SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
HF FINANCIAL CORP.
- --------------------------------------------------------------------------------
(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):
/ / 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:
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(4) Date Filed:
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[LOGO]
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FINANCIAL CORP.
P.O. BOX 5000
SIOUX FALLS, SOUTH DAKOTA 57117-5000
PHONE (605) 333-7556 - FAX (605) 333-7621
October 15, 1996
Dear Fellow Stockholder:
On behalf of the Board of Directors of HF Financial Corp., I cordially
invite you to attend the Annual Meeting of Stockholders of the Corporation to be
held at 2:00 p.m., Sioux Falls, South Dakota time, on November 20, 1996, at the
Best Western Ramkota Inn located at 2400 North Louise Avenue, Sioux Falls, South
Dakota.
Stockholders are being asked to vote upon the election of three directors of
the Corporation, to approve an amendment to the Corporation's 1991 Stock Option
and Incentive Plan to increase the number of shares reserved for issuance under
such Plan from 302,000 to 552,000, to approve the Corporation's 1996 Restricted
Stock Option Plan, and to ratify the appointment of McGladrey & Pullen, LLP as
auditors for the Corporation. Your Board of Directors unanimously recommends
that you vote FOR each of the nominees for director, FOR the approval of the
amendment to the Corporation's 1991 Stock Option and Incentive Plan, FOR the
adoption of the Corporation's 1996 Director Restricted Stock Plan, and FOR the
ratification of McGladrey & Pullen, LLP.
I encourage you to attend the Meeting in person. Whether or not you plan to
attend, however, 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. This will save the Corporation
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,
/s/ Curtis L. Hage
CURTIS L. HAGE
CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
HF FINANCIAL CORP.
225 SOUTH MAIN AVENUE
SIOUX FALLS, SOUTH DAKOTA 57102
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 20, 1996
------------------------
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of HF Financial Corp. (the "Corporation") will be held at 2:00 p.m.
Sioux Falls, South Dakota time, on November 20, 1996, at the Best Western
Ramkota Inn located at 2400 North Louise Avenue, Sioux Falls, South Dakota.
A proxy card and a Proxy Statement for the Meeting are enclosed along with
the 1996 Annual Report to Stockholders. The Meeting is for the purpose of
considering and acting upon:
1. The election of three directors of the Corporation;
2. The approval of an amendment to the Corporation's 1991 Stock Option and
Incentive Plan to increase the number of shares of the Corporation's
common stock reserved for issuance under such Plan from 302,000 to
552,000;
3. The approval of the adoption of the Corporation's 1996 Directors
Restricted Stock Plan;
4. The ratification of the appointment of McGladrey & Pullen, LLP as
auditors of the Corporation for the fiscal year ending June 30, 1997; 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 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 the Meeting may be
adjourned or postponed. Stockholders of record at the close of business on
September 23, 1996, are the stockholders entitled to vote at the Meeting and any
adjournments or postponements thereof.
A complete list of stockholders entitled to vote at the Meeting is available
for examination by any Stockholder, for any purpose germane to the Meeting,
between 9 A.M. and 3 P.M. on days which the Corporation is open for business, at
the main office of the Corporation located at 225 South Main Avenue, Sioux
Falls, South Dakota for a period of twenty days prior to the meeting.
You are requested to complete, sign and date the enclosed proxy card, which
is solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed postpaid return 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/ Donald F. Bertsch
DONALD F. BERTSCH
ACTING SECRETARY
Sioux Falls, South Dakota
October 15, 1996
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IMPORTANT: THE PROMPT RETURN OF PROXY CARDS WILL SAVE THE CORPORATION THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A
PRE-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
HF FINANCIAL CORP.
225 SOUTH MAIN AVENUE
SIOUX FALLS, SOUTH DAKOTA 57102
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 20, 1996
------------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of HF Financial Corp. (the
"Corporation") to be used at the Annual Meeting of Stockholders of the
Corporation (the "Meeting"), to be held at the Best Western Ramkota Inn located
at 2400 North Louise Avenue, Sioux Falls, South Dakota, on November 20, 1996, at
2:00 p.m., Sioux Falls, South Dakota time, and at all adjournments or
postponements of the Meeting. The accompanying Notice of Meeting, proxy card and
this Proxy Statement are first being mailed to stockholders on or about October
15, 1996. Certain of the information provided herein relates to Home Federal
Savings Bank ("Home Federal" or the "Bank"), a wholly owned subsidiary and the
primary operating entity of the Corporation.
At the Meeting, the stockholders of the Corporation are being asked to
consider and vote upon the election of three directors of the Corporation, to
approve an amendment to the Corporation's 1991 Stock Option and Incentive Plan
to increase the number of shares reserved for issuance under such Plan from
302,000 to 552,000, to approve the adoption of the Corporation's 1996 Director
Restricted Stock Plan, and a proposal to ratify the appointment of McGladrey &
Pullen, LLP as the Corporation's independent auditors for the fiscal year ending
June 30, 1997.
The close of business on September 23, 1996, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting and any and
all adjournments thereof. Only stockholders of record at that time are entitled
to notice of and to vote at the Annual Meeting. The total number of shares of
Common Stock, par value $.01 per share, of the Corporation (the "Common Stock")
outstanding on the Record Date was 3,017,123, which are the only securities of
the Corporation entitled to vote at the Annual Meeting. Each stockholder is
entitled to one vote on all matters to be voted on at the Annual Meeting for
each share of Common Stock held in the shareholder's name as of the Record Date.
VOTING RIGHTS AND PROXY INFORMATION
All shares of 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. Directors shall be
elected by a plurality of the votes present in person or represented by proxy at
the Meeting and entitled to vote on the election of directors. In all matters,
the affirmative vote of the majority of shares present in person or represented
by proxy at the Meeting and entitled to vote on the matter shall be the act of
the stockholders. The Corporation does not know of any matters, other than as
described in the Notice of Meeting, that are to come before the Meeting. If any
other matters are properly presented at the Meeting for action, the persons
named in the enclosed form of proxy will have the discretion to vote on such
matters in accordance with their best judgment.
If no instructions are indicated, properly executed proxies will be voted
FOR election of the nominees for director named herein, FOR the approval of the
amendment to the Corporation's 1991 Stock Option and Incentive Plan, FOR the
adoption of the Corporation's 1996 Director Restricted Stock Plan, and FOR the
proposal to ratify the appointment of McGladrey & Pullen, LLP. Proxies marked as
abstaining with respect to a proposal have the same effect as votes against the
proposal. If an executed proxy card is returned and the shareholder has
abstained from voting on any matter, the shares represented by such proxy will
be considered present at the meeting for purposes of determining a quorum and
for purposes of calculating the vote, but will not be considered to have been
voted in favor of such matter. If an executed
proxy is returned by a broker holding shares in street name which indicates that
the broker does not have discretionary authority as to certain shares to vote on
one or more matters, such shares will be considered present at the Meeting for
purposes of determining a quorum, but will not be considered to be represented
at the meeting for purposes of calculating the vote with respect to such matter.
One-third of the shares of the Corporation's Common Stock, present in person or
represented by proxy, shall constitute a quorum for purposes of the Meeting.
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 Corporation 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 Corporation 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 Donald F. Bertsch, Acting Secretary, HF Financial Corp., 225 South Main
Avenue, Sioux Falls, South Dakota 57102.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth certain information regarding ownership of
the Common Stock as of October 1, 1996, by (i) each person known to the
Corporation to own beneficially more than 5% of the Common Stock, (ii) each
director of the Corporation, (iii) each officer named in the executive
compensation table on page 6 of this Proxy Statement, and (iv) all directors and
officers as a group. Unless otherwise indicated, each person in the table has
sole voting and investment power as to the shares shown.
AMOUNT AND NATURE OF PERCENTAGE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING STOCK
- ---------------------------------------------------- -------------------- -----------------
John T. Vucurevich (1) ............................. 298,700 9.90%
629 Quincy Street
PO Box 170
Rapid City, SD 57709
HF Financial Corp. Employee Stock Ownership Plan
(2) . 205,561 6.81%
225 South Main Avenue
Sioux Falls, South Dakota 57102
Jeffrey L. Gendell (3) ............................. 175,100 5.80%
Tontine Partners, L.P.
31 West 52nd Street, 17th Floor
New York, New York 10019
Curtis L. Hage, Chairman, President and Chief
Executive Officer and Director (4)................ 114,540 3.73%
Donald F. Bertsch (5) .............................. 59,080 1.95%
Paul J. Hallem, Director (6) ....................... 41,614 1.38%
Robert L. Hanson, Director (6) ..................... 14,394 *
Mark A. Jerstad, Ph.D., Director (6) ............... 8,794 *
Linda Laskowski .................................... 500 *
Jeffrey G. Parker, Director (6) .................... 10,394 *
Wm. G. Pederson .................................... 1,000 *
Thomas L. Van Wyhe ................................. 1,000 *
Directors and executive officers as a group (13
persons) (7) ..................................... 282,147 9.08%
*Indicates individual owns less than one percent of outstanding shares of Common Stock.
- ------------------------
(1) The above information regarding beneficial ownership by Mr. John T.
Vucurevich is as reported in a Schedule 13D dated August 4, 1995.
2
(2) Includes 101,482 shares allocated to the individual accounts of employees,
officers and directors, with respect to which such individuals are deemed to
have sole voting and no investment power. Each participant may instruct the
Employee Stock Ownership Plan ("ESOP") trustee, Firstar Bank of Minnesota,
N.A., as to the voting of the shares allocated to such participant's account
under the ESOP. Unallocated shares and shares for which voting instructions
are not received shall be voted by the ESOP trustee in the same ratio as the
shares with respect to which instructions are received. The ESOP trustee may
be deemed under applicable regulations to "beneficially own" the 104,079
shares owned by the ESOP which have not been allocated to participants.
(3) The above information regarding beneficial ownership by Mr. Jeffrey L.
Gendell is as reported in a Schedule 13D dated April 18, 1996.
(4) Includes 43,782 shares held directly or held by certain members of Mr.
Hage's family, with respect to which shares Mr. Hage may be deemed to have
sole or shared voting and/or investment power. Also includes awards of
14,448 shares of Common Stock and 51,710 shares subject to options granted
to Mr. Hage under the Bank's Management Recognition and Retention Plan and
Trust (the "MRP") and the Corporation's 1992 Stock Option and Incentive Plan
(the "Stock Option Plan"), respectively. Also includes 4,600 shares
allocated to Mr. Hage's account under the ESOP.
(5) Includes 49,106 shares held directly by Mr. Bertsch with sole voting and/or
investment power. Also includes awards of 3,610 shares of Common Stock and
4,000 shares subject to options granted to Mr. Bertsch under the Bank's MRP
and the Stock Option Plan, respectively. Also includes 2,364 shares
allocated to Mr. Bertsch's account under the ESOP.
(6) Includes options granted under the Stock Option Plan and the MRP,
respectively as follows: Hallem-- 10,192, 6,422; Hanson--6,974, 1,000;
Jerstad--6,795, 1,000; and Parker--6,794, 1,000.
(7) Includes shares held directly, as well as 10,327 shares allocated under the
ESOP and 32,646 shares granted under the MRP and 86,622 shares subject to
options granted under the Stock Option Plan, which are currently exercisable
and are held in retirement accounts or 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 and officers may be deemed to have sole or shared
voting and investment power.
3
PROPOSAL I--ELECTION OF DIRECTORS
The Corporation's Board of Directors currently consists of eight members,
five of which were elected by the shareholders. The Board is divided into three
classes, one class of the directors is elected annually. Directors of the
Corporation are generally elected to serve for a three-year term or until their
respective successors are elected and qualified. All nominees have agreed to
stand for election at the annual meeting. If, prior to the annual meeting, the
Board of Directors learns that any nominee will be unable to serve by reason of
death, incapacity or other unexpected occurrence, the proxies which would have
otherwise been voted for such nominee will be voted for a substitute nominee, if
any, elected by the Board.
INFORMATION WITH RESPECT TO NOMINEES AND CONTINUING DIRECTORS
The principal occupation and business experience for the last five years and
certain other information with respect to each nominee for election as a
director and the other directors of the Corporation are set forth below. The
information concerning the nominees and the continuing directors has been
furnished by them to the Corporation.
INFORMATION ABOUT NOMINEES
CURTIS L. HAGE, age 50, a Class III Director, is Chairman, President and
Chief Executive Officer of the Corporation. Mr. Hage was elected Chairman of the
Board of Directors of the Corporation in September 1996 and has held the
position of President and Chief Executive Officer of the Corporation since
February 1991. Mr. Hage joined the Bank in 1968 and served in various capacities
prior to being elected its Executive Vice President in 1986. He was elected to
the Board of Directors of the Bank in October 1986.
JEFFREY G. PARKER, age 49, a Class III Director, is President and Chief
Executive Officer of Parker Transfer and Storage, Inc., Sioux Falls, South
Dakota, a moving and storage company. He has held his current position since
1969.
THOMAS L. VAN WYHE, age 46, a Class III Director, was elected on July 26,
1996, by the Corporation's Board of Directors to fill a vacancy created on that
date by the Board's decision to increase its membership from seven to eight
members. Mr. Van Wyhe is President of JSI Trane, Sioux Falls, South Dakota, an
air conditioning and heating sales and service company. He has been employed in
various capacities by that organization since 1973 and has held his present
position since 1994.
INFORMATION ABOUT CONTINUING DIRECTORS
PAUL J. HALLEM, age 70, a Class I Director, is currently retired. Prior to
his retirement in February 1991, Mr. Hallem was President and Chief Executive
Officer of the Bank, a position he had held since 1986. Mr. Hallem has over 39
years of experience in the savings and loan industry.
ROBERT L. HANSON, age 50, a Class II Director, is Chief Executive Officer of
Harold's Photo Centers located in Sioux Falls, South Dakota, a position he has
held since 1980.
MARK A. JERSTAD, PH.D., age 54, a Class I Director, is President and Chief
Executive Officer of The Evangelical Lutheran Good Samaritan Society, a
Christian, nonprofit organization, that provides services to senior citizens. He
has been employed in various capacities by that organization since 1985 and has
held his present position since October 1989.
LINDA LASKOWSKI, age 46, a Class II Director, was elected on July 26, 1996,
by the Corporation's Board of Directors to fill a vacancy created by the
retirement of former Board member Lee E. Engen. Ms. Laskowski is the Vice
President-Telephony of U S WEST, a telecommunications company. She has been with
that organization in various capacities since June 1973. Ms. Laskowski became a
member of the Home Federal Savings Bank Board of Directors on October 1, 1995.
4
WM. G. PEDERSON, age 40, a Class I Director, was elected on July 26, 1996,
by the Corporation's Board of Directors to fill a vacancy created on June 30,
1996, by the retirement of former Board member Douglas L. Hunter. Mr. Pederson
is Owner, President and Chief Executive Officer of PAM Oil, Inc., Sioux Falls,
South Dakota, a wholesale distributor of automotive products. He has held his
current position since 1986 and has been with the organization since 1978.
The Board of Directors of the Bank is currently comprised of the same eight
members as the Board of Directors of the Corporation. Because the Corporation
owns all of the issued and outstanding shares of capital stock of the Bank, the
Corporation elects the directors of the Bank.
MEETINGS OF THE BOARD OF DIRECTORS, COMMITTEES AND COMPENSATION
MEETINGS AND COMPENSATION OF THE CORPORATION'S BOARD OF DIRECTORS. Meetings
of the Corporation's Board of Directors are generally held on a quarterly basis.
The Board of Directors met 11 times during fiscal 1996. During fiscal 1996, no
incumbent director of the Corporation attended fewer than 75% of the aggregate
of the total number of Board meetings and the total number of meetings held by
the committees of the Board of Directors on which they served. In fiscal 1996,
non-employee directors received fees of $1,000 per month and a $300 fee for
attendance at committee meetings of which they are a member. Employee directors
receive no fees for their services as a director.
COMMITTEES OF THE CORPORATION. The Board of Directors of the Corporation
has standing Audit and Personnel, Compensation and Benefits Committees.
The Audit Committee recommends independent auditors to the Board, reviews
the results of the auditors' services, reviews with management and the internal
auditors the systems of internal control and internal audit reports and assures
that the books and records of the Corporation are kept in accordance with
applicable accounting principles and standards. The members of the Audit
Committee are Directors Hallem (Chairman), Jerstad and Parker. The Audit
Committee held three meetings in fiscal 1996.
The Personnel, Compensation and Benefits Committee is composed of Directors
Jerstad (Chairman), Hanson and Parker. The Personnel, Compensation and Benefits
Committee is responsible for administering the Corporation's Stock Option Plan
and reviews compensation and benefit matters. The Personnel, Compensation and
Benefits Committee held three meetings during fiscal 1996.
The entire Board of Directors acts as a Nominating Committee for selecting
nominees for election as directors. While the Board of Directors of the
Corporation will consider nominees recommended by stockholders, the Board has
not actively solicited such nominations. Pursuant to the Corporation's Bylaws,
nominations by stockholders must be delivered in writing to the Secretary of the
Corporation at least 30 days before the date of the Meeting.
5
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation paid
by Home Federal for services in all capacities rendered during the three fiscal
years ended June 30, 1994, 1995 and 1996 to the Corporation's Chief Executive
Officer and for the Chief Financial Officer for fiscal year ended June 30, 1996.
No other officer received compensation in excess of $100,000 during fiscal 1996.
The Corporation's Officers do not receive any cash compensation from the
Corporation for their services performed in their capacities as officers of the
Corporation.
LONG TERM COMPENSATION AWARDS
ANNUAL COMPENSATION ------------------------------ ALL OTHER
- ----------------------------------------------------------------------------- RESTRICTED STOCK OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) AWARD(S) ($) SARS (#) ($)
- ------------------------------------------- --------- ---------- --------- ----------------- ----------- -------------
Curtis L. Hage, President & 1996 $ 180,000 $ 4,028 -0- -0- 9,445(1)
Chief Executive Officer 1995 $ 172,500 $ 2,756 -0- 14,694 9,257(1)
1994 $ 155,000 $ 15,000 -0- 3,182 8,816(1)
Donald F. Bertsch, Senior 1996 $ 100,000 $ 3,702 -0- -0- 13,171(2)
Vice President & Chief 1995 $ 95,800 $ 1,531 -0- 6,122 11,346(2)
Financial Officer 1994 $ 85,800 $ 7,500 -0- 1,818 12,155(2)
- ------------------------
(1) Includes $5,850 and $3,595 for 1996, $5,187 and $4,070 for 1995, and $4,362
and $4,454 for 1994, which represents the Bank's contributions to the
Pension Plan and the ESOP, respectively, on behalf of Mr. Hage.
(2) Includes $10,641 and $2,530 for 1996, $8,905 and $2,441 for 1995, and $9,847
and $2,308 for 1994, which represents the Bank's contributions to the
Pension Plan and the ESOP, respectively, on behalf of Mr. Bertsch.
OPTION GRANTS IN LAST FISCAL YEAR
There were no options granted to executive officers during the year ended
June 30, 1996.
AGGREGATE JUNE 30, 1996, OPTION VALUES
The following table provides information regarding the number and value of
options granted to the Corporation's Chief Executive and Chief Financial
Officers at June 30, 1996.
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/
FY-END (#) SARS AT FY-END (1)
SHARES ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- --------------- ----------- ----------- ------------- ----------- -------------
Curtis L. Hage............. N/A N/A 51,710 10,090 $ 513,036 $ 29,353
Donald F. Bertsch.......... 20,000 $ 200,000 4,000 4,402 $ 15,712 $ 13,015
- ------------------------
(1) Represents the aggregate market value (market price of the Common Stock less
the exercise price) of the option granted based upon the average of the bid
and asked price of $15.00 per share of the Common Stock as reported on the
NASDAQ National Market System on June 30, 1996.
EMPLOYMENT AGREEMENTS
On April 23, 1992, the Bank entered into employment agreements with Messrs.
Hage and Bertsch. Amendments to those agreements were approved by the Board in
July of 1995. The employment agreements as amended provide for annual base
salaries as determined by the Board of Directors, which
6
may be not less than the employee's salary as of April 8, 1992, as increased
since that date. Salary increases are reviewed not less often than annually, and
are subject to the sole discretion of the Board of Directors. Each employment
agreement provides for an initial term of three years which, as of the end of
each year, is extended for one additional year upon authorization by the Board
of Directors. Each agreement addresses the employee's termination due to death,
as well as termination for cause or due to certain other events specified by
regulations of the Office of Thrift Supervision ("OTS"). The employment
agreements as amended are terminable by the employees upon 90 days' prior
written notice to the Bank. Each amended agreement provides for payment to the
employee, in the event there is a change in control as defined in the
agreements, of the Corporation or Home Federal, where employment terminates
involuntarily in connection with such change in control or within 24 months
thereafter. In such an event, the employee is entitled to payment of the
remaining salary payable under the agreement, as well as certain benefits, plus
a termination payment equal to 299% of the employee's compensation then in
effect under the employment agreement, provided that payments under the
agreement may not exceed an amount that would cause certain adverse tax
consequences to the Bank and the employee under Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"). Such termination payments are
also provided on a similar basis in the event of a voluntary termination of
employment due to a loss of the employee's status in connection with a change in
control that was at any time opposed by the Bank's or the Corporation's Board of
Directors. Assuming a change in control were to take place as of June 30, 1997,
the aggregate amount payable to Mr. Hage and Mr. Bertsch, pursuant to this
change in control provision would be approximately $472,500 and $257,294,
respectively. The employment agreements provide for, among other things,
participation in an equitable manner in employee benefits applicable to
executive personnel. On May 8, 1996, the Board of Directors extended Mr. Hage's
and Mr. Bertsch's amended employment agreements by one year to April 7, 1999.
PENSION PLAN
The Corporation sponsors a defined benefit pension plan for its employees
(the "Pension Plan"). An employee is eligible to participate in the Pension Plan
upon the completion of one year of service and upon reaching the age of 21. That
participation is retroactive to the previous July 1. A participant must complete
five years of service before such participant earns a vested interest in accrued
retirement benefits, at which time the participant is 100% vested. The Pension
Plan is funded solely through contributions made by the Corporation. It is
anticipated that this obligation will be funded through the Corporation's future
earnings.
The following table sets forth, as of June 30, 1996, estimated annual
pension benefits for individuals at age 65 payable in the form of a life annuity
under the most advantageous Pension Plan provisions for various levels of
compensation and years of service. The figures in this table are based upon the
assumption that the individual is age 65 as of June 30, 1996, with a specified
number of years of service as calculated under the Pension Plan.
YEARS OF SERVICE
------------------------------------------
REMUNERATION 10 20 30 40
- ------------- --------- --------- --------- ---------
$ 50,000 $ 9,236 $ 19,481 $ 29,726 $ 32,360
75,000 14,736 30,981 47,226 51,173
100,000 16,512 34,224 51,937 56,038
125,000 16,842 34,554 52,267 56,238
150,000 17,172 34,884 52,597 56,438
175,000 17,172 34,884 52,597 56,438
The benefit provided to a participant at normal retirement age (65 or if
later, the tenth anniversary of initial date of participation) is generally
based on the average of the participant's monthly compensation during which the
participant's compensation was highest ("average monthly compensation").
Compensation for this purpose includes all taxable compensation paid to the
participant, which includes salary, bonus
7
and restricted stock awards, upon vesting. Compensation for 1996 was limited to
$150,000 as stated under Section 401(a)(17) of the Code. The monthly benefit
provided to a participant who retires at age 65 is equal to 1.00% of average
monthly compensation for each year of service up to a maximum of 30 years plus
.65% of average monthly compensation in excess of "covered compensation" (as
defined in the Pension Plan) also multiplied by the participant's number of
years of service, up to a maximum of 30, without offset of the participant's
anticipated Social Security benefits.
A participant is eligible for an early retirement benefit upon the
attainment of age 62, provided such participant has participated in the Pension
Plan for a minimum of seven years. The monthly benefit payable at early
retirement is the actuarial value of the participant's accrued benefit. If a
participant continues to work beyond age 65, the participant is entitled to the
greater of: (i) such participant's benefit taking into account all service and
salaries or (ii) the actuarial increase of the benefit that would have been
payable had the participant retired on the normal retirement date. In the event
of termination of employment for any reason other than death, disability or
early or normal retirement, a participant is still entitled to 100% of the
participant's accrued normal retirement benefit, provided that the participant
is vested.
The normal form of benefit is a monthly income payable for life. A
participant may elect, at the time of retirement, several optional forms of
benefits which are the actuarial equivalent of the normal form, such as the
joint and survivor benefits for married participants or an actuarially
equivalent lump sum payment.
At June 30, 1996, the estimated credited years of service of Mr. Hage was
25.6 years. Mr. Hage had $150,000 of compensation covered under the Pension Plan
during fiscal 1996; however, Mr. Hage's benefits payable under the Pension Plan
upon retirement would be limited because his salary level exceeds the maximum
covered compensation under the Pension Plan.
At June 30, 1996, the estimated credited years of service of Mr. Bertsch was
5.6 years. Mr. Bertsch had approximately $20,000 projected annual compensation
under the Pension Plan based on fiscal 1996.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Personnel, Compensation and Benefits Committee has furnished the
following report on executive compensation:
Since its inception, the Personnel, Compensation and Benefits Committee of
the Board of Directors has been responsible for supervising and recommending for
full Board approval the compensation and benefits of the executive officers of
the Bank. The Committee has reviewed, at least annually, competitive salary
levels at other financial institutions and set salary ranges for executive
officer positions based on a philosophy of placing the average of the range in
relation to the competitive value of the position. From this reference point,
the base salaries of executive officers of the Bank have been set to be
commensurate with their experience, scope of duties and responsibilities and
overall level of performance.
At present, the executive compensation program is comprised of salary,
bonuses, incentive opportunities in the form of stock options, stock
appreciation rights and restricted stock, and miscellaneous benefits typically
offered to executives of similar corporations. Along with other eligible
employees, executive officers also participate in a defined benefit retirement
program and an Employee Stock Ownership Plan.
The compensation and bonuses for all executive officers, including the Chief
Executive Officer, have been based on the performance of the organization.
Specific areas that the Personnel, Compensation and Benefits Committee has
reviewed to determine the salary increases are return on assets, interest rate
risk measurements, capital ratios, delinquency ratios and regulatory ratings. In
addition, during fiscal 1996, in setting the compensation for the Chief
Executive Officer, the Personnel, Compensation and Benefits Committee also took
into consideration peer group comparisons of compensation for chief executive
officers and the contribution of the Chief Executive Officer to the overall
performance of the Bank.
8
Annual incentive plans for executive officers and the entire staff of the
Bank were developed and implemented in fiscal year 1996. Specific goals for the
organization were established along with specific goals for individual
departments. This program was developed to enhance shareholder value and enable
the organization to attract and retain competent management and employees.
The foregoing report is furnished by Messrs. Jerstad (Chairman), Hanson and
Parker.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Dr. Jerstad, who is President and Chief Executive Officer of The Evangelical
Lutheran Good Samaritan Society, serves on the Personnel, Compensation and
Benefits Committee of the Board of Directors for purposes of setting
compensation levels for Home Federal for fiscal 1996. Concurrently, Mr. Hage,
President and Chief Executive Officer, serves on The Evangelical Lutheran Good
Samaritan Society as Chairman of the Board of Directors and the Executive
Committee thereof which sets compensation for the executives of that
organization.
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The following line graph compares the cumulative total stockholder return on
the Corporation's Common Stock to the cumulative total return of the NASDAQ U.S.
and Foreign Total Return Index and the NASDAQ Bank Stock Index for the period
March 31, 1992, through June 30, 1996. The graph assumes that $100 was invested
on March 31, 1992, and that all dividends were reinvested. The Corporation's
Common Stock began trading on the NASDAQ National Market System on April 8,
1992.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
TOTAL RETURN TO
SHAREHOLDERS
March 1992 and June 1996
NASDAQ US AND NASDAQ
FOREIGN RETURN BANK STOCK HF FINANCIAL
INDEX INDEX CORP.
3/31/92 $100.000 $100.000 $100.000
6/30/92 $93.215 $109.025 $145.000
9/30/92 $96.742 $112.420 $153.517
12/31/92 $112.278 $129.827 $177.328
3/31/93 $114.835 $143.649 $217.726
6/30/93 $117.623 $138.827 $222.524
9/30/93 $127.438 $151.752 $257.125
12/31/93 $129.996 $148.055 $232.583
3/31/94 $124.571 $146.265 $228.668
6/30/94 $118.256 $157.886 $263.913
9/30/94 $128.241 $159.612 $299.307
12/31/94 $125.766 $147.476 $258.867
3/31/95 $136.498 $161.523 $263.068
6/30/95 $155.103 $178.296 $334.063
9/30/95 $178.516 $201.278 $330.563
12/31/95 $180.161 $219.698 $329.614
3/31/96 $188.890 $228.426 $304.262
6/30/96 $203.578 $232.295 $327.825
CERTAIN TRANSACTIONS
The Bank, like many financial institutions, has followed a policy of
granting to officers, directors and employees loans secured by the borrower's
residence and consumer loans. Consumer loans to non-officer employees are
originated at one percent below Home Federal's quoted interest rate. In
addition, in connection with single-family mortgage loans made to non-officer
employees, all in-house closing costs, expenses and points are waived. If the
employee relationship ceases, the terms of the loan revert back to the terms
that would have applied but for the employee-employer relationship. All loans to
the Bank's
9
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, and do not involve more than the normal risk of collectibility or present
other unfavorable features. All loans by the Bank to its directors and executive
officers are subject to OTS regulations restricting loans and other transactions
with affiliated persons of the Bank. Federal law requires that all such loans be
made on terms and conditions comparable to those for similar transactions with
non-affiliates. All loans from the Bank to its officers, directors, key
employees or their affiliates are approved by the Bank's Loan Committee and
ratified by the Bank's Board of Directors.
The Corporation intends that all transactions between the Corporation or the
Bank and its officers, directors, holders of 10% or more of the shares of any
class of its Common Stock and affiliates thereof, will contain terms no less
favorable to the Corporation than could have been obtained by it in arm's-length
negotiations with unaffiliated persons and will be approved by a majority of
disinterested directors of the Corporation, if any.
There were no loans made by Home Federal Savings Bank to its directors and
executive officers whose aggregate indebtedness to Home Federal Savings Bank
exceeded $60,000 at any time since June 30, 1995.
At June 30, 1996, Home Federal had approximately $94,500 (or 0.2% of the
Corporation's stockholders' equity) of loans to directors, executive officers
and affiliates of such persons.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and persons who own more than
10% of a registered class of the Corporation's equity securities, to file with
the SEC initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Corporation. Officers, directors
and greater than 10% stockholders are required by SEC regulation to furnish the
Corporation with copies of all Section 16(a) forms they file. To the
Corporation's knowledge, based solely on a review of the copies of such reports
furnished to the Corporation and written representations that no other reports
were required, during the fiscal year ended June 30, 1996, all Section 16(a)
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.
PROPOSAL II--AMENDMENT TO THE
CORPORATION'S 1991 STOCK OPTION AND INCENTIVE PLAN
BACKGROUND AND SUMMARY OF PLAN
On September 18, 1996, the Personnel, Compensation and Benefits Committee of
the Corporation's Board of Directors (the "Committee"), subject to shareholder
approval, amended the Corporation's 1991 Stock Option and Incentive Plan (the
"Plan") to increase the number of shares of Common Stock reserved for issuance
pursuant to the Plan from 302,000 to 552,000. The purpose of the Plan is to
strengthen the Corporation's ability to attract and retain key employees and to
furnish additional incentives to such persons by encouraging them to become
owners of Common Stock. The Plan provides for the granting of options,
restricted stock and stock appreciation rights to designated employees,
non-employees and consultants of the Corporation.
Copies of the Plan and the amendment to the Plan are available for
examination at the main office of the Corporation located at 225 South Main
Avenue, Sioux Falls, South Dakota, and will be mailed at no charge to any
shareholder who requests a copy. A copy of the Plan will also be available for
examination at the Meeting.
The closing price of the Corporation's Common Stock on October 1, 1996, as
reported on the NASDAQ National Market System, was $14.75 per share.
10
DESCRIPTION OF THE PLAN
Stock options, stock appreciation rights ("SARs"), limited SARs and
restricted stock awards may be granted to directors and officers of the
Corporation under the Plan. Options granted under the Plan may be either options
that qualify as "incentive stock options" (options that afford tax treatment to
recipients upon compliance with certain restrictions and that do not normally
result in tax deductions to the employer) or options that do not so qualify. In
the event of a change in control of the Corporation, outstanding options may
become immediately exercisable and restricted stock and SARs may become fully
vested. The exercise price of stock options granted under the Plan is required
to be at least equal to the fair market value per share of the stock on the date
of grant. These share amounts are subject to adjustment in the event of any
stock dividend, stock split, combination or exchange of shares, merger,
consolidation or other relevant capitalization change.
The Plan provides for the grant of SARs at any time, whether or not the
participant then holds stock options granting him or her the right to receive
the excess of the market value of the shares represented by the SARs on the date
exercised over the exercise price. SARs generally will be subject to the same
terms and conditions and exercisable to the same extent as stock options.
The Plan also provides for the grant of restricted stock, subject to
forfeiture, if the participant fails to remain in the continuous services of the
Corporation, or one of its subsidiaries, as a director, officer or employee for
a stipulated period. The holder of restricted stock shall have all of the rights
of a stockholder, including the right to receive dividends (with payment
deferred if the Committee so decides) and the right to vote the shares. The
participant may not, however, sell, assign, transfer, pledge or otherwise
encumber any of the restricted stock during the restricted period.
PROPOSED PLAN AMENDMENT
Of the 302,000 shares of Common Stock reserved by the Corporation for grant
pursuant to the Plan, 245,939 were subject to options as of the date of this
proxy statement. Because few additional shares are available for grant under the
Plan, the Corporation's Board of Directors recommends that the shareholders
approve the amendment to increase the shares available for issuance pursuant to
the Plan.
ADMINISTRATION
The Plan is administered by the Committee, which consists exclusively of
non-employee directors. The Committee has the authority to amend or terminate
the Plan subject, in certain cases, to Shareholder approval and to grant
options, restricted stock and stock appreciation rights determine the terms and
restrictions of such grants, select the employees to whom such grants are made,
promulgate rules relating to the Plan and to take other actions necessary or
advisable for the administration of the Plan.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Under the Plan, stock options may be issued (i) as incentive stock options
within the meaning of Section 422 of the Code, (ii) as non-statutory stock
options that do not qualify as incentive stock options, or (iii) a combination
of both. There is no taxable income to a participant as a result of the grant of
an incentive stock option or the exercise of an incentive stock option if the
participant does not dispose of the acquired stock for certain time periods.
However, the difference between the fair market value of the shares of Common
Stock under the option at the time of exercise and the option price will
generate a tax preference item that could result in an alternative minimum tax
liability for the employee. Upon sale of such shares, the difference between the
sale price and the option price will generally be taxable income. The
Corporation is not entitled to a federal income tax deduction upon the grant or
exercise of incentive stock options. Generally, there is no taxable income to a
participant as a result of the grant of a non-statutory stock option. However,
upon exercise, the participant will realize taxable income equal to the
difference between the fair market value of the Common Stock at the time of
exercise and the option price. The Corporation is not entitled to a tax
deduction upon the grant of a non-statutory stock option,
11
but is entitled to a tax deduction equal to the participant's taxable income
realized upon the exercise of the stock option. Restricted stock granted under
this Plan is subject to restrictions on its ownership and sale rights. There is
no tax upon the granting of restricted stock, but it is fully taxable as is
nonforfeitable. The Corporation receives a tax deduction at that time equal to
the value of the restricted stock when restrictions lapse. The foregoing
statements are based on current federal income tax laws and regulations and are
subject to changes in such tax laws and regulations, or interpretations thereof.
The Corporation's Board of Directors recommends that you vote in favor of
increasing the number of authorized shares of the Corporation's Common Stock
subject to its 1991 Stock Option and Incentive Plan.
PROPOSAL III--ADOPTION OF THE
CORPORATION'S 1996 DIRECTOR RESTRICTED STOCK PLAN
On September 18, 1996, the Committee adopted and approved the Corporation's
1996 Director Restricted Stock Plan (the "Director Restricted Stock Plan"),
subject to shareholder approval, pursuant to which awards of restricted shares
of Common Stock ("Restricted Shares") will be made to outside directors of the
Corporation. The purpose of the Director Restricted Stock Plan is to promote the
interests of the Corporation and its shareholders by establishing a direct line
between the financial interests of the Corporation's outside directors and the
performance of the Corporation, thereby enabling the Corporation to attract and
retain highly competent individuals to serve as its outside directors.
The Plan provides for an annual grant of Restricted Shares to each outside
(non-employee) director in a number of full shares equaling each director's
annual retainer, of $13,000, with any excess amounts being paid to the
Corporation's directors in cash rather than in fractional shares. The Plan
provides that the directors' annual retainer be increased annually as of July 1,
in an amount equal to the increases in the Consumer Price Index, North Central
Urban Consumers for the twelve month period ending each previous April 30.
Outside directors will no longer be eligible to receive any grants under the
1991 Stock Option and Incentive Plan.
Copies of the Director Restricted Stock Plan are available for examination
at the main office of the corporation located at 225 South Main Avenue, Sioux
Falls, South Dakota and will be mailed at no charge to any shareholder who
requests a copy. A copy of the Director Restricted Stock Plan will also be
available for examination at the meeting.
DURATION; SHARE AUTHORIZATION
The Director Restricted Stock Plan will become effective on January 1, 1997,
subject to the approval of the Corporation's shareholders, and will remain
effective until January 1, 2007, unless terminated earlier by the Corporation's
Board of Directors, acting through the Committee.
The maximum number of shares of Common Stock which may be issued or
delivered and as to which awards will be granted under the Director Restricted
Stock Plan is 50,000 shares. These share amounts are subject to adjustment in
the event of any stock dividend, stock split, combination or exchange of shares,
merger, consolidation or other relevant capitalization change.
The shares of Common Stock issued or delivered under the Director Restricted
Stock Plan will be authorized and unissued shares. Forfeited Restricted Shares
may again be subject to awards under the Director Restricted Stock Plan.
ADMINISTRATION
The Director Restricted Stock is to be administered by the Committee or such
other committee as the Board may designate. The Committee will establish rules
and guidelines relating to the Director Restricted Stock Plan and take such
other action as may be necessary for the proper administration of the director
Restricted Stock Plan. The Committee is granted no discretion in determining
which directors are eligible, the amount, terms and/or restrictions of such
awards.
12
PARTICIPANTS
All outside directors of the Corporation will receive an award under the
Director Restricted Stock Plan. At the present time, seven persons are eligible
to participate in the Director Restricted Stock Plan.
AWARDS UNDER DIRECTOR RESTRICTED STOCK PLAN
The awards made under the Director Restricted Stock Plan are formula awards
which are annually granted to outside directors, with the number of shares of
Restricted Stock awarded equal to the directors' annual retainer. In general,
Restricted Shares will be non-transferable and subject to a risk of forfeiture
during the period of a director's service on the Corporation's Board of
Directors. In all events, a director must complete one year of service before
these restrictions lapse, even if Board service ends before that date. Once that
year of service is completed, all Restricted Shares become nonforfeitable upon a
change in control, even before the director's service ends. Generally, a
director may not sell restricted shares until Board service ends.
As soon as practicable after the date of grant of Restricted Shares, stock
certificates representing such shares will be registered in the name of the
participant. During the restriction period, these certificates will be held in
custody by the Corporation or its designee. Despite the restrictions, the
participant will be the registered owner of the Restricted Shares and will have
the right to vote and receive dividends and distributions, if any, with respect
to such shares.
TERMINATION AND AMENDMENT
The Corporation's Board of Directors may amend or terminate the 1996
Director Restricted Stock Plan but, without a participant's consent, no such
action shall affect or in any way impair the rights of such participant under
any award granted prior to such action.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal federal income tax
consequences of awards under the Director Restricted Stock Plan based upon
current federal income tax laws. The summary is not intended to be exhaustive
and, among other things, does not describe state, local or foreign tax
consequences.
Due to the presence of transfer and forfeiture restrictions, a grant of
Restricted Shares has generally no tax consequences to the Corporation or the
participant. Except as discussed below, the full fair market value of Common
Stock issued as Restricted Shares will be taxed as ordinary income to the
participant when the restrictions on the stock expire, with such value being
determined at the time of such expiration. The Corporation will receive a
corresponding tax deduction at the same time. Dividends received by the
participant during the restriction period are treated as income and therefore
are taxed as ordinary income to the participant and are deductible by the
Corporation. Dividends received after the restriction period are treated as
dividends to the participant and are not deductible by the Corporation.
The participant may, under Section 83(b) of the Code, elect to report the
current fair market value of Restricted Shares as ordinary income in the year of
grant of the Restricted Shares, even though the shares of Common Stock are
subject to forfeiture restrictions. If a participant makes such an election, the
Corporation will receive an immediate tax deduction for such fair market value
of the shares in the year of grant, but will receive no deduction for any
subsequent appreciation during or after the restriction period. In addition, if
a Section 83(b) election is made, dividends paid during or after the restriction
period will be treated as dividends to the participant and, therefore, will not
be deductible by the Corporation.
In the case of Restricted Shares as to which no Section 83(b) election is
filed, the participant's tax basis in the shares of Common Stock received equals
the amount of ordinary income recognized by the participant upon the lapse of
the restrictions with respect to such shares plus any amount paid by the
participant for the shares. Upon a subsequent sale or exchange of the shares,
the amount realized by the
13
participant in excess of his tax basis will be short-term or long-term capital
gain or loss, depending on whether the participant has held the shares for at
least one year after the restrictions lapse. The Corporation will receive no
additional deduction at the time of disposition of the Common Stock by the
participant.
In the case of Restricted Shares as to which a Section 83(b) election is
made, any appreciation in the value of the subject shares of Common Stock after
a date of grant will be recognized as capital gain by the participant at such
time as the participant disposed of the shares in a taxable transaction. Any
capital gain then realized will be long-term or short-term, depending upon
whether the participant has held the shares for at least one year from the date
of grant.
The Corporation's Board of Directors recommends that you vote in favor of
adopting the 1996 Director Restricted Stock Plan.
PROPOSAL IV--RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors has renewed the Corporation's agreement for McGladrey
& Pullen, LLP to be its auditors for the fiscal year ending June 30, 1997,
subject to the ratification of the appointment by the Corporation's
stockholders. A representative of McGladrey & Pullen, LLP is expected to attend
the Annual Meeting to respond to appropriate questions and will have an
opportunity to make a statement.
The Board of Directors recommends that stockholders vote "FOR" the
ratification of the appointment of McGladrey & Pullen, LLP as the Corporation's
auditors for the fiscal year ending June 30, 1997.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Corporation'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 Corporation's executive offices,
225 South Main Avenue, Sioux Falls, South Dakota 57102, no later than May 23,
1997. Any such proposals shall be subject to the requirements of the proxy rules
adopted under the Securities Exchange Act of 1934.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than the matters described above in this Proxy Statement. However,
if any other matters should properly come before the Meeting, it is intended
that holders of the proxies will act in accordance with their best judgment.
The cost of solicitation of proxies will be borne by the Corporation. The
Corporation 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 and officers of the Corporation and regular employees of the Bank may
solicit proxies personally or by telegraph or telephone, without additional
compensation.
By Order of the Board of Directors,
/s/ Donald F. Bertsch
DONALD F. BERTSCH
ACTING SECRETARY
Sioux Falls, South Dakota
October 15, 1996
14
REVOCABLE PROXY CARD
HF FINANCIAL CORP.
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 20, 1996
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints, Paul J. Hallem, Robert L. Hanson, and
Mark A. Jerstad, Ph.D., each with the power to act alone and with full power
of substitution, to act as attorneys and proxies for the undersigned to vote
all shares of common stock of the Corporation which the undersigned is
entitled to vote at the Annual Meeting of Stockholders (the "Meeting"), to be
held on November 20, 1996, at the Best Western Ramkota Inn located at 2400
North Louise Avenue, Sioux Falls, South Dakota at 2:00 p.m., Sioux Falls,
South Dakota time, and at any and all adjournments thereof, as specified on
the reverse side of this proxy.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED HEREON AND THE
APPOINTMENT OF MCGLADREY & PULLEN, LLP. IF ANY OTHER BUSINESS IS PRESENTED AT
SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR
BEST JUDGEMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE MEETING.
(CONTINUED ON REVERSE SIDE)
Please mark your votes as indicated in this example
/X/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
LISTED BELOW, THE APPROVAL OF THE AMENDMENT TO THE CORPORATION'S 1991 STOCK
OPTION AND INCENTIVE PLAN, THE ADOPTION OF THE CORPORATION'S 1996 DIRECTOR
RESTRICTED STOCK PLAN, AND THE APPOINTMENT OF MCGLADREY & PULLEN, LLP.
For all
For all nominees, except
nominees as marked below
I. To elect as directors of all / / / /
nominees listed.
FOR AGAINST ABSTAIN
II. To approve the amendment to the Corporation's / / / / / /
1991 Stock Option and Incentive Plan to increase
the number of shares of the Corporation's common
stock reserved for issuance under such Plan from
302,000 to 552,000.
III. To approve the adoption of the Corporation's / / / / / /
1996 Director Restricted Stock Plan.
IV. To ratify the appointment of McGladrey & / / / / / /
Pullen, LLP as auditors of the Corporation
for the fiscal year ending June 30, 1997.
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE
- ------------ THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
Curtis L. Hage Jeffrey G. Parker Thomas L. Van Wyhe
In their discretion, the proxies are authorized to
vote on any other business that may properly come before
the Meeting or any adjournment thereof.
Should the undersigned be present and elect to vote
at the Meeting or at any adjournment thereof, and after
notification to the Secretary of the Corporation at the
Meeting of the stockholder's decision to terminate this
Proxy, then the power of such attorneys and proxies shall
be deemed terminated and of no further force and effect.
The undersigned acknowledges receipt from the
Corporation, prior to the execution of this Proxy, Notice
of the Annual Meeting, a Proxy Statement dated October
15, 1996, and the Corporation's Annual Report to
Stockholders for the fiscal year ended June 30, 1996.
Signatures(s) _______________________________________________ Date ____________