UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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.):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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March 21,2005
Dear Shareholders:
You are cordially invited to attend the 2005 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 22, 2005 at 10:00 a.m., Central Time, at
the Boston Centre, Suite 100, located at 809 Central Avenue, Fort Dodge, Iowa.
Enclosed are a Notice of Annual Meeting, Proxy Statement, Proxy Card and 2004
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 22, 2005
Time: 10:00 a.m., Central Time
Place: Boston Centre, Suite 100
809 Central Avenue
Fort Dodge, IA 50501
At our 2005 Annual Meeting, we will ask you to:
1. Elect two candidates to serve as directors for a three-year period
expiring at the 2008 Annual Meeting;
2. Ratify the appointment of McGladrey & Pullen, LLP, as independent
auditors for the fiscal year ending December 31, 2005; 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 8, 2005, the record date.
By Order of the Board of Directors,
/s/ Jean L. Lake
----------------
Jean L. Lake
Secretary
Fort Dodge, Iowa
March 21, 2005
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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.
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NORTH CENTRAL BANCSHARES, INC.
825 CENTRAL AVENUE
FORT DODGE, IOWA 50501
(515) 576-7531
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PROXY STATEMENT FOR THE
2005 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, 2005 to all shareholders entitled
to vote. If you owned shares of the Company's common stock at the close of
business on March 8, 2005, the record date, you are entitled to vote at the
Annual Meeting. On the record date, there were 1,538,230 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 at least a majority of the total number of
votes eligible to be cast in the election of directors will 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 8,
2005. (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.
-2-
Vote Required
Proposal 1: The two nominees for director who receive the most votes
Election of Two will be elected. So, if you do not vote for a nominee,
Directors or 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
Independent Public required to pass this proposal. So, if you "abstain"
Accountants from voting, it will have the same effect as if your
vote was not cast with respect to 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, 2004, which we will file with the Securities and
Exchange Commission ("SEC") by March 31, 2005, 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
The complete Annual Report on Form 10-K is available on the SEC website
at www.sec.gov or via the Bank's website at www.firstfederaliowa.com.
-4-
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 December 31, 2004. 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 December 31, 2004. We
obtained the information provided in the following table from filings with the
SEC and with the Company.
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent(1)
- ------------------------------------- -------------------- ----------
Employee Stock Ownership Plan of 167,609(2) 11.0%
First Federal Savings Bank of Iowa
825 Central Avenue
Fort Dodge, IA 50501
FMR Corp. 154,600(3) 10.1%
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. 121,800(4) 8.0%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Wellington Management Company, LLP 107,300(5) 7.0%
75 State Street
Boston, MA 02109
___________________________
(1) Percentages with respect to each person or group of persons have been
calculated based upon 1,530,530 shares of common stock, the number of shares
outstanding as of December 31, 2004.
(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, 2004, 159,492 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
-5-
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, 2004 and filed with the SEC on
February 14, 2005. FMR Corp. is a Massachusetts holding company for Fidelity Low
Priced Stock Fund, an investment company who beneficially owns 154,600 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 154,600 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., members of the Edward
C. Johnson, III family together own approximately 49% 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, the Johnson family is 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.
(4) Based on a Schedule 13G/A dated December 31, 2004 and filed with the SEC on
February 9, 2005, by Dimensional Fund Advisors, Inc. ("Dimensional").
Dimensional is an investment adviser which may be deemed to beneficially own
121,800 shares of the Company's common stock. Dimensional disclaims beneficial
ownership of such shares.
(5) Based on a Schedule 13G/A dated December 31, 2003 and filed with the SEC on
February 12, 2004 by Wellington Management Company, LLP ("Wellington").
Wellington is an investment advisor which may be deemed to beneficially own the
107,300 shares of the Company's common stock 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 37,200 shares and has shared investment
power over 107,300 shares of the Company's common stock.
-6-
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 February 28, 2005. The percent of common
stock outstanding was based on a total of 1,538,230 shares of the Company's
common stock as of February 28, 2005, plus shares of common stock which such
person or group has the right to acquire within 60 days after February 28, 2005,
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 and Chief Executive 62,018(4) 4.0%
Officer of the Company and the
Bank; President of the Company
C. Thomas Chalstrom Director and Executive Vice 18,946(5) 1.2%
President of the Company,
President and Chief Operating
Officer of the Bank
Paul F. Bognanno Director Nominee 500 *
Randall L. Minear Director 2,200(6) *
Melvin R. Schroeder Director 7,504(7) *
Robert H. Singer, Jr. Director 11,154(8) *
Mark M. Thompson Director 15,850(9) 1.0%
John L. Pierschbacher Chief Financial Officer and
(resigned)(10) Treasurer -- *
Kirk A. Yung Senior Vice President 14,971(11) 1.0%
All directors and executive officers
as a group (11persons)(12) 272,296 17.0%
___________________________
* Less than 1% of common stock outstanding.
(1) Unless indicated, 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 167,609 shares held in the ESOP as to which the members of the
Company's ESOP Committee (consisting of Directors Schroeder, Singer, and Minear)
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 10,893 shares over which Mr. Bradley has shared voting and
investment power. Also includes 2,897 shares held in the Bank's 401(k) plan.
Includes 18,628 shares held in the Bank's ESOP. Includes 29,600 shares which may
be acquired upon the exercise of stock options within 60 days after February 28,
2005.
(5) Includes 2,710 shares over which Mr. Chalstrom has shared voting
and investment power. Also includes 528 shares held in the Bank's 401(k) plan
and 9,208 shares held in the Bank's ESOP. Includes 6,500 shares which may be
acquired by Mr. Chalstrom upon the exercise of stock options within 60 days
after February 28, 2005.
(6) Includes 200 shares over which Mr. Minear has shared voting and investment
power. Includes 2,000 shares which may be acquired by Mr. Minear upon the
exercise of stock options within 60 days after February 28, 2005.
(7) Includes 7,504 shares over which Mr. Schroeder has shared voting and
investment power.
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(8) Includes 5,154 shares over which Mr. Singer has shared voting and
investment power. Includes 6,000 shares which may be acquired upon the exercise
of stock options within 60 days after February 28, 2005.
(9) Includes 100 shares over which Mr. Thompson has shared voting and
investment power. Includes 1,750 shares held in Mr. Thompson's individual
retirement account and 2,000 shares held in a limited partnership for which Mr.
Thompson is the general partner. Also reflects 12,000 shares which may be
acquired upon the exercise of stock options within 60 days after February 28,
2005.
(10) Mr. Pierschbacher resigned as Treasurer of the Bank and the Company and
as Chief Financial Officer of the Bank effective October 29, 2004.
(11) Includes 2,702 shares over which Mr. Yung has shared voting and investment
power. Also includes 257 shares held in the Bank's 401(k) plan. Includes 7,883
shares held in the Bank's ESOP. Includes 129 shares held by Mr. Yung on behalf
of his children. Includes 4,000 shares which may be acquired upon the exercise
of stock options within 60 days after February 28, 2005.
(12) The figures shown include 4,824 shares held pursuant to First Federal
Savings Bank of Iowa Employees Savings and Profit Sharing Plan and Trust that
have been allocated as of February 28, 2005 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
2008. 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
- --------------------
Mark M. Thompson 52 2008 Director 1999
Paul F. Bognanno 56 2008 Director 2005
Continuing Directors
- --------------------
David M. Bradley 52 2006 Chairman of the Board, President and 1989
Chief Executive Officer
Robert H. Singer, Jr. 56 2006 Director 1997
C. Thomas Chalstrom 40 2007 Executive Vice President 2004
Randall L. Minear 47 2007 Director 2004
Melvin R. Schroeder 67 2007 Director 1992
___________________________
(1) At December 31, 2004.
(2) Includes terms as directors of the Bank prior to the incorporation of the
Company on December 5, 1995.
-9-
The principal occupation and business experience of each nominee 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.
Nominees for Election as Directors
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.
Paul F. Bognanno is a self-employed consultant in Des Moines whose
primary client is CitiMortgage, Inc. From 1993 to 2004, he was the President and
Chief Executive Officer of Principal Residential Mortgage, a wholly-owned
subsidiary of The Principal Financial Group.
Continuing Directors
David M. Bradley has been Chief Executive Officer of the Bank since
1992. He was President of the Bank from 1990 until 2004. 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. From 1988 to 2002, Mr. Singer was the co-owner of Calvert,
Singer & Kelley Insurance Services, Inc., an insurance agency, in Fort Dodge,
Iowa.
C. Thomas Chalstrom has been employed with the Bank since 1985. He was
Executive Vice President from 1994 until 2004. Mr. Chalstrom was named Chief
Operating Officer of the Bank in December 1998. He became President of the Bank
in April 2004.
Randall L. Minear is the President of Terrus Real Estate Group, located
in Des Moines, Iowa. He formerly served as the Director of Corporate Real Estate
for The Principal Financial Group and as President of Principal Real Estate
Services, a subsidiary of The Principal Financial Group.
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.
Shareholder Communications with our Board of Directors
Shareholders may contact the Company's Board by contacting Jean L.
Lake, Secretary, at North Central Bancshares, Inc., 825 Central Avenue, Fort
Dodge, Iowa, 50501 or at (515) 576-7531. All comments will be forwarded directly
to the Board of Directors.
All directors and nominees are expected to attend the Annual Meeting.
At the 2004 Annual Meeting, all members of the Board of Directors were in
attendance.
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BOARD OF DIRECTORS AND MANAGEMENT
Board and Committee Meetings
The Company's Board of Directors held twelve regular meetings, one
annual meeting, and one special meeting during 2004. During 2004, 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. In 2004, the Personnel and Compensation Committee of the Company was
comprised of Directors Schroeder, Singer, and Minear with Director Schroeder
serving as Chairman. The Personnel and Compensation Committee met four times
during the year ended December 31, 2004. All members of the Personnel and
Compensation Committee are independent directors as defined in the National
Association of Security Dealers' Manual.
Nominating and Corporate Governance Committee. The Nominating and
Corporate Governance Committee formulates our corporate governance guidelines
and determines the qualification and independence of directors and committee
members. The committee is responsible for nominating persons for election to the
Board of Directors and also reviews if shareholder nominations (if any) comply
with the notice procedures set forth in the Company's bylaws. The Board of
Directors has adopted a written charter for the Nominating and Corporate
Governance Committee, a copy of which was attached to our Proxy Statement for
the 2004 Annual Meeting and filed with the SEC on March 22, 2004.
In 2004, the Nominating and Corporate Governance Committee was
comprised of Directors Singer (Chair) and Thompson through December 17, 2004,
and Directors Schroeder (Chair), Singer and Minear from December 17, 2004 to
present. The Nominating and Corporate Governance Committee met twice during the
year ended December 31, 2004. All members of the Nominating and Corporate
Governance Committee are independent directors as defined in the National
Association of Securities Dealers' Manual.
It is the policy of the Nominating and Corporate Governance Committee
to consider director candidates recommended by shareholders in accordance with
Article V, Section V of the Company's bylaws. Pursuant to Article V, Section V
of the Company's bylaws, any shareholder of record of the Company entitled to
vote for the election of directors at such meeting who provides timely notice in
writing to the Secretary of the Company (the "Secretary") may recommend or
nominate a director candidate for consideration by the Committee. To be timely,
a shareholder's notice must be delivered to or received by the Secretary not
later than the following dates: (i) with respect to an election of directors to
be held at an annual meeting of shareholders, sixty (60) days in advance of such
meeting if such meeting is to be held on a day which is within thirty (30) days
preceding the anniversary of the previous year's annual meeting, or ninety (90)
days in advance of such meeting if such meeting is to be held on or after the
anniversary of the previous year's annual meeting; and (ii) with respect to an
election to be held at an annual meeting of shareholders held at a time other
than within the time periods set forth in the immediately preceding clause (i),
or at a special meeting of shareholders for the election of directors, the close
of business on the tenth (10th) day following the date on which notice of such
meeting is first given to shareholders. The shareholder's notice to the
Secretary must set forth certain information regarding the proposed nominee and
the shareholder making such nomination. If a nomination is not properly brought
before the meeting in accordance with the Company's bylaws, the Chairman of the
meeting may determine that the nomination was not properly brought before the
meeting and shall not be considered. For additional information about the
Company's director nomination requirements, please see the Company's bylaws.
-11-
It is the policy of the Committee to select individuals as director
nominees who shall have the highest personal and professional integrity, who
shall have demonstrated exceptional ability and judgment and who shall be most
effective, in conjunction with the other nominees to the Board, in collectively
serving the long-term interests of the shareholders. Shareholder nominees are
analyzed by the Committee in the same manner as nominees that are identified by
the Committee. The Company does not pay a fee to any third party to identify or
evaluate nominees.
Mark M. Thompson and Paul F. Bognanno were each nominated by the
non-management, independent directors that comprise the Nominating and Corporate
Governance Committee. As of December 31, 2004, the Nominating and Corporate
Governance Committee had not received any shareholder recommendations for
nominees in connection with the 2005 Annual Meeting.
Audit Committee. The Audit Committee is chaired by Director Thompson,
with Directors Singer 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, a copy of which was attached
to our Proxy Statement for the 2004 Annual Meeting and filed with the SEC on
March 22, 2004. All members of the Audit Committee are independent directors as
defined in the National Association of Securities Dealers' Manual. The Company
believes that Mr. Thompson qualifies as an "Audit Committee Financial Expert" as
that term is defined by applicable SEC rules and has been so designated by the
Board of Directors. The committee met six times in the 2004 fiscal year.
-12-
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 Company's Audit Committee has reviewed and discussed the audited
financial statements of the Company for the fiscal year ended December 31, 2004
with management and McGladrey & Pullen, LLP, the Company's independent auditors.
The Company's Audit Committee has discussed the matters required by Statement on
Auditing Standards No. 61 (Communication with Audit Committee) with McGladrey &
Pullen, LLP.
The Company's Audit Committee has also received the written disclosures
and the letter from McGladrey & Pullen, LLP required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees), has
discussed the independence of McGladrey & Pullen, LLP and considered whether the
provision of non-audit services by McGladrey & Pullen, LLP is compatible with
maintaining the auditor's independence.
Based on the review and the discussions noted above, the Company's
Audit Committee recommended to the Board that the Company's audited consolidated
financial statements be included in its Annual Report on Form 10-K for the
fiscal year ended December 31, 2004, which will be filed with the SEC by March
31, 2005.
Audit Committee of
North Central Bancshares, Inc.
Mark M. Thompson (Chairman)
Melvin R. Schroeder
Robert H. Singer, Jr.
Principal Accountant Fees and Services
During the fiscal years ended December 31, 2003 and December 31, 2004,
the Company retained and paid McGladrey & Pullen, LLP to provide audit and other
services as follows:
Audit Fees
----------
2004 2003
---- ----
Audit(1) $ 77,000 $ 64,800
Audit-Related Fees(2) $ 8,500 $ 16,347
Tax Fees(3) $ 16,650 $ 16,080
All Other Fees $ 4,300 $ 4,883
Total $106,450 $102,110
_____________________
1) Includes fees related to review of Form 10-K, annual report and proxy;
review of financial statements included in Form 10-Q; attendance at audit
committee meetings related to the audit or reviews;
-13-
consultations on audit and accounting matters arising during the audit or
reviews; and services in connection with statutory and regulatory filings,
(consents, and assistance with and review of documents filed with the SEC).
2) Includes fees related to consultation concerning financial accounting and
reporting standards; audits of employee benefit plans; and other
attestation services.
3) Includes fees related to tax compliance and tax planning and tax advice.
Audit Committee Preapproval Policy
Preapproval of Services. The Committee shall preapprove all auditing
services and permitted non-audit services (including the fees and terms) to be
performed for the Company by its independent auditor, subject to the deminimis
exception for non-audit services described below which are approved by the
Committee prior to completion of the audit.
Exception. The preapproval requirement set forth above, shall not be
applicable with respect to non-audit services if:
(i) The aggregate amount of all such services provided constitutes
no more than five percent of the total amount of revenues paid
by the Company to its auditor during the fiscal year in which
the services are provided;
(ii) Such services were not recognized by the Company at the time
of the engagement to be non-audit services; and
(iii) Such services are promptly brought to the attention of the
Committee and approved prior to the completion of the audit by
the Committee or by one or more members of the Committee who
are members of the Board of Directors to whom authority to
grant such approvals has been delegated by the Committee.
Delegation. The Committee may delegate to one or more designated
members of the Committee the authority to grant required preapprovals. The
decisions of any member to whom authority is delegated under this paragraph to
preapprove activities under this subsection shall be presented to the full
Committee at its next scheduled meeting.
The Audit Committee approved all services performed by McGladrey &
Pullen, LLP pursuant to the policies outlined above.
-14-
Executive Officers Who Are Not Directors or Nominees
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
- -------------- --------------------------------------------
Jean L. Lake Secretary
David W. Edge Chief Financial Officer and Treasurer
Kirk A. Yung Senior Vice President
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.
Jean L. Lake, age 62, 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.
David W. Edge, CPA, age 46, has been employed with the Bank since
September 2004. He is the Bank's Chief Financial Officer and is in charge of the
accounting functions of the Bank and the Company. Prior to joining the Company,
Mr. Edge was Chief, Fiscal Service for the Veterans Affairs Central Iowa Health
Care System, Des Moines, Iowa and was responsible for the hospital's annual
operating and capital budgets. Prior to that he worked for Principal Bank, Des
Moines, Iowa, as Senior Financial Accounting Leader and ITS, Inc. as Senior Vice
President and Chief Financial Officer.
Kirk A. Yung, age 43, has been employed with the Bank since 1990, was
named Senior Vice President in January 1995 and is in charge of consumer and
commercial real estate lending.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Directors' Compensation
Fee Arrangements. Currently, non-employee directors receive monthly
fees of $550, an additional director's fee of $375 for each monthly meeting
attended and $125 for each committee meeting attended. Non-employee directors
who serve as Audit Committee Chair receive $200 for committee meetings. All
other board committee chairpersons receive $150 for each committee meeting
attended. The Company paid Board and Committee fees totaling $51,320 to its
directors for the fiscal year ended December 31, 2004.
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 are non-employee directors
("Eligible Directors") will be granted on each January 1, 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 per share equal to the fair market
value of a share of common stock on the date of the option grant.
-15-
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 2004 compensation program described in this Proxy Statement was
established by the Personnel and Compensation Committee of the Company's Board
of Directors. This Committee is comprised entirely of non-employee directors.
Each member of the Personnel and Compensation Committee is independent, as
defined in the National Association of Security Dealers' Manual.
Each December, the members of the Personnel and Compensation Committee
review and approve changes to base compensation, bonuses and benefits for senior
management and other officers. The Company's compensation program is designed to
attract, develop and retain strong individuals who are capable of maximizing the
Company's performance for the benefit of the shareholders.
The 2004 compensation program consisted of three components: (1) base
salary; (2) bonuses; 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, and align their financial interests with those of the Company's
shareholders.
During 2004, base salaries were set at levels determined, in the
subjective judgment of the Compensation Committee, to be commensurate with the
officers' customary respective duties and responsibilities, and to enable them
to maintain appropriate standards of living within their communities. Bonuses
were based primarily on the achievement of established goals. Fringe benefit
plans, consisting of a pension plan, 401(k) plan, and group insurance coverage,
were designed to provide for health and welfare of the officers and their
families, as well as for their long-term financial needs. In addition, all
eligible officers participated in the Company's Employee Stock Ownership Plan
(the "ESOP"). Each eligible officer has an individual account within the ESOP
Trust that is invested primarily in employer securities, with the result of that
portion of each officer's long-term retirement savings being tied to the
performance of the Company.
The Committee established the Chief Executive Officer's base salary for
2004 at $230,000, a 4.55% increase over his base salary for 2003, using the
criteria above, together with a peer comparison published in a national
compensation publication
Personnel and Compensation
Committee of North Central Bancshares, Inc.
Melvin R. Schroeder (Chairman)
Robert H. Singer, Jr.
Randall L. Minear
-16-
Compensation Committee Interlocks and Insider Participation. During
fiscal year 2004, there were no interlocks, as defined under the rules and
regulations of the SEC, between members of the Compensation Committee or
executive officers of the Company and corporations with respect to which such
persons were affiliated.
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 31, 1999 through December 31, 2004.
The following graph compares the Company's total cumulative shareholder
return by an investor who invested $100.00 on December 31, 1999, to December 31,
2004, 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
------
Symbol CRSP Total Returns Index for: 12/1999 12/2000 12/2001 12/2002 12/2003 12/2004
- ------ ----------------------------- ------- ------- ------- ------- ------- -------
_________ [ ] North Central Bancshares, Inc. 100.0 119.7 143.9 225.5 274.4 317.2
____ ____ * Nasdaq Stock Market (US Companies) 100.0 60.3 47.8 33.1 49.4 53.8
- - - - - - ^ Nasdaq Financial Stocks 100.0 108.1 118.7 122.3 166.4 193.1
SIC 6000-6799 US & Foreign
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 $100.0 on 12/31/1999.
-17-
Summary Compensation Table
The following Summary Compensation Table includes individual
compensation information on the Chief Executive Officer of the Company and the
Bank, the Executive Vice President of the Company and President and Chief
Operating Officer of the Bank, the Treasurer and Chief Financial Officer, and
the Senior 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, 2004, 2003 and 2002. No other officer received total salary and
bonus in excess of $100,000 in fiscal 2004.
Summary Compensation Table
Long Term Compensation
----------------------------------------------------
Annual Compensation Awards Payouts
----------------------------------- ------------------------- -------------------------
Other Restricted
Annual Stock LTIP All Other
Name and Principal Bonus Compensation Awards Options Payouts Compensation
Positions Year Salary($) ($) ($)(2) ($) (#) ($) ($)(3)
- ------------------- ---- ---------- ------ ------------ ----------- ------- ------- ------------
David M, Bradley 2004 $ 230,000 101 1,702 - - - 33,813
Chairman, 2003 $ 220,000 101 1,238 - - - 44,687
President and 2002 $ 210,000 101 942 - - - 48,664
Chief Executive
Officer
C. Thomas Chalstrom 2004 $ 125,000 17,197 - - - - 15,228
Director, 2003 $ 120,000 10,101 - - - - 22,057
Executive Vice 2002 $ 110,000 15,101 - - - - 24,377
President and
Chief Operating
Officer
John L. 2004 $ 103,021 - - - - - -
Pierschbacher(1) 2003 $ 99,000 101 - - - - 16,771
Treasurer and 2002 $ 98,000 101 - - - - 19,018
Chief Financial
Officer (resigned)
Kirk A. Yung 2004 $ 93,000 12,619 - - - - 11,342
Senior Vice 2003 $ 90,000 10,101 - - - - 16,977
President 2002 $ 80,000 12,701 - - - - 18,141
___________________________
(1) Mr. Pierschbacher resigned as Treasurer of the Bank and the Company and as
Chief Financial Officer of the Bank effective October 29, 2004.
(2) The Bank provides each Named Executive Officer with certain cash benefits,
such as interest on deferred compensation, and 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 each Named
Executive Officer in the Summary Compensation Table.
(3) Includes the dollar values of the following components: (1) allocations of
common stock under the ESOP during 2004: Mr. Bradley, $21,813; Mr. Chalstrom,
$15,228; Mr. Pierschbacher, $0; and Mr. Yung, $11,342; and (2) accruals under
the Supplemental Retirement and Deferred Compensation Plan during 2004 for Mr.
Bradley of $12,000.
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
-18-
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 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) 299% of
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 equal to 299% of 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.
-19-
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.
Retention Agreement
Effective as of March 20, 1998, the Bank entered into amended and
restated employee retention agreements (the "Retention Agreements") with Mr.
Chalstrom and Mr. Yung (the "Executives"). The Retention Agreements provide for
a three year term. The Retention Agreements provide that, commencing on the
first anniversary date and continuing each anniversary date thereafter, the
Board of Directors may, with each of the Executive's concurrence and after
conducting a performance evaluation, extend this term for an additional year, so
that the remaining term shall be three years. Each Executive's base salary will
be reviewed annually by the Personnel and Compensation Committee of the Board.
Subject to such review, these base salaries may be increased on the basis of his
job performance and the overall performance of the Bank. In addition to base
salary, the Retention 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 that are deemed appropriate by
the Bank and the Executives. The Retention Agreements provide for benefits to be
paid in the event of a termination of the Executives' employment following a
"change in control." In the event the Bank chooses to terminate the Executives'
employment for reasons other than for cause following a change in control, or in
the event of the Executives' resignation from the Bank following a change in
control within sixty days of: (i) a material reduction in compensation and
benefits from the levels in effect immediately prior to a change in control or
(ii) a material adverse change in functions, duties, responsibilities or terms
and conditions of employment, each Executive 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
Agreements or (ii) the average of the aggregate of salary plus bonus and the
amount of all determinable contributions made to, or under any employee benefit
plan for, the Executive by the Bank during the period of five years ending of
the date of his termination. The Bank would also continue the Executive's life,
health and disability insurance coverage for thirty-six months following his
termination of employment. Each Executive 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 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.
Cash and benefits paid to the Executives under the Retention 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 Retention Agreements will be limited to such amount as may be paid
without giving rise to such tax.
-20-
The Retention Agreements also generally provide that for a period of
one year following termination, the Executives agree 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.
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, 2004. 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 26,700 35,600 44,500 53,400 62,300
125,000 34,200 45,600 57,000 68,400 79,800
150,000 41,700 55,600 69,500 83,400 97,300
175,000 49,200 65,600 82,000 98,400 114,800
200,000 56,700 75,600 94,500 113,400 132,300
225,000(1) 64,000(1) 85,400(1) 106,700(1) 128,100(1) 149,400(1)
_______________________
(1) Under section 401(a)(17) of the Code, a participant's compensation in
excess of $225,000 (as adjusted to reflect cost-of-living increases) is
disregarded for purposes of determining highest average salary for benefit
accruals in 2004.
These annual benefit amounts are subject to adjustments for Social
Security benefits. At December 31, 2004, David M. Bradley, C. Thomas Chalstrom,
Kirk A. Yung and John L. Pierschbacher had 21, 19, 14 and 11 years,
respectively, of credited service under the Retirement Plan and their highest
average salary was $189,000, $109,000, $81,600 and $96,949, respectively.
Compensation recognized for purposes of retirement plan benefits consists of a
five-average salary as reported in the "Salary" column of the Summary
Compensation Table.
-21-
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 the Company, 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.
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 an additional 40,000 shares to be reserved to the Stock
Option Plan for future issuance. No additional grants will be made under this
stock option plan after September 21, 2006. No stock options were granted to the
Named Executive Officers in 2004.
-22-
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, 2004, which was $41.49 per share.
2004 Fiscal Year End Option/SAR Values
- --------------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired on Value Realized Options at Fiscal Year-end Fiscal Year-end
Exercise on Exercise (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- --------------------- ----------- --------------- -------------------------- -------------------------
David M. Bradley 11,000 254,075 31,200/4,800 734,888/115,752(1)(2)
C. Thomas Chalstrom 3,500 84,513 6,500/0 144,560/0(3)
John L. Pierschbacher 11,000 219,238 0/0 0/0
Kirk A. Yung 3,100 64,207 5,000/0 111,200/0(4)
___________________________
(1) Based on the following information with respect to options exercisable at
December 31, 2004: the closing price per share of common stock on December 31,
2004 was $41.49 per share and 31,200 options having a weighted average exercise
price of $17.936 per share, which equals a spread of $23.554.
(2) Based on the following information with respect to options that remain
unexercisable at December 31, 2004: the closing price per share of common stock
on December 31, 2004 was $41.49 per share and 4,800 options having a weighted
average exercise price of $17.375 per share, which equals a spread of $24.115.
(3) Based on the following information with respect to options exercisable at
December 31, 2004: the closing price per share of common stock on December 31,
2004 was $41.49 per share and 6,500 options having an exercise price of $19.25
per share, which equals a spread of $22.24.
(4) Based on the following information with respect to options exercisable at
December 31, 2004: the closing price per share of common stock on December 31,
2004 was $41.49 per share and 5,000 options having an exercise price of $19.25
per share, which equals a spread of $22.24.
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
unfavorable features.
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, except for one Form 4
for Director Thompson which was not filed on a timely basis.
-23-
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PROPOSAL 2
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
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The Audit Committee has appointed the firm of McGladrey & Pullen, LLP
to continue as independent auditors for the Company for the fiscal year ending
December 31, 2005, 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 Board of Directors unanimously recommends a vote "FOR" the
ratification of the appointment of McGladrey & Pullen, LLP
as independent public accountants for the Company.
================================================================================
-24-
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 2006
Annual Meeting, we must receive it by November 21, 2005. 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 2006 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 the
2006 Annual 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 2006 Annual Meeting. If the 2006 Annual
Meeting is held on or after the anniversary of the 2005 Annual Meeting, we must
receive your notice at least ninety (90) days in advance of the 2006 Annual
Meeting. For example, if the 2006 Annual Meeting is held on April 21, 2006, we
must receive your notice by February 20, 2006. Finally, if our 2006 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 2006 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
Fort Dodge, Iowa
March 21, 2005
-25-
North Central Bancshares, Inc.
[ ] Mark this box with an X if you
have made changes to your name
or address details above.
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Annual Meeting Proxy Card
- --------------------------------------------------------------------------------
A Election of Directors to a Three Year Term
1. The Board of Directors of North Central Bancshares, Inc. unanimously
recommends a vote "FOR" the listed nominees.
For Withhold
01 - Mark M. Thompson [ ] [ ]
02 - Paul F. Bognanno [ ] [ ]
B Issues
The Board of Directors of North Central Bancshares, Inc. unanimously recommends
a vote "FOR" the following proposal.
2. Ratification of the appointment of For Against Abstain
McGladrey & Pullen LLP as independent [ ] [ ] [ ]
auditors for the Company for the fiscal
year ending December 31, 2005.
Mark this box with an X if you plan to [ ]
attend the Annual Meeting.
C Authorized Signatures - Sign Here - This section must be completed for your
instructions to be executed.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the Proxy Statement for the Annual Meeting.
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.
Signature 1 - Please keep Signature 2 - Please keep Date (mm/dd/yyyy)
signature within the box signature within the box
- ------------------------- ------------------------ -----------------
- --------------------------------------------------------------------------------
Revocable Proxy
- --------------------------------------------------------------------------------
North Central Bancshares, Inc.
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 22,
2005.
The undersigned shareholder of North Central Bancshares, Inc. hereby appoints
Melvin R. Schroeder and Robert H. Singer, Jr., 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 8, 2005, at the Annual Meeting of Shareholders(the "Annual
Meeting") to be held on April 22, 2005 at 10:00 a.m., Central Time, at the
Boston Centre, Suite 100 located at 809 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.