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
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-12
FSF FINANCIAL CORP.
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(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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[FSF LETTERHEAD]
December 10, 2001
Dear Stockholder:
On behalf of the Board of Directors and management of FSF Financial
Corp, (the "Company"), we cordially invite you to attend the Annual Meeting of
Stockholders to be held at the Victorian Inn, 1000 Highway 7 West, Hutchinson,
Minnesota, on Tuesday, January 15, 2002, at 8:30 a.m. The attached Notice of
Annual Meeting and Proxy Statement describe the formal business to be transacted
at the Annual Meeting. During the Annual Meeting, we will also report on the
operations of the Company. Directors and officers of the Company, as well as
representatives of Larson, Allen, Weishair & Co., LLP, certified public
accountants, will be present to respond to any questions stockholders may have.
You will be asked to elect three directors and to ratify the
appointment of Larson, Allen, Weishair & Co., LLP as the Company's independent
accountants for the fiscal year ending September 30, 2002. The Board of
Directors has unanimously approved each of these proposals and recommends that
you vote FOR them.
Your vote is important, regardless of the number of shares you own and
regardless of whether you plan to attend the Annual Meeting. We encourage you to
read the enclosed proxy statement carefully and sign and return your enclosed
proxy card as promptly as possible because a failure to do so could cause a
delay in the Annual Meeting and additional expense to the Company. A
postage-paid return envelope is provided for your convenience. This will not
prevent you from voting in person, but it will assure that your vote will be
counted if you are unable to attend the Annual Meeting. If you do decide to
attend the Annual Meeting and feel for whatever reason that you want to change
your vote at that time, you will be able to do so. If you are planning to attend
the Annual Meeting, please let us know by marking the appropriate box on the
proxy card.
Sincerely,
/s/George B. Loban
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George B. Loban
President
/s/Donald A. Glas
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Donald A. Glas
Chief Executive Officer
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FSF FINANCIAL CORP.
201 MAIN STREET SOUTH
HUTCHINSON, MINNESOTA 55350
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 15, 2002
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of FSF Financial Corp. (the "Company"), will be held at the Victorian
Inn, 1000 Highway 7 West, Hutchinson, Minnesota 55350 on Tuesday, January 15,
2002, at 8:30 a.m. for the following purposes:
1. To elect three directors of the Company; and
2. To ratify the appointment of Larson, Allen, Weishair & Co., LLP as
independent public accountants of the Company for the fiscal year ending
September 30, 2002;
all as set forth in the Proxy Statement accompanying this notice, and to
transact such other business as may properly come before the Meeting and any
adjournments. The Board of Directors is not aware of any other business to come
before the Meeting. Stockholders of record at the close of business on November
30, 2001 are the stockholders entitled to vote at the Meeting and any
adjournments thereof.
A copy of the Company's Annual Report for the year ended September 30,
2001 is enclosed.
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU
OWN. WE ENCOURAGE YOU TO VOTE BY PROXY SO THAT YOUR SHARES WILL BE REPRESENTED
AND VOTED AT THE MEETING EVEN IF YOU CANNOT ATTEND. ALL STOCKHOLDERS OF RECORD
CAN VOTE BY WRITTEN PROXY CARD. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES
ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER TO VOTE PERSONALLY AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Richard H. Burgart
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Richard H. Burgart
Secretary
Hutchinson, Minnesota
December 10, 2001
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
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PROXY STATEMENT
OF
FSF FINANCIAL CORP.
201 MAIN STREET SOUTH
HUTCHINSON, MINNESOTA 55350
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ANNUAL MEETING OF STOCKHOLDERS
JANUARY 15, 2002
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GENERAL
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This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of FSF Financial Corp. (the "Company") to
be used at the Annual Meeting of Stockholders which will be held at the
Victorian Inn, 1000 Highway 7 West, Hutchinson, Minnesota, on Tuesday, January
15, 2002, at 8:30 a.m. local time (the "Meeting"). The accompanying Notice of
Annual Meeting of Stockholders and this Proxy Statement are being first mailed
to stockholders on or about December 10, 2001.
All properly executed written proxies that are delivered pursuant to
this Proxy Statement will be voted on all matters that properly come before the
Meeting for a vote. If your signed proxy specifies instructions with respect to
matters being voted upon, your shares will be voted in accordance with your
instructions. If no instructions are specified, your shares will be voted (a)
FOR the election of directors named in Proposal 1,(b) FOR Proposal 2
(ratification of independent public accountants); and (c) in the discretion of
the proxy holders, as to any other matters that may properly come before the
Meeting. Your proxy may be revoked at any time prior to being voted by: (i)
filing with the Corporate Secretary of the Company (Richard H. Burgart at 201
Main Street South, Hutchinson, Minnesota) written notice of such revocation,
(ii) submitting a duly executed proxy bearing a later date, or (iii) attending
the Meeting and giving the Secretary notice of your intention to vote in person.
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VOTING STOCK AND VOTE REQUIRED
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The Board of Directors has fixed the close of business on November 30,
2001 as the record date for the determination of stockholders who are entitled
to notice of, and to vote at, the Meeting. On the record date, there were
2,306,714 shares of the Company's common stock outstanding (the "Common Stock").
Each stockholder of record on the record date is entitled to one vote for each
share held.
The Articles of Incorporation of the Company (the "Articles of
Incorporation") provides that in no event shall any record owner of any
outstanding Common Stock which is beneficially owned, directly or indirectly, by
a person who beneficially owns in excess of 10% of the then outstanding shares
of Common Stock (the "Limit") be entitled or permitted to any vote with respect
to the shares held in excess of the Limit. Beneficial ownership is determined
pursuant to the definition in the Articles of Incorporation and includes shares
beneficially owned by such person or any of his or her affiliates (as such terms
are defined in the Articles of Incorporation), or which such person or any of
his or her affiliates has the right to acquire upon the exercise of conversion
rights or options and shares as to which such person or any of his or her
affiliates or associates have or share investment or voting power, but neither
any employee stock ownership or similar plan of the Company or any subsidiary,
nor any trustee with respect thereto or any affiliate of such trustee (solely by
reason of such capacity of such trustee), shall be deemed, for purposes of the
Articles of Incorporation, to beneficially own any Common Stock held under any
such plan.
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The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit) is necessary to constitute a quorum at the
Meeting. With respect to any matter, any shares for which a broker indicates on
the proxy that it does not have discretionary authority as to such shares to
vote on such matter (the "Broker Non- Votes") will not be considered present for
purposes of determining whether a quorum is present. In the event there are not
sufficient votes for a quorum or to ratify any proposals at the time of the
Meeting, the Meeting may be adjourned in order to permit the further
solicitation of proxies.
As to the election of directors, the proxy being provided by the Board
of Directors enables a stockholder to vote for the election of the nominees
proposed by the Board of Directors, as submitted as Proposal 1, or to withhold
authority to vote for the nominees being proposed. Directors are elected by a
plurality of votes of the shares present in person or represented by proxy at a
meeting and entitled to vote in the election of directors.
As to the ratification of the independent accountants, which is
submitted as Proposal 2, a stockholder may: (i) vote "FOR" the ratification;
(ii) vote "AGAINST" the ratification; or (iii) "ABSTAIN" with respect to the
ratification. Unless otherwise required by law, Proposal 2 and all other matters
shall be determined by a majority of votes cast affirmatively or negatively
without regard to (a) Broker Non-Votes, or (b) proxies marked "ABSTAIN" as to
that matter.
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PRINCIPAL HOLDERS
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Persons and groups owning in excess of 5% of the Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"). The following
table sets forth, as of the record date, persons or groups who own more than 5%
of the Common Stock and the ownership of all executive officers and directors of
the Company as a group. Other than as noted below, management knows of no person
or group that owns more than 5% of the outstanding shares of Common Stock at the
record date.
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Percent of Shares of
Amount and Nature of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding (%)
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First Federal fsb 359,720 15.6
Employee Stock Ownership Plan Trust ("ESOP")
201 Main Street South
Hutchinson, Minnesota (1)
Security Bancshares Company 200,000 8.8
P.O. Box 212
Glencoe, Minnesota (2)
George B. Loban 213,191 8.9
201 Main Street South
Hutchinson, Minnesota 55350 (3)
Donald A. Glas 221,466 9.2
201 Main Street South
Hutchinson, Minnesota 55350 (3)
Richard H. Burgart 120,643 5.1
201 Main Street South
Hutchinson, Minnesota 55350 (3)
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(1) The ESOP purchased such shares for the exclusive benefit of plan
participants with funds borrowed from the Company. These shares are
held in a suspense account and will be allocated among ESOP
participants annually on the basis of compensation as the ESOP debt is
repaid. The board of directors of the bank has appointed a committee
consisting of non-employee directors Caturia, Stearns, Dempsey, and
Knutson to serve as the ESOP administrative committee ("ESOP
Committee") and to serve as the ESOP trustees ("ESOP Trustee"). The
ESOP Committee or the Board instructs the ESOP Trustee regarding
investment of ESOP plan assets. The ESOP Trustee must vote all shares
allocated to participant accounts under the ESOP as directed by
participants. Unallocated shares and shares for which no timely voting
direction is received, will be voted by the ESOP Trustee as directed by
the ESOP Committee. As of the record date, 268,857 shares have been
allocated under the ESOP to participant accounts.
(2) Based on a Schedule 13G received by the Company on March 14, 1996.
(3) See "Proposal I - Election of Directors."
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the Securities and Exchange Act of 1934 , as amended,
requires the Company's directors and executive officers to file reports of
ownership and changes in ownership of their equity securities of the Company
with the Securities and Exchange Commission and to furnish the Company with
copies of such reports. To the best of the Company's knowledge, all of the
filings by the Company's directors and executive officers were made on a timely
basis during the 2001 fiscal year. Other than as noted in Principal Holders, the
Company is not aware of other beneficial owners of more than ten percent of its
Common Stock.
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PROPOSAL I - ELECTION OF DIRECTORS
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Election of Directors
The Articles of Incorporation requires that directors be divided into
three classes, as nearly equal in number as possible, each class to serve for a
three year period, with approximately one-third of the directors elected each
year. The Board of Directors currently consists of seven members, each of whom
also serves as a director of First Federal fsb (the "Bank"). Three directors
will be elected at the Meeting, to serve for three-year terms or until their
respective successors have been elected and qualified.
James J. Caturia, Jerome R. Dempsey, and Donald A. Glas (the
"Nominees") have been nominated by the Board of Directors to serve as directors.
The Nominees are currently members of the Board of Directors and have been
nominated for three-year terms to expire in 2005.
The persons named as proxies in the enclosed proxy card intend to vote
for the election of the persons listed below, unless the proxy card is marked to
indicate that such authorization is expressly withheld. Should the Nominees
withdraw or be unable to serve (which the Board of Directors does not expect) or
should any other vacancy occur in the Board of Directors, it is the intention of
the persons named in the enclosed proxy card to vote for the election of such
persons as may be recommended to the Board of Directors by the Nominating
Committee of the Board. If there are no substitute nominees, the size of the
Board of Directors may be reduced.
The following table sets forth information with respect to the nominees
and the other sitting directors, including for each their name, age, the year
they first became a director of the Company or the Bank, the expiration date of
their current term as a director, and the number and percentage of shares of the
Common Stock beneficially owned.
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Shares of
Year First Current Common Stock
Elected or Term to Beneficially Owned Percent
Name Age (1) Appointed (2) Expire on November 30, 2001 (3) of Class(%)
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BOARD NOMINEES FOR TERM TO EXPIRE IN 2005
James J. Caturia 63 1984 2002 23,817 (4)(10) 1.0
Jerome R. Dempsey 68 1984 2002 15,875 (10) *
Donald A. Glas 51 1981 2002 221,466 (5) 9.2
DIRECTORS CONTINUING IN OFFICE
Sever B. Knutson 69 1984 2003 52,732 (6)(10) 2.3
George B. Loban 51 1979 2003 213,191 (7) 8.9
Richard H. Burgart 54 1994 2004 120,643 (8) 5.1
Roger R. Stearns 53 1990 2004 53,166 (9)(10) 2.3
Directors and Named
Executive Officers as
a Group (7 persons) -- -- -- 700,890 27.3
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(1) At September 30, 2001.
(2) Refers to the year the individual first became a director of the Company or
the Bank.
(3) Unless otherwise noted, all persons named in the table above have sole or
shared voting or investment power with respect to the shares listed in the
table. The share amounts include shares of Common Stock that the following
persons may acquire through the exercise of stock options within 60 days of
the record date: James J. Caturia - 11,775, Jerome R. Dempsey - 8,425,
Donald A. Glas - 94,809, Sever B. Knutson - 4,750, George B. Loban -
94,658, Richard H. Burgart - 38,630, , and Roger R. Stearns - 4,750.
(4) Includes 1,850 shares in the individual retirement account of the spouse of
Mr. Caturia, which Mr. Caturia may be deemed to beneficially own.
(5) Includes 14,380 shares owned by the spouse of Mr. Glas and 1,000 shares
held by the daughter of Mr. Glas, which Mr. Glas may be deemed to
beneficially own.
(6) Includes 46,862 shares owned by the spouse of Mr. Knutson, which Mr.
Knutson may be deemed to beneficially own.
(7) Includes 2,800 shares held by the son of Mr. Loban, 2,800 shares held by
the daughter of Mr. Loban, and 28,255 shares held by the spouse of Mr.
Loban, which Mr. Loban may be deemed to beneficially own.
(8) Includes 28,895 shares held by the spouse of Mr. Burgart and 25 shares held
by the son of Mr. Burgart, which Mr. Burgart may be deemed to beneficially
own.
(9) Includes 10,800 shares held by Stearns Foundation, Inc. and 6,375 shares
held by Stearnswood, Inc. of which Mr. Stearns is an officer and director,
and 100 shares held in trust for Mr. Stearns' son and daughter, which Mr.
Stearns may be deemed to beneficially own.
(10) Excludes 90,863 shares of Common Stock held under the ESOP for which such
individual serves as a member of the ESOP Committee and ESOP Trust. Such
individual disclaims beneficial ownership with respect to shares held in a
fiduciary capacity. See "Principal Holders."
* Less than 1% of Common Stock outstanding.
Biographical Information
The principal occupation of each director, nominee for director, and
executive officer of the Company is set forth below. Unless otherwise noted, all
persons have held their present occupation for the last five years.
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Nominees for Director:
James J. Caturia is the owner and manager of Caturia Interiors, Inc.,
Hastings, Minnesota, a retail home furnishings company. Mr. Caturia is a member
of the Hastings Chamber of Commerce, a member of the Knights of Columbus Council
1600 and is involved with Habitat for Humanity.
Jerome R. Dempsey is a member of the Minnesota House of Representatives
where he serves as a member of the Bonding Committee and the Tax Committee. Mr.
Dempsey also serves as the Chairman of the Local Government and Metro Affairs
Committee. Additionally, Mr. Dempsey is a member of the Council 1600 Knights of
Columbus, the United Way, and the Chamber of Commerce. Mr. Dempsey is also
involved with the Special Olympics, Habitat for Humanity, and the American
Cancer Society.
Donald A. Glas is Co-Chair and Chief Executive Officer of the Company
and the Bank. Mr. Glas is also Chairman of Firstate Services, Inc., a wholly
owned subsidiary of the Bank. He is a founding director and a committee member
of the Hutchinson Community Development Corporation, and serves on the
Government Affairs Committee, the Federal Home Loan Bank System Committee and
the FDIC Insurance Committee of the America's Community Bankers, a national
trade group for the industry.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
ABOVE NOMINEES FOR DIRECTORS.
Continuing Directors:
Sever B. Knutson is the majority stockholder of Lynn Card Company, a
mail order business located in Hutchinson, Minnesota. Mr. Knutson chairs the
Transportation Committee of the Hutchinson Community Development Corporation and
also serves as the Operations Officer for the Hutchinson Squadron of the Civil
Air Patrol. Mr. Knutson served as an Officer in the United States Air Force for
22 years, retiring in 1972.
George B. Loban is Co-Chair and President of the Company and the Bank.
Mr. Loban is also Chairman of Homeowners Mortgage Corporation, a wholly owned
subsidiary of the Bank. He has previously served as Vice Chairman of the Federal
Home Loan Bank (the "FHLB") of Des Moines and is a member of the Governmental
Affairs Committee of the FHLB System. Mr. Loban serves on the board of directors
and a member of several committees of the American Community Bankers. Mr. Loban
is actively involved in his local community through the Chamber of Commerce,
United Way and other educational and civic organizations.
Richard H. Burgart is Chief Financial Officer, Treasurer and Secretary
of the Company and the Bank. Mr. Burgart is also Chairman of Insurance Planners,
an affiliate of the Bank. Mr. Burgart has participated in the Hutchinson Dollars
for Scholars, the Hutchinson Youth Hockey Association, and the Hutchinson
Community Development Corporation. Mr. Burgart is a member of the First
Congregational Church and he is a past national Chairman of the Financial
Managers Society.
Roger R. Stearns is the President and part owner of Stearnswood, Inc.
Hutchinson, Minnesota, a closely-held family corporation that currently
manufactures transport packaging for regional and international customers. He
currently serves on the Hutchinson Community Needs Task Force. Mr. Stearns
serves as a director of the Hutchinson Area Community Foundation, the Central
Prairie Railway Association and the Hutchinson Community Video Network. He is
also a trustee and Secretary of the Stearns Foundation.
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Meetings and Committees of the Board of Directors
During the fiscal year ended September 30, 2001, the Board of Directors
held a total of 14 meetings. No director attended fewer than 75% of the total
meetings of the Board of Directors and committees during the period of his
service. In addition to other committees, as of September 30, 2001, the Company
had a Nominating Committee, a Compensation Committee, and an Audit Committee.
The Nominating Committee consists of the Board of Directors of the
Company. Nominations to the Board of Directors made by stockholders must be made
in writing to the Secretary and received by the Company not less than 60 days
prior to the anniversary date of the immediately preceding annual meeting of
stockholders of the Company. Notice to the Company of such nominations must
include certain information required pursuant to the Certificate of
Incorporation. The Nominating Committee, which is not a standing committee, met
one time during the 2001 fiscal year.
The Compensation Committee is comprised of directors Caturia, Dempsey,
Knutson and Stearns. This standing committee establishes the Bank's salary
budget, director and committee member fees, and employee benefits provided by
the Bank for approval by the Board of Directors. The Committee met two times
during the 2001 fiscal year.
The Audit Committee is comprised of directors Caturia, Dempsey, Knutson
and Stearns. The Board of Directors has determined that each of the members of
the Audit Committee is independent in accordance with the requirements of the
Nasdaq Stock Market. The Board of Directors has adopted a written Audit
Committee Charter. The Audit Committee is a standing committee and responsible
for developing and maintaining the Company's audit program. The Committee also
meets with the Company's outside accountants to discuss the results of the
annual audit and any related matters. The Audit Committee met four times during
the 2001 fiscal year. In addition to regularly scheduled quarterly meetings, the
Audit Committee is available either as a group or individually to discuss any
matters that might affect the financial statements, internal controls or other
financial aspects of the operations of the Company.
Audit Committee Report
Review of Audited Financial Statements with Management.
The Audit Committee reviewed and discussed the audited financial
statement for the year ended September 30, 2001 with the management of the
Company.
Review of Financial Statements and Other Matters with Independent
Accountant.
The Audit Committee discussed with Larson, Allen, Weishair & Co., LLP
("LarsonAllen") the Company's independent accountants, the matters required to
be discussed by the statement on Auditing Standards No. 61 (Communications with
Audit Committees), as may be modified or supplemented. The Audit Committee has
received the written disclosures and the letter from LarsonAllen required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), as may be modified or supplemented, and has discussed with
LarsonAllen its independence. Effective November 1, 2001, the Company's
independent public accountants for the year ended September 30, 2001, Bertram
Cooper & Co., LLP ("Bertram Cooper") merged with the public accounting firm of
LarsonAllen. Bertram Cooper will operate under the new name of LarsonAllen.
Unless the context indicates otherwise, all references to LarsonAllen refers to
Bertram Cooper.
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Recommendation that Financial Statements be Included in Annual Report.
Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended September 30, 2001, for filing with the Securities and Exchange
Commission.
Audit Committee:
James J. Caturia
Jerome R. Dempsey
Sever B. Knutson, Chairman
Roger R. Stearns
Audit Fees
The aggregate fees billed by LarsonAllen for professional services
rendered for the audit of the Company's consolidated annual financial statements
for the 2001 fiscal year and the reviews of the financial statements included in
the Company's Forms 10-Q were approximately $62,000.
Financial Information Systems Design and Implementation Fees
For the 2001 fiscal year, LarsonAllen did not render to the Company or
its consolidated subsidiary professional services for financial information
systems design and implementation.
All Other Fees
The aggregate fees billed by LarsonAllen to the Company and its
consolidated subsidiary for all other services other than those covered under
"Audit Fees" for the 2001 fiscal year were approximately $12,000.
The Audit Committee considered whether the provision of the non-audit
services listed under "Financial Information Systems Design and Implementation
Fees" and "All Other Fees" above was compatible with maintaining LarsonAllen's
independence.
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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
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Directors' Compensation
Each non-employee member of the Board of Directors of the Bank received
a fee of $650 per meeting attended. In addition, committee fees consisted of
$350 for each committee meeting attended. For the year ended September 30, 2001,
total director fees paid by the Bank to all directors as a group were $54,000.
Under the 1998 Stock Compensation Plan, each non-employee director was
granted 1,500 shares of Common Stock on the effective date of grant.
Additionally, the non-employee directors received an option to purchase a number
of shares of Common Stock represented by the stock award ("Tandem Stock
Options"). Messrs. Glass, Loban, and Burgart were granted 33,974, 33,974, and
23,178 options,
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respectively and were not granted Tandem Stock Options. All stock options and
Tandem Stock Options are exercisable at the rate of 20% on the date of grant,
and 20% thereafter.
Executive Compensation
General. Executive officers received compensation from the Bank.
However, a portion of the executive officers' compensation is reimbursed to the
Bank by the Company in accordance with a cost sharing agreement between the two
entities.
Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to the named executive officers of the Company for
each of three years ended September 30, 2001. No other executive officer of the
Company or the Bank had a salary and bonus during such periods that exceeded
$100,000 for services rendered in all capacities to the Company or the Bank in
the aggregate.
Long Term
Compensation
Annual Compensation Awards
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Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary($) Bonus($)(1) Compensation($) Options (#)(2) Compensation($)
- ------------------- ------ --------- ----------- --------------- -------------- ---------------
Donald A. Glas 2001 196,000 90,000 -- 5,662 16,420(3)
Director and Chief 2000 184,000 73,600 -- 5,662 19,870
Executive Officer 1999 182,000 38,000 -- 11,324 32,110
George B. Loban 2001 196,000 90,000 -- 5,662 16,420(3)
Director and President 2000 184,000 73,600 -- 5,662 19,870
1999 182,000 38,000 -- 11,324 32,110
Richard H. Burgart 2001 140,500 64,800 -- 3,836 15,985(3)
Chief Financial Officer 2000 130,000 52,000 -- 3,836 19,437
and Treasurer 1999 128,750 27,000 -- 7,726 31,173
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(1) Payments under the Bank's Incentive Compensation Policy. See "-- Report of
the Compensation Committee on Executive Compensation."
(2) In Messrs. Glas, Loban and Burgart, represents options awarded under the
1994 Stock Option Plan and the 1998 Compensation Plan. See " -- Stock
Awards."
(3) At September 30, 2001, includes 1,461, 1,461 and 1,420 shares allocated
under the ESOP at a cost basis of $10.00 per shares. Such shares had an
aggregate market value of $23,814, $23,814 and $23,146, respectively at
September 30, 2001. Also, includes the imputed value of life insurance of
$1,810, 1,810, and $1,785, respectively.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of Messrs. Stearns
(Chair), Caturia, Dempsey and Knutson, all present members of the Board of
Directors of the Bank and the Company. No member of the Committee is, or was
during 2001, an executive officer of another Company whose board of directors
has a comparable committee on which one of the Company's executive officers
serves. None of the executive officers of the Company is, or was during 2001, a
member of a comparable compensation committee of a Company of which any of the
directors of the Company is an executive officer.
-9-
Report of the Compensation Committee on Executive Compensation
The executive officers of the Company and the Bank consist of Messrs.
George B. Loban (Co- Chairman of the Board and President), Donald A. Glas
(Co-Chairman of the Board and Chief Executive Officer), and Richard H. Burgart
(Chief Financial Officer, Treasurer and Secretary).
The Bank Compensation Committee (the "Committee") meets annually to
review compensation paid to executive officers and to determine the compensation
levels for all Bank employees. The Committee reviews various published surveys
of compensation paid to employees performing similar duties for depository
institutions and their holding companies, with a particular focus on the level
of compensation paid by comparable institutions in and around the Bank's market
area, including institutions with total assets of between $250 million and $500
million. Although the Committee does not specifically set compensation levels
for executive officers based on whether particular financial goals have been
achieved by the Bank the Committee does consider the overall profitability of
the Bank when making these decisions. With respect to each particular employee,
his or her particular contributions to the Bank over the past year are also
evaluated.
Bonuses are based upon the Bank's Incentive Compensation Policy. The
Incentive Compensation Policy was developed to reward executive management and
is based upon the Company's ability to meet certain performance ratio goals. For
the year ended September 30, 2001, bonuses were based upon the following
weighted performance ratios: (1) earnings per share; (2) book value per share;
(3) efficiency ratio; (4) operating ratio; (5) net interest margin; (6)
non-performing assets; and (7) return on assets. Application of the Incentive
Compensation Policy is based upon an incentive award level of 45% of the named
executive officer base salary multiplied by the percentage of the attained
performance ratio and the weighted percent of each of the performance ratios.
Mr. Glas, Co-Chairman of the Board and Chief Executive Officer, and Mr. Loban,
Co-Chairman of the Board and President, each received a bonus of $90,000.
In determining compensation, the Committee considers the annual
compensation paid to presidents, chief executive officers, and chief financial
officers of financial institutions in the State of Minnesota and surrounding
states with assets of between $250 million and $500 million and the individual
job performance of such individual in consideration of its specific salary
increase decision with respect to compensation to be paid to the President,
Chief Executive Officer, and Chief Financial Officer in the future.
Compensation Committee:
Roger R. Stearns, Chairman
James J. Caturia
Jerome R. Dempsey
Sever B. Knutson
-10-
Stock Awards. The following table sets forth information with respect
to the grants of stock options in 2001 under the 1998 Compensation Plan to the
named executive officers and held by them as of September 30, 2001. The Company
has not granted to the named executive officers any stock appreciation rights.
OPTION GRANTS TABLE
Option/Grants in Last Fiscal Year
---------------------------------
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for
Individual Grants Option Term(1)
- -------------------------------------------------------------------------------------------- -----------------------
% of Total
# of Securities Options Exercise
Underlying Granted to or Base
Options Employees in Price Expiration
Name Granted(#)(2) Fiscal Year ($/Sh) Date 5% 10%
- --------- ------------- ----------- ------ ------ ---- ----
Donald A. Glas 5,662 25.8 16.05 September 17, $59,457 $148,514
2011
George B. Loban 5,662 25.8 16.05 September 17, $59,457 $148,514
2011
Richard H. Burgart 3,836 17.5 16.05 September 17, $40,278 $100,618
2011
- -----------------
(1) The amounts represent certain assumed rates of appreciation only over 10
year period. Actual gains, if any, on stock option exercises and Common
Stock holdings are dependent on the future performance of the Common Stock
and overall stock market conditions. There can be no assurance that the
amount reflected in the table will be achieved. The values in the table are
based upon the exercise price of $16.05 and the closing price of $16.30 at
September 30, 2001.
The following table sets forth information with respect to awarded
stock options to purchase common stock granted under the 1994 Option Plan and
the 1998 Compensation Plan, respectively. The Company has not granted to the
named executive officers any stock appreciation rights.
-11-
OPTION EXERCISES AND YEAR END VALUE TABLE
Aggregated Option Exercises in Last Fiscal Year, and FY-End Option
------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Options In-The-Money Options
at FY-End (#)(1)(2) at FY-End ($)(1)(2)
--------------------- --------------------
Shares Acquired Value
Name on Exercise (#) Realized ($)(2) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- --------------- --------------- ------------------------- -------------------------
Donald A. Glas 1994 Option
Plan 11,909 55,079 38,188 / -- 259,678 / --
1998
Compensation
Plan -- -- 50,951 / 5,662 53,222 / 1,416
George B. Loban 1994 Option
Plan 11,759(3) 52,915 38,037 / -- 258,652 / --
1998
Compensation
Plan -- -- 50,951 / 5,662 53,222 / 1,416
Richard H. Burgart 1994 Option
Plan 35,243(3) 215,863 -- / -- -- / --
1998
Compensation
Plan -- -- 34,794 / 3,839 36,086 / 960
- -----------------
(1) For Messrs. Glas, Loban and Burgart, respectively, the 1994 Option Plan
information is based on the exercise price of $9.50 and the closing price
on September 30, 2001 of $16.30.
(2) For Messrs. Glas, Loban and Burgart, the 1998 Compensation Plan information
is based on the exercise prices of $19.125, $14.75 , $12.375, and $16.05,
and the closing price on September 30, 2001 of $16.30.
(3) In a stock for stock exchange, Messrs. Loban and Burgart received net
shares of 2,265 and 13,336, respectively.
Other Benefits
Employment Agreements. The Bank entered into employment agreements with
the named executive officers. The employment agreements provide for a term of
three years. The agreements may be terminable by the Bank for "just cause" as
defined in the agreement. If the Bank terminates an officer without just cause,
the officer will be entitled to a continuation of his salary from the date of
termination through the remaining term of the agreement, but in no event for a
period of less than one year. The employment agreements contain a provision
stating that in the event of involuntary termination of employment in connection
with, or within one year after, any change in control of the Bank, each officer
will be paid in a lump sum an amount equal to 2.99 times his average taxable
compensation paid during the five prior calendar years. In the event of a change
in control of the Bank, at September 30, 2001, Messrs. Glas, Loban and Burgart
would currently be entitled to an aggregate lump sum payment of approximately
$1.2 million, $1.2 million and $700,000, respectively.
Supplemental Executive Retirement Plans. The Bank maintains an insured
executive salary continuation plan ("ESCP") for the benefit of eligible
executive employees. The purpose of the ESCP is to furnish executive employees
with post-retirement and death benefits in addition to those which will be
provided under the Bank's SEP and other retirement benefits. The ESCP is also
designed to foster the retention of executive employees. It is anticipated that
benefits payable under the ESCPs will equal approximately $5,159 per month in
the case of Mr. Glas upon his retirement at age 56 for a maximum of
-12-
180 months, $4,166 in the case of Mr. Loban upon his retirement age 56 for a
maximum of 120 months, and $3,810 per month in the case of Mr. Burgart upon his
retirement at age 60 for a maximum of 180 months. For the year ended September
30, 2001, Messrs. Glas, Loban and Burgart had an accrued ESCP benefit of
$366,000, $210,000 and $198,000, respectively, and such benefits under the ESCP
were partially vested for Messrs. Glas and Burgart and fully vested for Mr.
Loban.
- --------------------------------------------------------------------------------
STOCK PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
The following graph compares the cumulative total shareholder return of
the Common Stock of the Company with that of (a) the total return index for
domestic companies listed on the Nasdaq Stock Market and (b) the total return
index for banks listed on the Nasdaq Stock Market. These total return indices of
the Nasdaq Stock Market are computed by the Center for Research in Securities
Prices ("CRSP") at the University of Chicago. All three investment comparisons
assume the investment of $100 at the market close on September 29, 1996 and the
reinvestment of dividends as paid. The graph provides comparisons at the end of
fiscal year of the Company.
[GRAPHIC OMITTED]
There can be no assurance that the Company's stock performance will
continue with the same or similar trends depicted in the graph below. The
Company will not make or endorse any predictions as to future stock performance.
- ----------------------------- -------------- -------------- ------------- ------------- ------------- --------------
9/29/96($) 9/30/97($) 9/30/98($) 9/30/99($) 9/30/00($) 9/30/01($)
- ----------------------------- -------------- -------------- ------------- ------------- ------------- --------------
CRSP Nasdaq US Index 100 137 139 228 302 124
- ----------------------------- -------------- -------------- ------------- ------------- ------------- --------------
CRSP Nasdaq Bank Index 100 167 165 176 189 214
- ----------------------------- -------------- -------------- ------------- ------------- ------------- --------------
FSF Financial Corp. 100 159 131 101 112 152
- ----------------------------- -------------- -------------- ------------- ------------- ------------- --------------
- --------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
The Bank, like many financial institutions, has followed a policy of
granting various types of loans to officers, directors, and employees. The loans
have been made in the ordinary course of business and
-13-
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with the Bank's other
customers, and do not involve more than the normal risk of collectibility, or
present other unfavorable features.
- --------------------------------------------------------------------------------
PROPOSAL II - RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
LarsonAllen was the Company's independent public accountants for the
fiscal year ended September 30, 2001. The Board of Directors has approved the
selection of LarsonAllen as its independent accountants for the fiscal year
ending September 30, 2002, subject to ratification by the Company's
stockholders. A representative of LarsonAllen is expected to be present at the
Meeting to respond to stockholders' questions and will have the opportunity to
make a statement if he or she so desires.
RATIFICATION OF THE APPOINTMENT OF THE ACCOUNTANTS REQUIRES THE
AFFIRMATIVE VOTE OF A MAJORITY OF THE VOTES CAST BY THE STOCKHOLDERS OF THE
COMPANY AT THE MEETING. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE RATIFICATION OF THE APPOINTMENT OF LARSONALLEN AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2002.
- --------------------------------------------------------------------------------
2003 ANNUAL MEETING STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be considered for inclusion in the Company's proxy
statement for the annual meeting of stockholders to be held in 2003, all
stockholder proposals must be submitted to the Secretary at the Company's
office, 201 Main Street South, Hutchinson, Minnesota 55350, on or before August
11, 2002. Under the Company's bylaws, in order to be considered for possible
action by stockholders at the 2002 annual meeting of stockholders, stockholder
nominations for director and stockholder proposals not included in the Company's
proxy statement must be submitted to the Secretary of the Company, at the
address set forth above, no later than November 15, 2002.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors does not know of any other matters that are
likely to be brought before the Meeting. If any other matters, not now known,
properly come before the Meeting or any adjournments, the persons named in the
enclosed proxy card, or their substitutes, will vote the proxy in accordance
with their judgment on such matters.
The cost of soliciting proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers, and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
-14-
- --------------------------------------------------------------------------------
FORM 10-K
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 2001 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE
RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY, FSF FINANCIAL CORP., 201 MAIN
STREET SOUTH, HUTCHINSON, MINNESOTA 55350.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Richard H. Burgart
----------------------------------
Richard H. Burgart, Secretary
Hutchinson, Minnesota
December 10, 2001
-15-
- --------------------------------------------------------------------------------
FSF FINANCIAL CORP.
- --------------------------------------------------------------------------------
201 MAIN STREET SOUTH
HUTCHINSON, MINNESOTA 55350
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 15, 2002
- --------------------------------------------------------------------------------
The undersigned hereby appoints the Board of Directors of FSF Financial
Corp. (the "Company"), or its designee, with full powers of substitution, to act
as attorneys and proxies for the undersigned, to vote all shares of common stock
of the Company which the undersigned is entitled to vote at the Annual Meeting
of Stockholders (the "Meeting"), to be held at the Victorian Inn, 1000 Highway 7
West, Hutchinson, Minnesota 55350 on Tuesday, January 15, 2002, at 8:30 a.m. and
at any and all adjournments thereof, in the following manner:
FOR WITHHELD
--- --------
I. To elect as directors all nominees
listed below for three-year terms
to expire in 2005 (except as marked
to the contrary):
James J. Caturia
Jerome R. Dempsey
Donald A. Glas |_| |_|
INSTRUCTIONS: To withhold your vote for any individual nominee, insert the
- ------------ nominee's name on the line provided below.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
II. Proposal to ratify the appointment
of Larson, Allen, Weishair & Co., LLP
as independent public accountants for
the Company for the fiscal year ending
September 30, 2002. |_| |_| |_|
The Board of Directors recommends a vote "FOR" all of the above listed
propositions.
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
SIGNED PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED
IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elects to vote at the Meeting,
or at any adjournments thereof, and after notification to the Secretary of the
Company at the Meeting of the stockholder's decision to terminate this proxy,
the power of said attorneys and proxies shall be deemed terminated and of no
further force and effect. The undersigned may also revoke this proxy by filing a
subsequently dated proxy or by notifying the Secretary of the Company of his or
her decision to terminate this proxy.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of an Annual Report to Stockholders, a Notice of the
Meeting and a Proxy Statement dated December 10, 2001.
Please check here if you
Dated: , |_| plan to attend the Meeting.
--------------- ---- -----
- ------------------------------------------ ----------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
- ------------------------------------------ ----------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
Please sign exactly as your name appears on this form of proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
- --------------------------------------------------------------------------------