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 Subsection 240.14a-11(c) or
Subsection 240.14a-12
[ ] Confidential, For use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
FIRST FEDERAL BANCORPORATION
- - ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
FIRST FEDERAL BANCORPORATION
- - ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. (NO FEE NOW
REQUIRED)
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] 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 transaction
applies:
_________________________________________________________________
3. Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (set
forth the amount on which the filing fee is calculated and state
how it was determined):
_________________________________________________________________
4. Proposed maximum aggregate value of transaction:
_________________________________________________________________
5. Total fee paid:
_________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1. Amount Previously Paid:
____________________________________________
2. Form, Schedule or Registration Statement No.:
____________________________________________
3. Filing Party:
____________________________________________
4. Date Filed:
____________________________________________
[COMPANY LETTERHEAD]
December 23, 1996
Dear Stockholder:
We invite you to attend the annual meeting of stockholders
of First Federal Bancorporation to be held at the main office of
First Federal Banking & Savings, FSB, 214 5th Street, Bemidji,
Minnesota on Tuesday, January 21, 1997 at 2:30 p.m.
The accompanying notice and proxy statement describe the
formal business to be transacted at the meeting. During the
meeting, we will also report on the operations of the Company's
subsidiary, First Federal Banking & Savings, FSB. Directors and
officers of the Company will be present to respond to any
questions the stockholders may have.
ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO SIGN,
DATE AND RETURN THE ACCOMPANYING FORM OF PROXY AS SOON AS
POSSIBLE EVEN IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING.
Your vote is important, regardless of the number of shares you
own. This will not prevent you from voting in person but will
assure that your vote is counted if you are unable to attend the
meeting.
Sincerely,
/s/ William R. Belford
William R. Belford
President
_________________________________________________________________
FIRST FEDERAL BANCORPORATION
214 5th Street
Bemidji, Minnesota 56601
(218) 751-5120
_________________________________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on January 21, 1997
_________________________________________________________________
NOTICE IS HEREBY GIVEN that the annual meeting of
stockholders (the "Annual Meeting") of First Federal
Bancorporation (the "Company") will be held at the main office of
First Federal Banking & Savings, FSB, 214 5th Street, Bemidji,
Minnesota on Tuesday, January 21, 1997 at 2:30 p.m.
A Proxy Statement and form of proxy for the Annual Meeting
accompany this notice.
The Annual Meeting is for the purpose of considering and
acting upon:
1. The election of two directors of the Company; and
2. The transaction of such other matters as may properly
come before the Annual Meeting or any adjournments
thereof.
The Board of Directors is not aware of any other business to
come before the Annual Meeting.
Any action may be taken on any one of the foregoing pro-
posals at the Annual Meeting on the date specified above or on
any date or dates to which, by original or later adjournment, the
Annual Meeting may be adjourned. Stockholders of record at the
close of business on December 1, 1996 are the stockholders
entitled to vote at the Annual Meeting and any adjournments
thereof.
You are requested to fill in and sign the accompanying form
of proxy which is solicited by the Board of Directors and to mail
it promptly in the accompanying envelope. The proxy will not be
used if you attend and vote at the Annual Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Karen Jacobson
KAREN JACOBSON
SECRETARY
Bemidji, Minnesota
December 23, 1996
_________________________________________________________________
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE
COMPANY THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO
ENSURE A QUORUM. THE ACCOMPANYING FORM OF PROXY IS ACCOMPANIED
BY A SELF-ADDRESSED ENVELOPE FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
_________________________________________________________________
_________________________________________________________________
PROXY STATEMENT
OF
FIRST FEDERAL BANCORPORATION
214 5th Street
Bemidji, Minnesota 56601
_________________________________________________________________
ANNUAL MEETING OF STOCKHOLDERS
January 21, 1997
_________________________________________________________________
_________________________________________________________________
GENERAL
_________________________________________________________________
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of First
Federal Bancorporation (the "Company") to be used at the annual
meeting of stockholders (the "Annual Meeting") which will be held
at the main office of First Federal Banking & Savings, FSB (the
"Bank"), 214 5th Street, Bemidji, Minnesota on Tuesday, January
21, 1997 at 2:30 p.m. This proxy statement and the accompanying
notice and form of proxy are being first mailed to stockholders
on or about December 23, 1996.
_________________________________________________________________
VOTING AND REVOCABILITY OF PROXIES
_________________________________________________________________
Stockholders who execute proxies retain the right to revoke
them at any time. Unless so revoked, the shares represented by
properly executed proxies will be voted at the Annual Meeting and
all adjournments thereof. Proxies may be revoked by written
notice to Karen Jacobson, Secretary of the Company, at the
address shown above, by filing a later dated proxy prior to a
vote being taken on a particular proposal at the Annual Meeting
or by attending the Annual Meeting and voting in person. The
presence of a stockholder at the Annual Meeting will not revoke
such stockholder's proxy.
Proxies solicited by the Board of Directors of the Company
will be voted in accordance with the directions given therein.
Where no instructions are indicated, proxies will be voted for
the nominees for directors set forth below and in favor of each
of the other proposals set forth in this proxy statement for con-
sideration at the Annual Meeting. The proxy confers
discretionary authority on the persons named therein to vote with
respect to the election of any person as a director where the
nominee is unable to serve or for good cause will not serve, and
matters incident to the conduct of the Annual Meeting. If any
other business is presented at the Annual Meeting, proxies will
be voted by those named therein in accordance with the
determination of a majority of the Board of Directors. Proxies
marked as abstentions will not be counted as votes cast. In
addition, shares held in street name which have been designated
by brokers on proxies as not voted will not be counted as votes
cast. Proxies marked as abstentions or as broker non-votes,
however, will be treated as shares present for purposes of
determining whether a quorum is present.
_________________________________________________________________
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
_________________________________________________________________
The securities entitled to vote at the Annual Meeting
consist of the Company's common stock, $.01 par value per share
(the "Common Stock"). Stockholders of record as of the close of
business on December 1, 1996 (the "Record Date") are entitled to
one vote for each share of Common Stock then held. At the Record
Date, the Company had 700,566 shares of Common Stock issued and
outstanding. The presence, in person or by proxy, of at least a
majority of the total number of shares of Common Stock
outstanding and entitled to vote will be necessary to constitute
a quorum at the Annual Meeting.
-1-
Persons and groups beneficially owning in excess of 5% of
the Common Stock are required to file certain reports regarding
such ownership pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). The following table sets forth,
as of the Record Date, certain information as to the Common Stock
believed by management to be beneficially owned by persons owning
in excess of 5% of the Common Stock and by all directors and
executive officers of the Company as a group.
Amount and Percent of
Nature of Shares of
Name and Address Beneficial Common Stock
of Beneficial Owners Ownership(1) Outstanding
- - -------------------- ------------ -----------
First Federal Bancorporation
Employee Stock Ownership Plan ("ESOP")
214 5th Street
Bemidji, Minnesota 56601 68,255 (2) 9.70%
First Federal Bancorporation
Stock Option Plan ("Option Plan") Trust
214 5th Street
Bemidji, Minnesota 56601 53,563 (3) 7.60
John Hancock Advisors, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199 56,000 8.00
All directors and executive
officers as a group (10 persons) 143,871 (4) 20.53%
<FN>
__________
(1) In accordance with Rule 13d-3 under the Exchange Act, a
person is deemed to be the beneficial owner, for purposes
of this table, of any shares of Common Stock if he or she
has or shares voting or investment power with respect to
such Common Stock or has a right to acquire beneficial
ownership at any time within 60 days from the Record Date.
As used herein, "voting power" is the power to vote or
direct the voting of shares and "investment power" is the
power to dispose or direct the disposition of shares.
Except as otherwise noted, ownership is direct, and the
named individuals and group exercise sole voting and
investment power over the shares of the Common Stock.
(2) These shares are held in a suspense account for future
allocation among participating employees as the loan used
to purchase the shares is repaid. The ESOP trustees,
currently Directors Smith, Sathre, Fankhanel and Sharp,
vote all allocated shares in accordance with instructions
of the participants. Unallocated shares and shares for
which no instructions have been received are voted by the
ESOP trustees in the same ratio as participants direct the
voting of allocated shares or, in the absence of such
direction, the Company's Board of Directors shall direct
the voting of such stock, or in the absence of such
direction from the Company's Board of Directors, the
trustees shall direct the voting of such stock in their
discretion. As of the Record Date, 13,055 shares had been
allocated, and 55,200 were unallocated.
(3) These shares are held in a trust account for future
issuance to option holders upon their exercise of stock
options for Company Common Stock under the Option Plan.
The trustees for this trust are the same as the ESOP
trustees. The shares held in the Option Plan trust are
voted in the same way that unallocated ESOP shares are
voted.
(4) Includes 37,841 shares held by the First Federal Banking &
Savings, FSB Grantor Trust (the "Grantor Trust"), the
beneficiaries of which are certain directors and executive
officers. The beneficiaries have neither voting nor
dispositive power with respect to these shares. Does not
include the unallocated shares held by the ESOP trust or
the shares held by the Option Plan Trust. For more
information, see Footnote (2).
</FN>
-2-
_________________________________________________________________
PROPOSAL I -- ELECTION OF DIRECTORS
_________________________________________________________________
General
The Company's Board of Directors consists of six members.
The Company's Articles of Incorporation require that directors be
divided into three classes, as nearly equal in number as
possible, with approximately one-third of the directors elected
each year. At the Annual Meeting, two directors will be elected
for a term expiring at the 2000 Annual Meeting. The Board of
Directors has nominated Walter R. Fankhanel and James R. Sharp to
serve as directors for a three-year period. All nominees are
currently members of the Board. Under Minnesota law and the
Company's Articles of Incorporation, directors are elected by a
majority of the votes cast at a meeting at which a quorum is
present.
It is intended that the persons named in the proxies
solicited by the Board of Directors will vote for the election of
the named nominees. If any nominee is unable to serve, the
shares represented by all valid proxies will be voted for the
election of such substitute as the Board of Directors may
recommend or the size of the Board may be reduced to eliminate
the vacancy. At this time, the Board knows of no reason why any
nominee might be unavailable to serve.
The following table sets forth, for each nominee for
director and continuing director of the Company, his age, the
year he first became a director of the Bank, which is the
Company's principal operating subsidiary, and the expiration of
his term as a director. All such persons were appointed as
directors in 1994 in connection with the incorporation and
organization of the Company. Each director of the Company also
is a member of the Board of Directors of the Bank.
Age at Year First Elected Current
September 30, as Director Term
NAME 1996 of the Bank to Expire
- - ---- ----------- ----------------- ------------
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2000
Walter R. Fankhanel 59 1975 1997
James R. Sharp 61 1980 1997
DIRECTORS CONTINUING IN OFFICE
Ralph T. Smith 63 1966 1998
William R. Belford 48 1987 1998
Martin R. Sathre 71 1962 1999
Dean J. Thompson 40 1994 1999
Set forth below is information concerning the Company's
directors for at least the past five years, unless otherwise
stated.
WALTER R. FANKHANEL has served as General Manager of Dave
Walters, Inc., a dealer of automobiles, manufactured housing and
a developer of multi-family housing since 1957.
JAMES R. SHARP retired in 1993 after 33 years as a High
School Teacher, Counselor and Administrator in Bemidji,
Minnesota. Mr. Sharp has served as President of the Headwaters
Shrine Club, is a member of the Bemidji Town & Country Club, the
Bemidji Curling Club, the AAD Temple Shrine, the Scottish Rite,
the Masonic Lodge, the Eagles Club and the American Legion Club.
RALPH T. SMITH is a principal with the Smith Law Firm, P.A.,
located in Bemidji, Minnesota. Mr. Smith has been on the Board
of Directors of various community organizations including: North
Country Regional Hospital (Past Chairman); Bemidji Area Chamber
of Commerce; Bemidji Jaycees and Headwaters Community Music
Center.
WILLIAM R. BELFORD has been President and Chief Executive
Officer of the Bank since 1987. Mr. Belford has served on the
Board of Directors and as Campaign Chairman of the United Way of
Bemidji, as President and board member for the Joint Economic
Development Commission, as Chairman and Secretary of the Savings
League of Minnesota, on the Board of Directors of the Chamber of
Commerce, as Treasurer and on the Board of the Visitors and
Convention Bureau. He is currently Chairman of the Minnesota
League of Savings and Community Bankers.
MARTIN R. SATHRE is an Abstracter and Title Insurance Agent
for Sathre Abstractors Incorporated of Bemidji, Minnesota. Mr.
Sathre is Secretary of Bemidji Development Corporation, a non-
profit corporation that owns and operates a local industrial
park, and Committee Chairperson and past President of the Rotary
Club of Bemidji.
DEAN J. THOMPSON is an owner of Ken K. Thompson Jewelry, a
retail jeweler located in Bemidji, Minnesota. Mr. Thompson was
previously on the Board of Directors of the Bemidji Area Chamber
of Commerce, Former Chairman of the Downtown Bemidji Business and
Professional Association, and is a member of the Bemidji Jaycees,
Headwaters Chapter/Ducks Unlimited, Bemidji Elks Lodge #1052, the
Bemidji State University President's Club and the Bemidji
Downtown Development Authority.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following table sets forth information regarding the
executive officers of the Company who do not serve on the Board
of Directors.
Age at
September 30,
Name 1996 Title
- - ---- -------------- ------
Dennis M. Vorgert 49 Treasurer
Karen Jacobson 54 Secretary
The principal occupation of each executive officer of the
Company for the last five years, unless otherwise stated, is set
forth below.
DENNIS M. VORGERT has served as Treasurer of the Company
since its incorporation in 1994 and of the Bank since 1978. He
is a member of the Bemidji Curling Club, the Bemidji Rotary Club,
the Knights of Columbus, as well as Past Secretary of Church
Council.
KAREN JACOBSON has served as Secretary of the Company since
its incorporation in 1994, and of the Bank since 1990. Ms.
Jacobson is Treasurer of the local American Heart Association,
and a member of the United Way Communications Committee.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company holds regular monthly
meetings and holds special meetings as needed. During the year
ended September 30, 1996, the Board met 14 times. No director
attended fewer than 75% in the aggregate of the total number of
Board meetings held while he was a member during the year ended
September 30, 1996 and the total number of meetings held by
committees on which he served during such fiscal year. The Board
of Directors has standing Audit, Loan and Investment Committees.
The full Board of Directors serves as the Compensation Committee.
The Audit Committee consists of Directors Smith (Chairman),
Sathre and Thompson. The Audit Committee met three times during
fiscal year 1996 to examine and approve the independent audit
report prepared by the independent auditors, to review and
recommend the independent auditors to be engaged by the Company
and to review the internal audit function and internal audit
controls.
The Company does not have a standing Nominating Committee.
Under the Company's current Bylaws, the full Board acts as a
Nominating Committee for selecting the management nominees for
election as directors. The Nominating Committee met one time
during fiscal 1996.
EXECUTIVE COMPENSATION
The following table sets forth cash and noncash compensation
for the fiscal year ended September 30, 1996 awarded to or earned
by the Company's Chief Executive Officer for services rendered in
all capacities to the Company and its subsidiaries during fiscal
1996.
Name and Principal All Other
Position Year Salary Bonus Compensation (1)
- - ----------------- ---- ------ ----- -----------------
William R. Belford 1996 $112,500 $37,380 $20,150
Chief Executive Officer 1995 108,000 21,800 19,796
1994 105,000 27,401 21,607
<FN>
____________
(1) For 1996, includes a car allowance of $770, life insurance
policy payments of $895, a profit sharing contribution of
$8,885, and a supplemental executive retirement plan
payment of $9,600; for 1995, includes a car allowance of
$771, life insurance policy payments of $895, a profit
sharing contribution of $8,530, and a supplemental
executive retirement plan payment of $9,600; for 1994,
includes a car allowance of $752, life insurance policy
payments of $895, a profit sharing contribution of $10,360,
and a supplemental executive retirement plan payment of
$9,600.
</FN>
Employment Agreements. The Company and the Bank, effective
April 3, 1995, entered into separate employment agreements (the
"Employment Agreements") with Mr. William R. Belford (the
"Executive"), President and Chief Executive Officer of the Bank
and of the Company. In such capacities, the Executive is
responsible for overseeing all operations of the Bank and the
Company, and for implementing the policies adopted by the Boards
of Directors. Such Boards believe that the Employment Agreements
assure fair treatment of the Executive in relation to his career
with the Company and the Bank by assuring him of some financial
security.
The Employment Agreements provide for a term of three years,
with an annual base salary of $112,500 from the Bank, and with
the Company guaranteeing the Bank's obligations. On each
anniversary date from the date of commencement of the Employment
Agreements, the Executive's term of employment will be extended
for an additional one-year period beyond the then effective
expiration date, upon a determination by the Boards of Directors
that the performance of the Executive has met the required
performance standards and that such Employment Agreements should
be extended. The Employment Agreements provide the Executive
with a salary review by the Boards of Directors not less often
than annually, as well as with inclusion in any discretionary
bonus plans, retirement and medical plans, customary fringe
benefits and vacation and sick leave. The Employment Agreements
will terminate upon the Executive's death and may terminate due
to the Executive's disability. The Employment Agreements are
also terminable for "just cause" as defined in the Employment
Agreements. In the event of termination for just cause, no
severance benefits are available. If the Company or the Bank
terminates the Executive without just cause, the Executive will
be entitled to a continuation of his salary and benefits from the
date of termination through the remaining term of the Employment
Agreements, plus an additional 12-month period. Severance
benefits payable to the Executive will be paid in a lump sum, or
in installments, as he elects. If either Employment Agreement is
terminated due to the Executive's "disability" (as defined in the
Employment Agreements), the Executive will not be entitled to a
continuation of his salary and benefits. In the event of the
Executive's death during the term of either Employment Agreement,
his estate will be entitled to receive the
Executive's salary through the last day of the calendar month in
which his death occurred. The Executive is able to voluntarily
terminate his employment by providing 60 days' written notice to
the Boards of Directors of the Bank and the Company, in which
case the Executive is entitled to receive only his compensation,
vested rights and benefits up to the date of termination.
The Employment Agreements contain provisions stating that in
the event of the Executive's involuntary termination of
employment in connection with, or within one year after, any
change in control of the Bank or the Company, other than for
"just cause," the Executive will be paid within 10 days of such
termination an amount equal to the difference between (i) 2.99
times his "base amount," as defined in Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii)
the sum of any other parachute payments, as defined under Section
280G(b)(2) of the Code, that the Executive receives on account of
the change in control (including but not limited to parachute
payments the Employee receives pursuant to his employment
agreement with the Company). "Control" generally refers to the
acquisition, by any person or entity, of the ownership or power
to vote more than 25% of the Bank's or Company's voting stock,
the control of the election of a majority of the Bank's or the
Company's directors, or the exercise of a controlling influence
over the management or policies of the Bank or the Company. In
addition, under the Employment Agreements, a change in control
occurs when, during any consecutive two-year period, directors of
the Company or the Bank at the beginning of such period cease to
constitute two-thirds of the Board of Directors of the Company or
the Bank, unless the election of replacement directors was
approved by a two-thirds vote of the initial directors then in
office. The Employment Agreement with the Bank provides that
within five business days of a change in control, the Bank shall
fund, or cause to be funded, a trust in the amount of 2.99 times
the Executive's base amount, that will be used to pay the
Executive amounts owed to him upon termination, other than for
just cause, within one year of the change in control. The amount
to be paid to the Executive from this trust upon his termination
is determined according to the procedures outlined in the
Employment Agreement with the Bank, and any money not paid to the
Executive is returned to the Bank. The Employment Agreement also
provides for a similar lump sum payment to be made in the event
of the Executive's voluntary termination of employment within one
year following a change in control, upon the occurrence, or
within 90 days thereafter, of certain specified events following
the change in control, which have not been consented to in
writing by the Executive, including (i) the requirement that the
Executive move his personal residence or perform his principal
executive functions more than 35 miles from the Bank's current
primary office, (ii) a material reduction in the Executive's base
compensation as in effect on the date of the change in control,
(iii) the failure of the Company or the Bank to maintain existing
or substantially similar employee benefit plans, including
material vacation, fringe benefits, stock option and retirement
plans, (iv) the assignment to the Executive of duties and
responsibilities which are materially different from those
normally associated with his position with the Bank, (v) a
material reduction in the Executive's authority and
responsibility, and (vi) the failure to re-elect the Executive to
the Company's or the Bank's Board of Directors. The aggregate
payments that would be made to Mr. Belford, assuming his
termination of employment under the foregoing circumstances and
based on Mr. Belford's salary through the year ended September
30, 1996, would have been approximately $359,886. In the event
that the Executive prevails over the Company or the Bank in a
legal dispute as to the Employment Agreements, he will be
reimbursed for his legal and other expenses.
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the
grants of stock options under the First Federal Bancorporation
1995 Stock Option and Incentive Plan (the "Option Plan") to the
Company's Chief Executive Officer. No executive officer of the
Company, other than as set forth below, received a total salary
and bonus in fiscal year 1996 that exceeded $100,000 for services
rendered in all capacities to the Company and its subsidiaries.
Individual Grants
------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted (1) Fiscal Year Price(1) Date
- - ---- --------------- ------------- --------- -----------
William R. Belford 21,563 100% $13.6875 10/16/05
<FN>
________________
(1) Option grant was effective as of October 17, 1995, upon
stockholder approval of the Option Plan, and was previously
reported in the Proxy Materials for the year ended September
30, 1995. Exercise price is the market price of the Common
Stock as of the date of grant. This grant was previously
disclosed in last year's proxy statement.
</FN>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-
END OPTION VALUES
The following table sets forth the 1996 fiscal year-end
value of unexercised in-the-money options held by the Company's
Chief Executive Officer.
Value of Securities
Number of Securities Underlying Unexercised
Underlying Unexercised In-the-Money
Options at FY-End (1) Options at FY-End (1)
Shares Acquired Value -------------------------- ---------------------------
Name on Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- - ---- --------------- ---------- ----------- ------------- ----------- -------------
William R. Belford -- $ -- $ 4,313 $17,250 $11,052 $44,203
<FN>
__________
(1) Consists of options granted under the Option Plan. Option
grant was effective as of October 17, 1995, upon stockholder
approval of the Option Plan. Exercise price is the market
price of the Common Stock of $13.6875 as of the date of
grant. At September 30, 1996, the fair market value of the
underlying securities was $16.25 per share.
</FN>
DIRECTOR COMPENSATION
The Company's directors receive fees of $750 per monthly
meeting attended. This fee includes any Executive Committee
meetings. During fiscal 1996, the Company's directors' fees
totaled $51,300.
Director Retirement Plan. The Bank's Board of Directors has
adopted the First Federal Banking & Savings, FSB Retirement Plan
for Non-Employee Directors (the "Directors' Plan"), effective
October 1, 1993, for its directors (i) who are members of the
Bank's Board of Directors on or after October 1, 1993, and (ii)
who are not employees on the date of being both nominated and
elected (or re-elected) to the Board. A participant in the
Directors' Plan will receive, on each of the three annual
anniversary dates of his or her retirement, an amount equal to
one-third of the product of his or her "Benefit Percentage,"
times his or her "Vested Percentage," times $6,000. A
participant's "Benefit Percentage" is based on his or her overall
years of service on the Board of Directors of the Bank, and
increases in increments of 33-1/3% from 0% for less than six
years of service, to 33-1/3% for six to eleven years of service,
to 66-2/3% for twelve to seventeen years of service, to 100% for
eighteen or more years of service. A participant's "Vested
Percentage" equals 33-1/3% if the participant serves on the Board
as a non-employee director
for one or fewer years of service after the effective date of the
Directors' Plan, increases to 66-2/3% if the participant
completes two years of service following the plan's effective
date, and becomes 100% if the participant completes three or more
years of service following the plan's effective date. However,
in the event a participant terminates service on the Board at or
after his attainment of age 70, or due to "disability", or in the
event of a "change in control" (as such terms are defined in the
Directors' Plan), the participant's Vested Percentage becomes
100% regardless of his or her years of service. A participant's
"Vested Percentage" will also accelerate to 100% upon such
participant's termination of service on the Board due to his or
her death. This provision may have the effect of deferring a
hostile change in control by increasing the costs of acquiring
control. If a participant dies before collecting any retirement
benefits, his or her surviving beneficiary (or, if no surviving
beneficiary, the participant's estate) will receive a lump sum
payment having a present value equal to 100% of the benefits that
would have been paid to the participant under the Directors' Plan
if the participant had (i) terminated service on the Board on the
date of his death, (ii) survived to collect the full benefits
payable for retirement or disability, and (iii) a Vested
Percentage equal to 100%. In the event that a participant dies
after beginning to receive retirement benefits, the Bank shall
pay to the participant's surviving beneficiary (or, if none, to
the participant's estate) a lump sum payment having a present
value equal to 100% of the aggregate remaining payments that the
participant would have received had he or she survived to collect
all retirement benefits payable under the Directors' Plan. Trust
assets will be subject to the claims of the Bank's general
creditors.
TRANSACTIONS WITH MANAGEMENT
The Bank offers loans to its directors, officers, and
employees. These loans currently are made in the ordinary course
of business with the same collateral, interest rates and
underwriting criteria as those of comparable transactions
prevailing at the time and to not involve more than the normal
risk of collectibility or present other unfavorable features.
Under current law, the Bank's loans to directors and executive
officers are required to be made on substantially the same terms,
including interest rates, as those prevailing for comparable
transactions and must not involve more than the normal risk of
repayment or present other unfavorable features. Furthermore,
loans above the greater of $25,000 or 5% of the Bank's capital
and surplus (i.e., up to $584,214) to such persons must be
approved in advance by a disinterested majority of the Board of
Directors. At September 30, 1996, the Bank's loans to directors
and executive officers totaled $153,063, or 1.54% of the Bank's
retained earnings at that date.
_________________________________________________________________
SECURITY OWNERSHIP OF MANAGEMENT
_________________________________________________________________
Beneficial Ownership of Management. The following table
sets forth, as of the Record Date, the beneficial ownership of
the Common Stock of each of the Company's directors and nominees,
the sole executive officer named in the Summary Compensation
Table and by all directors and executive officers as a group.
Percent of Shares
Total Beneficial of Common Stock
Ownership (1) Outstanding
------------- ---------------
William Belford(2) 27,777 3.96%
Ralph Smith(3) 28,963 4.13
Martin Sathre(4) 15,190 2.16
Walter Fankhanel(4) 25,598 3.85
James Sharp(4) 17,122 2.44
Dean Thompson(5) 13,303 1.90
All Executive Officers
and Directors as a
Group(6) (10 persons) 143,871 20.53%
<FN>
____________
(1) For the definition of beneficial ownership, see footnote 1
to the table in "Voting Securities and Principal Holders
Thereof." Does not include the unallocated shares held by
the ESOP Trust or the Grantor Trust. For more information,
see "Voting Securities and Principal Holders Thereof --
Footnotes (2) and (3)."
(2) For Mr. Belford, includes 5,300 shares and 13,400 shares
held in his 401(k) plan and grantor trust accounts,
respectively, 2,539 shares held in Mr. Belford's ESOP
account, and 4,313 shares pursuant to vested options
exercisable within 60 days of the Record Date.
(3) For Mr. Smith includes 17,100 shares held in family trusts,
655 shares held in his grantor trust account and 863 shares
pursuant to vested options exercisable within 60 days of
the Record Date.
(4) For each of Messrs. Sathre, Fankhanel and Sharp, includes
7,541 shares held in their respective grantor trust
accounts and 863 shares pursuant to vested options
exercisable within 60 days of the Record Date.
(5) For Mr. Thompson, includes 1,163 shares held in his grantor
trust account and 863 shares pursuant to vested options
exercisable within 60 days of the Record Date.
(6) For "All Executive Officers and Directors as a Group"
includes, 12,972 shares and 37,841 shares held in 401(k)
plan and grantor trust accounts, respectively, 5,788 shares
held in ESOP accounts, 10,527 shares pursuant to options
exercisable within 60 days of the Record Date and 17,100
shares held in family trusts.
</FN>
Section 16(a) Beneficial Ownership Reporting Compliance.
All directors, officers and beneficial owners of more than 10% of
the Company's outstanding shares of Common Stock complied with
the reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934, except for President William R. Belford who
failed to file one ownership report on Form 4 reporting one
transaction, on a timely basis, due to certain shares being
purchased through his retirement plan account.
_________________________________________________________________
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
_________________________________________________________________
KPMG Peat Marwick LLP, was the Company's independent
certified public accounting firm for the 1996 fiscal year. A
representative of KPMG Peat Marwick LLP is expected to be present
at the Annual Meeting and will have the opportunity to make a
statement if he or she so desires.
_________________________________________________________________
OTHER MATTERS
_________________________________________________________________
The Board of Directors is not aware of any business to come
before the Annual Meeting other than those matters described
above in this proxy statement and matters incident to the conduct
of the Annual Meeting. However, if any other matters should pro-
perly come before the Annual Meeting, it is intended that proxies
in the accompanying form will be voted in respect thereof in
accordance with the determination of a majority of the Board of
Directors.
_________________________________________________________________
MISCELLANEOUS
_________________________________________________________________
The cost of soliciting proxies will be borne by the Company.
The Company will reimburse brokerage firms and other custodians,
nominees and fiduciaries for reasonable expenses incurred by them
in sending proxy materials to the beneficial owners of Common
Stock. In addition to solicitations by mail, directors, officers
and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional
compensation.
The Company's 1996 Annual Report to Stockholders, including
financial statements, is being mailed to all stockholders of
record as of the close of business on the Record Date. Any
stockholder who has not received a copy of such Annual Report may
obtain a copy by writing to the Secretary of the Company. Such
Annual Report is not to be treated as a part of the proxy
solicitation material or as having been incorporated herein by
reference.
_________________________________________________________________
STOCKHOLDER PROPOSALS
_________________________________________________________________
In order to be eligible for inclusion in the Company's proxy
materials for next year's Annual Meeting of Stockholders, any
stockholder proposal to take action at such meeting must be
received at the Company's main office at 214 5th Street, Bemidji,
Minnesota 56601, no later than August 26, 1997. Any such
proposal shall be subject to the requirements of the proxy rules
adopted under the Exchange Act.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Karen Jacobson
KAREN JACOBSON
SECRETARY
Bemidji, Minnesota
December 23, 1996
_________________________________________________________________
ANNUAL REPORT ON FORM 10-K
_________________________________________________________________
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED SEPTEMBER 30, 1996 AS FILED WITH THE SECURITIES
EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT CHARGE TO EACH
STOCKHOLDER AS OF THE RECORD DATE UPON WRITTEN REQUEST TO
CORPORATE SECRETARY, FIRST FEDERAL BANCORPORATION, 214 5TH
STREET, BEMIDJI, MINNESOTA 56601.
_________________________________________________________________
REVOCABLE PROXY
_________________________________________________________________
FIRST FEDERAL BANCORPORATION
Bemidji, Minnesota
_________________________________________________________________
ANNUAL MEETING OF STOCKHOLDERS
January 21, 1997
The undersigned hereby appoints Dean Thompson and Martin
Sathre, with full powers of substitution, to act as proxies for
the undersigned, to vote all shares of Common Stock of First
Federal Bancorporation (the "Company") which the undersigned is
entitled to vote at the Annual Meeting of Stockholders, to be
held at the main office of First Federal Banking & Savings, FSB,
214 5th Street, Bemidji, Minnesota on Tuesday, January 21, 1997
at 2:30 p.m., and at any and all adjournments thereof, as
follows:
VOTE
FOR WITHHELD
--- --------
1. The election as directors of all
nominees listed below (except as
marked to the contrary below). [ ] [ ]
Walter R. Fankhanel
James R. Sharp
INSTRUCTION: To withhold your vote for
any individual nominee, insert that
nominee's name on the line provided below.
______________________________
The Board of Directors recommends a vote "FOR" the listed
proposition.
_________________________________________________________________
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS
STATED. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL
MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN
ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF
DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF
NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING. THIS
PROXY CONFERS DISCRETIONARY AUTHORITY ON THE HOLDERS THEREOF TO
VOTE WITH RESPECT TO THE ELECTION OF ANY PERSON AS DIRECTOR WHERE
THE NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE
AND MATTERS INCIDENT TO THE CONDUCT OF THE ANNUAL MEETING.
_________________________________________________________________
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Annual Meeting or at any adjournment thereof and after notifica-
tion to the Secretary of the Company at the Annual Meeting of the
stockholder's decision to terminate this proxy, then the power of
said attorneys and proxies 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 annual meeting, a
Proxy Statement dated December 23, 1996 and an Annual Report to
Stockholders.
Dated: _______________________, 199_
__________________________ __________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
__________________________ __________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the envelope in
which this form of proxy was mailed. When signing as attorney,
executor, administrator, trustee or guardian, please give your
full title. If shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN
THE ACCOMPANYING POSTAGE-PREPAID ENVELOPE.