SCHEDULE 14A INFORMATION
(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 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))
HFB FINANCIAL CORPORATION
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
1. Title of each class of securities to which
transaction applies:
________________________________________________________________
2. Aggregate number of securities to which transaction
applies:
________________________________________________________________
3. Per unit price or other underlying value of
transaction computed pursuant to Exchange Act 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:
____________________________________________
[LETTERHEAD]
October 23, 1998
Dear Stockholder:
We invite you to attend the Annual Meeting of Stockholders
of HFB Financial Corporation (the "Corporation"), the holding
company of Home Federal Bank, Federal Savings Bank to be held at
Pine Mountain State Resort Park, Pineville, Kentucky, on
Tuesday, November 24, 1998 at 2:00 p.m.
The Annual Meeting has been called for the election of
directors. Enclosed is a proxy statement, a proxy card and an
Annual Report to Stockholders for the 1998 fiscal year.
Directors and officers of the Corporation, as well as
representatives of the Corporation's independent auditors will
be present to respond to any questions the stockholders may
have.
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES
YOU OWN. On behalf of the Board of Directors, we urge you to
please sign, date and return the enclosed proxy card in the
enclosed postage-prepaid envelope as soon as possible, even if
you currently plan to attend the annual meeting. 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/ David B. Cook
David B. Cook
President
HFB FINANCIAL CORPORATION
1602 CUMBERLAND AVENUE
MIDDLESBORO, KENTUCKY 40965
(606) 248-1095
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 24, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stock-
holders (the "Meeting") of HFB Financial Corporation (the
"Corporation"), the holding company of Home Federal Bank,
Federal Savings Bank, will be held at Pine Mountain State Resort
Park, Pineville, Kentucky on Tuesday, November 24, 1998 at 2:00
p.m.
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 Corporation;
and
2. Such other matters as may properly come before the
Meeting or any adjournment thereof.
NOTE: The Board of Directors is not aware of any other
business to come before the Meeting.
Any action may be taken on any one of the foregoing
proposals at the Meeting on the date specified above, or on any
date or dates to which, by original or later adjournment, the
Meeting may be adjourned. Pursuant to the Bylaws of the
Corporation, the Board of Directors has fixed the close of
business on October 1, 1998, as the record date for
determination of the stockholders entitled to vote at the
Meeting and any adjournments thereof.
You are requested to fill in and sign the enclosed form of
Proxy which is solicited by the Board of Directors and to mail
it promptly in the enclosed envelope. The proxy will not be
used if you attend and vote at the Meeting in person.
BY ORDER OF THE BOARD
OF DIRECTORS
/s/ Frank W. Lee
Frank W. Lee
Secretary
Middlesboro, Kentucky
October 23, 1998
IMPORTANT: PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED PROXY.
THE PROMPT RETURN OF PROXIES WILL SAVE YOUR CORPORATION THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A
QUORUM. AN ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
PROXY STATEMENT
OF
HFB FINANCIAL CORPORATION
1602 CUMBERLAND AVENUE
MIDDLESBORO, KENTUCKY 40965
(606) 248-1095
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 24, 1998
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of HFB
Financial Corporation (the "Corporation"), the holding company
of Home Federal Bank, Federal Savings Bank ("Home Federal" or
the "Bank"), to be used at the Annual Meeting of Stockholders of
the Corporation (the "Meeting") which will be held at Pine
Mountain State Resort Park, Pineville, Kentucky, on Tuesday,
November 24, 1998 at 2:00 p.m. The accompanying Notice of
Annual Meeting and this Proxy Statement are being first mailed
to stockholders on or about October 23, 1998.
REVOCATION OF PROXIES
Stockholders who execute proxies retain the right to
revoke them at any time. Unless so revoked, the shares
represented by such proxies will be voted at the Meeting and all
adjournments thereof. Proxies may be revoked by written notice
to the Secretary of the Corporation, the filing of a later proxy
prior to a vote being taken on a particular proposal at the
Meeting or by attendance at the Meeting and voting in person. A
written notice revoking a previously executed proxy should be
sent to HFB Financial Corporation, 1602 Cumberland Avenue,
Middlesboro, Kentucky 40965 -- Attention: Frank W. Lee,
Secretary. Proxies solicited by the Board of Directors of the
Corporation 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 consideration at the 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 with respect to 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 proxy cards
as not voted will not be counted as votes cast. Proxies marked
as abstentions or as broker no votes, however, will be treated
as shares present for purposes of determining whether a quorum
is present.
VOTING SECURITIES AND SECURITY OWNERSHIP
Holders of record of the Corporation's common stock, par
value $1.00 per share (the "Common Stock"), as of the close of
business on October 1, 1998 (the "Record Date") are entitled to
one vote for each share then held. As of the Record Date, the
Corporation had 1,089,648 shares of Common Stock issued and out-
standing, and there were approximately 400 stockholders of
record (not including certain persons holding shares in "street
name"). The presence, in person or by proxy, of at least a
majority of the total number of shares of the Common Stock
outstanding on the Record Date will be required to constitute a
quorum at the Meeting.
The following table sets forth information as of the
Record Date (i) with respect to any person who was known to the
Corporation to be the beneficial owner of more than five percent
of the Common Stock and (ii) as to the Common Stock beneficially
owned by each director or nominee of the Corporation, each
executive officer of the Corporation who is not a Director, and
all directors and executive officers of the Corporation as a
group.
AMOUNT AND PERCENT OF
NATURE OF SHARES OF
BENEFICIAL COMMON STOCK
OWNERSHIP(1)(2) OUTSTANDING
--------------- ------------
HFB Financial Corporation
Employee Stock Ownership Plan and Trust
1602 Cumberland Avenue
Middlesboro, Kentucky 40965 11,559 (3) 1.06%
Frank W. Lee, Director 25,200 2.31
Charles A. Harris, Director 31,549 2.90
Frances Coffey Rasnic, Director 6,187 .06
David B. Cook, Director and Executive Officer 66,597 6.11
Earl Burchfield, Director 33,498 3.06
E.W. Nagle, Director 22,687 2.07
Robert V. Costanzo, Chairman of the Board 14,995 1.38
Stanley Alexander, Jr., Executive Officer 9,699 .89
All directors and executive
officers as a group (8 persons) 207,412 (4) 18.69
<FN>
- --------------
(1) As to the Corporation's directors and executive officers, includes 4,000,
4,021, 6,021, 6,021 and 20,063 shares which may be acquired by Messrs.
Burchfield, Nagle, Costanzo, Ms. Rasnic and all directors and executive
officers as a group upon the exercise of stock options granted under the
HFB Financial Corporation 1992 Stock Option Plan.
(2) Includes 17,846, 5,528, 3,795, 8,544, 600 and 36,313 shares held for the
benefit of Directors Lee, Harris, David B. Cook, Burchfield, Costanzo and
all directors and executive officers as a group, respectively, through
trusts established under the Bank's discontinued and current deferred
compensation plans for directors. In accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, 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.
(3) Shares owned by the HFB Financial Corporation Employee Stock Ownership
Plan and Trust ("ESOP") are held in a suspense account for allocation
among participants on the basis of compensation as the loan is repaid. Of
the 79,436 shares held by the ESOP, 67,878 shares had been allocated as of
June 30, 1998. The ESOP Committee as appointed by the Board of Directors,
consists of Directors Harris, Costanzo and Burchfield. Directors Harris,
Costanzo and Burchfield, none of whom are full-time employees of the Bank,
serve as the ESOP Trustees. The ESOP Trustees must vote all allocated
shares held in the ESOP in accordance with the directions of the ESOP
Committee.
(4) Includes shares held by certain directors and executive officers as
custodians under Uniform Transfers to Minors Acts, by their spouses and
children and for the benefit of certain directors and executive officers
under individual retirement accounts ("IRAs"). Does not include 11,559
unallocated shares held by the ESOP. Includes 36,313 shares owned by
directors and executive officers through trusts established under the
Bank's discontinued and current deferred compensation plans for directors.
</FN>
2
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PROPOSAL I - ELECTION OF DIRECTORS
- ---------------------------------------------------------------
GENERAL
The Corporation's Board of Directors currently is composed
of seven members, with approximately one-third of the Members of
the Board to be elected annually in accordance with the
Corporation's bylaws. In December of 1997, long-time Officer
and Director J.D. Cook passed away, and the Board was reduced in
size to seven members. More information regarding Mr. Cook can
be found in the 1998 Annual Report which accompanies this Proxy
Statement. At the Meeting, two persons nominated by the Board
of Directors, who currently are directors and whose terms expire
in 1998, will stand for election.
The Board of Directors has nominated E. W. Nagle and
Robert V. Costanzo to serve as directors for a three-year period
or until their respective successors have been elected and shall
qualify. It is intended that the persons named in the proxies
solicited by the Board 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. 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 and for
each director continuing in office, such person's name, age as
of June 30, 1998, the year he or she first became a director of
the Bank and the year his or her current term as a director will
expire. All such persons became directors of the Corporation in
1992, upon the Corporation's organization, except Ms. Rasnic,
who was appointed a director of the Corporation in 1996.
YEAR FIRST CURRENT
ELECTED OR TERM
AGE AS OF APPOINTED TO
NAME JUNE 30, 1998 DIRECTOR EXPIRE
- ---- ------------- ------------ ------
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2001
E. W. Nagle 86 1961 1998
Robert V. Costanzo 42 1989 1998
DIRECTORS CONTINUING IN OFFICE
Frank W. Lee 85 1952 1999
Charles A. Harris 64 1987 1999
Frances Coffey Rasnic 49 1996 1999
David B. Cook 48 1974 2000
Earl Burchfield 68 1976 2000
The principal occupation of each Director and Executive
Officer of the Corporation during the last five years is set
forth below.
E. W. NAGLE is retired from the Middlesboro Tanning
Company, where he served as an officer. He is a member of the
Lions Club and a Charter Member of the All Sports Hall of Fame.
ROBERT V. COSTANZO is Chairman of the Board of the
Corporation, and is a practicing attorney in Middlesboro,
Kentucky. He has served as a member of the Middlesboro-Bell
County Airport Board of Directors. He is a member of the
Middlesboro Kiwanis Club, the Kentucky Bar Association and
Academy of Trial Attorneys.
3
FRANK W. LEE currently serves as Secretary/Treasurer of
the Bank and the Company. He has a law degree and is a member
of the Kentucky Bar Association. Mr. Lee is a retired
pharmacist and is the past owner of Lee's Drug Store in
Middlesboro, Kentucky. Mr. Lee is a former director of a local
bank.
CHARLES A. HARRIS is owner of Harris Insurance Agency in
Harlan, Kentucky. Mr. Harris is serving, or has served as
president of the Harlan Lions Club, Chairman of the Harlan
County Chapter of American Red Cross, Harlan Chamber of
Commerce, Councilman of City of Harlan, Kentucky, Harlan
Volunteer Firefighters, Harlan School Futures Committee, Advisor
to Harlan State Vocational Technical School, President of the
Alumni Association of Harlan Boys Choir, Board Member of Red
Bird Mission, Beverly, Kentucky and Board Member of Harlan
County Extension Service. Mr. Harris is also a member of the
Oleika Shrine and the Harlan County Shrine Club.
FRANCES COFFEY RASNIC is associated with the Coffey
Funeral Home of New Tazewell and Harrogate, Tennessee. She
currently serves as a board member of the Claiborne County
Chamber of Commerce, Secretary of Claiborne County American
Cancer Society, and as a Board Member of C.E.A.S.E.
DAVID B. COOK currently serves as president and CEO of
Home Federal Bank FSB in Middlesboro, Kentucky and HFB Financial
Corporation, Jacksboro, Tennessee. A graduate of Western
Kentucky University and a member of First Baptist Church in
Middlesboro, Mr. Cook has served as president of both the
Lexington Chapter of the Society of Real Estate appraisers and
the ROHO club of Middlesboro. He has previously served as a
board member on the Bell County Chamber of Commerce, the Board
of Housing Appeals for the city of Middlesboro and the City
Council's Finance Committee. He is a past board member of the
Bluegrass Council of Boy Scouts of America, Lexington, Kentucky.
Mr. Cook is presently on the board of the Bell County Industrial
Foundation and Revolving Loan Committee.
EARL BURCHFIELD is retired as a newspaper publisher. Mr.
Burchfield is a past member of the Middlesboro Rotary Club, a
past trustee of Applachian Hospitals, a past member of Bell
County and Claiborne County Chambers of Commerce and active in
the area Gideons organization. He serves as a Nursing Home
Volunteer, as well as church treasurer and Deacon.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following sets forth information with respect to the
executive officer of the Company, including his age as of the
Record Date, who does not serve on the Board of Directors.
STANLEY ALEXANDER, JR., age 49, is currently the Bank's
and the Corporation's Chief Financial Officer. Mr. Alexander
graduated from the Graduate School of Banking at the University
of Wisconsin in 1984 and had 17 years of banking experience
prior to joining Home Federal in 1991. He currently serves as
treasurer of the Middlesboro-Bell County Airport Board,
Secretary of the ROHO Club, and has served as a member of the
"Advisory Group" to the Middlesboro City Council's Finance
Committee.
COMMITTEES OF THE BOARDS OF DIRECTORS OF THE CORPORATION
The Boards of Directors of the Corporation and the Bank
conduct their business through meetings of the Boards and their
committees. During the fiscal year ended June 30, 1998, the
Corporation's Board of Directors held 12 meetings. No current
director attended fewer than 75% of the total aggregate meetings
of the Corporation's Board of Directors and committees on which
such Board member served during fiscal 1998.
The Corporation's audit committee is comprised of
Directors Burchfield (Chairman) and Rasnic, and Chief Financial
Officer Stanley Alexander, Jr. The audit committee meets as
needed, to examine and approve the audit report prepared by the
independent auditors of the Corporation. During fiscal 1998,
the Corporation's audit committee met once.
4
The Corporation's Nominating Committee is comprised of the
full Board of Directors for the purpose of evaluating candidates
and making nominations for election as directors. This
Committee met one time during fiscal 1998 in that capacity.
While the Board of Directors will consider nominees recommended
by stockholders, it has not actively solicited recommendations
from the Corporation's stockholders for nominees nor, subject to
the procedural requirements set forth in the Corporation's
Charter and Bylaws, established any procedures for this purpose.
The Corporation's compensation committee is comprised of
Directors Lee (Chairman), Burchfield and Harris. The Committee
meets periodically to evaluate the compensation and fringe
benefits of the directors, officers and employees and to
recommend changes and to monitor and evaluate employee morale.
The compensation committee met once during fiscal 1998.
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The Corporation's principal subsidiary is the Bank. The
Corporation has no full time employees, relying instead on
employees of the Bank for the limited corporate services
provided. All compensation paid to officers and other employees
is paid by the Bank. The following table sets forth information
regarding cash and noncash compensation for the 1998 fiscal year
awarded to or earned by the Corporation's Chief Executive
Officer, as no other executive officer's total salary and bonus
for the fiscal year exceeded $100,000 for services rendered in
all capacities to the Corporation and its subsidiaries.
Long-Term
Annual Compensation(1) Compensation
Name and Principal ---------------------- Payout of All Other
Position Year Salary Bonus Restricted Stock(2) Compensation (3)
- ----------------- ---- ------ ----- ------------------- ----------------
David B. Cook
President and Chief 1998 $118,875 $ 5,989 $19,739 $38,608
Executive Officer of the 1997 112,500 11,094 58,964 41,481
Corporation and Bank 1996 107,500 12,656 62,790 37,851
Stanley Alexander, Jr.
Chief Financial Officer of
the Corporation and Bank 1998 67,000 43,333 -- 12,707
<FN>
- ---------
(1) Excludes perquisites, which did not exceed 10% of each named executive officer's annual salary and
bonus.
(2) Reflects value of restricted stock awards based on the difference of the market value of the Common
Stock of $20.00 as of October 1, 1998, and when vested for fiscal 1995.
(3) Includes fees in the amount of $11,200 in fiscal 1998, $9,900 in fiscal 1997 and $10,100 in fiscal
1996 for Mr. Cook's services as a director for the Corporation and the Bank. ESOP contributions in
fiscal 1998, 1997 and 1996 for the benefit of Mr. Cook of $27,408, $30,483 and $27,751, respectively.
ESOP contributions for Mr. Alexander were $12,607 in fiscal 1998.
</FN>
PENSION PLAN
The Corporation's principal subsidiary is the Bank. The
Bank participates in a multiple employer defined benefit plan
(the "Pension Plan"). Employees who have one year of service
and reached age 21 are eligible to participate in the Pension
Plan. They are 100% vested after five years of service.
Employees are entitled to a normal retirement benefit at age 65
equal to 2% times years of benefit service times the average
annual salary (as defined) for the five consecutive years of
highest salary during benefit service, with annual 1%
adjustments for retirees who attain age 66 and older. The
Pension Plan also provides for early retirement benefits
(commencing as early as age 55), disability
5
retirement benefits and death benefits. Contributions are
actuarially determined. The Bank makes all contributions to the
Pension Plan. During 1998, the Bank did not contribute to the
Pension Plan. At June 30, 1998, Mr. David B. Cook had 25 years
of credited service under the Pension Plan.
The following table illustrates annual pension benefits at
age 65 under the Pension Plan at various levels of compensation
and years of service, assuming 100% vesting of benefits. All
retirement benefits illustrated in the table below are without
regard to any Social Security benefits to which a participant
might be entitled.
Years of Service
Average -------------------------------------------------------------------
Compensation 5 10 15 20 25 30 35
- ------------ ------ ------ ------ ------ ------ ----- ------
$ 20,000 $ 2,000 $ 4,000 $ 6,000 $ 8,000 $ 10,000 $ 12,000 $ 14,000
40,000 4,000 8,000 12,000 16,000 20,000 24,000 28,000
60,000 6,000 12,000 18,000 24,000 30,000 36,000 42,000
80,000 8,000 16,000 24,000 32,000 40,000 48,000 56,000
100,000 10,000 20,000 30,000 40,000 50,000 60,000 70,000
120,000 12,000 24,000 36,000 48,000 60,000 72,000 84,000
140,000 14,000 28,000 42,000 56,000 70,000 84,000 98,000
OPTION PLAN
The following table sets forth information regarding the
exercise of stock options during the 1998 fiscal year and the
number and value of options held by the named executive officer
at the end of the 1998 fiscal year under the Corporation's 1992
Stock Option Plan (the "Option Plan"). No options were granted
during the 1998 fiscal year, and Mr. Alexander did not exercise
any options during fiscal 1998.
Number of Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Year-End at Fiscal Year-End
Shares Acquired Value (All Immediately (All Immediately
Name on Exercise Realized (1) Exercisable) Exercisable)
- --------- --------------- ---------- ------------------ -------------------
David B. Cook 4,454 $ 40,086 -- $ --
Stanley Alexander, Jr. -- -- -- --
<FN>
(1) For Mr. Cook, based on the difference between the exercise price of the stock
options of $6.00 per share and the market value of the Common Stock of $15.00
per share, based on the most recent trades known as of the date of exercise.
</FN>
EMPLOYMENT AGREEMENT
The Bank entered into employment agreements with David B.
Cook, President and Chief Executive Officer and Stanley
Alexander, Jr. Chief Financial Officer. David B. Cook, as
President and Chief Executive Officer is responsible for
overseeing all operations of the Bank, and for implementing the
policies adopted by the Board of Directors. Stanley Alexander,
Jr., as Chief Financial Officer, is responsible for overseeing
the financial operations of the Bank. The employment agreements
for David B. Cook and Stanley Alexander, Jr. commenced on the
date of completion of the conversion of the Bank from mutual to
stock form on December 28, 1992 for a term of three years. On
each anniversary date from the date of commencement of the
agreements, the term of employment is extended for an additional
one year period beyond the then effective expiration date, upon
a determination by the Board of Directors that performance of
the employee has met the required standards and that such
agreements should be extended. The
6
Agreements, as extended, provide for an annual base salary which
is currently $122,750 for David B. Cook and $68,000 for Stanley
Alexander, Jr. The agreements provide the employee with a
salary review by the Board 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 agreements terminate upon the
employee's death, and is terminable by the Bank for "just cause"
as defined in the agreement. In the event of termination for
just cause, no severance benefits are available. If the Bank
terminates an employee without just cause, the employee will be
entitled to a continuation of his salary and benefits from the
date of termination through the remaining term of the agreement
plus an additional 12-month period, but in no event in excess of
three years' salary. The employee is able to voluntarily
terminate his agreement by providing 60 days' written notice to
the Board of Directors, in which case the employee 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 employee's involuntary termination of
employment in connection with, or within one year after, any
change in control of the Bank or the Corporation, the employee
will be paid within 30 days of such termination a sum equal to
2.99 times the average annual compensation he received during
the five-year period immediately prior to the date of change in
control. "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 Corporation's voting stock, or the control
of the election of a majority of Directors or the exercise of a
controlling influence over the management or policies of the
Bank or Corporation. The employment agreement also provides for
a similar lump sum payment to be made in the event of the
employee's voluntary termination of employment upon the
occurrence, or within 90 days thereafter, of certain specified
events following any change in control, whether approval by the
Board of Directors or otherwise which have not been consented to
in writing by the employee including (i) requiring the employee
to move his personal residence or perform his principal
executive functions more than 35 miles from the Bank's current
primary office, (ii) requiring the employee to report to a
person or persons other than the Board of Directors of the Bank
(or the President and the Board, for Mr. Alexander), (iii)
failing to maintain existing employee benefit plans, including
material vacation, fringe benefits, stock option and retirement
plans, (iv) assigning duties and responsibilities to the
employee which are other than those normally associated with his
position with the Bank, (v) materially diminishing the
employee's authority and responsibility, and (vi) failing to re-
elect the employee to the Bank's Board of Directors (for David
B. Cook only). The aggregate payments that would be made to
David B. Cook and Stanley Alexander, Jr. assuming termination of
employment under the foregoing circumstances at June 30, 1998
would have been approximately $297,188 and $167,500,
respectively.
DIRECTORS' COMPENSATION
Members of the Board of Directors and committees of the
Board of Directors of the Corporation receive a monthly retainer
of $750, plus $250 per regular or special Board meeting
attended.
TRANSACTIONS WITH MANAGEMENT
All of the Bank's loans to directors and executive
officers are made on substantially the same terms, including
interest rates, as those prevailing for comparable transactions
and do 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
(up to $500,000) to such persons must be approved in advance by
a disinterested majority of the Board of Directors. The Bank
does not offer favorable terms on mortgage loans to directors or
officers.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Olive, LLP, which was the Corporation's independent
certified public accounting firm for the 1998 fiscal year, has
been retained by the Board of Directors to be the Corporation's
auditors for the 1999 fiscal year. A representative of Olive,
LLP is currently expected to be present at the Annual Meeting to
respond to stockholders' questions and will have the opportunity
to make a statement if he or she so desires.
7
OTHER MATTERS
The Board of Directors is not aware of any business to
come before the Meeting other than those matters described above
in this Proxy Statement. However, if any other matters should
properly come before the Meeting, it is intended that proxies in
the accompanying form will be voted in respect thereof in
accordance with the judgment of the person or persons voting the
proxies.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to regulations promulgated under the Securities
Exchange Act of 1934, as amended, the Corporation's officers,
directors and persons who own more than 10 percent of the
outstanding Common Stock ("Insiders") are required to file
reports detailing their ownership and changes of ownership in
such Common Stock, and to furnish the Corporation with copies of
all such reports. Based solely on the Company's review of
ownership reports received prior to the Record Date, or written
representations from reporting persons that no annual report of
change in beneficial ownership is required, the Company believes
that all directors, executive officers and stockholders owning
in excess of ten percent of the Common Stock have complied with
the reporting requirements for the 1998 fiscal year.
MISCELLANEOUS
The cost of solicitation of proxies will be borne by the
Corporation. In addition to solicitations by mail, directors,
officers, and regular employees of the Corporation may solicit
proxies personally or by telegraph or telephone without
additional compensation.
The Corporation's Annual Report to Stockholders is being
mailed to all stockholders of record as of the close of business
on October 1, 1998. Any stockholder who has not received a copy
of such Annual Report may obtain a copy by writing the
Corporation. Such Annual Report is not to be treated as a part
of the proxy solicitation material nor as having been
incorporated herein by reference.
A COPY OF THE CORPORATION'S FORM 10-KSB AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT
CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN
REQUEST TO STANLEY ALEXANDER, JR., CHIEF FINANCIAL OFFICER, HFB
FINANCIAL CORPORATION, 1602 CUMBERLAND AVENUE, MIDDLESBORO,
KENTUCKY 40965.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the proxy
materials of the Corporation for next year's Meeting of Stock-
holders, any stockholder proposal to take action at such meeting
must be received at the Corporation's executive office at 1602
Cumberland Avenue, Middlesboro, Kentucky 40965 no later than May
25, 1999. Any such proposals shall be subject to the require-
ments of the proxy rules adopted under the Securities Exchange
Act of 1934, as amended.
BY ORDER OF THE BOARD OF
DIRECTORS
/s/ Frank W. Lee
Frank W. Lee
Secretary
Middlesboro, Kentucky
October 23, 1998
8
REVOCABLE PROXY
HFB FINANCIAL CORPORATION
________________________________________________________________
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 24, 1998
________________________________________________________________
The undersigned hereby appoints Frances Coffey Rasnic,
Earl Burchfield and Charles A. Harris, with full powers of
substitution, to act as attorneys and proxies for the
undersigned, to vote all shares of the common stock of HFB
Financial Corporation which the undersigned is entitled to vote
at the Annual Meeting of Stockholders, to be held at Pine
Mountain State Resort Park, Pineville, Kentucky, on Tuesday,
November 24, 1998 at 2:00 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). [ ] [ ]
E. W. Nagle
Robert V. Costanzo
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY
INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME ON THE
LINE BELOW.
_________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES
LISTED ABOVE.
________________________________________________________________
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES.
IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY
WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST
JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF
NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at
the Meeting or at any adjournment thereof, then the power of
said attorneys and prior proxies shall be deemed terminated and
of no further force and effect. The undersigned may also revoke
his proxy by filing a subsequent proxy or notifying the
Secretary of his decision to terminate his proxy.
The undersigned acknowledges receipt from the
Corporation prior to the execution of this proxy of notice of
the Meeting, a proxy statement dated October 23, 1998, and an
Annual Report to Stockholders.
Dated: _______________________, 1998
__________________________ __________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
__________________________ __________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the enclosed card.
When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held
jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.