a committee to discuss
any matters that the Committee or each of these groups believe should be
discussed. In addition, the Committee, or at least its Chair, should communicate
with management and the independent auditors quarterly to review the Company's
financial statements and significant findings based upon the auditors limited
review procedures.
III. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
REVIEW PROCEDURES
1. Review and reassess the adequacy of this Charter as least annually.
Submit the charter to the Board of Directors for approval and have the documents
published at least every three years in accordance with SEC regulations.
2. Review the Company's annual audited financial statements prior to
filing or distribution. Review should include discussion with management and
independent auditors of significant issues regarding accounting principles,
practices and judgements.
A-1
3. In consultation with the management, the independent auditors, and
the internal accountants, consider the integrity of the company's financial
reporting processes and controls. Discuss significant financial risk exposures
and the steps management has taken to monitor, control, and report such
exposures. Review significant findings prepared by the independent auditors and
the internal accounting department together with management's responses.
4. Review with financial management and the independent auditors the
company's quarterly financial results prior to the release of earnings and/or
the company's quarterly financial statements prior to filing or distribution.
Discuss any significant changes to the Company's accounting principles and any
items required to be communicated by the independent auditors in accordance with
SAS 61. The Chair of the Committee may represent the entire Audit Committee for
purposes of this review.
INDEPENDENT AUDITORS
5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall review the
independence and performance of the auditors and annually recommend to the Board
of Directors the appointment of the independent auditors or approve any
discharge of auditors when circumstances warrant.
6. Approve the fees and other significant compensation to be paid to
the independent auditors.
7. On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships they have with the Company
that could impair the auditors' independence.
8. Review the independent auditors audit plan - discuss scope,
staffing, locations, reliance upon management, and internal accounting and
general audit approach.
9. Prior to releasing the year-end earnings, discuss the results of the
preliminary audit review with the independent auditors. Discuss certain matters
required to be communicated to audit committee in accordance with AICPA SAS 61.
10. Review significant reports prepared by the independent auditors
together with management's response and follow-up to these reports.
11. Consider the independent auditors' judgements about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
INTERNAL ACCOUNTING DEPARTMENT
12. Review the budget, plan, changes in plan, activities,
organizational structure, and qualifications of the accounting department, as
needed.
13. Review the appointment, performance , and replacement of the senior
accounting executive.
14. Review significant reports prepared by the accounting department
together with management's response and follow-up to these reports.
15. On at least an annual basis, review with the company's counsel, any
legal matters that could have a significant impact on the organizations
financial statements, the Company's compliance with applicable laws and
regulations, and inquiries received from regulators or governmental agencies.
OTHER AUDIT COMMITTEE RESPONSIBILITIES
16. Annually prepare a report to shareholders as required by the
Securities and Exchange Commission. The report should be included in the
Company's annual proxy statement.
A-2
17. Perform any other activities consistent with the Charter, the
Company's by-laws, and governing law, as the committee or the Board deems
necessary or appropriate.
18. Maintain minutes of meetings and periodically report to the board
of Directors' on significant results of the foregoing activities.
19. Periodically preform a self-assessment of audit committee
performance.
20. Review financial and accounting personnel succession planning with
the Company.
21. Annually review policies and procedures as well as audit results
associated with directors' and officers expense accounts and perquisites.
Annually review a summary of director and officers' related party transactions
and potential conflicts of interest.
A-3
NORTH BANCSHARES, INC.
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 2001
The undersigned hereby appoints the Board of Directors of North
Bancshares, Inc. (the "Company"), and its survivor, 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 Company's Annual Meeting of Stockholders (the "Meeting") to be held at
the Chicago Historical Society, located at 1601 N. Clark Street, Chicago,
Illinois on April 25, 2001 at 10:00 a.m., local time, and at any and all
adjournments and postponements of the Meeting.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE NOMINEES FOR ELECTION NAMED ON THIS
PROXY CARD AND FOR THE RATIFICATION OF THE APPOINTMENT OF CROWE, CHIZEK AND
COMPANY LLP AS THE COMPANY'S AUDITORS. IF ANY OTHER BUSINESS IS PRESENTED AT THE
MEETING, THIS PROXY WILL BE VOTED BY THE BOARD OF DIRECTORS IN ITS BEST
JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS
TO BE PRESENTED AT THE MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES LISTED IN ITEM 1 AND "FOR" THE RATIFICATION OF
THE APPOINTMENT OF AUDITORS NAMED IN ITEM 2.
1. The election as directors of both nominees listed below (except as
marked to the contrary):
[ ]FOR [ ]VOTE WITHHELD [ ]FOR ALL EXCEPT
INSTRUCTION: TO VOTE FOR BOTH NOMINEES, MARK "FOR." TO WITHHOLD YOUR VOTE FROM
BOTH NOMINEES, MARK "VOTE WITHHELD." TO VOTE FOR ONE NOMINEE, BUT
NOT BOTH NOMINEES, MARK "FOR ALL EXCEPT" AND STRIKE A LINE THROUGH
THE NAME OF THE NOMINEE FROM WHOM YOU WISH TO WITHHOLD YOUR VOTE.
MARY ANN HASS JOSEPH A. GRABER
2. The ratification of the appointment of CROWE, CHIZEK and COMPANY LLP as
auditors for the Company for the fiscal year ending December 31, 2001.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
(Continued and to be SIGNED on Reverse Side)
In its discretion, the Board of Directors, as proxy for the
stockholder, is authorized to vote on any other business that may properly come
before the Meeting or any adjournment or postponement thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
This Proxy may be revoked at any time before it is voted by: (i) filing
with the Secretary of the Company at or before the Meeting a written notice of
revocation bearing a later date than this Proxy; (ii) duly executing a
subsequent proxy relating to the same shares and delivering it to the Secretary
of the Company at or before the Meeting; or (iii) attending the Meeting and
voting in person (although attendance at the Meeting will not in and of itself
constitute revocation of this Proxy). If this Proxy is properly revoked as
described above, then the power of the Board of Directors to act as attorney or
proxy for the undersigned shall be deemed terminated and of no further force and
effect.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of notice of the Meeting, a Proxy Statement and an
Annual Report to Stockholders.
Dated:
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PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
------------------------- -------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears above on
this card. When signing as attorney, executor,
administrator, trustee or guardian, please give your
full title. If shares are held jointly, each holder
should sign.
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PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS
PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE
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