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United States
Securities and Exchange Commission
Proxy Statement Pursuant to Section 14(a)
Under the Securities Exchange Act of 1934
(Amendment No.___)*
Filed by the Registrant: [_] 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(a)(2))
[ ] Definitive proxy statement
[X] Definitive additional materials [_] Soliciting material pursuant to Rule
14a-11(c) or Rule 14a-12
StateFed Financial Corporation
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(Name of Registrant as Specified in its Charter)
Krause Gentle Corporation
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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 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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[LOGO OF WAK]
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W.A. Krause
President & CEO
October 6, 2000
To: Holders of StateFed Financial Corporation Stock
Dear Fellow Stockholders:
Like you, Krause Gentle Corporation ("Krause Gentle") has invested in
shares of common stock of StateFed Financial Corporation ("StateFed"). At the
time of Krause Gentle's purchase of those shares it was believed that the value
of StateFed's shares would grow in value much like the shares of stock of other
savings and loans that went public during the 1990s. Unfortunately, this was not
to be the case.
The shares of stock of StateFed have underperformed in the market and all
of our investments in StateFed have been disappointing. Indeed, StateFed shares
have substantially underperformed when compared to the Dow Industrial Average,
the Standard and Poor's 500, the NASDAQ Bank Index and the SNL Thrift Index.
Krause Gentle has been concerned about its investment in StateFed shares
and we think you should be too.
In an effort to maximize shareholder value for all shareholders, Krause
Gentle has attempted to negotiate the purchase of StateFed but has met with
resistance from StateFed's management at all turns.
In May of 1999, Krause Gentle extended an offer to StateFed to purchase all
issued and outstanding shares of its stock for $13.75. At the time, StateFed
shares were trading in the market for between $10.00 to 11.00 per share, or 20%
to 27% below the offer made by Krause Gentle. This offer was rejected by
StateFed's management, which countered with a proposal to buy back Krause
Gentle's shares for $11.00 per share. Today, over a year after we made our
offer, StateFed trades at just $10.00.
Despite StateFed's management's encouraging words to shareholders about the
bright future for the value of StateFed shares, the market price for shares
continued to languish.
Not willing to accept StateFed's empty promises, Krause Gentle decided to
seek representation on StateFed's Board of Directors. In June of this year,
Krause Gentle submitted nominations for individuals to run against incumbent
StateFed directors who are up for reelection at StateFed's annual shareholder
meeting currently scheduled for October 25, 2000. Some three weeks after the
nominations were submitted, StateFed management rejected the nominations
claiming that the nominations did not comply with relevant provisions of
StateFed's bylaws. However, StateFed management refused to tell Krause Gentle
specifically why the nominations were infirm. Pressing on, Krause Gentle
resubmitted its nominations and received the exact same reply from StateFed
management, again with no explanation specifically why the nominations did not
comply with the bylaws.
Krause Gentle believed all along that its nominations were proper and
complied in every aspect with the bylaws and decided to go forth with its
nominations. Just recently, Krause Gentle was informed by StateFed that it would
no longer be challenging the validity of Krause Gentle's nominations. We feel
Krause Gentle Corporation
6400 Westown Parkway - West Des Moines, Iowa 50266-9857
this is indicative of the way the board of directors is unresponsive to the
needs of the shareholders, the true owners of the company. The company forced us
to hire a squadron of lawyers before the company agreed to allow shareholders
the opportunity to vote for an alternative slate of directors at this year's
annual meeting.
We have nominated Kyle J. Krause and Dennis N. Folden to serve on the board
of directors of the company in opposition to the incumbent directors. If
elected, our nominees will encourage the Board of Directors to actively seek and
evaluate acquisition proposals
Krause Gentle encourages you to attend the annual meeting of StateFed
shareholders and share any concerns that you may have about stockholder value of
StateFed, just as Krause Gentle intends to do.
Thank you for your attention to this matter and we look forward to seeing
you at the annual meeting.
Sincerely,
W.A. Krause
President, Krause Gentle Corporation
YOUR VOTE IS EXTREMELY IMPORTANT
1. Please SIGN, MARK, DATE and MAIL your BLUE proxy card in the enclosed
postage-paid envelope. If you wish to vote for our Nominees, you must submit
the enclosed BLUE proxy card and must NOT submit management's proxy card.
2. If you have already voted for the current Board, you have every legal right
to change your mind and vote FOR our Nominees on the BLUE proxy card. Only
your latest dated proxy card will count.
3. If your shares are held for you by a bank, brokerage firm or other nominee,
only your bank, broker or nominee can vote your shares and only after
receiving your instructions. Please sign, date and return the enclosed BLUE
proxy card in the postage-paid envelope provided or call your bank, broker
or nominee and instruct your representative to vote FOR our Nominees on the
BLUE proxy card.
4. Time is Short. Please vote today!
If you have any questions or need assistance in voting your shares or in
changing your vote, please contact Beacon Hill Partners, Inc. at the toll free
number listed below.
BEACON HILL PARTNERS, INC.
(212) 843-8500 (call Collect)
or Call toll-free (800) 755-5001
ATTENTION
StateFed
Financial Corporation Shareholders
[Artwork Appears Here]
Vote for a change ...
so we can work together and increase
the stock's value.
"We are asking for the opportunity to work together to increase shareholder
value. Today StateFed is trading below book value ... is this acceptable?"
Dennis N. Folden
Executive Vice President
Krause Gentle Corporation
"We want a fresh, new approach to the current StateFed style of banking. Our
main objective is to enhance this stock's value."
Kyle J. Krause
Chief Operating Officer
Krause Gentle Corporation
MAIL YOUR BLUE PROXY CARD TODAY!
YOUR VOTE is EXTREMELY IMPORTANT!
1. Please SIGN, MARK, DATE and MAIL the BLUE proxy card that you will receive
in the mail. If you wish to vote for our nominees, you must submit the BLUE
proxy card and must NOT submit management's proxy card.
2. If you have already voted for the current Board, you have every legal right
to change your mind and vote for our nominees on the BLUE proxy card. Only
your latest dated proxy card will count.
3. If your shares are held for you by a bank, brokerage firm or other nominee,
only your bank, broker or nominee can vote your shares and only after
receiving your instructions. Please sign, date and return the BLUE proxy
card or call your bank, broker or nominee and instruct your representative
to vote for our nominees on the BLUE proxy card.
4. Time is short! Mail your BLUE proxy card by October 20, 2000 to ensure
delivery by October 25th. Please vote today!!
If you have any questions or need assistance in voting your shares or in
changing your vote, please contact Beacon Hill Partners, Inc. at the toll free
number listed below.
BEACON HILL PARTNERS, INC.
(212) 843-8500 (call collect)
(800) 755-5001
[Artwork of Proxy Card]