SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 Amendment No.
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, for Use of the Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Under Rule14a-12
North Central Bancshares, Inc.
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined.):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a) (2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
March 21, 2003
Dear Shareholders:
You are cordially invited to attend the 2003 Annual Meeting of
Shareholders (the "Annual Meeting") of North Central Bancshares, Inc. (the
"Company"), the holding company for First Federal Savings Bank of Iowa (the
"Bank"), which will be held on April 25, 2003 at 10:00 a.m., Central Time, at
the Trolley Center, located at 900 Central Avenue, Fort Dodge, Iowa. Enclosed
are a Notice of Annual Meeting, Proxy Statement, Proxy Card and 2002 Annual
Report to Shareholders.
The attached Notice of Annual Meeting of Shareholders and Proxy
Statement describe the formal business to be transacted at the Annual Meeting.
In addition, management will report on the operations and activities of the
Company and there will be an opportunity for you to ask questions about the
Company's business. We also expect representatives of the accounting firm of
McGladrey & Pullen, LLP to be present at the Annual Meeting to respond to
questions.
Your Board of Directors unanimously recommends that you vote "FOR" the
director nominees named in the Proxy Statement and "FOR" the ratification of the
appointment of the independent public accountants.
Your vote is important regardless of the number of shares you own.
Whether or not you plan to attend the Annual Meeting, the Board of Directors
urges you to sign, date and return your Proxy Card as soon as possible in the
enclosed postage paid envelope. This will not prevent you from voting in person
at the Annual Meeting, but will assure that your vote is counted if you are
unable to attend. If you are a shareholder whose shares are not registered in
your own name, you will need additional documentation from your record holder to
attend and to vote personally at the Annual Meeting. Examples of such
documentation would include a broker's statement, letter or other document that
will confirm your ownership of shares of the Company.
On behalf of the Board of Directors and all of the employees of the
Company and the Bank, I wish to thank you for your continued support.
Sincerely,
/s/David M. Bradley
----------------
David M. Bradley
Chairman of the Board, President and
Chief Executive Officer
NORTH CENTRAL BANCSHARES, INC.
825 CENTRAL AVENUE
FORT DODGE, IOWA 50501
(515) 576-7531
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date: Friday, April 25, 2003
Time: 10:00 a.m., Central Time
Place: Trolley Center
900 Central Avenue
Fort Dodge, IA 50501
At our 2003 Annual Meeting, we will ask you to:
1. Elect two candidates to serve as directors for a three-year
period expiring at the 2006 Annual Meeting;
2. Ratify the appointment of McGladrey & Pullen, LLP, as independent
auditors for the fiscal year ending December 31, 2003; and
3. Transact any other business as may properly come before the
Annual Meeting.
You may vote at the Annual Meeting and at any adjournment or
postponement thereof if you were a shareholder of the Company at the close of
business on March 10, 2003, the record date.
By Order of the Board of Directors,
/s/Jean L. Lake
---------------
Jean L. Lake
Secretary
Fort Dodge, Iowa
March 21, 2003
================================================================================
You are cordially invited to attend the Annual Meeting. It is important that
your shares be represented regardless of the number of shares you own. The Board
of Directors urges you to sign, date and mark the enclosed proxy card promptly
and return it in the enclosed envelope. Returning the proxy card will not
prevent you from voting in person if you attend the Annual Meeting.
================================================================================
4
NORTH CENTRAL BANCSHARES, INC.
825 CENTRAL AVENUE
FORT DODGE, IOWA 50501
(515) 576-7531
-------------------------------------------------------------------
PROXY STATEMENT FOR THE
2003 ANNUAL MEETING OF SHAREHOLDERS
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Why We Sent You This Proxy Statement
We have sent to the shareholders of North Central Bancshares, Inc. (the
"Company") this Proxy Statement and enclosed proxy card because the Board of
Directors of the Company is soliciting your proxy to vote at the Annual Meeting.
You do not need to attend the Annual Meeting to vote your shares. You may simply
complete, sign and return the enclosed proxy card, and your votes will be cast
for you at the Annual Meeting. This process is described below in the section
entitled "Voting Rights."
We began mailing this Proxy Statement, the Notice of Annual Meeting and
the enclosed proxy card on or about March 21, 2003 to all shareholders entitled
to vote. If you owned shares of the Company's common stock at the close of
business on March 10, 2003, the record date, you are entitled to vote at the
Annual Meeting. On the record date, there were 1,613,380 shares of common stock
issued and outstanding.
Quorum
A quorum of shareholders is necessary to hold a valid meeting. The
presence, in person or by proxy, of the holders of at least a majority of the
total number of votes eligible to be cast in the election of directors generally
by the holders of the outstanding shares entitled to vote at the Annual Meeting
is necessary to constitute a quorum.
Voting Rights
You are entitled to one vote at the Annual Meeting for each share of
the Company's common stock that you owned at the close of business on March 10,
2003. (The number of shares you owned as of the record date is listed on the
enclosed proxy card.) Our Articles of Incorporation provide restrictions on the
voting of our common stock if you beneficially own more than 10% of our
outstanding common stock.
You may vote your shares at the Annual Meeting in person or by proxy.
To vote in person, you must attend the Annual Meeting and obtain and submit a
ballot, which we will provide to you at the Annual Meeting. To vote by proxy,
you must complete, sign and return the enclosed proxy card. If you properly
complete and sign your proxy card and send it to us in time to vote, your
"proxy" (one of the individuals named on your proxy card) will vote your shares
as you have directed. If you sign the proxy card but do not specify how you want
to vote your shares, your proxy will vote your shares FOR the election of the
two nominees for director and FOR the ratification of the appointment of the
Company's independent public accountants.
If any other matters are properly presented, your proxy will vote the
shares represented by all properly executed proxies on such matters as a
majority of the Board of Directors determines. As of the date of this Proxy
Statement, we know of no other matters that may be presented at the Annual
Meeting, other than those discussed in this Proxy Statement.
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Vote Required
Proposal 1: The two nominees for director who receive the most votes
Election of Two will be elected. So, if youdo not vote for a nominee, or
Directors you indicate "withhold authority" for any nominee on
your proxy card, your vote will not count "for" or
"against" the nominee. You may not vote your shares
cumulatively for the election of the directors.
Proposal 2: The affirmative vote of the holders of a majority of the
Ratification of shares present in person or by proxy at the Annual
Appointment of Meeting and entitled to vote on this proposal is required
Independent Public to pass these proposals. So, if you "abstain" from voting,
Accountants it will have the same effect as if you voted "against"
this proposal.
Effect of Broker Non-Votes
If your broker holds shares that you own in "street name", the broker
may vote your shares on Proposals 1 and 2 listed above even if the broker does
not receive instructions from you. If your broker does not vote on any of the
proposals, this will constitute a "broker non-vote." A broker non-vote will not
be counted as having voted in person or by proxy and will have no effect on the
outcome of the election of the directors or the ratification of the appointment
of our independent public accountants.
Confidential Voting Policy
The Company maintains a policy of keeping shareholder votes
confidential. The Company only lets its Inspector of Election examine the voting
materials. The Inspector of Election will not disclose your vote to management
unless it is necessary to meet legal requirements. The Inspector of Election
will, however, forward any written comments that you may have to management.
Revoking Your Proxy
You may revoke your proxy at any time before it is actually voted at
the Annual Meeting by:
o Filing with the Secretary of the Company a letter revoking the proxy;
o Submitting another signed proxy with a later date; or
o Attending the Annual Meeting and voting in person, provided you file a
written revocation with the Secretary of the Annual Meeting prior to
voting.
If your shares are not registered in your own name, you will need
appropriate documentation from your record holder to vote personally at the
Annual Meeting. Examples of such documentation include a broker's statement,
letter or other document that will confirm your ownership of shares of the
Company's common stock as of the record date.
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Solicitation of Proxies
The Company will pay the costs of soliciting proxies from its
shareholders. Directors, officers or employees of the Company and the Bank may
solicit proxies by:
o mail;
o telephone; and
o other forms of communication.
We will reimburse banks, brokers, nominees and other fiduciaries for
the expenses they incur in forwarding the proxy materials to you.
Obtaining an Annual Report on Form 10-K
If you would like a copy of our Annual Report on Form 10-K for the
fiscal year ended December 31, 2002, which we will file with the Securities and
Exchange Commission ("SEC") by March 31, 2003, we will send you one (without
exhibits) free of charge. Please write to:
Jean L. Lake
Secretary
North Central Bancshares, Inc.
825 Central Avenue
Fort Dodge, IA 50501
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Shareholders of the Company
The following table shows certain information for persons who we know
"beneficially owned" 5% or more of our common stock as of March 10, 2003. In
general, beneficial ownership includes those shares over which a person has
voting or investment power. In this proxy statement, "voting power" is the power
to vote or direct the voting of shares, and "investment power" includes the
power to dispose or direct the disposition of shares. Beneficial ownership also
includes the number of shares that a person has the right to acquire within 60
days (such as through the exercise of stock options) after March 10, 2003. We
obtained the information provided in the following table from filings with the
SEC and with the Company.
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Name and Address of
Beneficial Owner Beneficial Ownership Percent(1)
- -------------------------------------- ---------------------- ----------
Employee Stock Ownership Plan of 186,800(2) 11.6%
First Federal Savings Bank of Iowa
825 Central Avenue
Fort Dodge, IA 50501
FMR Corp. 165,900(3) 10.3%
Edward C. Johnson, III
Abigail P. Johnson
Fidelity Management & Research Company
Fidelity Low Priced Stock Fund
82 Devonshire Street
Boston, MA 02109
Dimensional Fund Advisors, Inc. 147,200(4) 9.1%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Wellington Management Company, LLP 146,000(5) 9.0%
75 State Street
Boston, MA 02109
- ----------
(1) Percentages with respect to each person or group of persons have been
calculated based upon 1,613,380 shares of Common Stock, the number of
shares outstanding as of March 10, 2003.
(2) The Employee Stock Ownership Plan ("ESOP") is administered by a committee
of the Company's Board of Directors (the "ESOP Committee"). The ESOP's
assets are held in a trust (the "ESOP Trust"), for which First Bankers
Trust Company, N.A. serves as trustee (the "ESOP Trustee"). The ESOP Trust
purchased these shares with funds borrowed from the Company, initially
placed these shares in a suspense account for future allocation and intends
to allocate them to employees over a period of years as its acquisition
debt is retired. The terms of the ESOP Trust Agreement provide that,
subject to the ESOP Trustee's fiduciary responsibilities under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the ESOP
Committee will vote, tender or exchange shares of Common Stock held in the
ESOP Trust in accordance with the following rules. The ESOP Committee will
vote, tender or exchange shares of Common Stock allocated to participants'
accounts in accordance with instructions received from the participants. As
of December 31, 2002, 154,212 shares held by the ESOP Trust have been
allocated. The ESOP Committee will vote allocated shares as to which no
instructions are received and any shares that have not been allocated to
participants' accounts in the same proportion as allocated shares with
respect to which the ESOP trustee receives instructions are voted. The ESOP
Trustee will tender or exchange any shares in the suspense account or that
otherwise have not been allocated to participants' accounts in the same
proportion as allocated shares with respect to which the ESOP Trustee
receives instructions are tendered or exchanged. With respect to allocated
shares as to which no instructions are received, the ESOP Trustee will be
deemed to have received instructions not to tender or exchange such shares.
Except as described above, the ESOP Committee of the Company's Board of
Directors has sole investment power, but no voting power over the Common
Stock held in the ESOP Trust.
(3) Based on a Schedule 13G/A dated December 31, 2002 and filed with the SEC on
February 14, 2003. FMR Corp. is a Massachusetts holding company for
Fidelity Low Priced Stock Fund, an investment company who beneficially owns
165,900 shares of the Company's Common Stock. Fidelity Management &
Research Company, a wholly owned subsidiary of FMR Corp. and an investment
advisor, is the beneficial owner of 165,900 shares of the Company's Common
Stock as a result of acting as an investment adviser to Fidelity Low Priced
Stock Fund. In their capacity as the majority shareholders and board
members of the FMR Corp., Edward C. Johnson, III and Abigail P. Johnson,
together own approximately 49% of the voting power of FMR Corp. In
addition, the Johnson family group and all other Class B shareholders of
FMR Corp. have entered into a shareholders' voting agreement under which
all Class B shareholders of FMR Corp. will be voted in accordance with the
majority vote of Class B shares of FMR Corp. Based on the foregoing, Edward
C. Johnson, III and Abigail P. Johnson are deemed to own a controlling
interest of FMR Corp., and therefore may be deemed to beneficially own the
shares held by Fidelity Low Priced Stock Fund.
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(4) Based on a Schedule 13G/A, dated December 31, 2002, and filed with the SEC
on February 13, 2003, by Dimensional Fund Advisors, Inc. ("Dimensional").
Dimensional is an investment adviser which may be deemed to beneficially
own 147,200 shares of the Company's Common Stock. Dimensional disclaims
beneficial ownership of such shares.
(5) Based on a Schedule 13G/A, dated December 31, 2002, and filed with the SEC
on February 12, 2003 by Wellington Management Company, LLP ("Wellington").
Wellington is an investment advisor which may be deemed to beneficially own
the 146,000 shares of the Company's Common Stock which are held of record
by clients of Wellington, which clients are entitled to receive, or have
the power to direct the receipt of, dividends from, or the proceeds from
the sale of, such shares. Wellington has shared voting power over 106,000
shares and has shared investment power over 146,000 shares of the Company's
Common Stock.
Security Ownership of Management
The following table sets forth information with respect to the shares
of Common Stock beneficially owned by each director of the Company, by each
named executive officer of the Company identified in the Summary Compensation
Table included elsewhere herein and all directors and executive officers of the
Company or the Company's wholly owned subsidiary, First Federal Savings Bank of
Iowa (the "Bank") as a group as of March 10, 2003. The percent of Common Stock
outstanding was based on a total of 1,613,380 shares of the Company's Common
Stock as of March 10, 2003, plus shares of Common Stock which such person or
group has the right to acquire within 60 days after March 10, 2003, by the
exercise of stock options. Except as otherwise indicated, each person and each
group shown in the table has sole voting and investment power with respect to
the shares of Common Stock listed next to their name.
Amount and Percent of
Nature of Common
Beneficial Stock
Name Title(1) Ownership(2)(3) Outstanding
- ----------------------------------------------- -------------------- --------------- ------------
David M. Bradley Chairman of the 78,517(4) 4.4%
Board, President and
Chief Executive
Officer
KaRene Egemo Director 26,972(5) 1.5%
Melvin R. Schroeder Director 17,504(6) *
Mark M. Thompson Director 11,500(7) *
Robert H. Singer, Jr. Director 12,506(8) *
Craig R. Barnes Director 6,600(9) *
C. Thomas Chalstrom Officer 22,235(10) 1.2%
All directors and executive officers as a group 372,967 21.0%
(10 persons)(11)
- ----------
(1) Titles are for both the Company and the Bank.
(2) See "Principal Shareholders of the Company" for a definition of "beneficial
ownership."
(3) The figure shown for all directors and executive officers as a group
includes all 186,800 shares held in the ESOP as to which the members of the
Company's ESOP Committee (consisting of Directors Schroeder, Egemo and
Singer) may be deemed to have sole investment power, except in limited
circumstances, thereby causing each such Committee member to be deemed a
beneficial owner of such shares. Each of the members of the ESOP Committee
disclaims beneficial ownership of such shares and, accordingly, such shares
are not attributed to the members of the ESOP Committee individually.
(4) Includes 7,740 shares over which Mr. Bradley has shared voting and
investment power. Also includes 2,089 shares held in the Bank's 401(k)
plan. Includes 16,735 shares held in the Bank's ESOP. Includes 48,800
shares which may be acquired upon the exercise of stock options within 60
days after March 10, 2003.
(5) Includes 19,762 shares over which Ms. Egemo has shared voting and
investment power. Includes 7,210 shares which may be acquired upon the
exercise of stock options within 60 days after March 10, 2003.
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(6) Includes 7,504 shares over which Mr. Schroeder has shared voting and
investment power. Includes 10,000 shares which may be acquired upon the
exercise of stock options within 60 days of March 10, 2003.
(7) Includes 1,500 shares held in Mr. Thompson's individual retirement account
and 2000 shares held in a limited partnership for which Mr. Thompson is the
general partner. Also reflects 8,000 shares which may be acquired upon the
exercise of stock options within 60 days after March 10, 2003.
(8) Includes 5,006 shares over which Mr. Singer has shared voting and
investment power. Includes 7,500 shares which may be acquired upon the
exercise of stock options within 60 days after March 10, 2003.
(9) Includes 600 shares over which Mr. Barnes has shared voting and investment
power. The figure shown includes 6,000 shares which may be acquired upon
the exercise of stock options within 60 days after March 10, 2003.
(10) The figure shown includes 11,000 shares which may be acquired by Mr.
Chalstrom upon the exercise of stock options within 60 days after March 10,
2003. Also includes 301 shares held in the Bank's 401(k) plan and 8,224
shares held in the Bank's ESOP.
(11) The figures shown include 4,583 shares held pursuant to First Federal
Savings Bank of Iowa Employees Savings and Profit Sharing Plan and Trust
that have been allocated as of March 10, 2003 to all executive officers as
a group. Such persons have sole voting power and sole investment power as
to such shares.
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DISCUSSION OF PROPOSALS
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PROPOSAL 1
ELECTION OF DIRECTORS
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General
The Articles of Incorporation of the Company provide that the Board of
Directors shall be divided into three classes, each class to contain, as near as
may be possible, one-third of the entire number of the Board. The directors of
each class serve for a term of three years, with one class elected each year. In
all cases, directors serve until their successors are elected and qualified.
The Nominating Committee has nominated two candidates for election as
directors at the Annual Meeting, each to serve for a three year term ending in
2006. Each nominee has consented to being named in this Proxy Statement and to
serve, if elected. However, if any nominee should become unable to serve, the
proxies received in response to this solicitation that were voted in favor of
such nominee will be voted for the election of such other person as shall be
designated by the Board of Directors of the Company, unless the Board of
Directors shall determine to further reduce the number of directors pursuant to
the Bylaws of the Company. In any event, proxies cannot be voted for a greater
number of persons than the two nominees named.
Information with Respect to Nominees and Continuing Directors
The following table sets forth certain information with respect to each
nominee for election as a director and each director whose term does not expire
at the Annual Meeting ("Continuing Director"). There are no arrangements or
understandings between the Company and any director or nominee pursuant to which
such person was elected or nominated to be a director of the Company. For
information with respect to security ownership of directors, see "General
Information -- Security Ownership of Certain Beneficial Owners and Management --
Security Ownership of Management."
End of Director
Name Age(1) Term Position Held with Company Since(2)
- ------------------------- ------ ------ ------------------------------------- --------
Nominees for a Three-Year
Term Expiring in 2006
- -------------------------
David M. Bradley 50 2003 Chairman of the Board, President and 1989
Chief Executive Officer
Robert H. Singer, Jr. 54 2003 Director 1997
Continuing Directors
- ------------------------
Craig R. Barnes 45 2004 Director 2001
KaRene Egemo 66 2005 Director 1993
Melvin R. Schroeder 65 2004 Director 1992
Mark M. Thompson 50 2005 Director 1999
- ----------
(1) At December 31, 2002.
(2) Includes terms as directors of the Bank prior to the incorporation of the
Company on December 5, 1995. The principal occupation and business
experience of the nominees for election as director and each Continuing
Director is set forth below. Positions held by a director or executive
officer have been held for at least the past five years unless stated
otherwise.
8
Nominees for Election as Directors
David M. Bradley has been President of the Bank since 1990 and Chief
Executive Officer of the Bank since 1992. He has been affiliated with the Bank
since 1982. Mr. Bradley has served as the President and Chief Executive Officer
of the Company since the Company's inception in December 1995. He became
Chairman of the Board of the Company and the Bank as of January 1, 1997.
Robert H. Singer, Jr. is Executive Director of the Fort Dodge Area
Chamber of Commerce. Mr. Singer was the co-owner of Calvert, Singer & Kelley
Insurance Services, Inc., an insurance agency, in Fort Dodge, Iowa, since 1988.
Continuing Directors
Craig R. Barnes is a Senior Vice President for Commercial Capital
Markets for Washington Mutual. Mr. Barnes was formerly the Executive Director of
International Products for Principal Capital Management , a member of the
Principal Financial Group.
KaRene Egemo has been the owner of Egemo Realty, Inc. in Fort Dodge,
Iowa since 1978.
Melvin R. Schroeder was formerly Vice President of Instruction at Iowa
Central Community College in Fort Dodge, Iowa, until his retirement in 2001. He
had been employed with the College since 1967.
Mark M. Thompson has been the owner of Mark Thompson CPA, P.C. in Fort
Dodge, Iowa since 1984 and has been a certified public accountant since 1978.
Board and Committee Meetings
The Company's Board of Directors held 12 regular meetings, one annual
meeting and 2 special meeting during 2002. During 2002, all directors of the
Company attended at least 75% of the total meetings held during the period of
their service on the Board of Directors and committees thereof. The Board of
Directors maintains committees, the nature and composition of which are
described below.
Personnel and Compensation Committee. The Personnel and Compensation
Committee meets periodically to review the performance of and to make
recommendations to the Board regarding the compensation of the Company's
officers. The current Personnel and Compensation Committee of the Company is
comprised of Directors Schroeder, Egemo and Singer, with Schroeder serving as
Chairman. The Personnel and Compensation Committee met three times during the
year ended December 31, 2002.
Nominating Committee. The Nominating Committee discusses director
nominations prior to each Annual Meeting of the Company. Currently, it is
comprised of Directors Schroeder, Singer and Barnes with Schroeder serving as
Chairperson. The Nominating Committee met one time during the year ended
December 31, 2002.
The Nominating Committee recommends nominees for election as directors
and reviews, if any, shareholder nominations to ensure compliance with the
notice procedures set forth in the Company's Bylaws.
The Company's Bylaws set forth a procedure for shareholders to nominate
directors by notifying the Secretary of the Company in writing and meeting the
requirements set forth in the Bylaws. These requirements are further discussed
in "Additional Information" of this Proxy Statement.
9
Audit Committee. The Audit Committee is chaired by Director Thompson,
with Directors Barnes and Schroeder as members. The Audit Committee oversees and
monitors our financial reporting process and internal control system, reviews
and evaluates the audit performed by our outside auditors and reports any
substantive issues found during the audit to the Board. The Audit Committee is
directly responsible for the appointment, compensation and oversight of the work
of our independent auditors. The committee will also review and approve all
transactions with affiliated parties. The board of directors of the Company have
adopted a written charter for the Audit Committee. All members of the Audit
Committee are independent directors as defined under The Nasdaq Stock Market
listing standards. The Company believes that Mr. Thompson qualifies as an "Audit
Committee Financial Expert" as that term is defined by applicable SEC rules. The
committee met four times in the 2002 fiscal year.
AUDIT COMMITTEE REPORT
NORTH CENTRAL BANCSHARES, INC. AUDIT COMMITTEE REPORT
The following Audit Committee Report is provided in accordance with the
rules and regulations of the SEC. Pursuant to such rules and regulations, this
report shall not be deemed "soliciting materials," filed with the SEC, subject
to Regulation 14A or 14C of the SEC or subject to the liabilities of section 18
of the Securities Exchange Act of 1934, as amended.
The Audit Committee has reviewed and discussed the audited financial
statements as of and for the year ended December 31, 2002 with management. The
committee has also reviewed and discussed with McGladrey & Pullen, LLP, their
independent auditors the matters required to be discussed by SAS 61.
The Audit Committee also has received the written disclosures and the
letter from the independent accountants required by Independence Standards Board
Standard No. 1 (Independence Standards Board Standard No.1, Independence
Discussions with Audit Committee) and has discussed McGladrey & Pullen, LLP's
independence with that firm.
Based on the foregoing review and discussions, the Audit Committee
recommended to the Board of Directors of the Company that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2002.
Audit Committee of
North Central Bancshares, Inc.
Mark M. Thompson (Chairman)
Melvin R. Schroeder
Craig R. Barnes
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Executive Officers Who Are Not Directors
The following individuals are executive officers of the Company and the
Bank and hold the offices set forth below opposite their names.
Name Positions Held with the Company and the Bank
- --------------------- ------------------------------------------------------
C. Thomas Chalstrom Executive Vice President
Jean L. Lake Secretary
John L. Pierschbacher Treasurer
Kirk A. Yung Senior Vice President
Name Position Held with the Bank
- --------------------- ------------------------------------------------------
C. Thomas Chalstrom Chief Operating Officer
John L. Pierschbacher Chief Financial Officer
The executive officers of the Company and the Bank are elected annually
and hold office until their respective successors have been elected and
qualified, or until death, resignation, or removal by the Boards of Directors of
each of the Company and the Bank.
Biographical information of executive officers of the Company and the
Bank is set forth below.
C. Thomas Chalstrom, age 38, has been employed with the Bank since
1985, was named Executive Vice President in December 1994. Mr. Chalstrom was
named Chief Operating Officer of the Bank in December 1998.
Jean L. Lake, age 60, has been employed with the Bank since 1972 and
was named Secretary in 1987. Ms. Lake serves as Board Secretary and is in charge
of marketing.
John L. Pierschbacher, CPA, age 43, has been employed with the Bank
since 1992. Mr. Pierschbacher was named Treasurer of the Bank in January 1994.
He is the Bank's Chief Financial Officer and is in charge of the accounting
functions of the Bank and the Company.
Kirk A. Yung, age 40, has been employed with the Bank since 1990, was
named Senior Vice President in January 1995 and is in charge of consumer
lending.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Directors' Compensation
Fee Arrangements. Currently, non-employee directors receive monthly
fees of $525, an additional director's fee of $350 for each monthly meeting
attended and $100 for each committee meeting attended.
Stock Option Plan. Directors of the Company are eligible to receive
grants of options pursuant to the Company's Option Plan. See "Stock Option
Plan." Under the Stock Option Plan, individuals who were non-employee directors
("Eligible Directors") on September 21, 1996, (the "Effective Date") received an
initial grant of an option to purchase 20,000 shares of Common Stock. All such
options are exercisable in five equal installments beginning one year from the
date of grant. Individuals who became an Eligible Director after the Effective
Date, but before January 1, 1998, were granted on each of January 1, 1997 and
1998, an option to purchase 500 shares and on January 23, 1998, an additional
option to purchase 3,000 shares of Common Stock. Such options were immediately
exercisable upon grant. Such Eligible Directors and any individuals who become
an Eligible Director after January 1, 1998, will be granted on each January 1
after 1998, an option, which will be immediately exercisable upon grant, to
purchase 2,000 shares of Common Stock, provided the Plan is still in effect and
the Eligible Director is still serving as such on the date of grant. All options
granted to Eligible Directors under the Stock Option Plan have an exercise price
11
per share equal to the fair market value of a share of Common Stock on the date
of the option grant.
Executive Compensation
The Report of the Company's Personnel and Compensation Committee (the
"Report") and the Performance Graph (the "Graph") included in this section are
provided in accordance with the rules and regulations of the SEC. Pursuant to
such rules and regulations, the Report and the Graph shall not be deemed
"soliciting material," filed with the SEC, subject to Regulation 14A or 14C of
the SEC or subject to the liabilities of section 18 of the Exchange Act.
Compensation Committee Report
The 2002 compensation programs described in this Proxy Statement were
established by the Personnel and Compensation Committee of the Company's Board
of Directors. This Committee is comprised entirely of non-employee directors.
The Company's compensation program was designed to create and sustain
high performance, to attract and retain the people necessary to grow the
business, and to induce employees to act as shareholders of the Company and to
become personally accountable for their own individual actions and the overall
Company's success. The program was designed to be highly sensitive to
performance and reflect both short and long term performance.
The 2002 compensation program consisted of three components: (1) base
salary; (2) annual bonus; and (3) long term incentives, e.g., stock options,
deferred compensation, and fringe benefits. These elements were intended to
provide an overall compensation package that is commensurate with the Company's
financial resources, that is appropriate to assure the retention of experienced
management personnel, especially in these times of great competition for skilled
personnel, and align their financial interests with those of the Company's
shareholders, and that is responsive to immediate and long-term needs of
executive officers and their families.
During 2002, base salaries were set at levels determined, in the
subjective judgment of the Compensation Committee, to be commensurate with the
executive officers' customary respective duties and responsibilities, and to
enable them to maintain appropriate standards of living within their
communities. During the year 2002 discretionary bonus awards were reduced and
were replaced with incentives based on achieving established goals. Fringe
benefit plans, consisting of a pension plan, 401(K) plan, and group insurance
coverages, are designed to provide for health and welfare of the executives and
their families, as well as for their long term financial needs. In addition, all
executive officers participate in the Company's Employee Stock Ownership Plan
(the "ESOP"). Each executive officer has an individual account within the ESOP
Trust which is invested in employers securities, with the result of that portion
of each executive officers long-term retirement savings being tied to the
performance of the Bank and the Company.
The Chief Executive Officer's base salary for the year 2002 was set at
$210,000 and he was awarded a bonus of $101 for 2002.
Personnel and Compensation
Committee of North Central
Bancshares, Inc.
Melvin R. Schroeder (Chairman)
KaRene Egemo
Robert H. Singer, Jr.
12
Compensation Committee Interlocks and Insider Participation. There are
no interlocks, as defined under the rules and regulations of the SEC, between
the Personnel and Compensation Committee and corporate affiliates of members of
the Personnel and Compensation Committee or otherwise.
Performance Graph. Pursuant to the regulations of the SEC, the graph
below compares the performance of the Bank with that of the Nasdaq Composite
Index (U.S. Companies) and the Nasdaq Bank Composite Index (banks and bank
holding companies, over 99% of which are based in the United States) from
December 29, 1995 through December 31, 2002. On March 20, 1996, the Bank
completed a reorganization from the mutual holding company form of organization
to the stock holding company form of organization. At that time, the Company
replaced the Bank as the issuer listed by the Nasdaq Stock Market.
The following graph compares North Central Bancshares, Inc.'s total
cumulative shareholder return by an investor who invested $100.00 on December
31, 1997, to December 31, 2002, to the total return by an investor who invested
$100.00 in each of the Nasdaq Stock Market Index and the Nasdaq Financial Stocks
Index for the same period.
[GRAPHIC OMITTED]
Legend
Cumulative Total Return
-------------------------------------------------------------
CRSP Total Return Index for: 12/97 12/98 12/99 12/00 12/01 12/02
------ ------ ------ ------- ------ ------
North Central Bancshares, Inc. 100.00 86.36 78.60 94.08 113.08 177.28
Nasdaq Stock Market (U.S. Companies) 100.00 140.99 261.48 157.42 124.89 86.34
Nasdaq Financial Stocks 100.00 99.36 95.51 108.94 117.96 120.60
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal
year-end, is not a trading day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on 12/30/1997.
13
Summary Compensation Table.
The following Summary Compensation Table includes individual
compensation information on the Chief Executive Officer and Executive Vice
President (the "Named Executive Officers") for services rendered in all
capacities to the Company and the Bank during the fiscal years ended December
31, 2002, 2001 and 2000. No other officer received total salary and bonus in
excess of $100,000 in fiscal 2002.
Summary Compensation Table
Long Term Compensation
-------------------------------------------------
Annual Compensation Awards Payouts
----------------------------------- --------------------- ------------------------
Other Restricted
Annual Stock LTIP All Other
Name and Principal Bonus Compensation Awards Options Payouts Compensation
Positions Year Salary($) ($) ($)(1) ($) (#)(2) ($) ($)(3)
- -------------------- ---- ---------- ------- ------------ ---------- ------- ------- ------------
David M, Bradley 2002 $ 210,000 101 942 - - - 59,063
Chairman, 2001 $ 200,000 101 715 - 12,000 - 41,999
President and 2000 $ 190,000 101 - - - - 33,219
Chief Executive
Officer
C. Thomas Chalstrom 2002 $ 110,000 15,101 - - - - 29,343
Executive Vice 2001 $ 100,000 9,857 - - - - 20,050
President 2000 $ 90,000 5,101 - - - - 18,138
- ----------
(1) The Bank provides Mr. Bradley with certain non-cash benefits and
perquisites, such as the use of an automobile and certain other personal
benefits, the aggregate value of which did not exceed the lesser of $50,000
or 10% of the total annual salary and annual bonus reported for him in the
Summary Compensation Table.
(2) Represents shares of the Company's Common Stock as to which Mr. Bradley has
the right to acquire beneficial ownership pursuant to the exercise of stock
options. Such options were granted on January 1, 2001 pursuant to the
Company's 1996 Stock Option Plan, and vest in 20% increments on January 1st
of each year. The first installments vested on January 1, 2002.
(3) Includes the dollar values of the following components: (1) allocations of
Common Stock under the ESOP during 2002, 2001 and 2000: Mr. Bradley,
$49,063, $32,999, and $33,219; Mr. Chalstrom, $29,343, $20,050, and
$18,138; and (2) accruals under the Supplemental Retirement and Deferred
Compensation Plan during 2002 and 2001 for Mr. Bradley of $10,000 and
$9,000, respectively.
Employment Agreements.
Effective as of March 20, 1996, the Company entered into an employment
agreement with Mr. Bradley, and the Bank entered into an amended and restated
employment agreement with Mr. Bradley (collectively, the "Employment
Agreements"). The Employment Agreements establish the duties and compensation of
Mr. Bradley and are intended to ensure that the Bank and the Company will be
able to maintain a stable and competent management base.
The Employment Agreements with Mr. Bradley provide for a three year
term. The Bank Employment Agreement provides that, commencing on the first
anniversary date and continuing each anniversary date thereafter, the Board of
Directors may, with Mr. Bradley's concurrence and after conducting a performance
evaluation, extend this term for an additional year, so that the remaining term
shall be three years. The Company Employment Agreement provides for automatic
daily extensions such that the term of the Company Employment Agreement shall be
a rolling period of three years unless written notice of non renewal is given by
the Company's Board of Directors or Mr. Bradley. Mr. Bradley's base salary will
be reviewed annually by the Personnel and Compensation Committee of the Board.
Subject to such review, Mr. Bradley's base salary may be increased on the basis
of his job performance and the overall performance of the Bank and the Company.
In addition to base salary, the Employment Agreements provide for, among other
things, entitlement to participation in stock, retirement and welfare benefit
plans and eligibility for fringe benefits applicable to executive personnel such
as a company car and fees for club and organization memberships deemed
appropriate by the Bank or the Company and Mr. Bradley. The Employment
Agreements provide for termination by the Bank or the Company at any time for
"cause" as defined in the Employment Agreements. In the event the Bank or the
14
Company chooses to terminate Mr. Bradley's employment for reasons other than for
cause, or in the event of Mr. Bradley's resignation from the Bank and the
Company upon: (i) failure to re-appoint, elect or re elect him to his current
offices; (ii) a material change in his functions, duties or responsibilities;
(iii) a relocation of his principal place of employment outside Webster County,
Iowa without his consent; (iv) liquidation or dissolution of the Bank or the
Company; (v) a change of control; or (vi) a breach of the Employment Agreement
by the Bank or the Company, Mr. Bradley or, in the event of death, his
beneficiary, would be entitled to a lump sum cash payment in an amount equal to
the present value of the remaining base salary and bonus payments due to him and
the additional contributions or benefits that would have been earned under any
employee benefit plans of the Bank or the Company during the remaining terms of
the Employment Agreements. The Bank and the Company would also continue Mr.
Bradley's life, health and disability insurance coverage for the remaining term
of the Employment Agreements.
In general, for purposes of the Employment Agreements and the plans
maintained by the Company or the Bank, a "change in control" will generally be
deemed to occur when a person or group of persons acting in concert acquires
beneficial ownership of 20% or more of any class of equity security, such as
Common Stock of the Company or the Bank, or in the event of a tender offer,
exchange offer, merger or other form of business combination, sale of assets or
contested election of directors which results in a change in control of the
majority of the Board of Directors of the Company or the Bank.
Payment under the Company Agreement would be made by the Company. In
addition, payments to Mr. Bradley under the Bank Agreement will be guaranteed by
the Company in the event that payments or benefits are not paid by the Bank.
However, to the extent that payments under the Company Agreement and the Bank
Agreement are duplicative, payments due under the Company's Employment Agreement
would be offset by amounts actually paid by the Bank. The Employment Agreements
also provide that Mr. Bradley would be entitled to reimbursement of certain
costs incurred in negotiating, interpreting or enforcing the Employment
Agreements. Mr. Bradley would also be indemnified by the Bank and the Company to
the fullest extent allowable under federal and Iowa law, respectively.
Cash and benefits paid to Mr. Bradley under the Employment Agreements
together with payments under other benefit plans following a "change in control"
of the Bank or the Company may constitute an "excess parachute" payment under
Section 280G of the Internal Revenue Code (the "Code"), resulting in the
imposition of a 20% excise tax on the recipient and the denial of the deduction
for such excess amounts to the Company and the Bank. In such an event, payments
under the Employment Agreements will be limited to the lesser of: (i) 2.99 times
Mr. Bradley's average total compensation (whether or not taxable) for the period
of five taxable years ending immediately prior to his termination of employment,
or (ii) after provision for the excise tax, if any, imposed under section 4999
of the Code, the greater of an amount 2.99 times Mr. Bradley's average taxable
compensation for the period of five taxable years ending immediately prior to
his termination of employment or the maximum amount which may be paid to Mr.
Bradley under the Employment Agreements without giving rise to such tax.
The Employment Agreements also generally provide that for a period of
one year following termination for cause, Mr. Bradley agrees not to compete with
the Bank or Company in any city, town or county in which the Bank or Company
maintains an office or has filed an application to establish an office. The
Employment Agreements also provide that Mr. Bradley agrees to keep any material
document or information obtained from the Bank or Company confidential. In
addition, the Employment Agreements provide that for a period of one year
following termination, Mr. Bradley agrees not to solicit or offer employment to
any officer or employee of the Bank or Company or solicit their respective
customers.
15
Retention Agreement.
Effective as of March 20, 1998, the Bank entered into an amended and
restated employee retention agreement with Mr. Chalstrom (the "Retention
Agreement"). The Retention Agreement with Mr. Chalstrom provides for a three
year term. The Retention Agreement provides that, commencing on the first
anniversary date and continuing each anniversary date thereafter, the Board of
Directors may, with Mr. Chalstrom's concurrence and after conducting a
performance evaluation, extend this term for an additional year, so that the
remaining term shall be three years. Mr. Chalstrom's base salary will be
reviewed annually by the Personnel and Compensation Committee of the Board.
Subject to such review, Mr. Chalstrom's base salary may be increased on the
basis of his job performance and the overall performance of the Bank. In
addition to base salary, the Retention Agreement provides for, among other
things, entitlement to participation in stock, retirement and welfare benefit
plans and eligibility for fringe benefits applicable to executive personnel that
are deemed appropriate by the Bank and Mr. Chalstrom. The Retention Agreement
provides for benefits to be paid in the event of a termination of Mr.
Chalstrom's employment following a "change in control." In the event the Bank
chooses to terminate Mr. Chalstrom's employment for reasons other than for cause
following a change in control, or in the event of Mr. Chalstrom's resignation
from the Bank following a change in control within sixty days of: (i) a material
reduction in his compensation and benefits from the levels in effect immediately
prior to a change in control or (ii) a material adverse change in his functions,
duties, responsibilities or terms and conditions of employment, Mr. Chalstrom
or, in the event of death, his beneficiary, would be entitled to a lump sum cash
payment in an amount equal to the greater of (i) the payments due under the
remaining term of the Retention Agreement or (ii) the average of the aggregate
of his salary plus bonus and the amount of all determinable contributions made
to, or under any employee benefit plan for, Mr. Chalstrom by the Bank during the
period of five years ending of the date of his termination. The Bank would also
continue Mr. Chalstrom's life, health and disability insurance coverage for
thirty-six months following his termination of employment. Mr. Chalstrom would
also be indemnified by the Bank to the fullest extent allowable under federal
and Iowa law, respectively, for actions related to his service to the Bank as an
officer or director.
In general, for purposes of the Retention Agreement and the plans
maintained by the Company or the Bank, a "change in control" will generally be
deemed to occur when a person or group of persons acting in concert acquires
beneficial ownership of 20% or more of any class of equity security, such as
common stock of the Company or the Bank, or in the event of a tender offer,
exchange offer, merger or other form of business combination, sale of assets or
contested election of directors which results in a change in control of the
majority of the Board of Directors of the Company or the Bank.
Cash and benefits paid to Mr. Chalstrom under the Retention Agreement
together with payments under other benefit plans following a "change in control"
of the Bank or the Company may constitute an "excess parachute" payment under
Section 280G of the Internal Revenue Code (the "Code"), resulting in the
imposition of a 20% excise tax on the recipient and the denial of the deduction
for such excess amounts to the Company and the Bank. In such an event, payments
under the Retention Agreement will be limited to such amount as my be paid
without giving rise to such tax.
The Retention Agreement also generally provide that for a period of one
year following termination, Mr. Chalstrom agrees not to compete with the Bank
and the Company in any city, town or county in which the Bank or Company
maintains an office or has filed an application to establish an office.
16
Pension Plan.
The Bank participates in a multiple-employer noncontributory
tax-qualified defined benefit plan (the "Retirement Plan") for eligible
employees. As required, the Bank annually contributes an amount to the
Retirement Plan necessary to satisfy the actuarially determined minimum funding
requirements in accordance with the ERISA.
Pension Plan Table.
The following table sets forth the estimated annual benefits payable
upon retirement at age 65 under the Bank's Retirement Plan based on the
Retirement Plan provisions at December 31, 2002. The amounts are expressed in
the form of a single life annuity available at various levels of compensation
and years of benefit service:
Years of Service and
Benefit Payable at Retirement
- --------------------------------------------------------------------------------
Highest Average
Salary 15 20 25 30 35
- --------------- ---------- ---------- ---------- ----------- -----------
$ 100,000 27,000 36,100 45,100 54,100 63,100
125,000 34,500 46,100 57,600 69,100 80,600
150,000 42,000 56,100 70,100 84,100 98,100
175,000 49,500 66,100 82,600 99,100 115,600
200,000(1) 57,000(1) 76,100(1) 95,100(1) 114,100(1) 133,100(1)
- ----------
(1) Under section 401(a)(17) of the Code, a participant's compensation in
excess of $200,000 (as adjusted to reflect cost-of-living increases) is
disregarded for purposes of determining highest average salary for benefit
accruals in plan years beginning in or after 2002.
These annual benefit amounts are subject to adjustments for Social
Security benefits. At December 31, 2002, David M. Bradley and C. Thomas
Chalstrom had 19 and 17 years, respectively, of credited service under the
Retirement Plan and their highest average salary was $171,996 and $90,000,
respectively. Compensation recognized for purposes of retirement plan benefits
consists of salary as reported in the "Salary" column of the Summary
Compensation Table.
Supplemental Retirement Plan.
Effective as of January 1, 2001, the Bank established a Supplemental
Retirement and Deferred Compensation Plan ("SERP") for certain eligible
executives. The SERP is a non-qualified plan that provides for discretionary
contributions by the Bank and also offers eligible executives the opportunity to
defer the receipt of a portion of their income in a manner that defers taxation
of such income.
Employee Stock Ownership Plan and Trust.
The Bank has established an ESOP for eligible employees. The ESOP is a
tax-qualified plan subject to the requirements of ERISA and the Internal Revenue
Code of 1986. 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.
Shares of common stock purchased by the ESOP are pledged as collateral
for a loan from North Central Bancshares, Inc., and will be held in a suspense
account until released for allocation among participants in the ESOP as the loan
is repaid. Contributions to the ESOP and shares released from the suspense
account in an amount proportional to the repayment of the ESOP loans will be
allocated among participants on the basis of compensation in the year of
allocation, up to an annual adjusted maximum level of compensation.
17
The Bank's contributions to the ESOP will not be fixed, so benefits
payable under the ESOP cannot be estimated. The ESOP Trustee, subject to its
fiduciary duty, must vote all allocated shares held in the ESOP in accordance
with the instructions of the participating employees. Under the ESOP,
unallocated shares or any allocated shares for which the ESOP Trustee does not
receive voting instructions will be voted in a manner calculated to most
accurately reflect the instructions the ESOP Trustee has received from
participants regarding the allocated stock as long as such vote is in accordance
with the provisions of ERISA.
Stock Option Plan.
The Stock Option Plan was approved by the Company's shareholders at a
Special Meeting of Shareholders held on September 21, 1996. The Stock Option
Plan provides for the grant of Options to certain officers, employees and
outside directors of the Company. The Stock Option Plan is not subject to ERISA.
The purpose of the Stock Option Plan is to promote the growth and profitability
of the Company; to provide certain key officers; employees and directors of the
Company and its affiliates with an incentive to achieve corporate objectives, to
attract and retain individuals of outstanding competence and to provide such
individuals with an equity interest in the Company. In 2001, the Board of
Directors approved additional 40,000 shares to be reserved to the Stock Option
Plan for future issuance.
The following table provides the value for "in-the-money" options,
which represent the positive spread between the exercise price of any such
existing stock options and the closing price per share of the common stock on
December 31, 2002, which was $31.00 per share.
2002 Fiscal Year End Option/SAR Values
- ------------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired on Value Realized Options at Fiscal Year-end Fiscal Year-end
Exercise on Exercise (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------- ----------- -------------- ------------------------- -------------------------
David M. Bradley 4,000 60,868 49,900/13,600 807,387/177,800(1)(2)
C. Thomas Chalstrom 4,000 55,472 12,700/1,300 200,781/15,275(3)(4)
- ----------
(1) Based on the following information with respect to options exercisable at
December 31, 2002: the closing price per share of common stock on December
31, 2002 was $31.00 per share and 49,900 options having a weighted average
exercise price of $14.8199 per share, which equals a spread of $16.1801.
(2) Based on the following information with respect to options that remain
unexercisable at December 31, 2002: the closing price per share of common
stock on December 31, 2002 was $31.00 per share and 13,600 options having a
weighted average exercise price of $17.9265 per share, which equals a
spread of $13.0735.
(3) Based on the following information at December 31, 2002 with respect to
options that are exercisable at December 31, 2002: the closing price per
share of common stock on December 31, 2002 was $31.00 per share and 12,700
options having a weighted average exercise price of $15.1900 per share,
which equals a spread of $15.8100.
(4) Based on the following information with respect to options that remain
unexercisable at December 31, 2002; the closing price per share of common
stock on December 31, 2002 was $31.00 per share and 1,300 options having a
weighted average exercise price of $19.25 per share which equals a spread
of $11.75 per share.
Transactions With Certain Related Persons
From time to time the Bank makes loans to its and the Company's
officers and directors, which loans are made in the ordinary course of business,
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons and
do not involve more than the normal risk of collectibility or present other
18
unfavorable features. The outstanding principal balance of such loans to such
individuals totaled $1.9 million or 4.98% of the Company's total equity at
December 31, 2002.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors and
certain officers, and persons who own more than ten percent of a registered
class of the Company's equity securities to file reports of ownership and
changes in ownership with the SEC. Officers, directors and greater than ten
percent shareholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of copies of such reports of ownership
furnished to the Company or the Bank, or written representations that no forms
were necessary, the Company believes that, during the last fiscal year, all
filing requirements applicable to its officers, directors and greater than ten
percent shareholders of the Company were complied with.
19
-------------------------------------------------------------------
PROPOSAL 2
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
-------------------------------------------------------------------
The Board of Directors has appointed the firm of McGladrey & Pullen,
LLP to continue as independent auditors for the Company for the fiscal year
ending December 31, 2003, subject to ratification of such appointment by the
Company's shareholders. Representatives of McGladrey & Pullen, LLP are expected
to be present at the Annual Meeting. They will have an opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
The following table presents fees for professional audit services
rendered by McGladrey & Pullen, LLP for the audit of the Company's annual
financial statements for 2002 and 2001, and fees billed for other services
rendered by McGladrey & Pullen, LLP and its associated entity RSM McGladrey,
Inc.
2002 2001
-------- --------
Audit Fees $ 59,959 $ 52,800
Tax fees(1) 9,757 7,745
All other fees(2) 300 14,945
-------- --------
$ 70,016 $ 75,490
- ----------
(1) Tax fees consisted of fees for tax consultation and tax compliance
services.
(2) All other fees in 2002 consisted of consultations regarding the Company's
employee benefit plans. All other fees in 2001 consisted of consultations
regarding an application for a low income housing project and
acquisitions/divestitures.
================================================================================
The Board of Directors unanimously recommends a vote "FOR" the
ratification of the appointment of McGladrey & Pullen, LLP
as independent public accountants for the Company.
================================================================================
20
ADDITIONAL INFORMATION
Date for Submission of Shareholder Proposals
Under the proxy solicitation regulations of the SEC, if you wish to
submit a proposal to be included in the Company's Proxy Statement for the 2004
Annual Meeting, we must receive it by November 21, 2003. SEC rules contain
standards as to whether shareholder proposals are required to be included in the
Proxy Statement. Any such proposal will be subject to 17 C.F.R. 240.14a-8 of the
rules and regulations promulgated by the SEC.
In addition, under the Company's Bylaws, if you wish to nominate a
director or bring other business before an annual meeting (which is not included
in the proxy statement for the 2004 Annual Meeting), you must be a shareholder
of record and have given timely notice in writing to the Secretary of the
Company, according to the procedures set forth in the Company's Bylaws. If our
2004 Meeting is held on a day that is within thirty (30) days preceding the
anniversary of this year's meeting, we must receive your notice at least sixty
(60) days in advance of the 2004 Annual Meeting. For example, if the 2004 Annual
Meeting is held on April 23, 2004, we must receive your notice by February 23,
2004. We must receive your notice at least ninety (90) days in advance of the
2004 Annual Meeting. Finally, if our 2004 Annual Meeting is held on a date which
is outside the time periods set forth above, we must receive your notice by the
close of business on the tenth (10th) day following the date on which notice of
the 2004 Annual Meeting is first given to shareholders as provided in the
Company's Bylaws.
By Order of the Board of Directors,
/s/Jean L. Lake
---------------
Jean L. Lake
Secretary
REVOCABLE PROXY NORTH CENTRAL BANCSHARES, INC. REVOCABLE PROXY
825 Central Avenue, Fort Dodge, Iowa 50501
This proxy is solicited on behalf of the Board of Directors of
North Central Bancshares, Inc.
for the Annual Meeting of Shareholders to be held on April 25, 2003
The undersigned shareholder of North Central Bancshares, Inc. hereby
appoints Craig R. Barnes and Melvin R. Schroeder, or either of them, with full
powers of substitution, to represent and to vote as proxy, as designated, all
shares of common stock of North Central Bancshares, Inc. held of record by the
undersigned on March 10, 2003, at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held on April 25, 2003 at 10:00 a.m., Central Time, at
the Trolley Center, located at 900 Central Avenue, Fort Dodge, Iowa, or at any
adjournment or postponement thereof. The undersigned hereby revokes all prior
proxies.
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is given, this
Proxy will be voted FOR the election of nominees listed in Item 1 and FOR the
proposal in Item 2. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the Annual Meeting or any
adjournment or postponement thereof. As of the date of the Proxy Statement for
the Annual Meeting, the Board of Directors is not aware of any such other
business.
PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE.
The Board of Directors of North Central Bancshares, Inc. unanimously recommends
a vote "FOR" all nominees in Item 1 and "FOR" the proposals in Items 2 and 3.
Please Mark Your Choice Like This |X| in Blue or Black Ink.
I Will Attend Annual Meeting [ ]
1. Election of Directors to a Three Year Term.
Nominees: David M. Bradley Robert H. Singer, Jr.
[ ] FOR all nominees [ ] WITHHOLD for all nominees
Instruction: To withhold authority for any individual nominee, write that
nominee's name on the space provided.
-------------------------------------------------------------------------
2. Ratification of appointment of McGladrey & Pullen LLP as independent
auditors for the Company for the fiscal year ending December 31, 2003.
| | FOR | | AGAINST | | ABSTAIN
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the Proxy Statement for the Annual Meeting.
Dated: ,2003
------------------------------
-----------------------------------------
Signature of Shareholder
-----------------------------------------
Signature if held jointly
Please sign exactly as your name appears
on this proxy. Joint owners should each
sign personally. If signing as attorney,
executor, administrator, trustee or
guardian, please include your full title.
Corporate or partnership proxies should
be signed by an authorized officer.