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 __, 2004
March 19, 2004
Dear Stockholder:
You are cordially invited to attend the 2004 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 21, 2004.
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
two directors to the Board of Directors of the Company and the ratification of
the appointment of KPMG LLP as auditors for the Company's 2004 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 this 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 21, 2004
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 21,
2004 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 two 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, 2004; 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
27, 2004, 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
Kathie R. Highland
Secretary
Webster City, Iowa
March 19, 2004
- --------------------------------------------------------------------------------
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 21, 2004
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 21, 2004, 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
19, 2004.
At the Annual Meeting, stockholders will vote on the election of two
directors of the Company and on the ratification of the appointment of the
Company's auditors for 2004.
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 at any time prior to their exercise by sending
written notice of revocation to the Secretary of the Company, at the address of
the Company shown above, by delivering to the Company a duly executed proxy
bearing a later date, or by attending the Annual Meeting and voting in person.
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. If you are a stockholder whose
shares are not registered in your own name, you will need appropriate
documentation from your record holder to vote personally at the Annual Meeting.
VOTING SECURITIES, PRINCIPAL HOLDERS THEREOF AND METHODS OF COUNTING VOTES
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 27, 2004
(the "Record Date") are entitled to one vote for each share then held. As of the
Record Date, the Company had 3,772,372 shares of Company Common Stock issued and
outstanding, 2,300,000 of which were held by WCF Financial, M.H.C. (the "Mutual
Holding Company"), and 1,472,372 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 two 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 ratify 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 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.
2
Amount of Shares
Owned and Nature Percent of Shares
Name and Address of of Beneficial of Company Common Stock
Beneficial Owners Ownership (1)(4) Outstanding
------------------- ---------------- -----------------------
Directors and Officers (2)
Donald I. Newman 48,160 1.28%
Dr. Carroll E. Haynes 24,500 .65
Dennis J. Tasler 89,862 2.38
Phyllis A. Murphy 34,918 .93
Dr. Leo Moriarty 800 .02
Stephen L. Mourlam 30,080 .80
Kyle R. Swon 25,232 .67
All Directors and Executive Officers 253,552 6.72
as a Group (7 persons) (3)
Principal Stockholder:
WCF Financial, M.H.C. 2,300,000 60.97
820 Des Moines Street
Webster City, Iowa 50595
- -------------------------
(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 (the "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. Carroll E. Haynes and Phyllis A. Murphy, each for a three-year
period and until his successor shall have been elected and shall qualify. Dr.
Haynes and Ms. Murphy are currently members of the Board of Directors.
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 one or more
nominees) 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
3
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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEE LISTED IN THIS PROXY
STATEMENT.
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. Carroll E. Haynes 71 Director and 1967 2004 24,500 *
Chairman of the Board
Phyllis A. Murphy 53 President and Chief 1995 2004 34,918 *
Executive Officer
DIRECTORS CONTINUING IN OFFICE
Stephen L. Mourlam 51 Executive Vice President 2001 2006 30,080 *
and Director
Kyle R. Swon 42 Senior Vice President 2001 2006 25,232 *
and Director
Dennis J. Tasler 64 Director 1985 2006 89,862 2.38
Dr. Leo Moriarty 44 Director 2000 2008 800 *
Donald I. Newman 67 Director 1988 2008 48,160 1.28
- -------------------------
* 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.
(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, Principal Holders Thereof and Methods of Counting Votes."
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.
4
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.
Board Independence
The Board of Directors has determined that, except as to Ms. Murphy and
Messrs. Mourlam and Swon, each member of the Board of Directors is an
"independent director" within the meaning of the Nasdaq corporate governance
listing standards, which the Board has elected to determine corporate
governance. Ms. Murphy and Messrs. Mourlam and Swon are not considered
independent because they are executive officers of the Company.
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.
Based on the Company's review of ownership reports, during the year ended
December 31, 2003, no officer or director failed to timely file any Forms 3, 4,
or 5.
Meetings and Committees of the Board of Directors
General. 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, 2003, the Board of Directors held twelve regular meetings and
one special meeting. During the year ended December 31, 2003, 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; the full Board of
Directors acts as such committee.
ESOP Committee. The ESOP Committee consists of Directors Haynes, Tasler
and Newman and administers the Company's Employee Stock Ownership Plan. The
committee met one time in 2003.
Stock Benefits Committee. 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 2003.
Audit Committee. The Audit Committee consists of Directors Newman
(Chairman), Dr. Moriarty and Mr. Tasler. The committee met two times in 2003.
Each member of the Audit Committee is "independent" as defined in the Nasdaq
listing standards. Each member of the Audit Committee is able to read and
understand financial statements, and no member of the Audit Committee has
participated in the preparation of the Company's or the Bank's, or any of the
Bank's subsidiaries', financial statements during the past three years.
Directors Newman and
5
Tasler are deemed by the Company to be an "audit committee financial expert."
Directors Newman and Tasler have an understanding of generally accepted auditing
principles (GAAP) and has the ability and experience to prepare, audit, evaluate
and analyze financial statements which present the breadth and level of
complexity of issues that the Company reasonably expects to be raised by the
Company's financial statements. The Company's Board of Directors adopted an
Audit Committee Charter in May 2000, which was last amended on March 17, 2004
and is attached to this proxy statement as Appendix A. A copy of the charter of
the Audit Committee is available on the Company's website at www.webcityfed.com.
The duties and responsibilities of the Audit Committee include, among
other things:
o retaining, overseeing and evaluating a firm of independent certified
public accountants to audit the annual financial statements;
o in consultation with the independent auditors and the internal
auditor, reviewing the integrity of the Company's financial
reporting processes, both internal and external;
o approving the scope of the audit in advance;
o reviewing the financial statements and the audit report with
management and the independent auditors;
o considering whether the provision by the external auditors of
services not related to the annual audit and quarterly reviews is
consistent with maintaining the auditor's independence;
o reviewing earnings and financial releases and quarterly reports
filed with the SEC;
o consulting with the internal audit staff and reviewing management's
administration of the system of internal accounting controls;
o approving all engagements for audit and non-audit services by the
independent auditors; and
o reviewing the adequacy of the audit committee charter.
Nominating Committee. The Company's Nominating Committee, which is
appointed by the Board of Directors, is comprised of Directors Moriarty,
Newman and Tasler. All of the members of the Nominating Committee have been
determined by the Board of Directors to be "independent directors" within the
meaning of the Nasdaq corporate governance listing standards. The Nominating
Committee selects nominees to the Board of Directors of the Company. The
Nominating Committee met once during 2003. The Company's Board of Directors has
adopted a written charter for the Committee, which is available at the Company's
website at www.webcityfed.com.
The functions of the Nominating Committee include the following:
o to lead the search for individuals qualified to become members of
the Board and to select director nominees to be presented for
stockholder approval;
o to review and monitor compliance with the requirements for board
independence;
o to review the committee structure and make recommendations to the
Board regarding committee membership;
o to develop and recommend to the Board for its approval a set of
corporate governance guidelines; and
6
o to develop and recommend to the Board for its approval a
self-evaluation process for the Board and its committees.
The Nominating Committee identifies nominees by first evaluating the
current members of the Board of Directors willing to continue in service.
Current members of the Board with skills and experience that are relevant to the
Company's business and who are willing to continue in service are first
considered for re-nomination, balancing the value of continuity of service by
existing members of the Board with that of obtaining a new perspective. If any
member of the Board does not wish to continue in service, or if the Committee or
the Board decides not to re-nominate a member for re-election, or if the size of
the Board is increased, the Committee would solicit suggestions for director
candidates from all Board members. In addition, the Committee is authorized by
its charter to engage a third party to assist in the identification of director
nominees. The Nominating Committee would seek to identify a candidate who at a
minimum satisfies the following criteria:
o has the highest personal and professional ethics and integrity and
whose values are compatible with the Company's;
o has had experiences and achievements that have given him or her the
ability to exercise and develop good business judgment;
o is willing to devote the necessary time to the work of the Board and
its committees, which includes being available for Board and
committee meetings;
o is familiar with the communities in which the Company operates
and/or is actively engaged in community activities;
o is involved in other activities or interests that do not create a
conflict with their responsibilities to the Company and its
stockholders; and
o has the capacity and desire to represent the balanced, best
interests of the stockholders of the Company as a group, and not
primarily a special interest group or constituency.
The Nominating Committee will also take into account whether a candidate
satisfies the criteria for "independence" within the meaning of the Nasdaq
corporate governance listing standards, and if a nominee is sought for service
on the audit committee, the financial and accounting expertise of a candidate,
including whether an individual qualifies as an audit committee financial
expert.
Procedures for the Nomination of Directors by Shareholders
The Nominating Committee has adopted procedures for the submission of
director nominees by stockholders. If a determination is made that an additional
candidate is needed for the Board, the Nominating Committee will consider
candidates submitted by the Company's stockholders. Stockholders can submit
qualified names of candidates for Director by writing to our Corporate Secretary
at 820 Des Moines Street, Webster City, Iowa 50595. The Corporate Secretary must
receive a submission not less than ninety (90) days prior to the date of the
Company's proxy materials for the preceding year's annual meeting. The
submission must include the following information:
o the name and address of the stockholder as they appear on the
Company's books, and number of shares of the Company's common stock
that are owned beneficially by such stockholder (if the stockholder
is not a holder of record, appropriate evidence of the stockholder's
ownership will be required);
o the name, address and contact information for the candidate, and the
number of shares of common stock of the Company that are owned by
the candidate (if the candidate is not a holder of record,
appropriate evidence of the stockholder's ownership should be
provided);
7
o a statement of the candidate's business and educational experience;
o such other information regarding the candidate as would be required
to be included in the proxy statement pursuant to SEC Regulation
14A;
o a statement detailing any relationship between the candidate and the
Company;
o a statement detailing any relationship between the candidate and any
customer, supplier or competitor of the Company;
o detailed information about any relationship or understanding between
the proposing stockholder and the candidate; and
o a statement that the candidate is willing to be considered and
willing to serve as a Director if nominated and elected.
Submissions that are received and that meet the criteria outlined above
are forwarded to the Chairman of the Nominating Committee for further review and
consideration. A nomination submitted by a stockholder for presentation by the
stockholder at an annual meeting of stockholders must comply with the procedural
and informational requirements described in this proxy statement under the
heading "Other Matters and Advance Notice Procedures."
Stockholder Communications with the Board
A stockholder of the Company who wants to communicate with the Board or
with any individual Director can write to the Corporate Secretary of the
Company, at 820 Des Moines Street, Webster City, Iowa 50595, Attention: Board
Administration. The letter should indicate that the author is a stockholder and
if shares are not held of record, should include appropriate evidence of stock
ownership. Depending on the subject matter, management will:
o forward the communication to the Director or Directors to whom it is
addressed;
o attempt to handle the inquiry directly, for example where it is a
request for information about the company or it is a stock-related
matter; or
o not forward the communication if it is primarily commercial in
nature, relates to an improper or irrelevant topic, or is unduly
hostile, threatening, illegal or otherwise inappropriate.
At each Board meeting, management shall present a summary of all
communications received since the last meeting that were not forwarded and makes
those communications available to the Directors.
Code of Ethics
The Company has adopted a code of ethics that is applicable to the
Company's President and Chief Executive Officer, Chief Financial Officer (who is
also the Company's principal accounting officer), and other senior officers. The
Code of Ethics is available on the Company's website at www.webcityfed.com.
Amendments to and waivers from the Code of Ethics also will be disclosed on the
Company's website.
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:
Management has the primary responsibility for the Company's internal
controls and financial reporting process. The independent auditors are
responsible for performing an independent audit of the Company's
8
consolidated financial statements in accordance with auditing standards
generally accepted in the United States of America and to issue an opinion
thereon. The Audit Committee's responsibility is to monitor and oversee these
processes.
As part of its ongoing activities, the Audit Committee has:
o Reviewed and discussed with management and the independent auditors
the Company's audited consolidated financial statements for the year
ended December 31, 2003;
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, 2003 and be filed with the SEC. In addition, the Audit
Committee recommended that the Board of Directors appoint KPMG LLP as the
Company's independent auditors for the year ending December 31, 2004, subject to
the ratification of this appointment by the stockholders.
This report shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
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
$350 for each meeting attended during the year ended December 31, 2003. The Bank
paid a total of $72,800 in director and committee fees to members of the Board
of Directors during the year ended December 31, 2003. No separate fees are paid
to members for service on the Board of Directors of the Company, or for service
on committees of the Company's Board of Directors.
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, 2003 was 5.25 percent. The Company's
interest expense for the Deferred Fee Plan was $37,500 for the year ended
December 31, 2003. Fees deferred under the Plan for the year ended December 31,
2003 were $21,100.
9
Executive Compensation
The following table sets forth for the years ended December 31, 2003,
2002, and 2001, certain information as to the total remuneration paid by the
Company to the named executive officer of the Company (the "Named Executive
Officer"). No other executive officer of the Company received total annual
compensation in excess of $100,000 during the year ended December 31, 2003.
==================================================================================================================================
SUMMARY COMPENSATION TABLE
==================================================================================================================================
Long-Term
Annual Compensation Compensation Awards
- ---------------------------------------------------------------------------- ---------------------------------
Years Restricted
Ended Other Stock Options/ All Other
Name and December Salary Bonus Annual Award(s) SARs Compensation
Principal Position (1) 31, ($)(2) ($) ($)(3) ($) (#) Payouts ($)(4)
- ----------------------- ----------- ---------- ----------- ------------- ----------- ---------- --------- ---------------
Phyllis A. Murphy 2003 $105,000 $ 500 $10,200 -0- -0- -0- $ 442
President and Chief 2002 103,000 1,500 10,200 -0- -0- -0- 430
Executive Officer 2001 100,000 500 9,600 -0- -0- -0- 414
==================================================================================================================================
(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, 2003, 2002 and 2001.
(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 with 12 months of employment are eligible to accrue
10
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").
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 or
partial lump sum payment equal to 25%, 50% or 75% of the total benefit and a
monthly allowance for the remainder of the benefit which must commence at the
time of the partial lump sum settlement. 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, 2003, the Company made a contribution in the amount of
$103,362 to the Retirement Plan.
The following table indicates the annual retirement benefit that would be
payable under the Retirement Plan upon retirement at age 65 in calendar year
2003, 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 $120,000
============================= =============== ============= =============== ============== ============== ================
The following table sets forth the years of credited service (i.e.,
benefit service) as of June 30, 2003, for the individual named in the cash
compensation table.
Years of
Name Credited Service
---- ----------------
Phyllis A. Murphy....................... 28
Employee Stock Ownership Plan and Trust. Webster City Federal Savings 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.
11
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 Company, 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.
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 33a% 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 $12.75 per share, which was the
trading price of the Bank Common Stock on the date the Stock Option Plan was
approved by stockholders of the Bank. Options exercisable for 28,500 shares of
Company Common Stock have been reserved for future issuance under the Plan. No
options were granted to the Named Executive Officer under the Plan during the
year ended December 31, 2003. The exercise price of any option granted under the
Stock Option Plan may be paid in cash or Company Common Stock. The Named
Executive Officer did not exercise options during 2003.
Set forth below is certain information concerning options outstanding to
the Company's Chief Executive Officer at December 31, 2003.
====================================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
====================================================================================================================
Number of Unexercised Value of Unexercised
Options at In-the-Money Options at
Year-End Year-End (1)
------------------------- --------------------------
Shares Acquired Value Exercisable/Unexercisable Exercisable/Unexercisable
Name upon Exercise Realized (#) ($)
- ---------------------------- ---------------- ----------------- ------------------------- --------------------------
Phyllis A. Murphy -- -- 0/0 0/0
====================================================================================================================
- ------------------------------------
(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, 2003, at which date shares of Company Common Stock were
quoted on the Nasdaq SmallCap Market at $14.00.
The Company does not have any equity compensation program that was not
approved by stockholders other than the Bank's employee stock ownership plan.
Set forth below is certain information as of December 31, 2003 regarding
equity compensation to directors and executive officers of the Company approved
by stockholders.
12
====================================================================================================================
Number of securities to be Number of securities
issued upon exercise of remaining available for
outstanding options and Weighted average issuance
Plan rights exercise price under plan
- --------------------------------------------------------------------------------------------------------------------
Equity Compensation Plans approved
by Stockholders 16,625 $12.75 14,250
- --------------------------------------------------------------------------------------------------------------------
Equity Compensation Plans not
approved by Stockholders -- -- --
- --------------------------------------------------------------------------------------------------------------------
Total 16,625 $12.75 14,250
====================================================================================================================
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 or executive officers 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.
As of December 31, 2003 the Bank's directors and executive officers had
loans outstanding from the Bank totaling $692,500 in the aggregate. All such
loans were made by the Bank in compliance with federal law and the
above-described policies.
The Sarbanes-Oxley Act of 2002 generally prohibits an issuer from: (i)
extending or maintaining credit; (ii) arranging for the extension of credit; or
(iii) renewing an extension of credit in the form of a personal loan for an
officer or director. There are several exceptions to this general prohibition,
however, one of which is applicable to the Company. Namely, this prohibition
does not apply to loans made by a depository institution that is insured by the
FDIC and is subject to the insider lending restrictions of the Federal Reserve
Act. All loans to the Company's directors and officers by the Bank are made in
conformity with the Federal Reserve Act and regulations promulgated thereunder.
PROPOSAL II--RATIFICATION OF APPOINTMENT OF AUDITORS
The Audit Committee of 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, 2004, subject to the ratification of the engagement by the
Company's stockholders. Auditors are not deemed independent under federal
securities regulations unless the Audit Committee has approved the engagement,
or alternatively, the engagement is entered into pursuant to detailed
pre-approval policies and procedures established by the audit committee which
sets forth each specific service to be performed by auditor. 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, 2004. 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.
Stockholder ratification of the selection of KPMG LLP is not required by
the Company's bylaws or otherwise. However, the Board is submitting the
selection of the independent auditors to the stockholders for ratification as a
matter of good corporate practice. If the stockholders fail to ratify the
selection of KPMG LLP, the Audit Committee will reconsider whether or not to
retain that firm. Even if the selection is ratified, the Audit
13
Committee in its discretion may direct the appointment of a different
independent accounting firm at any time during the year if it determines that
such change is in the best interests of the Company and its stockholders.
Fees Paid to KPMG LLP
Set forth below is certain information concerning aggregate fees billed
for professional services rendered by KPMG LLP during 2003 and 2002:
Audit Fees. The aggregate fees billed to the Company by KPMG LLP for
professional services rendered by KPMG LLP for the audit of the Company's annual
financial statements, review of the financial statements included in the
Company's Quarterly Reports on Form 10-QSB and services that are normally
provided by KPMG LLP in connection with statutory and regulatory filings and
engagements was $54,700 and $50,000 during the fiscal years ended December 31,
2003 and 2002, respectively.
Audit-Related Fees. There were no fees billed to the Company by KPMG LLP
for assurance and related services rendered by KPMG LLP that are reasonably
related to the performance of the audit of and review of the financial
statements and that are not already reported in "Audit Fees," above, during the
fiscal years ended December 31, 2003 and 2002. These services included review of
the financial statements included in the Company's quarterly and annual reports.
Tax Fees. The aggregate fees billed to the Company by KPMG LLP for
professional services rendered by KPMG LLP for tax compliance, tax advice and
tax planning was $16,600 and $16,850 during the fiscal years ended December 31,
2003 and 2002, respectively. These services included preparation of federal and
state tax returns and supporting schedules based on information provided by the
Company, as well as assistance with determination of quarterly estimated tax
payment requirements.
All Other Fees. The were no fees billed to the Company by KPMG LLP that
are not described above during the fiscal years ended December 31, 2003 and
2002. These services included tax consulting services.
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.
Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of
Independent Auditor
The Audit Committee's policy is to pre-approve all audit and non-audit
services provided by the independent auditors. These services may include audit
services, audit-related services, tax services and other services. Pre-approval
is generally provided for up to one year and any pre-approval is detailed as to
particular service or category of services and is generally subject to a
specific budget. The Audit Committee has delegated pre-approval authority to its
Chairman when expedition of services is necessary. The independent auditors and
management are required to periodically report to the full Audit Committee
regarding the extent of services provided by the independent auditors in
accordance with this pre-approval, and the fees for the services performed to
date. None of the fees paid for non-audit services in 2003 and 2002 were
approved per the Audit Committee's pre-approval policies (which had not been
implemented at the time such fees were paid).
Required Vote and Recommendation of the Board of Directors
In order to ratify the selection of KPMG LLP as independent auditors for
the 2004 fiscal year, the proposal must receive the affirmative vote of at least
a majority of the votes cast at the Annual Meeting, either in person or by
proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF KPMG LLP AS
INDEPENDENT AUDITORS
14
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 12, 2004.
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.
The date on which the 2005 Annual Meeting of Stockholders is expected to
be held is April 20, 2005. Accordingly, advance written notice of business or
nominations to the Board of Directors to be brought before the 2005 Annual
Meeting of Stockholders must be given to the Company no later than April 15,
2005.
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, 2003 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
Kathie R. Highland
Secretary
Webster City, Iowa
March 19, 2004
15
APPENDIX A
WEBSTER CITY FEDERAL BANCORP
AUDIT COMMITTEE CHARTER
(Revised March 17, 2004)
Organization
The Audit Committee shall be comprised of a minimum of three directors as
determined by the Board. All of the directors serving on the Audit Committee of
the Company shall be "independent directors" according to SEC regulations and
NASDAQ listing requirements, and free from any relationship (including
disallowed compensatory arrangements) that, in the opinion of the Board, would
interfere with the exercise of their independent judgment as a member of the
Committee.
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 past employment experience in
finance or accounting, requisite professional certification in accounting, or
other comparable experience. The Board shall determine whether at least one
member of the Committee qualifies as an "audit committee financial expert" in
compliance with criteria established by the SEC and other relevant regulations.
The existence of such member, including his or her name and whether he or she is
independent, shall be disclosed in periodic filings as required by the SEC.
Audit Committee members shall be appointed by the Board of Directors of the
Company and shall serve until their successors are duly elected and qualified.
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 at least quarterly or more frequently as circumstances
dictate. Each regularly scheduled meeting shall conclude with an executive
session of the Committee absent members of management and on such terms and
conditions as the Committee may choose. As part of its responsibility to foster
open communication, the Committee will meet periodically with management, the
internal auditor and the independent auditor in separate executive sessions to
discuss any matters that the Committee or each of those parties believe should
be discussed privately. The Committee will meet quarterly with the independent
auditor and management to discuss the Company's financial statements.
Statement of Policy
The Audit Committee shall provide assistance to the Board of Directors in
fulfilling its 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, any internal auditors of the Company, 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.
A-1
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
and Quarterly Reports on Form 10-QSB, including disclosures made in
management's discussion and analysis, 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 Review and discuss with management and the independent auditor the
certifications of the Company's chief executive officer and chief
financial officer about any significant deficiencies in the design or
operation of internal controls or material weaknesses therein and any
fraud involving management or other employees who have a significant role
in the Company's internal controls, as required by the Sarbanes-Oxley Act
of 2002 (Sections 302 and 906), and the relevant reports rendered by the
independent auditor.
o Discuss with management and the independent auditor significant financial
reporting issues and judgments made in connection with the preparation of
the Company's financial statements, including any significant changes in
the Company's selection or application of accounting principles, any major
issues as to the adequacy of the Company's internal controls and any
special steps adopted in light of material control deficiencies.
o Discuss with management the Company's major financial risk exposures and
the steps management has taken to monitor and control such exposures,
including the Company's risk assessment and risk management policies.
o Review with management, corporate counsel and the independent auditor the
status of legal matters, including the significance of such matters on the
Company's financial statements, and the adequacy of disclosures regarding
such matters in the Company's financial statements and SEC filings.
o Review with management and the independent auditor all related party
transactions and determine that all required disclosures are included in
the Company's annual report and annual proxy statement.
A-2
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 Review and pre-approve both audit and non-audit services to be provided by
the independent auditor (other than with respect to non-significant
exceptions permitted by the Sarbanes-Oxley Act of 2002) in accordance with
the Company's pre-approval policy.
o Meet with the independent auditor prior to the audit to discuss the
planning and staffing of the audit.
o Employees or former employees of the independent auditor who participated
in any capacity in the audit of the Company will not be hired by the
Company unless (a) it is determined that such a hiring would not violate
any rules and regulations and (b) the hiring is pre-approved by the Board.
o Perform such other functions as assigned by law, the Company's charter or
by-laws, or the Board.
Other Responsibilities
o Discuss with management and the independent auditor any correspondence
with regulators or governmental agencies and any reports which raise
material issues regarding the Company's financial statements or accounting
policies.
o Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters, and the confidential, anonymous
submission by employees of concerns regarding questionable accounting or
auditing matters.
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
A-3
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.
A-4
REVOCABLE PROXY
WEBSTER CITY FEDERAL BANCORP
ANNUAL MEETING OF STOCKHOLDERS
April 21, 2004
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 21, 2004, 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 |_| |_|
Dr. Carroll E. Haynes
Phyllis A. Murphy
To withhold your 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, 2004.
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 19,
2004, and audited financial statements.
Dated: _________________, 2004 |_| 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.
- --------------------------------------------------------------------------------