P R E L I M I N A R Y C O P I E S
PS FINANCIAL, INC.
4800 South Pulaski Road
Chicago, Illinois 60632-4195
(773) 376-3800
- --------------------------------------------------------------------------------
March 29, 2000
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of PS Financial,
Inc. (the "Company"), I cordially invite you to attend the Annual Meeting of
Stockholders of the Company. The meeting will be held at 11:00 a.m., local time,
on May 3, 2000 at the main office of the Company located at 4800 South Pulaski
Road, Chicago, Illinois.
At the meeting, stockholders are being asked to elect two directors and
to ratify the appointment of Crowe Chizek and Company as the Company's
independent auditors for the fiscal year ending December 31, 2000. Stockholders
are also being asked to vote on a resolution proposed by a stockholder, as
described herein. Your board of Directors recommends that you vote FOR the
nominees named herein and FOR the ratification of the appointment of the
independent auditors. Your Board of Directors unanimously recommends you vote
AGAINST the stockholder proposal.
Whether or not you plan to attend, however, please read the enclosed
Proxy Statement and then complete, sign and date the enclosed proxy and return
it in the accompanying postpaid return envelope as promptly as possible. This
will save the Company additional expense in soliciting proxies and will ensure
that your shares are represented at the meeting.
Very truly yours,
Kimberly P. Rooney
President and Chief Executive Officer
PS Financial, Inc.
4800 South Pulaski Road
Chicago, Illinois 75711
(773) 376-3800
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on May 3, 2000
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of PS Financial, Inc. (the "Company") will be held at the main office
of the Company located at 4800 South Pulaski Road, Chicago, Illinois on May 3,
2000 at 11:00 a.m., local time.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Company;
2. The ratification of the appointment of Crowe, Chizek and
Company, LLP as auditors for the Company for the fiscal year
ending December 31, 2000;
3. A stockholder proposal if presented by its proponent;
and such other matters as may properly come before the Meeting, or at any
adjournments or postponements thereof. The Board of Directors is not aware of
any other business to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on
the date specified above, or on any date or dates to which the Meeting may be
adjourned or postponed. Stockholders of record at the close of business on March
15, 2000 are the stockholders entitled to vote at the Meeting, and any
adjournments or postponements thereof.
You are requested to complete and sign the enclosed Proxy Card which is
solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. The Proxy will not be used if you attend and vote at the
Meeting in person.
By Order of the Board of Directors
Kimberly P. Rooney
President and Chief Executive Officer
Chicago, Illinois
March 29, 2000
- --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
PROXY STATEMENT
PS Financial, Inc.
4800 South Pulaski Road
Chicago, Illinois 75711
(773) 376-3800
ANNUAL MEETING OF STOCKHOLDERS
May 3, 2000
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors and executive officers named in this proxy statement
of PS Financial, Inc. (the "Company") of proxies to be used at the Annual
Meeting of Stockholders (the "Meeting") which will be held at the main office of
the Company located at 4800 South Pulaski Road, Chicago, Illinois on May 3, 2000
at 11:00 a.m., local time, and all adjournments or postponements of the Meeting.
The accompanying Notice of Annual Meeting of Stockholders and this Proxy
Statement are first being mailed to stockholders on or about March 29, 2000.
Certain of the information provided herein relates to Preferred Savings Bank
(the "Bank"), a wholly-owned subsidiary and predecessor of the Company.
At the Meeting, stockholders of the Company are being asked to consider
and vote upon (i) the election of two directors of the Company; (ii) the
ratification of the appointment of Crowe, Chizek and Company, LLP as the
Company's independent auditors for the fiscal year ending December 31, 2000; and
(iii) a stockholder proposal as described herein.
Vote Required and Proxy Information
All shares of common stock of the Company, par value $.01 per share
(the "Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed WHITE proxy cards will be voted FOR the nominees
named herein, FOR the ratification of the appointment of independent auditors
and AGAINST the stockholder proposal. The Company does not know of any matters,
other than as described in the Notice of Annual Meeting of Stockholders, that
are to come before the Meeting. If any other matters are properly presented at
the Meeting for action, the persons named in the enclosed WHITE proxy card and
acting pursuant thereto will have the discretion to vote on such matters in
accordance with their best judgment.
Directors shall be elected by a plurality of the votes present in
person or represented by proxy at the Meeting and entitled to vote on the
election of directors. In all matters other than the election of directors, the
affirmative vote of the majority of the votes cast on the matter shall be the
act of the stockholders. Proxies marked to abstain with respect to a proposal
will have the same effect as votes against the proposal. Votes withheld (for the
election of directors) and broker non-votes will have no effect on the vote.
One-third of the shares of the Common Stock, present in person or represented by
proxy, shall constitute a quorum for purposes of the Meeting. Abstentions and
broker non-votes will be treated as shares present at the Meeting for purposes
of determining a quorum.
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments or postponements thereof. Proxies may be
revoked by: (i) filing with the Secretary of the Company at or before the
Meeting a written notice of revocation bearing a later date than the proxy, (ii)
duly executing a subsequent proxy relating to the same shares and delivering it
to the Secretary of the Company at or before the Meeting or (iii) attending the
Meeting and voting in person (although attendance at the Meeting will not in and
of itself constitute revocation of a proxy). Any written notice revoking a proxy
should be delivered to S. J. Ptak, Secretary, at the address shown above.
Voting Securities and Principal Holders Thereof
Stockholders of record as of the close of business on March 15, 2000
will be entitled to one vote for each share then held. As of that date, the
Company had 1,669,290 shares of Common Stock issued and outstanding. The
following table sets forth, as of March 15, 2000, information regarding share
ownership of: (i) those persons or entities known by management to beneficially
own more than five percent of the Common Stock; (ii) the Chief Executive
Officer; and (iii) all directors and executive officers of the Company and the
Bank as a group. For information regarding the beneficial ownership of Common
Stock by directors of the Company, see "Proposal I--Election of
Directors--General."
Shares Percent
Beneficially of
Beneficial Owner Owned Class
Paul J. Duggan 131,700 7.89%
Jackson Boulevard Capital Management, Ltd.
Jackson Boulevard Equities, L.P.
Jackson Boulevard Partners
Jackson Boulevard Investments, L.P.
Jackson Offshore Fund, Ltd.
Vincent Cainkar
Burbank Partners
Louis F. Cainkar, Ltd. Profit Sharing Plan (1)
53 West Jackson Blvd.
Suite 400
Chicago, Illinois 60604
PS Financial, Inc.(2) 172,814 10.35
Employee Stock Ownership Plan ("ESOP")
4800 South Pulaski Road
Chicago, Illinois 60632-4195
Kimberly P. Rooney, President,(3) 109,668 6.48
Chief Executive Officer and Director
4800 South Pulaski Road
Chicago, Illinois 60632-4195
All directors and executive 119,485 11.50
officers (7 persons) as a group(4)
- -----------
(1) The above information is as reported by Paul J. Duggan ("Duggan"),
Jackson Blvd Capital Management Ltd. ("Jackson Capital"), Jackson Blvd
Equities, L.P. ("Jackson Equities"), Jackson Blvd Investments, L.P.
("Jackson Investments"), Jackson Offshore Fund, Ltd. ("Jackson
Offshore"), Vincent Cainkar, Burbank Partners, and Louis F. Cainkar,
Ltd. Profit Sharing Plan on Amendment No. 3 to Schedule 13-D dated
February 24, 2000. Pursuant to such report, Duggan reported sole voting
and dispositive power over 500 shares, shared voting power over 112,575
shares and dispositive power over 37,814 shares. Jackson Capital
reported sole voting and dispositive power over no shares, shared
voting power over 57,075 shares and dispositive power over 75,700
shares. Jackson Equities reported sole voting and dispositive power
over no shares and shared voting and dispositive power over 37,814
shares. Jackson Partners reported sole voting and dispositive power
over no shares and shared voting and dispositive power over 55,500
shares. Jackson Investments reported sole voting and dispositive power
over no shares and shared voting and dispositive power over 19,261
shares. Jackson Offshore reported sole voting and dispositive power
over no shares, shared voting power over no shares and shared
dispositive power over 18,625 shares. Vincent Cainkar reported sole
voting and dispositive power over 100 shares and shared voting and
dispositive power over 22,000 shares. Burbank Partners reported sole
voting and dispositive power over no shares and shared voting and
dispositive power over 17,900 shares. Louis F. Cainkar, Ltd. Profit
Sharing Plan reported sole voting and dispositive power over no shares
and shared voting and dispositive power over 3,100 shares.
2
(2) The amount reported represents shares held by the Employee Stock
Ownership Plan ("ESOP"), 75,027 of which have been allocated to
accounts of participants. First Bankers Trust, Quincy, Illinois, the
trustee of the ESOP, may be deemed to beneficially own the shares held
by the ESOP which have not been allocated to accounts of participants.
Participants in the ESOP are entitled to instruct the trustee as to the
voting of shares allocated to their accounts under the ESOP.
Unallocated shares for which no voting instructions are received are
voted by the trustee in the same proportion as allocated shares voted
by participants.
(3) Includes shares held directly as well as 15,195 shares allocated to Ms.
Rooney's account pursuant to the Company's ESOP and 21,822 shares which
Ms. Rooney has the right to acquire pursuant to stock options that are
currently exercisable.
(4) Amount includes shares held directly, as well as shares allocated to
such individuals under the ESOP, shares held jointly with family
members, shares held in retirement accounts, shares held in a fiduciary
capacity or by certain family members, with respect to which shares the
group members may be deemed to have sole voting and/or investment
power. The amounts reported include 64,700 shares subject to currently
exercisable options awarded to such individuals pursuant to the Stock
Option Plan.
PROPOSAL I - ELECTION OF DIRECTORS
General
The Company's Board of Directors currently consists of six members,
each of whom is also a director of the Bank with the exception of L.G. Ptak. The
Board is divided into three classes, and approximately one-third of the
directors are elected annually. Directors of the Company are generally elected
to serve for a three-year term or until their respective successors are elected
and qualified.
The following table sets forth certain information, as of March 15,
2000, regarding the composition of the Company's Board of Directors, including
each director's term of office. The Board of Directors acting as the nominating
committee has recommended and approved the nominees identified in the following
table. 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 a nominee)
will be voted at the Meeting FOR the election of the nominees identified below.
If a nominee is unable to serve, the shares represented by all valid proxies
will be voted for the election of such substitute nominee as the Board of
Directors may recommend. At this time, the Board of Directors knows of no reason
why any nominee may be unable to serve, if elected. Except as disclosed herein,
there are no arrangements or understandings between the nominees and any other
person pursuant to which the nominees were selected.
Shares of
Common Stock Percent
Position(s) Held Director Term to Beneficially of
Name Age in the Company Since(1) Expire Owned(2) Class
- --------------------- ---- ------------------------------ -------- --------- ------------- -------
NOMINEES
Jeanine M. McInerney 42 Director 1996 2003 8,164 0.49%
Rocco DiIorio 68 Director 1990 2003 10,164 0.61
DIRECTORS CONTINUING IN OFFICE
Edward Wolak 76 Director 1969 2001 15,164 0.91
Lorraine G. Ptak 75 Director 1975 2001 84,552 4.99
Sylvester J. Ptak 75 Chairman of the Board 1969 2002 84,552 4.99
Kimberly P. Rooney 43 President, Chief Executive 1989 2002 109,668 6.48
Officer and Director
<FN>
(1) Includes service as director of Preferred Savings Bank.
(2) Amount includes shares held directly, as well as shares allocated to
such individuals under the ESOP, shares held jointly with family
members, shares held in retirement accounts, shares held in a fiduciary
capacity or by certain family members, with respect to which shares the
group members may be deemed to have sole voting and/or investment
power. The amounts reported also include 4,364, 4,364, 4,364, 4,364,
21,822 and 21,822 shares which Ms. McInerney, Mr. DiIorio, Mr. Wolak,
Ms. Ptak, Mr. Ptak and Ms. Rooney, respectively, have the right to
acquire pursuant to stock options that are currently exercisable.
</FN>
3
The principal occupation of each director of the Company and each
nominee for director is set forth below. All directors and nominees have held
their present positions for at least 5 years unless otherwise indicated.
Sylvester J. Ptak. Mr. Ptak is the Chairman of the Board and Vice
President of the Bank, a position he has held since 1995. Mr. Ptak has been a
member of the Board of Directors of the Bank since 1969. He also served as
Secretary of the Bank from 1969 to 1975 and President and Chief Executive
Officer of the Bank from 1975 to 1995. Mr. Ptak is the father of President
Rooney and husband of Secretary-Treasurer Lorraine Ptak. As Chairman of the
Board and Vice President of the Bank, Mr. Ptak supervises the lending
department.
Kimberly P. Rooney. Ms. Rooney is currently serving as President and
Chief Executive Officer of the Bank, a position she had held since 1995. Prior
to joining the Bank as President, Ms. Rooney served as an attorney for the Bank.
From time to time, Ms. Rooney performs legal work for long-time clients. Ms.
Rooney is the daughter of Chairman Ptak and Secretary-Treasurer Lorraine Ptak.
Jeanine McInerney. Ms. McInerney is a clinical nurse consultant with
Healthpoint Medical. She has been employed as a nurse for approximately 15
years.
Rocco DiIorio. Mr. DiIorio is a retired sewer contractor.
Edward Wolak. Mr. Wolak is a retired plant engineer with Crown Stove,
Inc., a position he held for approximately 40 years. Mr. Wolak is the spouse of
Lorraine Ptak's sister.
Lorraine G. Ptak. Ms. Ptak is currently serving as Secretary-Treasurer
of the Bank, a position she has held since 1975. Mrs. Ptak is also a director of
the Holding Company. Ms. Ptak is the wife of Chairman S.J. Ptak and the mother
of President Rooney.
Paul J. Duggan has notified the Company of his intent to nominate
himself and Vincent Cainkar to stand for election to the Board of Directors at
the Meeting. In the event Mr. Duggan solicits proxies in opposition to the
recommendations of your Board, we will provide you with additional information.
YOUR BOARD OF DIRECTORS URGES YOU TO RETURN ONLY MANAGEMENT'S WHITE PROXY CARD,
WHICH IS ENCLOSED, AND TO VOTE "FOR" THE ELECTION OF EACH OF THE BOARD'S
NOMINEES.
Meetings and Committees of the Board of Directors
Meetings of the Company's Board of Directors generally are held on a
quarterly basis. The Board of Directors met four times during the fiscal year
ended December 31, 1999. During fiscal 1999, no incumbent director of the
Company attended fewer than 75% of the aggregate of the total number of Board
meetings. The Company has standing Nominating, Audit and Compensation
Committees.
The Bank's Board of Directors generally meets monthly and may have
additional special meetings upon request of the Chairman of the Board, the
President or one-third of the directors. The Board of Directors of the Bank met
twelve times during the year ended December 31, 1999. During fiscal 1999, no
incumbent director of the Bank attended fewer than 75% of the aggregate of the
total number of Board meetings and the total number of meetings held by the
committees of the Board of Directors on which he served. The Board of Directors
has standing Nominating, Loan, Investment, Audit, CRA and Interest Rate Risk
Committees.
The Nominating Committee is composed of Directors S.J. Ptak, Kimberly
Rooney and L.G. Ptak and selects the annual nominees for election as directors.
This Committee met one time during the fiscal year ended December 31, 1999.
The Loan Committee meets to approve all loans originated by the Bank
and sets interest rates for all loan types. The entire Board of Directors
comprises the Loan Committee. This Committee met twelve times during calendar
year 1999.
4
The Investment Committee develops investment objectives and performance
standards consistent with the Bank's financial needs and reviews the Bank's
investment policies and recommends changes to the full Board. This Committee is
comprised of Chairman Ptak, President Rooney and Chief Financial Officer Przybyl
and met twelve times during calendar year 1999.
The Audit Committee meets at least annually to review and recommend the
Company's and the Bank's engagement of external auditors. Such Committee reviews
audit reports and related matters and acts as the liaison with Preferred
Savings' external auditors and the Board. Directors DiIorio, McInerney and Wolak
currently comprise the Committee. This Committee met one time in 1999.
The Compensation Committee is responsible for administration of the
Stock Option Plan and the RRP. The members of the Compensation Committee are
Directors McInerney, Wolak and DiIorio. This Committee met one time during
fiscal 1999.
The CRA Committee meets on a monthly basis to review compliance with
the Community Reinvestment Act. The CRA Committee is composed of the entire
Board of Directors. This Committee met twelve times during calendar year 1999.
The Interest Rate Risk Committee is comprised of Chairman Ptak,
Director Rooney and officer Przybyl. This Committee meets quarterly to review
the Bank's interest rate risk position and product mix and make recommendations
for adjustments to the full Board. This Committee met four times in fiscal 1999.
Director Compensation
The Board of Directors of the Company are not paid a fee for Board
Meetings attended. The Board of Directors of the Bank are paid a monthly fee of
$300 for service on the Board. Directors do not receive any compensation for
Committee meetings attended.
Executive Compensation
The following table sets forth information concerning the compensation
for services in all capacities to the Company for the fiscal year ended December
31, 1999 of the Company's Chief Executive Officer. No other executive officer's
aggregate annual compensation (salary plus bonus) exceeded $100,000 in fiscal
1999.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Awards
--------------------
Annual Compensation Restricted
------------------------- Stock Options/ All Other
Fiscal Salary Bonus Award(s) SARs Compensation
Name and Principal Position Year ($) ($) ($) (#) ($)(3)
- ---------------------------------- ------ --------- --------- ---------- --------- ------------
Kimberly P. Rooney, President, 1999 $92,000 $18,000$ --- --- $ ---
Chief Executive Officer and
Director(1) 1998 87,000 10,000 --- --- 138,883
1997 78,000 10,000 305,494(2) 54,553(2) 20,858
================================== ====== ========= ========= ========== ========= ============
<FN>
(1) Pursuant to SEC rules, the table excludes perquisites and other
personal benefits which do not exceed the lesser of $50,000 or 10% of
salary and bonus.
(2) Pursuant to the Stock Option and Incentive Plan, the Company granted to
Ms. Rooney an option to purchase 54,553 shares. In addition, pursuant
to the Company's Recognition and Retention Plan, the Company granted to
Ms. Rooney 21,821 shares of restricted stock with a value of $305,494
based on the market price of PS Financial, Inc. Common Stock on May 26,
1997.
(3) Amount reflects the dollar value of shares allocated to Ms. Rooney's
account pursuant to the Company's ESOP.
</FN>
5
Employment Agreement And Severance Agreements
The Bank has entered into employment agreements with Chairman Ptak and
President Rooney providing for an initial term of three years. The agreements
provide for an annual base salary in an amount not less than each individual's
respective salary and provide for an annual extension subject to the performance
of an annual formal evaluation by disinterested members of the Board of
Directors of the Bank. The agreements also provide for termination upon the
employee's death, for cause or in certain events specified by OTS regulations.
The employment agreements are also terminable by the employee upon 90 days'
notice to the Bank.
In addition, in the event of an "involuntary termination" in which the
employment of the employee is terminated without the written consent of the
employee and includes a material diminution of or interference with the
employee's duties, responsibilities and benefits as specified in the agreements,
the employee will be entitled to the benefits under the agreement for the
remaining term of the agreement.
The employment agreements provide for payment to Chairman Ptak and
President Rooney of an amount equal to 299% of their five-year annual average
compensation, respectively, in the event there is a "change in control" of the
Bank where employment involuntarily terminates in connection with such change in
control or within twelve months thereafter. For the purposes of the employment
agreements, a "change in control" is defined as any event which would require
the filing of an application for acquisition of control or notice of change in
control pursuant to 12 C.F.R. ss.574.3 or 4. Such events are generally triggered
prior to the acquisition or control of 25% of the Holding Company's common
stock. If the employment of Chairman Ptak or President Rooney had been
terminated as of December 31, 1999 under circumstances entitling them to
severance pay as described above, they would have been entitled to receive a
lump sum cash payment of approximately $141,916 and $229,752, respectively. The
agreements also provide for the continued payment to Chairman Ptak and President
Rooney of health benefits for the remainder of the term of this contract in the
event such individual is involuntarily terminated in the event of change in
control.
The Bank entered into a change in control severance agreement with
Officer Jeffrey Przybyl. The agreement became effective upon completion of the
Conversion and provides for an initial term of 18 months. The agreement provides
for extensions of one year, on each anniversary of the effective date of the
agreement, subject to a formal performance evaluation performed by disinterested
members of the Board of Directors of the Bank. The agreement provides for
termination for cause or in certain events specified by OTS regulations.
The agreement provides for a lump sum payment to Mr. Przybyl of $40,000
and the continued payment for the remaining term of the contract of life and
health insurance coverage maintained by the Bank in the event there is a "change
in control" of the Bank where employment terminates involuntarily in connection
with such change in control. This termination payment is subject to reduction by
the amount of all other compensation to the employee deemed for purposes of the
Code to be contingent on a "change in control," and may not exceed three times
the employee's average annual compensation over the most recent five-year period
or be non-deductible by the Bank for federal income tax purposes. For the
purposes of the agreement, a "change in control" is defined as any event which
would require the filing of an application for acquisition of control or notice
of change in control pursuant to 12 C.F.R. ss.574.3 or 4 or any successor
regulation. Such events are generally triggered prior to the acquisition of
control of 25% of the Company's Common Stock.
The following table provides information as to the value of the options
held by the Company's President and Chief Executive Officer at December 31,
1999, none of which have been exercised. No stock appreciation rights were
granted as of such date.
6
Aggregated Option/SAR Exercises in Last Fiscal Year and Year-end Option/SAR Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options/SARs at Options/SARs at
Acquired Value FY-End (#) FY-End ($)(2)
on Exercise Realized ---------------------------- ----------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------- ------------ ---------- ------------- -------------- ------------ ---------------
Kimberly P. Rooney -- --- 21,822(1) 32,733(1) $18,657 $27,986
==================== ============ ========== ============= ============== ============ ===============
<FN>
(1) Represents options to purchase Common Stock awarded to the Company's
Chief Executive Officer and President. The options vest in five equal
annual installments. The first installment vested on May 26, 1998, with
the remaining installments to vest equally on May 26, 1999, 2000, 2001
and 2002.
(2) Represents the aggregate market value (market price of common stock
less the exercise price) of the options based upon the closing price of
$11.875 per share of the common stock as reported on the Nasdaq
National Market on December 31, 1999. The exercise price of each option
held by Ms. Rooney is $11.02.
</FN>
Certain Transactions
The Bank has followed a policy of granting loans to officers, directors
and employees, if such loans are made in the ordinary course of business and on
the same terms and conditions, including interest rates and collateral, as those
of comparable transactions prevailing at the time, in accordance with the Bank's
underwriting guidelines, and do not involve more than the normal risk of
collectibility or present other unfavorable features. Loans to executive
officers and directors must be approved by a majority of the disinterested
directors and loans to other officers and employees must be approved by the
Bank's loan committee. All loans by the Bank to its executive officers and
directors are subject to OTS regulations restricting loan and other transactions
with affiliated persons of the Bank. Federal law currently requires that all
loans to executive officers and directors be made on terms and conditions
comparable to those for similar transactions with non-affiliates. At December
31, 1999 there were no loans to executive officers and directors and their
associates.
PROPOSAL II
RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors has renewed the Company's arrangement for Crowe,
Chizek and Company, LLP to be its auditors for the 2000 fiscal year, subject to
the ratification of the appointment by the Company's stockholders. A
representative of Crowe, Chizek and Company, LLP is expected to attend the
Meeting to respond to appropriate questions and will have an opportunity to make
a statement if he so desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF CROWE, CHIZEK AND COMPANY, LLP AS THE
COMPANY'S AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2000.
PROPOSAL III
STOCKHOLDER PROPOSAL ON THE SALE OF THE COMPANY
Paul J. Duggan ("Duggan"), 53 West Jackson Boulevard, Suite 400,
Chicago, Illinois 60604, has given notice that he intends to present the
proposal set forth below for consideration at the Annual Meeting. Duggan has
informed the Company that he beneficially owns 131,700 shares of Common Stock.
The Board of Directors of the Company is opposed to this proposal and urges
shareholders to vote "Against" the proposal. To be approved, the proposal must
receive the affirmative vote of a majority of the votes cast on the proposal.
7
Proposed Resolution
RESOLVED, that the stockholders of the Company, believing that the
value of their investment in the Company can best be maximized through a sale or
merger of the Company, hereby request that the Board of Directors promptly
proceed to effect such a sale or merger by (i) retaining a leading qualified
investment banking firm for the specific purpose of soliciting offers to acquire
the Company by sale or merger and (ii) establishing a committee of the Board of
Directors consisting of all directors, who are not current or former officers or
employees of the Company or related by blood or marriage to a current or former
officer or employee of the Company, to consider and recommend to the full Board
of Directors for approval the best available offer to acquire the Company by
sale or merger.
Supporting Statement
This Resolution and Supporting Statement were written with facts
available to this writer (Paul Duggan) as of November 17, 1999. Results of the
company's fiscal year will not be available until February 2000.
PS Financial, Inc. (PSFI) went public in November of 1996. On January
13, 1998, when PSFI stockholders were credited with a taxable dividend of $4.00,
the stock closed at $15.25. In the 22 months since, PSFI's stock has fallen to
$11.75 per share (a 23% decline). During the same time frame, the value of the
Dow Jones Industrial Average has risen 40.75%, the S&P 500 has grown 48.38%, the
NASDAQ has grown 112.07%, and the NASDAQ Bank Index has fallen 5.6%. The stock
of PSFI has under-performed its peer group and the broad market averages. During
this period of decline, PSFI has raised its dividend, increased its earnings and
completed numerous buy-backs. Despite the best efforts of management, the
company's stock has languished.
Consolidation, increased size and efficiency will be the trends for the
new millennium. PSFI stockholders should also benefit from these trends. Current
regulations now favor merger and consolidation. Now is the time for management
and stockholders to cash out and move on. I believe the market is ignoring
smaller thrifts. Value today is placed on larger operations in the financial
arena. Consolidations make sense and justify the costs of web sites, ATM
networks and marketing. Efficiency is a prime mover in financial consolidation.
PSFI, a single office operation, would be a fine branch for a larger concern.
PSFI currently trades at less than book value. Buyers would pay a premium over
book value for the core deposit and real estate location of PSFI. It is time to
do something different. A No vote is a vote for the status quo. A Yes vote for
the stockholder proposal is a vote to maximize value and a vote to move forward.
I urge you to consider voting Yes for the proposal.
Statement of the Board of Directors of the Company in Opposition to the
Stockholder Proposal
The Board of Directors of the Company recommends that you vote
"AGAINST" this proposal for the following reasons:
The Board of Directors of the Company is committed to maximizing value
for shareholders and pursues the course of action that will, in the Board's
judgment, best achieve that objective. As such, the Board, in consultation with
its advisors, reviews on a regular basis strategic alternatives and
opportunities available to the Company in furtherance of maximizing shareholder
value. Subsequent to receiving the stockholder proposal, the Board of Directors
engaged Keefe, Bruyette & Woods, Inc., a firm that specializes in financial
institutions to analyze the Company's business plan and advise the Board on ways
to maximize stockholder value. Keefe, Bruyette & Woods has been familiar with
the Company since it acted as investment banker during the Company's mutual to
stock conversion in 1996.
Upon completion of the 1996 stock conversion, the Company had an equity
to assets ratio of 42.8%, well in excess of industry standards, regulatory
requirements and the amount necessary to execute its long term business plan.
Return on equity, a measure of stockholder value, was 2.97% for the first full
fiscal year of operations after completion of the conversion. Since the time the
Company went public, the Board of Directors has continuously sought ways to
maximize the Company's value and utilize its excess capital. The Board of
Directors introduced a regular quarterly cash dividend in the second quarter of
1998 at $0.12 per share, increasing this steadily over time to its current rate
of $0.14 per share, a 16.7% increase since the initial dividend. Further, the
Board declared a special one time dividend of $4.00 per share in December, 1997
as a way to further utilize the excess capital. The Company has also utilized
share
8
repurchases and since its inception has repurchased 488,681 shares at a total
cost of $6.4 million. As of September 30, 1999, the equity to assets ratio stood
at 16.37% and the return on equity for the nine months then ended was 8.07%.
As part of its recent analysis of the Company's business plan, Keefe,
Bruyette & Woods analyzed several potential scenarios developed by management
and presented them to the Board of Directors. The Board of Directors determined,
based on its discussions with Keefe, Bruyette & Woods, that continuing to
enhance stockholder value by repurchasing additional shares through a dutch
auction tender offer, [which we recently] completed and refining and
implementing our business plan, would be in the best short-term interest of
stockholders.
In the [recently completed] dutch tender, the Company purchased 20% of
its outstanding shares at $______ per share for a total of $____________. The
transaction was designed to enhance the Company's balance sheet in order to
increase return on equity and earnings per share by reducing the amount of
equity and shares outstanding.
The Board and management of PS Financial believe that the Company's
financial performance compares favorably with other publicly traded thrift
institutions. In measuring financial performance, management compared the
cumulative total shareholder return on the Company's common stock with the
cumulative return on the NASDAQ Combined Bank Index, the SNL Thrift Index and
the BKX, which is a capitalization-weighted index consisting of 24
exchange-listed and NASDAQ Market System stocks, representing national money
center banks and leading regional institutions. Total return assumes the
reinvestment of all dividends. For the twelve months ended December 31, 1999,
the total shareholder return on the Company's common stock was 18.0%. By
comparison, the NASDAQ Combined Bank Index was down 8.0%, the SNL Thrift Index
was down 21.0% and the BKX index was down 6.0% for the same period.
The Board and management of PS Financial, after consultation with its
advisors, believe that the best method to maximize value for shareholders is to
continue to pursue its business plan with a goal of achieving a return on equity
of 10.25% by September 30, 2001, subject to market conditions.
In addition to implementing its own initiatives, the Board remains open
and welcomes viable suggestions from all of the Company's shareholders to
further enhance shareholder value. However, the Board does not believe that
placing a "for sale" sign on the Company is in the best long-term interest of
shareholders, particularly in light of the difficult current market for
financial institution stocks.
The Board believes that the intent of the Proposal is to force the
Board to sell the Company to a third party as soon as possible. The Board is
committed to considering all options available to the Company for enhancing
shareholder value, including through potential merger and/or other business
combination transactions. The Board and management recognize that the banking
industry is in the process of undergoing tremendous change and will remain
attuned to the marketplace to make sure the Company's shareholders benefit fully
from the best opportunities for growth in shareholder values the future will
provide. The Board will responsibly review any offer for a combination with the
Company and exercise its business judgment to determine whether to accept such
an offer. However, the Board does not believe that putting the Company on the
"auction block", without reviewing all alternatives, is likely to result in
maximizing shareholder value.
The Board believes strongly that adoption of the Proposal is not in the
best long-term interest of shareholders. In the Board's opinion, Mr. Duggan, the
proponent of the Proposal, is pursuing a short-term agenda, without regard to
the long-term interests of the Company or the other shareholders, which will not
maximize shareholder value. While we recognize that the Proposal only requests
certain action by the Board and does not obligate the Board to take any action,
an announcement that the Proposal has been adopted could severely damage the
Company's long-term relationships with its customers. Moreover, the Company may
have difficulty retaining employees and attracting new employees if the Proposal
is adopted. This could adversely impact the Company's ability to effectively
compete in the short-and-long term, resulting in a possible decline in revenues
and a corresponding decline in shareholder value. Moreover, Mr. Duggan's actions
have already resulted in the Company incurring expenses and diverting resources
that could have been put to better use.
9
The Board is dedicated to maximizing value for all shareholders. We
believe the Company is well positioned to deliver exceptional shareholder value.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
"AGAINST" PROPOSAL III.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials
for the next Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's main office, located at
4800 South Pulaski Road, Chicago, Illinois 60632-4195, no later than January 3,
2001. Any such proposal shall be subject to the requirements of the proxy rules
adopted under the Exchange Act, as amended. Otherwise, any stockholder proposal
to take action at such meeting must be received at the Company's main office
located at 4800 South Pulaski Road, Chicago, Illinois 60632-4195 by February 22,
2001; provided, however, that in the event that the date of the annual meeting
is held before April 13, 2001 or after June 2, 2001, the stockholder proposal
must be received not later than the close of business on the later of the 60th
day prior to such annual meeting or the tenth day following the day on which
notice of the date of the annual meeting was mailed or public announcement of
the date of such meeting was first made. All stockholder proposals must also
comply with the Company's by-laws and Delaware law.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitation by mail,
directors, officers and regular employees of the Company and/or the Bank may
solicit proxies personally or by telegraph or telephone without additional
compensation.
BY ORDER OF THE BOARD OF DIRECTORS
Kimberly P. Rooney
President and Chief Executive Officer
Chicago, Illinois
March 29, 2000
10
APPENDIX
The following table sets forth the names, principal occupations,
business addresses and the number of shares of the common stock of PS Financial,
Inc. (the "Company") beneficially owned by the directors of the Company and
Preferred Savings Bank (the "Bank") and such other officers and employees, and
associates of such directors, officers and employees, as may be deemed
participants in this proxy solicitation under the federal securities laws
(together the "Participants").
Name, Occupation and Address Shares Owned(1)
---------------------------- ---------------
Sylvester J. Ptak 80,188
Chairman
PS Financial, Inc.
4800 S. Pulaski Road
Chicago, Illinois 60632
Kimberly P. Rooney 65,745
President & CEO; Director
PS Financial, Inc.
4800 S. Pulaski Road
Chicago, Illinois 60632
Jeffrey Przybyl 15,696
Chief Financial Officer
PS Financial, Inc.
4800 S. Pulaski Road
Chicago, Illinois 60632
Lorraine G. Ptak 80,188
Retired
120 Edgebrook Court
Indian Head Park, Illinois 60525
Rocco DiIorio 10,164
Retired
5601 Lawn
Western Springs, Illinois 60558
Jeannine McInerney 8,164
Clinical Nurse Consultant
5646 West 35th Street
Cicero, Illinois 60804
Edward Wolak 15,164
Retired
111 Edgebrook Court
Indian Head Park, Illinois 60525
Theresa Benes 810
Vice President, Customer Service -------
3822 West 65th Street
Chicago, Illinois 60629
Total 276,119
=======
- -------------
(1) For detailed information regarding each Participant's beneficial
ownership of common stock, including the number of shares listed above
which represent shares currently purchasable upon the exercise of stock
options, see the tables in the Proxy Statement listing beneficial
ownership under the captions "Voting Securities and Certain Holders
Thereof " and "Proposal I - Election of Directors."
A-1
None of the Participants has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) during the past ten
years. No Participant owns any shares of common stock of record but not
beneficially. No Participant owns any securities of any subsidiary of the
Company.
During the past two years, none of the Participants has borrowed or
otherwise obtained funds for the purpose of acquiring or holding any securities
of the Company.
None of the Participants has any substantial direct or indirect
interest in any matters to be acted upon at the Meeting, other than the
directors who have been re-nominated for election to the Board.
During the past two years, the Participants listed above effected the
following purchases and sales of the Company's common stock: Mr. Przybyl
acquired 332 shares on November 6, 1998 at a price of $10.50 per share.
In addition, Ms. Rooney, Messrs. Ptak and Przybyl, and Ms. Benes have,
during the past two years, acquired beneficial ownership of shares of common
stock through their participation in the Company's Employee Stock Ownership Plan
(the "ESOP"). Share allocations under the ESOP to Ms. Rooney, Messrs. Ptak and
Przybyl and Ms. Benes for the plan years ended December 31, 1999 and 1998 were
[_______] shares and 13,888 shares; [_______] shares and 7,761 shares; [_______]
shares and 9,247 shares; and [_______] shares and 4,063 shares, respectively.
Each of the Participants listed above has been granted options to
purchase common stock under the PS Financial, Inc. 1997 Stock Option and
Incentive Plan, with the exception of Ms. Benes, as follows: Ms. Rooney and Mr.
Ptak - each granted on May 28, 1997 a ten-year option to purchase 54,553 shares
of common stock at an exercise price of $11.02 per share, vesting 20% annually
beginning May 28, 1998; Ms. Ptak and Ms. McInerney and Messrs. DiIorio and Wolak
- - granted on May 28, 1997 a ten-year option to purchase 10,911 shares of common
stock at an exercise price of $11.02 per share, vesting 20% annually beginning
May 28, 1998; and Mr. Przybyl - granted on May 28, 1997 a ten-year option to
purchase 9,000 shares of common stock at an exercise price of $11.02 per share,
vesting 20% annually beginning May 28, 1998.
Each of the Participants listed above has been awarded shares of
restricted stock under the PS Financial, Inc. 1997 Management Recognition and
Retention Plan, as follows: Ms. Rooney and Mr. Ptak - each awarded on May 28,
1997, 21,821 restricted shares of common stock, vesting 20% annually beginning
May 28, 1998; Ms. Ptak - awarded on May 28, 1997, 4,364 restricted shares of
common stock, vesting 20% annually beginning May 28, 1998; Mr. Przybyl - awarded
on May 28, 1997, 3,000 restricted shares of common stock, vesting 20% annually
beginning May 28, 1998; and Ms. McInerney and Ms. Ptak and Messrs. Wolak and
DiIorio, each awarded on May 28, 1997, 2,000 restricted shares of common stock,
vesting 20% annually beginning May 28, 1998.
Other than the stock option and restricted stock awards discussed above
and the participation by Ms. Rooney, Messrs. Ptak and Przybyl and Ms. Benes in
the ESOP, no Participant is, or was within the past year, a party to any
contract, arrangement or understanding with any person with respect to any
securities of the Company.
Except as disclosed in this Proxy Statement, none of the Participants
has any arrangement or understanding with respect to any future employment by
the Company or its subsidiaries or any future transactions to which the Company
or any of its subsidiaries will or may be a party, nor any material interest,
direct or indirect, in any transaction which has occurred since January 1, 1999
or any currently proposed transaction, or series of similar transactions, to
which the Company or any of its subsidiaries was or is to be a party and in
which the amount involved exceeds $60,000.
A-2
REVOCABLE PROXY
PS FINANCIAL, INC.
Annual Meeting of Stockholders
May 3, 2000
The undersigned hereby appoints the Board of Directors of PS Financial,
Inc. (the "Company"), and the survivor of them, with full powers of
substitution, to act as attorneys and proxies for the undersigned to vote all
shares of common stock of the Company which the undersigned is entitled to vote
at the Annual Meeting of Stockholders (the "Meeting"), to be held on May 3, 2000
at 11:00 a.m., and at any and all adjournments thereof, as follows:
I. The election as directors of all nominees listed below.
--- ---
--- FOR --- WITHHELD
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
JEANINE M. McINERNEY ROCCO DIIORIO
II. The ratification of the appointment of Crowe, Chizek and Company LLP as
auditors of the Company for the fiscal year ending December 31, 2000.
--- --- ---
--- FOR --- AGAINST --- ABSTAIN
III. Stockholder Proposal
--- --- ---
--- FOR --- AGAINST --- ABSTAIN
In their discretion, the proxies are authorized to vote on such other
matters as may properly come before the Meeting or any adjournment thereof.
The Board of Directors recommends a vote "FOR" each of the nominees
listed above and the ratification of Crowe, Chizek and Company LLP as
auditors of the Company for the fiscal year ending December 31, 2000.
The Board of Directors recommends a vote "AGAINST" Proposal III.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR PROPOSALS I AND II AND AGAINST PROPOSAL III. IF ANY
OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE
NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting or at
any adjournment thereof, and after notification to the Secretary of the Company
at the Meeting of the stockholder's decision to terminate this Proxy, then the
power of such attorneys and proxies shall be deemed terminated and of no further
force and effect.
The undersigned acknowledges receipt from the Company, prior to the
execution of this Proxy, of Notice of the Meeting, a Proxy Statement dated March
29, 2000 and the Company's Annual Report to Stockholders for the fiscal year
ending December 31, 1999.
Dated:
----------------------- -----------------------------------
SIGNATURE OF STOCKHOLDER
-----------------------------------
SIGNATURE OF STOCKHOLDER
Please sign exactly as your name(s) appear(s) above 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 PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.