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 under Rule 14a-12
GFSB BANCORP, INC.
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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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[GFSB BANCORP, INC. LETTERHEAD]
September 27, 2002
Dear Stockholder:
On behalf of the Board of Directors and management of GFSB Bancorp, Inc.
(the "Company"), I cordially invite you to attend the Annual Meeting of
Stockholders to be held at Gallup Federal Savings Bank's Loan Center located at
214 West Aztec Avenue, Gallup, New Mexico, on October 28, 2002, at 10:00 a.m.,
local time. The attached Notice of Annual Meeting and Proxy Statement describe
the formal business to be transacted at the annual meeting. During the Annual
Meeting, I will report on the operations of the Company. Directors and officers
of the Company will be present to respond to any questions you may have.
You will be asked to elect two directors and to ratify the appointment of
Neff + Ricci LLP as the Company's independent public accountants for the fiscal
year ending 2003. The Board of Directors has 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. I 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. Please note that 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 annual meeting.
Sincerely,
/s/ James Nechero, Jr.
----------------------
James Nechero, Jr.
President
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GFSB BANCORP, INC.
221 WEST AZTEC AVENUE
GALLUP, NEW MEXICO 87301
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 28, 2002
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of GFSB Bancorp, Inc. (the "Company"), will be held at Gallup Federal Savings
Bank's Loan Center located 214 West Aztec Avenue, Gallup, New Mexico, on October
28, 2002, at 10:00 a.m., local time, for the following purposes:
1. To elect two directors of the Company; and
2. To ratify the appointment of Neff + Ricci LLP as independent public
accountants of the Company for the fiscal year ending June 30, 2003;
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 September
16, 2002 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 June 30, 2002 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/ George S. Perce
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George S. Perce
Secretary
Gallup, New Mexico
September 27, 2002
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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
GFSB BANCORP, INC.
221 WEST AZTEC AVENUE
GALLUP, NEW MEXICO 87301
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ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 28, 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 GFSB Bancorp, Inc. (the "Company") to be
used at the Annual Meeting of Stockholders which will be held at Gallup Federal
Savings Bank's Loan Center located at 214 West Aztec Avenue, Gallup, New Mexico,
on October 28, 2002, at 10:00 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 September 27, 2002.
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 the appointment 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 Secretary of the Company (George S. Perce, at 221
West Aztec Avenue, Gallup, New Mexico 87301) 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 September 16,
2002 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
1,150,106 shares of the Company's common stock outstanding (the "Common Stock").
Additionally, each stockholder of record on the record date is entitled to one
vote for each share held.
The certificate of incorporation of the Company (the "Certificate 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 Certificate of Incorporation and includes
shares beneficially owned by such person or any of his or her affiliates or
associates (as such terms are defined in the Certificate of Incorporation), or
which such person or any of his or her affiliates or associates have 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 Certificate of Incorporation, to beneficially own
any Common Stock held under any such plan.
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 appointment of independent public
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. 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.
-2-
Percent of Shares of
Amount and Nature of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding(%)
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Gallup Federal Savings Bank Employee Stock
Ownership Plan (the "ESOP")
221 West Aztec Avenue, Gallup, New Mexico 96,896 (1) 8.4
Lance S. Gad
1250 Fence Raw Drive
Fairfield, Connecticut 06430 82,126 (2) 7.1
Charles L. Parker, Jr.
221 West Aztec Avenue
Gallup, New Mexico 87,313 (3) 7.5
Richard C. Kauzlaric
221 West Aztec Avenue
Gallup, New Mexico 129,476 (3) 11.2
George S. Perce
221 West Aztec Avenue
Gallup, New Mexico 87,333 (3) 7.5
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(1) The ESOP purchased such shares for the exclusive benefit of ESOP
participants with funds borrowed from the Company. These shares are held in
a suspense account and are allocated among ESOP participants annually on
the basis of compensation as the ESOP debt is repaid. 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 directors is received will be voted by the ESOP Trustee as directed
by the ESOP Committee. As of the record date, 51,850 shares have been
allocated under the ESOP to participant accounts.
(2) Based on a Schedule 13G filed on February 10, 1998.
(3) See "Proposal 1 - Election of Directors".
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the 1934 Act 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, except for Messrs. Parker and Spurlin, all of the
filings by the Company's directors and executive officers were made on a timely
basis during the 2002 fiscal year. Messrs. Parker and Spurlin each failed to
file a timely Form 4 for one transaction. The Company is not aware of any other
person who failed to file on a timely basis any required report.
-3-
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PROPOSAL 1 - ELECTION OF DIRECTORS
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The Certificate 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 Gallup Federal Savings Bank (the "Bank"). Two
directors will be elected at the Meeting, to serve for a three-year term or
until his successor has been elected and qualified.
Vernon I. Hamilton and James Nechero, Jr. (the "Nominees") have been
nominated by the Board of Directors to serve as a 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. Beneficial ownership of executive officers and
directors of the Company, as a group, is also set forth under this caption.
-4-
Shares of
Common
Stock
Beneficially
Year First Current Owned as of
Elected or Term to September 16, Percent
Name and Position(s) Age(1) Appointed(2) Expire 2002(3) Owned(%)
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BOARD NOMINEES FOR TERM TO EXPIRE IN 2005
Vernon I. Hamilton 72 1990 2002 55,907 4.8
Director
James Nechero, Jr. 68 1976 2002 49,883 4.3
President and Director
DIRECTORS CONTINUING IN OFFICE
Michael P. Mataya 52 1994 2003 29,800 2.6
Director and Treasurer
Charles L. Parker, Jr. 40 1994 2003 87,313 (4) 7.5
Director
George S. Perce 63 1990 2003 87,333 (4) 7.5
Director and Secretary
Richard C. Kauzlaric 64 1983 2004 129,476 11.2
Director
Wallace R. Phillips, D.D.S. 80 1971 2004 39,082 (4) 3.4
Chairman of the Board
NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Richard P. Gallegos 51 -- -- 19,502 1.7
Vice President and
President of the Bank
Jerry R. Spurlin 60 -- -- 37,991 3.3
Chief Financial Officer and
Assistant Secretary
Leonard C. Scalzi 54 -- -- 7,540 *
Senior Vice President of the Bank
Directors and executive officers as a -- -- -- 566,601 45.9
group (11 persons)
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(1) At June 30, 2002.
(2) Refers to the year the individual first became a director of the Company or
the Bank. All such directors became directors of the Company when the
Company was incorporated in March 1995.
(3) Includes the following number of shares that may be acquired within 60 days
of the record date by the exercise of options: Hamilton - 9,096; Nechero -
9,457; Mataya - 8,927; Parker - 9,265; Perce - 9,289; Kauzlaric - 10,181;
Phillips - 9,096; Gallegos - 7,500; and Scalzi - 3,500.
(4) Excludes 96,896 shares of Common Stock held under the ESOP for which such
individual serves as either an ESOP Trustee or as a member of the ESOP
Committee. Beneficial ownership is disclaimed with respect to such ESOP
shares held in a fiduciary capacity.
* Less than 1% of the common stock outstanding.
-5-
Biographical Information
Set forth below is certain information with respect to the directors,
including director nominees and executive officers of the Company. All directors
and executive officers have held their present positions for five years unless
otherwise stated.
Nominees for Directors:
Vernon I. Hamilton is President of V.I. Hamilton Construction Co., Inc. Mr.
Hamilton is a member of the United Methodist Church, the Elks, the Masons, and
the Community Concert Association.
James Nechero, Jr. was appointed President of the Company in 2000. Mr.
Nechero is the President of Eagle Energy, Inc., a real estate investment company
and is a member of the New Mexico Amigos.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
ABOVE NOMINEES FOR DIRECTORS.
Continuing Directors:
Michael P. Mataya is President and Chief Executive Officer of Indian
Capital Distributing Co., a wholesale gasoline marketer. Mr. Mataya is Director
of the New Mexico Petroleum Marketers Association and is a former member of the
Board of Directors for Los Angeles Crippled Children's Hospital.
Charles L. Parker, Jr., currently serves as President of Sanders Trading
Corp., Twin Lakes Trading Corp. and Chambers Trading Corp. Mr. Parker also
serves as Vice President of Allifer, Inc. These corporations are privately held
and engaged in retail and real estate investment activities.
George S. Perce is a Professional Engineer, a Professional Surveyer, the
retired owner of Perce Engineering and owner of Perce Farms of Deming, a
producing pecan grove.
Richard C. Kauzlaric is President of Bubany Insurance Agency, Inc. He is
President of Western New Mexico Gallup Foundation, past Regent of Western New
Mexico University, Past President of New Mexico Amigos, and a sustaining member
of the Amigos. Mr. Kauzlaric has been instrumental in the redevelopment of
downtown Gallup. Mr. Kauzlaric served as Chairman of the Board of the Bank from
1989 to 2000.
Wallace R. Phillips, D.D.S. is a retired dentist. He currently serves as
Commissioner of the Gallup Municipal Airport.
-6-
Named Executive Officers Who Are Not Directors:
Richard P. Gallegos joined the Bank as its President on November 16, 1998
and was appointed Vice President of the Company in 2000. Prior to his joining
the Bank, Mr. Gallegos was a President and Vice President of a financial
institution in Gallup, New Mexico and Albuquerque, New Mexico, respectively. Mr.
Gallegos is Treasurer of the Gallup-McKinley County Chamber of Commerce, a
committee member of the McKinley/Cibola/San Juan Counties Enterprise Loan Fund
and a member of the Gallup Rotary Club. Previously, Mr. Gallegos served on the
board of Consumer Credit Counseling of New Mexico.
Jerry R. Spurlin has been with the Bank since September of 1990 and served
as President from February 1991 to November 1998. Mr. Spurlin currently serves
as Chief Financial Officer and Assistant Secretary of the Company and is
Treasurer and a member of the Board of Directors of the Bank. Previously, he was
an Executive Vice President, Senior Vice President and Vice President at a
financial institution in Alamogordo, New Mexico. He has served twice as
President of the Gallup-McKinley County Chamber of Commerce, and is the Chairman
of the Staff Parish Relations Committee for the First United Methodist Church of
Gallup. Mr. Spurlin is Secretary/ Treasurer of New Mexico Western University
Gallup Foundation, a former director of the Gallup Downtown Development Group
and a member of the Gallup Rotary Club. He is the Treasurer and a director of
the Navajo Partnership for Housing and President of Habitat For Humanity of
Gallup.
Leonard C. Scalzi, joined the Bank on May 1, 2000 as Senior Vice President
- - Commercial Lending. Previously, Mr. Scalzi served as a senior lender for two
New Mexico financial institutions. He is a member of the New Mexico Amigos, a
director for Childhaven, a director of the San Juan College Foundation, a
director of Independent Community Bankers Association of New Mexico and a former
president and director of the San Juan Country Club.
Other Executive Officer Who Is Not A Director:
William W. Head, Jr., age 62, is the Chief Lending Officer of the Bank.
Previously Mr. Head was a lawyer in private practice with an emphasis in
banking, commercial, real estate and probate law. Currently, Mr. Head is a
director of the Housing Authority of the City of Gallup. He has been a member of
the Board of Directors and President of the Inter-Tribal Indian Ceremonial
Association.
Meetings and Committees of the Board of Directors
During the fiscal year ended June 30, 2002, the Board of Directors of the
Company held a total of nine 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, the Company has a Nominating
Committee, a Personnel and 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
once during the 2002 fiscal year.
-7-
The Personnel and Compensation Committee is comprised of Directors
Hamilton, Mataya, Perce, Phillips, and Mr. Gallegos. This standing committee
meets as needed to review all personnel matters. As a member of the Committee,
Mr. Gallegos does not act on matters related to his compensation. The Committee
met three times during the 2002 fiscal year.
The Audit Committee is comprised of Directors Kauzlaric, Mataya, Parker and
Perce. The Board of Directors has determined that each of the members of the
Audit Committee is independent in accordance with the listing requirements for
Nasdaq SmallCap market issuers. The Board of Directors has adopted a written
audit committee charter, which was previously attached to the Company's 2000
annual meeting proxy statement. The Audit Committee is a standing committee and
reports to the Board of Directors. Its primary function is to assist the board
in fulfilling its responsibility to stockholders related to financial accounting
and reporting, the system of internal controls established by management and the
adequacy of auditing relative to these activities. The Audit Committee met six
times during the 2002 fiscal year.
Audit Committee Report
Review of Audited Financial Statements with Management.
The Audit Committee reviewed and discussed the audited financial statement
for the year ended June 30, 2002 with the management of the Company.
Review of Financial Statements and Other Matters with Independent
Accountant.
The Audit Committee discussed with Neff + Ricci LLP ("Neff + Ricci"), the
Company's independent public 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 Neff + Ricci required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), as may be modified or supplemented, and has discussed with Neff +
Ricci its independence.
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-KSB for the year ended June
30, 2002, for filing with the Securities and Exchange Commission.
Audit Committee:
George S. Perce, Chairman
Richard Kauzlaric
Michael P. Mataya
Charles L. Parker, Jr.
Audit Fees
The aggregate fees billed by Neff + Ricci for professional services
rendered for the audit of the Company's consolidated annual financial statements
for the 2002 fiscal year and the reviews of the financial statements included in
the Company's quarterly reports on Forms 10-QSB were approximately $37,000.
-8-
Financial Information Systems Design and Implementation Fees
For the 2002 fiscal year, Neff + Ricci did not render to the Company or its
consolidated subsidiary any professional services for financial information
systems design and implementation. Accordingly, there were no fees billed for
fiscal 2002 by Neff + Ricci to the Company or its consolidated subsidiary.
All Other Fees
The aggregate fees billed by Neff + Ricci to the Company and its
consolidated subsidiary for all other services other than those covered under
"Audit Fees" for the 2002 fiscal year were approximately $3,400.
The Audit Committee considered whether the provision of the non-audit
services listed under "All Other Fees" above is compatible with maintaining Neff
+ Ricci's independence.
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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
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Director Compensation
Each member of the Board of Directors of the Company receives an annual
retainer of $3,000 plus $100 per regular or special board meeting attended. Each
member of the Board of Directors of the Bank who attends a minimum of ten
regular meetings receives an annual fee of $13,200. The Chairman of the Board of
the Bank receives an additional fee of $6,000. Committee members receive fees of
$100 per meeting attended. Except for Mr. Nechero, no board or committee fees
are paid to board members who are also employees. During the fiscal year ended
June 30, 2002, the Company paid a total of $125,000 in director fees.
-9-
Executive Compensation
Summary Compensation Table. The following table sets forth information
concerning the compensation for services in all capacities for the fiscal years
provided below of those persons who were, at June 30, 2002, (a) our chief
executive officer and (b) our other most highly compensated officers
(collectively, the "named executive officers"). No other executive officer of
the Company or the Bank received cash compensation (salary and bonus) in excess
of $100,000 for the year ended June 30, 2002.
Long Term Compensation
Annual Compensation Awards
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Securities
Restricted Underlying
Name and Other Annual Stock Options/ All Other
Principal Position Year Salary($) Bonus($) Compensation($)(1) Awards($) SARs(#) Compensation($)
- ------------------- ---- --------- -------- ------------------ --------- -------- ---------------
James Nechero, Jr. 2002 -- -- 16,700 -- -- --
President of the 2001 -- -- 17,600 -- -- --
Company 2000 -- -- 17,500 -- 1,833 (2) --
Richard P. Gallegos 2002 117,420 32,500 -- -- -- 6,854 (5)
Senior Vice President 2001 114,000 28,000 -- -- -- 7,144
and President of the 2000 108,000 35,000 -- -- (3) -- (2) --
Bank
Jerry R. Spurlin 2002 86,400 20,000 61,413 (4) -- 15,618 (6)
Chief Financial 2001 83,883 25,000 -- -- -- 13,963
Officer 2000 79,683 24,000 -- -- -- 12,241
Leonard C. Scalzi 2002 73,500 30,000 -- -- -- 1,546 (9)
Senior Vice President 2001 70,000 50,000 -- -- -- --
2000 12,115 (7) 5,000 (7) -- 41,250 (8) 8,751 (2) --
- -------------------------------
(1) Represents directors fees.
(2) For Messrs. Nechero, Gallegos, and Scalzi represents awards of 1,833,
12,500, and 8,750 option shares, respectively, on November 16, 1998, April
28, 2000 and May 1, 2000. See "Other Benefits -- Stock Awards."
(3) In fiscal 1999, Mr. Gallegos was awarded 7,500 shares of Common Stock under
the Management Stock Bonus Plan ("MSBP") based upon the value of such stock
of $10.90 per share as of the date of such award. Such stock awards become
non-forfeitable at the rate of 1,500 shares per year commencing on November
16, 1999. Dividend rights associated with such stock are accrued and held
in arrears to be paid at the time that such stock becomes non-forfeitable.
At June 30, 2002, 3,000 shares with a market value of $45,000 at such date
(based on the closing price of Common Stock of $15.00 at such date) remain
unvested.
(4) Mr. Spurlin was awarded 4,250 shares under the MSBP based upon the value of
such stock of $14.45 per share as of the date of such award. Dividend
rights associated with the MSBP are accrued and held in arrears to be paid
at the that such stock becomes non-forfeitable. At June 30, 2002, 3,400
shares with a market value of $51,000 at such date (based on the closing
price of Common Stock of $15.00 at such date) remain unvested.
(5) Includes an allocation of 1,286 shares of Common Stock (at a cost basis of
$5.33) under the ESOP. As of June 30, 2002, the market value of the ESOP
shares was $19,290.
(6) Includes $2,266 of health insurance and an allocation of 2,505 shares of
Common Stock (at a cost basis of $5.33) under the ESOP. As of June 30,
2002, the market value of the ESOP shares was $37,575.
(7) Mr. Scalzi commenced employment on May 1, 2000.
(8) Represents awards of 3,750 shares of Common Stock under the MSBP based upon
the value of such stock of $11.00 per share as of the date of such award.
Such stock awards become non-forfeitable at the of 750 shares per year
commencing on May 1, 2001. Dividend rights associated with such stock are
accrued and held in arrears to be paid at the time that such stock becomes
non- fortfeitable. At June 30, 2002, 2,250 shares with a market value of
$33,750 at such date (based on the closing price of $15.00 at such date)
remain unvested.
(9) Includes an allocation of 290 shares of Common Stock (at a cost basis of
$5.33) under the ESOP. As of June 30, 2002, the market value of the ESOP
shares was $4,350.
-10-
Stock Awards. The following table sets forth information with respect to
previously awarded stock options to purchase the Common Stock granted to the
named executive officers and held by them as of June 30, 2002. The Company has
not granted to those named executive officers any stock appreciation rights.
Aggregated Options in Last Fiscal Year and FY-End Option
- ----------------------------------------------------------------------------------------------------------------------
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Options in-the-Money Options
on Value at FY-End at FY-End
Exercise Realized (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ----------------------------------------------------------------------------------------------------------------------
Richard P. Gallegos -- -- 7,500 / 5,000 30,750 / 20,500 (1)
James Nechero, Jr. -- -- 9,456 / -- 65,267 / -- (2)(3)
Jerry R. Spurlin 10,687 57,496 (4) -- / -- -- / --
Leonard C. Scalzi -- -- 3,500 / 5,250 14,000 / 121,000 (5)
- ---------------------------------
(1) Based upon an exercise price of $10.90 per share and a closing price of
$15.00 at June 30, 2002.
(2) Based upon an exercise price of $7.40 per share for 7,623 exercisable
shares and a closing price of $15.00 at June 30, 2002.
(3) Based upon an exercise price of $11.00 for 1,833 exercisable shares and a
closing price of $15.00 at June 30, 2002.
(4) Based upon an exercise price of $7.40 per share and exercise price of
$12.78.
(5) Based upon an exercise price of $11.00 per share and a closing price of
$15.00 at June 30, 2002.
Change in Control Agreement. The Bank entered into separate employment
agreements with Messrs Gallegos, Spurlin and Scalzi for a term of three years.
The agreements are terminable by the Bank at its sole discretion. If the Bank
terminates any of these three executives absent a change in control of the Bank,
such individuals will not be entitled to any severance payments. In the event of
the termination of employment in connection with any change in control of the
Bank or the Company, such individuals will each be paid a lump sum amount equal
to 200% times the base annual salary in effect as of the end of the calendar
year prior to the date of termination of employment. In the event of a change of
control as of June 30, 2002, Messrs. Gallegos, Spurlin and Scalzi would have
received approximately $228,000, $168,000, and $140,000, respectively.
- --------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
The Bank, like many financial institutions, grants loans to its officers
and directors. All loans by the Bank to its directors and executive officers are
subject to OTS regulations restricting loans and other transactions with
affiliated persons of the Company. Savings institutions are permitted to make
loans to executive officers, directors and principal shareholders ("insiders")
on preferential terms, provided the extension of credit is made pursuant to a
benefit or compensation program of the Bank that is widely available to
employees of the Bank or its affiliates and does not give preference to any
insider over other employees of the Bank or affiliate. As part of the Bank's
compensation program, the Bank sets the interest rate for loans approved for
full-time employees, officers and directors for personal, non-business purposes
at a rate which is 1% lower than the rate for non-employees for the same type of
loan, as long as the resulting interest rate is not lower than the Bank's cost
of funds. Such rates are only effective while such persons are employees,
officers, or directors of the Bank. Upon termination, resignation or retirement,
the rate reverts to the market rate that existed at the time the loan is
granted. All other loans to insiders have been made in the ordinary course of
business, and on substantially the same terms and conditions, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with the
-11-
Bank's other customers, and do not involve more than the normal risk of
collectibility, nor present other unfavorable features.
Set forth below is certain information relating to loans made on
preferential terms to executive officers and directors of the Company and the
Bank whose total aggregate loan balances on preferential terms exceeded $60,000
at any time during the year ended June 30, 2002.
Prevailing
Original Rate at Unpaid
Name of Officer or Date Loan Time of Employee Balance
Director Type of Loan Originated Amount ($) Loan (%) Rate (%) 06/30/02 ($)
- ------------------ ---------------- ---------- ---------- -------- ---------- ------------
James Nechero, Jr. Home Mortgage 03/12/98 112,000 6.63 5.63 105,271
Michael P. Mataya
Revocable Trust Home Mortgage 09/06/99 260,000 7.75 6.75 229,724
Michael P. Mataya Automobile 02/02/00 42,558 12.00 11.00 42,558
Michael P. Mataya Automobile 02/15/02 42,062 10.50 9.50 42,062
Jerry R. Spurlin Automobile 06/11/99 19,750 8.00 7.00 8,382
Jerry R. Spurlin Home Mortgage 08/07/98 129,000 6.63 5.63 102,621
Jerry R. Spurlin Home Equity Line
of Credit 4/23/97 17,000 7.75 6.75 12,410
William W. Head, Jr. Home Mortgage 10/18/99 132,000 7.75 6.75 123,850
William W. Head, Jr. Home Equity Line
of Credit 5/22/00 20,000 7.75 6.75 14,149
Charles L. Parker, Jr. Home Mortgage 03/07/01 400,000 7.38 6.38 380,694
- --------------------------------------------------------------------------------
PROPOSAL 2 -- RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
Neff + Ricci was the Company's independent public accountants for the
fiscal year ended June 30, 2002. The Board of Directors has approved the
selection of Neff + Ricci to be its accountants for the fiscal year ending June
30, 2003, subject to ratification by the Company's stockholders.
RATIFICATION OF THE APPOINTMENT OF THE ACCOUNTANTS REQUIRES THE APPROVAL 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 Neff + Ricci AS THE COMPANY'S ACCOUNTANTS FOR THE FISCAL
YEAR ENDING JUNE 30, 2003.
- --------------------------------------------------------------------------------
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, 221 West
Aztec Avenue, Gallup, New Mexico 87301, on or before May 29, 2003. Under the
Certificate of Incorporation, in order to be considered for possible action by
stockholders at the 2003 annual meeting of stockholders, stockholder proposals
not included in the Company's proxy statement
-12-
must be submitted to the Secretary of the Company, at the address set forth
above, no later than August 27, 2003.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
FORM 10-KSB
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
JUNE 30, 2002 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD
DATE UPON WRITTEN REQUEST TO THE SECRETARY, GFSB BANCORP, INC., 221 WEST AZTEC
AVENUE, GALLUP, NEW MEXICO 87301.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ George S. Perce
-------------------
George S. Perce
Secretary
Gallup, New Mexico
September 27, 2002
-13-
Appendix A
- ----------
- --------------------------------------------------------------------------------
GFSB BANCORP, INC.
221 WEST AZTEC AVENUE
GALLUP, NEW MEXICO 87301
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 28, 2002
- --------------------------------------------------------------------------------
The undersigned hereby appoints the Board of Directors of GFSB Bancorp,
Inc. (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 Gallup Federal Savings Bank's
Loan Center located at 214 West Aztec Avenue, Gallup, New Mexico, on October 28,
2002, at 10:00 a.m., local time and at any and all adjournments thereof, in the
following manner:
FOR WITHHELD
--- --------
1. To elect two directors as set forth
below (except as marked to the contrary): |_| |_|
Vernon I. Hamilton
James Nechero, Jr.
(Instruction: to withhold authority to vote
for any individual nominee, write that nominee's
name on the space provided below)
---------------------------------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
2. To ratify appointment of Neff +
Ricci LLP, as independent public
accountants of the Company for
the fiscal year ending June 30, 2003. |_| |_| |_|
The Board of Directors recommends a vote "FOR" the above listed
propositions.
- --------------------------------------------------------------------------------
THIS SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS SIGNED PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED. IF ANY
OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS SIGNED 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.
- --------------------------------------------------------------------------------
A-1
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect 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 written notification to 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 a Notice of Annual Meeting of Stockholders, a Proxy
Statement dated September 27, 2002 and the 2002 Annual Report.
Dated: , 2002
-----------------------------
Please check this box if you are planning on attending the Meeting. |_|
- ------------------------------------ ------------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ------------------------------------ ------------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this 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-PREPAID ENVELOPE.
- --------------------------------------------------------------------------------
A-2