SCHEDULE 14-A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ ] Filed by a Party other than the Registrant [x] Check
the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Webster City Federal Bancorp
(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.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii),14a-6(i)(1),or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
.................................................................
2) Aggregate number of securities to which transaction applies:
.................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
.................................................................
4) Proposed maximum aggregate value of transaction:
.................................................................
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed: March __, 2002
March 15, 2002
Dear Stockholder:
You are cordially invited to attend the 2002 Annual Meeting of Stockholders of
Webster City Federal Bancorp ("Webster City Federal" or the "Company"). The
Annual Meeting will be held at the offices of Webster City Federal, 820 Des
Moines Street, Webster City, Iowa, at 1:00 p.m., Iowa time, on April 17, 2002.
The enclosed Notice of Annual Meeting and Proxy Statement describe the formal
business to be transacted. During the Annual Meeting, we will also report on the
operations of the Company. Directors and officers of the Company, as well as a
representative of our independent auditors, will be present to respond to any
questions that stockholders may have. Also enclosed for your review is our
Annual Report to Stockholders which contains detailed information concerning the
activities and operating performance of the Company.
The business to be conducted at the Annual Meeting consists of the election of
four directors to the Board of Directors of the Company and the ratification of
the appointment of KPMG LLP as auditors for the Company's 2002 fiscal year.
The Board of Directors of the Company has determined that the matters to be
considered at the Annual Meeting are in the best interest of the Company and its
stockholders. For the reasons set forth in the Proxy Statement, the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.
On behalf of the Board of Directors, we urge you to sign, date and return the
enclosed proxy card 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. Your
vote is important, regardless of the number of shares that you own.
Sincerely,
Phyllis A. Murphy
President and Chief Executive Officer
WEBSTER CITY FEDERAL BANCORP
820 Des Moines Street
Webster City, Iowa 50595
(515) 832-3071
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On April 17, 2002
Notice is hereby given that the Annual Meeting of Webster City Federal
Bancorp (the "Company" or "Webster City Federal") will be held at the offices of
Webster City Federal, 820 Des Moines Street, Webster City, Iowa, on April 17,
2002 at 1:00 p.m., Iowa time.
A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.
The Annual Meeting is for the purpose of considering and acting upon:
1. The election of four directors of the Company;
2. The ratification of the appointment of KPMG LLP as auditors for
the Company for the fiscal year ending December 31, 2002; and
such other matters as may properly come before the Annual Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Annual Meeting.
Any action may be taken on the foregoing proposals at the Annual Meeting on
the date specified above, or on any date or dates to which the Annual Meeting
may be adjourned. Stockholders of record at the close of business on February
28, 2002, are the stockholders entitled to vote at the Annual Meeting, and any
adjournments thereof.
A list of stockholders entitled to vote at the Annual Meeting will be
available at the Company's main office, 820 Des Moines Street, Webster City,
Iowa, for the twenty days immediately prior to the Annual Meeting. It also will
be available for inspection at the meeting itself.
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL MEETING, IS
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE
REVOKED AT ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY FILING
WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY
BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE ANNUAL MEETING MAY REVOKE
HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE ANNUAL
MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN
YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN
ORDER TO VOTE PERSONALLY AT THE ANNUAL MEETING.
By Order of the Board of Directors
/s/ Kathie R. Highland
-----------------------
Kathie R. Highland
Secretary
Webster City, Iowa
March 15, 2002
________________________________________________________________________________
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE ANNUAL MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED WITHIN THE UNITED STATES.
________________________________________________________________________________
PROXY STATEMENT
WEBSTER CITY FEDERAL BANCORP
820 Des Moines Street
Webster City, Iowa 50595
(515) 832-3071
ANNUAL MEETING OF STOCKHOLDERS
April 17, 2002
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Webster City Federal Bancorp
("Webster City Federal" or the "Company") to be used at the Annual Meeting of
Stockholders of Webster City Federal (the "Annual Meeting"), which will be held
at the offices of Webster City Federal, 820 Des Moines Street, Webster City,
Iowa, on April 17, 2002, at 1:00 p.m., Iowa Time, and all adjournments of the
Annual Meeting. The accompanying Notice of Annual Meeting of Stockholders and
this Proxy Statement are first being mailed to stockholders on or about March
15, 2002.
At the Annual Meeting, stockholders will vote on the election of four
directors of the Company and on the ratification of the appointment of the
Company's auditors for 2002.
REVOCATION OF PROXIES
Stockholders who execute proxies in the form solicited hereby retain the
right to revoke them in the manner described below. Unless so revoked, the
shares represented by such proxies will be voted at the Annual Meeting and all
adjournments thereof. Proxies solicited on behalf of the Board of Directors of
the Company will be voted in accordance with the directions given thereon. Where
no instructions are indicated, validly executed proxies will be voted "FOR" the
proposals set forth in this Proxy Statement for consideration at the Annual
Meeting.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxy holders discretionary authority to vote
the shares in accordance with their best judgment on such other business, if
any, that may properly come before the Annual Meeting or any adjournments
thereof.
Proxies may be revoked by sending written notice of revocation to the
Secretary of the Company, at the address of the Company shown above. The
presence at the Annual Meeting of any stockholder who had given a proxy shall
not revoke such proxy unless the stockholder delivers his or her ballot in
person at the Annual Meeting or delivers a written revocation to the Secretary
of the Company prior to the voting of such proxy.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Holders of record of the Company's common stock, par value $.10 per share
(the "Company Common Stock") as of the close of business on February 28, 2002
(the "Record Date") are entitled to one vote for each share then held. As of the
Record Date, the Company had 1,871,151 shares of Company Common Stock issued and
outstanding, 1,150,000 of which were held by WCF Financial, M.H.C. (the "Mutual
Holding Company"), and 721,151 of which were held by stockholders other than the
Mutual Holding Company. The presence in person or by proxy of a majority of the
outstanding shares of Company Common Stock entitled to vote is necessary to
constitute a quorum at the Annual Meeting. Broker non-votes and abstentions will
be counted as shares present and entitled to vote for the purposes of
establishing a quorum. In the event there are not sufficient votes for a quorum,
or to approve or ratify any matter being presented at the time of the Annual
meeting, the Annual Meeting may be adjourned in order to permit the further
solicitation of proxies.
As to the election of directors, the proxy card provided by the Board of
Directors enables a stockholder to vote "FOR" the election of the four nominees
proposed by the Board, or to "WITHHOLD AUTHORITY" to vote for the nominees being
proposed. Directors are elected by a plurality of votes cast, without regard to
either broker non-votes or proxies as to which authority to vote for the
nominees being proposed is withheld.
As to the ratification of KPMG LLP as independent auditors of the Company,
by checking the appropriate box, a stockholder may: (i) vote "FOR" the item;
(ii) vote "AGAINST" the item; or (iii) "ABSTAIN" from voting on such item. The
ratification of this matter must be approved by the affirmative vote of a
majority of the shares represented at the Annual Meeting and entitled to vote.
Broker non-votes and proxies marked "ABSTAIN" will not be counted as votes in
favor of the proposal to ratfiy the appointment of KPMG LLP as the Company's
auditors.
Proxies solicited hereby will be returned to the Company and will be
tabulated by an Inspector of Election designated by the Company's Board of
Directors.
Management of the Company anticipates that shares of Company Common Stock
owned by the Mutual Holding Company will be voted in favor of the nominees for
director and in favor of Proposal II. The affirmative vote of such shares would
ensure the election of such nominees and the approval of such Proposal II.
Persons and groups who beneficially own in excess of five percent of the
Company Common Stock are required to file certain reports with the Securities
and Exchange Commission ("SEC") regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The following
table sets forth, as of the Record Date, the shares of Company Common Stock
beneficially owned by directors and nominees individually, by executive officers
individually, by executive officers and directors as a group and by each person
who was the beneficial owner of more than five percent of the outstanding shares
of Company Common Stock on the Record Date.
Amount of Shares
Owned and Nature Percent of Shares
Name and Address of of Beneficial of Bank Common Stock
Beneficial Owners Ownership (1)(4) Outstanding
------------------- ------------------- -----------------------
Directors and Officers (2)
Donald I. Newman 24,080 1.29%
Dr. Carroll E. Haynes 12,250 .65
Dennis J. Tasler 43,036 2.30
Phyllis A. Murphy 22,240 1.19
Dr. Leo Moriarty 400 .02
Stephen L. Mourlam 15,065 .81
Kyle R. Swon 11,958 .64
All Directors and Executive Officers 129,029 6.90
as a Group (7 persons) (3)
Principal Stockholder:
1,150,000 61.46
WCF Financial, M.H.C
820 Des Moines Street
Webster City, Iowa 50595
_________________________
(footnotes on following page)
2
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed to
be the beneficial owner for purposes of this table, of any shares of
Company Common Stock if he has shared voting or investment power with
respect to such security, 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.
Includes all shares held directly as well as by spouses and minor children,
in trust and other indirect ownership, over which shares the named
individuals effectively exercise sole or shared voting and investment
power.
(2) The mailing address for each person listed is 820 Des Moines Street,
Webster City, Iowa 50595.
(3) The Company's executive officers and directors are also executive officers
and directors of WCF Financial, M.H.C.
(4) Includes shares of Company Common Stock allocated to the accounts of
employees pursuant to the Employee Stock Ownership Plan ("ESOP") of Webster
City Federal Savings Bank. Under the terms of the ESOP, shares of Company
Common Stock so allocated are voted by the ESOP trustee in the manner
calculated to most accurately reflect the instructions it has received from
the participants regarding the allocated shares, unless its fiduciary duty
otherwise requires.
PROPOSAL I--ELECTION OF DIRECTORS
The Company's Board of Directors is currently composed of seven members.
The Company's bylaws provide that approximately one-third of the directors are
to be elected annually. Directors of the Company are generally elected to serve
for a three-year period or until their respective successors shall have been
elected and shall qualify. The Board of Directors has nominated to serve as
directors Dr. Leo Moriarty and Donald I. Newman, each for a three-year period
and until his successor shall have been elected and shall qualify, and Stephen
L. Mourlam and Kyle R. Swon, each for a one-year period and until his successor
shall have been elected and shall qualify. Dr. Moriarty and Messrs. Newman,
Mourlam and Swon are currently members of the Board of Directors. Messrs.
Mourlam and Swon were appointed to the Board in July of 2001.
The table below sets forth certain information regarding the composition of the
Company's Board of Directors, including the terms of office of Board members. It
is intended that the proxies solicited on behalf of the Board of Directors
(other than proxies in which the vote is withheld as to the nominee) will be
voted at the Annual Meeting for the election of the nominees identified below.
If a nominee is unable to serve, the shares represented by all such proxies will
be voted for the election of such substitute as the Board of Directors may
recommend. At this time, the Board of Directors knows of no reason why any of
the nominees might be unable to serve, if elected. Except as indicated herein,
there are no arrangements or understandings between any nominee and any other
person pursuant to which such nominee was selected.
Shares of Company
Common Stock
Positions Beneficially
Held in the Director Current Term Owned on Percent
Name (1) Age Company Since (2) to Expire Record Date (3) of Class
-------- --- ------- --------- --------- --------------- --------
NOMINEES
Dr. Leo Moriarty 42 Director 2000 2002 400 *
Donald I. Newman 65 Director 1988 2002 24,080 1.29
Stephen L. Mourlam 49 Executive Vice President 2001 2002 15,065 *
and Director
Kyle R. Swon 40 Senior Vice President 2001 2002 11,958 *
and Director
DIRECTORS CONTINUING IN OFFICE
Dr. Carroll E. Haynes 69 Director and 1967 2004 12,250 *
Chairman of the Board
Phyllis A. Murphy 51 President and Chief 1995 2004 22,240 1.19
Executive Officer
Dennis J. Tasler 62 Director 1985 2003 43,036 2.30
* Less than 1%.
(1) The mailing address for each person listed is 820 Des Moines Street,
Webster City, Iowa 50595. Each of the persons listed as a director of the
Company is also a director of Webster City Federal Savings Bank, the
Company's savings association subsidiary, as well as the Bank's service
subsidiary and WCF Financial, M.H.C., which owns the majority of the issued
and outstanding shares of Company Common Stock.
(footnotes continued on following page)
3
(2) With the exception of Dr. Moriarty and Messrs. Mourlam and Swon, reflects
initial appointment to the Board of Directors of Webster City Federal
Savings Bank.
(3) See definition of "beneficial ownership" in the table under "Voting
Securities and Principal Holders Thereof."
The principal occupation during the past five years of each director of the
Company is set forth below. References to the Company include, where applicable,
Webster City Federal Savings Bank, which reorganized to form the Company as its
holding company in July 1999. All directors have held their present positions
for five years unless otherwise stated.
Dr. Carroll E. Haynes, a Director of the Company, retired in October of
1999. He was a self-employed dentist for 40 years.
Phyllis A. Murphy was appointed President and Chief Executive Officer of
the Company on January 1, 1999. Ms. Murphy previously served as Executive Vice
President and the Chief Operating Officer and Personnel Officer of the Company.
She was also the Secretary of the Company and Compliance Officer. She has been
with the Company since 1971.
Donald I. Newman, a Director of the Company, retired as President and Chief
Executive Officer of the Company, effective December 31, 1998. Mr. Newman had
been an executive officer of the Company for 10 years.
Dennis J. Tasler, a Director of the Company, is Chief Executive Officer and
majority stockholder of Tasler, Inc., Webster City, Iowa.
Dr. Leo Moriarty, a Director of the Company, was appointed to the Board in
October of 2000. He is a self-employed dentist in Webster City, Iowa.
Stephen L. Mourlam was appointed Executive Vice President on January 1,
1999. Mr. Mourlam is the Chief Financial Officer. He previously served as Senior
Vice President and Chief Financial Officer. He has been with the Company since
1979.
Kyle R. Swon was appointed Senior Vice President on January 1, 1999. Mr.
Swon is the Chief Lending Officer. He has been with the Company since 1987.
Ownership Reports by Officers and Directors
The common stock of the Company is registered pursuant to Section 12(g) of
the Exchange Act. The officers and directors of the Company and beneficial
owners of greater than 10% of the Company Common Stock ("10% beneficial owners")
are required to file reports on Forms 3, 4 and 5 with the SEC disclosing
beneficial ownership and changes in beneficial ownership of the Company Common
Stock. SEC rules require disclosure in the Company's Proxy Statement and Annual
Report on Form 10-KSB of the failure of an officer, director or 10% beneficial
owner of the Company Common Stock to file a Form 3, 4 or 5 on a timely basis.
During the year ended December 31, 2001, no officer or director failed to timely
file any Forms 3, 4, or 5.
Meetings and Committees of the Board of Directors
The business of the Company's Board of Directors is conducted through
meetings and activities of the Board and its committees. During the year ended
December 31, 2001, the Board of Directors held twelve regular and two special
meetings. During the year ended December 31, 2001, no director attended fewer
than 75% of the total meetings of the Board of Directors of the Company and
committees on which such director served.
The Company does not have a standing compensation or nominating committee;
the full Board of Directors acts as such committees.
The ESOP Committee consists of Directors Haynes, Tasler and Newman and
administers the Company's Employee Stock Ownership Plan. The committee did not
meet in 2001.
The Stock Benefits Committee administers the Company's Stock Option Plan
and is composed of Directors Newman, Tasler and Haynes. This Committee did not
meet in 2001.
4
The Audit Committee consists of Directors Newman (Chairman), Dr.
Moriarty and Mr. Tasler. The committee reviews the Forms 10-QSB and 10-KSB and
at least annually meets with the independent auditors of the Company. The
Committee also reviews and approves the annual engagement of the Company's
independent auditors, the Company's audit policy and the internal audit
function, and reviews with management the Company's internal controls. The
committee met two times in 2001. Each member of the Audit Committee is
"independent" as defined in the listing standards of the National Association of
Securities Dealers. The Company's Board of Directors adopted an Audit Committee
Charter in May 2000, which was amended September 19, 2001. The amended charter
is appended as Exhibit A.
Audit Committee Report
In accordance with rules established by the SEC, the Audit Committee of
the Company has prepared the following report for inclusion in this proxy
statement:
As part of its ongoing activities, the Audit Committee has:
o Reviewed and discussed with management the Company's audited
consolidated financial statements for the year ended December 31,
2001;
o Discussed with the independent auditors of the Company the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communications with Audit Committees, as amended; and
o Received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, and has discussed with
the independent auditors their independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited consolidated financial
statements be included in the Company's Annual Report on Form 10-KSB for the
year ended December 31, 2001.
This report has been provided by the Audit Committee:
Donald I. Newman (Chairman)
Dr. Leo Moriarty
Dennis J. Tasler
Directors' Compensation
Members of the Board of Directors each received fees of $500 per month and
$300 for each meeting attended during the year ended December 31, 2001.
Directors' Deferred Fee Plan. All directors of the Company are eligible to
participate in the Deferred Fee Plan by deferring all or any portion of their
director's fees until termination of service as a director of the Company. Upon
a director's termination of service, the director's account balance will be
paid, at the option of the Company, in either a lump sum or annual installments
over a period of up to 10 years. If a director dies before receiving his or her
entire account balance, the remaining balance will be paid to his or her
designated beneficiary or to his or her estate. Amounts deferred under the
Deferred Fee Plan continue to be a part of the Company's general fund. Interest
on amounts deferred are calculated at the prime rate (as published in the Wall
Street Journal on January 1 of each year) plus 100 basis points. The interest
rate paid for the year ended December 31, 2001 was 10.5 percent. The Company's
interest expense for the Deferred Fee Plan was $68,900 for the year ended
December 31, 2001. Fees deferred under the Plan for the year ended December 31,
2001 were $25,500.
5
Executive Compensation
The following table sets forth for the years ended December 31, 2001,
2000, and 1999, certain information as to the total remuneration paid by the
Company to the named executive officer of the Company (the "Named Executive
Officer").
|===========================================================================================================================|
| |
| SUMMARY COMPENSATION TABLE |
|===========================================================================================================================|
| | | |
| | Long-Term | |
| Annual Compensation | Compensation Awards | |
|----------------------------------------------------------------------------------------------------------| |
| | | | | | | | | |
| | Years | | | | | | | |
| | Ended | | | Other | Restricted | | | |
| | December | | | Annual | Stock |Options/ | | All Other |
| Name and | 31, | Salary | Bonus | Compensation| Award(s) | SARs | | Compensation |
| Principal Position (1)| | ($)(2) | ($) | ($)(3) | ($) | (#) | Payouts | ($)(4) |
|-----------------------|----------|-------------|---------|-------------|-------------|---------|---------|----------------|
| | | | | | | | | |
| Phyllis A. Murphy | 2001 | $100,000 | $500 | $9,600 | -0- | -0- | -0- | $414 |
| President and Chief | 2000 | 90,000 | 500 | 9,600 | -0- | -0- | -0- | 359 |
| Executive Officer | 1999 | 80,000 | 500 | 9,600 | -0- | -0- | -0- | 198 |
| | | | | | | | | |
|===========================================================================================================================|
(1) Ms. Murphy was appointed President and Chief Executive Officer in January
1999. Previously, she served as Executive Vice President, Chief Operating
Officer and Personnel Officer. No other executive officer received salary
and bonuses that in the aggregate exceeded $100,000 in the years ended
December 31, 2001, 2000 and 1999.
(2) Amount shown is gross earnings before pre-tax medical insurance paid by
officer which is not taxable.
(3) Includes Directors' fees paid for attendance at Board Meetings of the
Company.
(4) Includes payments for premiums made pursuant to a life insurance policy
maintained on the named executive officer under the
Company's life insurance plan for employees.
Benefits
Severance Agreements. The Company has entered into severance agreements
(the "Severance Agreements") with Phyllis A. Murphy, the President and Chief
Executive Officer of the Company, Stephen L. Mourlam, Executive Vice President
of the Company and Kyle R. Swon, Senior Vice President of the Company. The
Severance Agreements provide for certain benefits in the event of a change of
control of the Company or the Mutual Holding Company. The Severance Agreements
are available to certain full-time officers of the Company who have been
specifically approved by resolution of the Board of Directors to be eligible to
enter into the Severance Agreements.
Following a change of control of the Mutual Holding Company or the Company,
as defined in the Severance Agreement, the executive officer shall be entitled
to a payment under the Severance Agreement if the executive officer terminates
employment following any demotion, loss of title, office or significant
authority, reduction in his or her annual compensation or benefits, or
relocation of his or her principal place of employment by more than 30 miles.
In the event that Phyllis Murphy is entitled to receive payments pursuant
to her Severance Agreement, she shall receive a cash payment of up to a maximum
of three times her annual compensation prior to termination of employment, plus
life and medical coverage for a period of up to 36 months from the date of
termination.
In the event that Mr. Mourlam or Mr. Swon is entitled to receive payments
pursuant to the executive officer's Severance Agreement, the executive officer
shall receive a cash payment up to a maximum of two times the annual
compensation prior to termination of employment, plus life and medical coverage
for a period of up to 24 months from the date of termination.
Defined Benefit Plan. The Company participates in a noncontributory
multiple-employer defined benefit plan ("Retirement Plan"). All employees age 21
or older are eligible to accrue benefits under the Retirement Plan. As
necessary, the Company contributes an amount to the Retirement Plan to satisfy
the actuarially determined minimum funding requirements in accordance with the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
6
The Retirement Plan provides a benefit to or on behalf of each covered
employee upon normal retirement at or after age 65. An employee's retirement
benefit under the Retirement Plan is determined by formula and is equal to two
percent times the employee's years of service with the Company multiplied by the
average of his highest consecutive five years' salary. For these purposes,
"salary" is defined as a participant's basic annual salary rate as of each
January 1, exclusive of special payments such as overtime, bonuses and fees. An
employee who defers the receipt of a retirement benefit will have his benefit
increased by .8% for each month of deferral beyond normal retirement age (with a
maximum increase of 48%). A participant will receive a reduced benefit upon
early retirement, disability or death. Retirement benefits are payable in
various annuity forms as well as in the form of a single lump sum payment. The
regular form of all retirement benefits (normal, early or disability) includes
not only a retirement allowance, but also a lump sum retirement death benefit
which is 12 times the annual retirement allowance less the sum of such allowance
payments made before death. All retirement allowances continue for life even
though under the regular form there would be no death benefit payable after 12
years. Upon termination of employment other than as specified above, a
participant who was employed by the Company for a minimum of five years is
eligible to receive his or her vested accrued benefit commencing on such
participant's normal retirement date. For the plan year ended June 30, 2001, the
Company did not make a contribution to the Retirement Plan because the Plan was
fully funded at such date.
The following table indicates the annual retirement benefit that would be
payable under the Retirement Plan upon retirement at age 65 in plan year 2001,
expressed in the form of a single life annuity for the final average salary and
benefit service classification specified below.
||=================================================================================||
|| ||
|| YEARS OF BENEFIT SERVICE AT RETIREMENT ||
||-----------------|---------|---------|----------|-----------|----------|---------||
|| | | | | | | ||
|| High 5-Year | | | | | | ||
|| Average Salary | 15 | 20 | 25 | 30 | 35 | 40 ||
||-----------------|---------|---------|----------|-----------|----------|---------||
|| | | | | | | ||
|| $25,000 | $7,500 | $10,000 | $12,500 | $15,000 | $17,500 | $20,000||
||-----------------|---------|---------|----------|-----------|----------|---------||
|| | | | | | | ||
|| $50,000 | $15,000| $20,000 | $25,000 | $30,000 | $35,000 | $40,000||
||-----------------|---------|---------|----------|-----------|----------|---------||
|| | | | | | | ||
|| $75,000 | $22,500| $30,000 | $37,500 | $45,000 | $52,500 | $60,000||
||-----------------|---------|---------|----------|-----------|----------|---------||
|| | | | | | | ||
|| $100,000 | $30,000| $40,000 | $50,000 | $60,000 | $70,000 | $80,000||
||-----------------|---------|---------|----------|-----------|----------|---------||
|| | | | | | | ||
|| $150,000 | $45,000| $60,000 | $75,000 | $90,000 | $105,000 | $120,00||
||=================|=========|=========|==========|===========|==========|=========||
The following table sets forth the years of credited service (i.e., benefit
service) as of June 30, 2001, for the individual named in the cash compensation
table.
Years of
Name Credited Service
---- ----------------
Phyllis A. Murphy............. 26
Employee Stock Ownership Plan and Trust. Webster City Federal Savings Bank
(the "Bank") established an Employee Stock Ownership Plan and Related Trust
("ESOP") for eligible employees in connection with the reorganization of the
Bank to stock form and subsequent stock offering (the "Offering"). The ESOP is a
tax-qualified plan subject to the requirements of ERISA of 1974 ("ERISA") and
the Internal Revenue Code of 1986 (the "Code"). Employees with a 12-month period
of employment with the Bank during which they worked at least 1,000 hours and
who have attained age 21 are eligible to participate.
Stock Option Plan. The Bank adopted a Stock Option Plan (the "Stock Option
Plan") in 1996 for the award of options in the Bank Common Stock to certain
employees and nonemployee directors of the Bank and the Mutual Holding Company.
The Stock Option Plan authorized the grant of stock options and limited rights
to purchase an aggregate of 95,000 shares. Pursuant to the Stock Option Plan,
grants may be made of (i) options to purchase Bank Common Stock intended to
qualify as incentive stock options under Section 422 of the Code, (ii) options
that do not so qualify, and (iii) limited rights that are exercisable only upon
the change in control of the Bank or the Mutual Holding Company. Nonemployee
directors are eligible only to receive nonstatutory options. Upon formation of
the Company in July 1999, the Company Common Stock was substituted for Bank
Common Stock on a one-for-one basis for future awards under the Stock Option
Plan.
7
The grant of awards under the Stock Option Plan is determined by the Stock
Benefits Committee, a committee of the Board of Directors consisting of
nonemployee directors of the Company.
Stock options granted pursuant to the Stock Option Plan are exercisable in
three equal annual installments of 331/3% commencing one year from the date of
grant; provided, however, that all options will be 100% exercisable in the event
the optionee terminates his service due to normal retirement, death or
disability, or in the event of a change in control of the Mutual Holding Company
or the Company.
Pursuant to the Stock Option Plan, each nonemployee director of the Company
has received an option to purchase 4,750 shares of Company Common Stock. All
options were granted at an exercise price of $12.75 per share, which was the
trading price of the Bank Common Stock on the date the Stock Option Plan was
approved by stockholders of the Bank. Options exercisable for 14,250 shares of
Company Common Stock have been reserved for future issuance under the Plan. No
options were granted to the Named Executive Officer under the Plan during the
year ended December 31, 2001. The exercise price of any option granted under the
Stock Option Plan may be paid in cash or Company Common Stock. No options were
exercised by the Named Executive Officers during 2001.
Set forth below is certain information concerning options outstanding to
the Company's Chief Executive Officer at December 31, 2001.
||================================================================================================================||
|| ||
|| AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND ||
|| FISCAL YEAR-END OPTION VALUES ||
||================================================================================================================||
|| | | | Number of Unexercised | Value of Unexercised ||
|| | Shares Acquired | Value | Options at | In-the-Money Options at ||
|| Name | upon Exercise | Realized | Year-End | Year-End (1) ||
|| | | |-----------------------------|---------------------------||
|| | | | | ||
|| | | | Exercisable/Unexercisable| Exercisable/Unexercisable ||
|| | | | (#) | ($) ||
||------------------|--------------------|--------------|-----------------------------|---------------------------||
|| | | | | ||
||Phyllis A. Murphy | -- | -- | 7,0000/0 | 22,750/0 ||
||================================================================================================================||
__________________________________
(1) Equals the difference between the aggregate exercise price of such options
and the aggregate fair market value of the shares of Company Common Stock
that would be received upon exercise, assuming such exercise occurred on
December 31, 2001, at which date shares of Company Common Stock were quoted
on the Nasdaq SmallCap Market at $16.00.
Transactions with Certain Related Persons
Current federal law requires that all loans or extensions of credit by the
Bank to executive officers and directors must be made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with the general public and must not involve more
than the normal risk of repayment or present other unfavorable features. Federal
law also limits the amount of credit the Bank may extend to its executive
officers, its directors and its affiliates and the types of permitted collateral
for such credit, and prescribes terms and conditions for such transactions
deemed to be consistent with safe and sound banking practices. However, federal
regulations permit executive officers and directors to receive the same terms
through benefit or compensation plans that are widely available to other
employees, as long as the director or executive officer is not given
preferential treatment compared to the other participating employees. The Bank
has established a conflict of interest policy requiring that all loans made to
directors be made in the ordinary course of business on the same terms and
conditions as the Bank would make to any other customer in the ordinary course
of business, and that such loans not involve more than a normal risk of
collectibility or present any unfavorable features. With respect to non-director
executive officers, the Bank's policy is to permit reduced rates and/or the
waiver or reduction of points on loans, provided the same terms are made
available to other non-executive employees of the Bank.
8
As of December 31, 2001 the Bank's directors or executive officers had
loans outstanding from the Bank totaling $826,000 in the aggregate. All such
loans were made by the Bank in compliance with federal law and the
above-described policies.
PROPOSAL II--RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has approved the engagement of KPMG
LLP to be the Company's auditors for the year ending December 31, 2002, subject
to the ratification of the engagement by the Company's stockholders. At the
Annual Meeting, stockholders will consider and vote on the ratification of the
engagement of KPMG LLP for the Company's fiscal year ending December 31, 2002. A
representative of KPMG LLP is expected to attend the Annual Meeting to respond
to appropriate questions and to make a statement if he so desires.
In order to ratify the selection of KPMG LLP as the auditors for the year
ending December 31, 2002, the proposal must receive the affirmative vote of a
majority of shares represented at the Annual Meeting and entitled to vote. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF KPMG LLP AS
AUDITORS FOR THE 2002 FISCAL YEAR.
Set forth below is certain information concerning aggregate fees billed for
professional services rendered by KPMG LLP during fiscal year 2001.
Audit Fees $48,600
Financial Information Systems
Design and Implementation Fees $ --
All Other Fees $20,950
The Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining KPMG LLP's independence. The Audit
Committee concluded that performing such services does not affect KPMG LLP's
independence in performing its function as auditor of the Company.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials for
next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's executive office, 820
Des Moines Street, Webster City, Iowa 50595, no later than November 16, 2002.
Any such proposals shall be subject to the requirements of the proxy rules
adopted under the Exchange Act. Any such proposals will also be subject to the
requirements of the proxy rules adopted under the Exchange Act.
OTHER MATTERS AND ADVANCE NOTICE PROCEDURES
The Board of Directors is not aware of any business to come before the
Annual Meeting other than the matters described above in this Proxy Statement.
However, if any matters should properly come before the Annual Meeting, it is
intended that holders of the proxies will act as directed by a majority of the
Board of Directors, except for matters related to the conduct of the Annual
Meeting, as to which they shall act in accordance with their best judgment. The
Board of Directors intends to exercise its discretionary authority to the
fullest extent permitted under the Exchange Act.
The Bylaws of the Company provide an advance notice procedure for new
business to be taken up at the Annual Meeting. In order for a stockholder to
properly bring business before the Annual Meeting, the stockholder must state
the new business in writing and file the description of the new business with
the Secretary of the Company at least five days prior to the date of the Annual
Meeting. A stockholder may make any other proposal at the Annual Meeting itself,
and the proposal may be discussed and considered, but unless stated in writing
and filed with the Secretary at least five days prior to the Annual Meeting, the
proposal will be laid over for action at an adjourned, special or annual meeting
of the stockholders taking place 30 days or more thereafter. Nothing in this
paragraph shall be deemed to require the Company to include in its proxy
statement and proxy relating to an annual meeting any stockholder proposal that
does not meet all of the requirements for inclusion established by the SEC in
effect at the time such proposal is received.
9
The date on which the 2003 Annual Meeting of Stockholders is expected to be
held is April 16, 2003. Accordingly, advance written notice of business or
nominations to the Board of Directors to be brought before the 2003 Annual
Meeting of Stockholders must be given to the Company no later than April 11,
2003.
MISCELLANEOUS
The cost of solicitation of proxies in the form enclosed herewith will be
borne by the Company. The Company will reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them in
sending proxy materials to the beneficial owners of Company Common Stock. In
addition to solicitations by mail, directors, officers and regular employees of
the Company may solicit proxies personally or by telegraph or telephone without
additional compensation.
A COPY OF THE COMPANY'S REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER
31, 2001 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE
UPON WRITTEN REQUEST TO PHYLLIS A. MURPHY, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, WEBSTER CITY FEDERAL, 820 DES MOINES STREET, WEBSTER CITY, IOWA 50595.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Kathie R. Highland
---------------------
Kathie R. Highland
Secretary
Webster City, Iowa
March 15, 2002
10
EXHIBIT A
---------
WEBSTER CITY FEDERAL BANCORP
AUDIT COMMITTEE CHARTER
(Revised 9/19/01)
Organization
The Audit Committee shall be comprised of a minimum of three directors as
determined by the Board. A majority of the directors of the Company shall be
"independent directors" according to the SEC and NASDAQ guidelines.
All members of the committee shall have a basic understanding of finance and
accounting and be able to read and understand fundamental financial statements.
At least one member of the Committee shall have accounting or related financial
management expertise.
Audit Committee members shall be appointed by the Board of Directors of the
Company. If an Audit Committee Chairman is not designated or present, the
members of the Committee may designate a Chairman by majority vote of the
Committee Membership.
The Committee shall meet as circumstances dictate. The Audit Committee Chairman
shall approve an agenda prior to each meeting. The Committee shall meet
privately in executive session at least annually with management and the
independent auditors of the Company.
Statement of Policy
The Audit Committee shall provide assistance to the Board of Directors in
fulfilling their oversight responsibilities. The Committee will be responsible
for monitoring the integrity of the Company's financial reporting process and
systems of key internal controls regarding finance, accounting, legal and
regulatory compliance. In so doing, it is the responsibility of the Committee to
maintain free and open communication between the Committee, the independent
auditors and management of the Company. In discharging its oversight role, the
Committee is empowered to investigate any matter brought to its attention with
full access to all books, records, facilities and personnel of the Company and
the power to retain outside counsel or other experts for this purpose at the
Company's expense.
Responsibilities and Duties
The Audit Committee policies and procedures shall be flexible in order to best
react to changing conditions and to ensure that the corporate accounting and
reporting practices of the Company are in accordance with all requirements and
are of the highest quality.
In carrying out these responsibilities, the Audit Committee will:
o Review and reassess the adequacy of the Charter at least annually. Submit
the Charter to the Board of Directors for approval and have the document
published in accordance with SEC regulations.
o Review with management and the independent auditors the financial
statements to be included in the Company's Annual Report on Form 10-KSB,
prior to the filing thereof, including their judgment about the quality,
not just the acceptability of accounting principles, the reasonableness of
significant judgments and the clarity of the disclosures in the financial
statements. The committee will discuss certain matters required to be
communicated to audit committees in accordance with SAS 61, as amended.
o In consultation with management and the independent auditors, consider the
integrity of the Company's financial reporting processes and controls.
Discuss significant financial risk exposures and the steps management has
taken to monitor, control and report such exposure. Review significant
findings prepared by the independent auditors together with management's
response.
o Prepare a report annually to the shareholders as required by the Securities
and Exchange Commission. The report should be included in the Company's
annual proxy statement. The SEC requires that the Audit Committee issue a
report to shareholders stating whether they have:
o Reviewed and discussed the audited financial statements with
management.
o Discussed with the independent auditors the matter required to be
discussed by SAS 61; and
o Received certain disclosures from the auditors regarding their
independence as required by the Independent Standards Board.
o Based on the foregoing, the report will include a statement whether
the Audit Committee recommended to the full Board that the audited
financial statements be included in the annual report filed with the
SEC.
o Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
o Review the appointment and performance of personnel responsible for
internal audit of the Company, if any. Internal audit personnel will report
directly to the Audit Committee.
Independent Auditors
o The independent auditors are ultimately accountable to the Audit Committee
and the Board of Directors. The Audit Committee, as representatives of the
shareholders, shall review the independence and performance of the auditors
and annually recommend to the Board of Directors the appointment of the
independent auditors or approve any discharge of auditors when
circumstances warrant.
o Review and approve the independent auditors' engagement letter and audit
engagement fees prior to payment. Review significant management consulting
engagements to be performed by the independent auditors' firm and be
advised of any other significant study undertaken at the request of
management that is beyond the scope of the audit engagement letter.
o The Committee will review and discuss, at least annually, all significant
relationships between the auditors (and their representatives) and the
Company that could impair the auditors' independence.
o Review the independent auditors' audit plan, discuss scope, staffing,
reliance upon management and general audit approach to see that it is
sufficiently detailed and covers any significant areas of concern that the
Audit Committee may have.
o Discuss the results of the audit with the independent auditors prior to
releasing the year end financial statements. Discuss certain matters
required to be communicated to the audit committee in accordance with AICPA
SAS 61, as amended.
o Perform such other functions as assigned by law, the Company's charter or
by-laws, or the Board.
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. These are
the responsibilities of management and the independent accountant. Nor is it the
duty of the Audit Committee to conduce investigations to resolve disagreements,
if any, between management and the independent accountant, or to assure
compliance with laws and regulations.
2
REVOCABLE PROXY
WEBSTER CITY FEDERAL BANCORP
ANNUAL MEETING OF STOCKHOLDERS
April 17, 2002
The undersigned hereby appoints the official proxy committee consisting of
the entire Board of Directors (other than those members of the Board of
Directors nominated for election) with full powers of substitution to act as
attorneys and proxies for the undersigned to vote all shares of Common Stock of
Webster City Federal Bancorp that the undersigned is entitled to vote at the
Annual Meeting of Stockholders ("Annual Meeting") to be held at the offices of
Webster City Federal Bancorp, 820 Des Moines Street, Webster City, Iowa, on
April 17, 2002, at 1:00 p.m. The official proxy committee is authorized to cast
all votes to which the undersigned is entitled as follows:
VOTE
FOR WITHHELD
--- --------
1. The election as directors of the nominees listed below [ ] [ ]
Donald I. Newman
Stephen L. Mourlam
Kyle R. Swon
Dr. Leo Moriarty
To withhold you vote for one or more nominees, write
the name of the nominee(s) below
_____________________________
_____________________________
_____________________________
FOR AGAINST ABSTAIN
--- ------- -------
2. The ratification of appointment of KPMG LLP as [ ] [ ] [ ]
auditors for the year ending December 31, 2002.
The Board of Directors recommends a vote "FOR" each of the listed proposals.
________________________________________________________________________________
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED ABOVE. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH ANNUAL MEETING, THIS PROXY WILL BE VOTED BY THE
MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
________________________________________________________________________________
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Annual Meeting or at
any adjournment thereof and after notification to the Secretary of the Company
at the Annual Meeting of the stockholder's decision to terminate this proxy,
then the power of said attorneys and proxies shall be deemed terminated and of
no further force and effect. This proxy may also be revoked by sending written
notice to the Secretary of the Company at the address set forth on the Notice of
Annual Meeting of Stockholders, or by the filing of a later proxy prior to a
vote being taken on a particular proposal at the Annual Meeting.
The undersigned acknowledges receipt from the Company prior to the execution of
this proxy of notice of the Annual Meeting, a proxy statement dated March 15,
2002, and audited financial statements.
Dated: _________________, 2002 o Check Box if You Plan
to Attend Annual Meeting
- ------------------------------- -----------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ------------------------------- -----------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this card. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If
shares are held jointly, each holder should sign.
________________________________________________________________________________
Please complete and date this proxy and return it promptly
in the enclosed postage-prepaid envelope.
________________________________________________________________________________