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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of 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(e)(2)).
[X] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to Section 240.14a-12
Umbrella 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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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
April 28, 2003
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of Umbrella Bancorp, Inc. (the "Company"), the holding company
for UmbrellaBank, fsb (the "Savings Bank"), Summit, Illinois, which will be held
on May 28, 2003, at 2:00 p.m., at 222 West Huron Street, Suite 500, Chicago,
Illinois 60610.
The attached Notice of the Annual Meeting and proxy statement describe the
formal business to be transacted at the Annual Meeting. Directors and officers
of the Company as well as a representative of Crowe Chizek and Company LLC, the
Company's independent auditors, will be present at the Annual Meeting to respond
to any questions from our stockholders.
The scheduled business of the Annual Meeting shall be the election of two
directors and the ratification of the appointment of Crowe Chizek and Company
LLC as independent auditors for the fiscal year ending December 31, 2003.
The Board of Directors of the Company has determined that the matters to be
considered at the Annual Meeting are in the best interests of the Company and
its stockholders. For the reasons set forth in the proxy statement, the Board of
Directors unanimously recommends a vote "FOR" the matters to be considered.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. YOUR COOPERATION IS
APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK MUST BE REPRESENTED, EITHER IN
PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR THE CONDUCT OF BUSINESS.
On behalf of the Board of Directors and all of the employees of the Company
and its subsidiaries, I wish to thank you for your continued support. We
appreciate your interest.
Respectfully submitted,
John G. Yedinak
Chairman of the Board of Directors
UMBRELLA BANCORP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 28, 2003
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Umbrella Bancorp, Inc. (the "Company") will be held at 2:00
p.m. Central Time on May 28, 2003 at 222 West Huron Street, Suite 500, Chicago,
Illinois 60610.
The Annual Meeting is for the purpose of considering and voting upon
the following matters:
1. The election of two directors for a term of three years or until a
successor is elected and qualified;
2. The ratification of the appointment of Crowe Chizek and Company LLC
as independent auditors for the fiscal year ending December 31, 2003; and
3. Such other matters as may properly come before the Annual Meeting
or any adjournments thereof.
The Board of Directors has established April 23, 2003 as the record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting and any adjournments thereof. Only record holders of the
common stock of the Company as of the close of business on that date will be
entitled to vote at the Annual Meeting or any adjournments thereof. In the event
there are not sufficient votes for a quorum or to approve or ratify any of the
foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be
adjourned in order to permit further solicitation of proxies by the Company. A
list of stockholders entitled to vote at the Annual Meeting will be available at
the Company's administrative offices located at 5818 South Archer Road, Summit,
Illinois, 60501, for a period of ten days prior to the Annual Meeting and will
also be available at the meeting itself.
By Order of the Board of Directors
Frances M. Pitts
Secretary
Summit, Illinois
April 28, 2003
UMBRELLA BANCORP, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 2003
SOLICITATION AND VOTING OF PROXIES
This proxy statement is being furnished to stockholders of Umbrella
Bancorp, Inc. ("Umbrella Bancorp" or the "Company") in connection with the
solicitation by the Board of Directors of the Company (the "Board of Directors"
or "Board") of proxies to be used at the Annual Meeting of Stockholders (the
"Annual Meeting") to be held on May 28, 2003, at 2:00 p.m., at 222 West Huron
Street, Suite 500, Chicago, Illinois 60610 and at any adjournments thereof. The
2002 Annual Report to Stockholders, including the consolidated financial
statements for the fiscal year ended December 31, 2002, accompanies this proxy
statement, which is first being mailed to stockholders on or about April 28,
2003.
Regardless of the number of shares of common stock owned, it is
important that record holders of a majority of the shares be represented by
proxy or present in person at the Annual Meeting. Stockholders are requested to
vote by completing the enclosed proxy and returning it signed and dated in the
enclosed postage-paid envelope. Stockholders are urged to indicate their vote in
the spaces provided on the proxy. PROXIES SOLICITED BY THE BOARD OF DIRECTORS OF
UMBRELLA BANCORP WILL BE VOTED IN ACCORDANCE WITH THE DIRECTIONS GIVEN THEREIN.
WHERE NO INSTRUCTIONS ARE INDICATED, SIGNED PROXIES WILL BE VOTED "FOR" THE
ELECTION OF THE NOMINEES FOR DIRECTOR NAMED IN PROPOSAL 1 OF THIS PROXY
STATEMENT, AND "FOR" THE RATIFICATION OF THE INDEPENDENT AUDITORS AS SET FORTH
IN PROPOSAL 2 OF THIS PROXY STATEMENT.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. EXECUTION OF A PROXY,
HOWEVER, CONFERS ON THE DESIGNATED PROXY HOLDERS DISCRETIONARY AUTHORITY TO VOTE
THE SHARES IN ACCORDANCE WITH THEIR BEST JUDGMENT ON SUCH OTHER BUSINESS, IF
ANY, THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS
THEREOF.
A proxy may be revoked at any time prior to its exercise by the filing
of a written notice of revocation with the Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. However, if you are a
stockholder whose shares are not registered in your own name, you will need
appropriate documentation from your record holder to vote personally at the
Annual Meeting.
The cost of solicitation of proxies on behalf of management will be
borne by the Company. In addition to the solicitation of proxies by mail,
proxies may also be solicited personally or by telephone by directors, officers
and regular employees of the Company and UmbrellaBank, fsb (the "Savings Bank")
without additional compensation therefor. Umbrella Bancorp will also request
persons, firms and corporations holding shares in their names, or in the name of
their nominees, which are beneficially owned by others, to send proxy materials
to and obtain proxies from such beneficial owners, and will reimburse such
holders for their reasonable expenses in doing so.
VOTING SECURITIES
The securities which may be voted at the Annual Meeting consist of
shares of common stock of Umbrella Bancorp ("Common Stock"), with each share
entitling its owner to one vote on all matters to be voted on at the Annual
Meeting except as described below. There is no cumulative voting for the
election of directors.
The close of business on April 23, 2003, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Annual Meeting
and any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 1,845,720 shares.
The presence, in person or by proxy, of the holders of at least a
majority of the total number of shares of Common Stock entitled to vote is
necessary to constitute a quorum at the Annual Meeting. In the event there are
not sufficient votes for a quorum or to approve or ratify any proposal at the
time of the Annual Meeting, the Annual 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 shareholder to vote "FOR" the election of the nominees
proposed by the Board, or to "WITHHOLD VOTE" for the nominees being proposed.
Under Maryland law and the Company's Certificate of Incorporation, directors are
elected by a plurality of shares voted, without regard to either (i) broker
non-votes, or (ii) proxies as to which authority to vote for one or more of the
nominees being proposed is withheld.
As to ratification for the appointment of Crowe Chizek and Company LLC
as independent auditors of the Company, as set forth in Proposal 2, and all
other matters that may properly come before the Annual Meeting, by checking the
appropriate box, you may: (i) vote "FOR" the item; (ii) vote "AGAINST" the item;
or (iii) "ABSTAIN" with respect to the item. Under the Company's Bylaws, unless
otherwise required by law, all such matters shall be determined by a majority of
the votes cast, without regard to either (a) broker non-votes, or (b) proxies
marked "ABSTAIN" as to that matter.
Proxies solicited hereby will be returned to the Company, and will be
tabulated by inspectors of election designated by the Board, who will neither be
employed by nor be directors of the Company or any of its affiliates.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as to those persons
believed by management to be beneficial owners of more than 5% of the
outstanding shares of Common Stock on the Record Date, as disclosed in certain
reports regarding such ownership filed with the Company and with the Securities
and Exchange Commission (the "SEC"), in accordance with Sections 13(d) or 13(g)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") by such
persons and groups. Other than those persons listed below, the Company is not
aware of any person or group, as such term is defined in the Exchange Act, that
owns more than 5% of the Common Stock as of the Record Date.
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
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Common Stock John G. Yedinak 831,311 (1) 44.65%
804 Kenmare
Burr Ridge, Illinois 60521
Common Stock Sergio Martinucci 368,381 (1) 19.72%
5440 N. Paris
Chicago, Illinois 60656
Common Stock George P. Yedinak 197,707 (2) 10.69%
21 East Goethe, No. 1A
Chicago, Illinois 60610
Common Stock Frances M. Pitts 140,953 (1) 7.55%
6624 Greene Road
Woodridge, Illinois 60517
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(1) Includes shares set forth below under "Proposal 1 - Information with
Respect to the Nominees, Continuing Directors and Executive Officers."
(2) Includes an aggregate of 185,837 shares held under irrevocable Grantor
Trusts previously reported by Mr. John G. Yedinak and 3,000 shares subject
to options which are currently exercisable.
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
Directors are elected for staggered terms of three years each, with a
term of office of only one of the three classes of directors expiring each year.
Directors serve until their successors are elected and qualified.
The nominees proposed for election at the Annual Meeting are Arthur E.
Byrnes and Frances M. Pitts. Mr. Byrnes and Ms. Pitts are directors of the
Company and the Savings Bank. Neither Mr. Byrnes nor Ms. Pitts is being proposed
for election pursuant to any agreement or understanding between any person and
the Company.
In the event that the nominee is unable to serve or declines to serve
for any reason, it is intended that proxies will be voted for the election of
such other person as may be designated by the present Board of Directors. The
Board of Directors has no reason to believe that either Mr. Byrnes or Ms. Pitts
will be unable or unwilling to serve. UNLESS AUTHORITY TO VOTE FOR A DIRECTOR IS
WITHHELD, IT IS INTENDED THAT THE SHARES REPRESENTED BY THE ENCLOSED PROXY IF
EXECUTED AND RETURNED WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES PROPOSED
BY THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
NOMINEES NAMED IN PROPOSAL 1.
INFORMATION WITH RESPECT TO THE NOMINEES, CONTINUING DIRECTORS AND CERTAIN
EXECUTIVE OFFICERS:
The following table sets forth, as of the Record Date, the names of the
nominees and continuing directors and the named Executive Officers, as defined
below, as well as their ages; a brief description of their recent business
experience, including present occupations and employment; certain directorships
held by each; and the year in which each first became a director of the Company
or Savings Bank and the year in which their term (or in the case of the
nominees, proposed terms) as director of the Company expires. This table also
sets forth the amount of Common Stock and the percent thereof beneficially owned
by each director and the named Executive Officers and all directors and
executive officers as a group as of the Record Date.
AMOUNT
NAME AND PRINCIPAL EXPIRATION AND NATURE OWNERSHIP
OCCUPATION AT PRESENT DIRECTOR OF TERM OF BENEFICIAL AS PERCENT
AND FOR PAST FIVE YEARS AGE SINCE(1)(2) AS DIRECTOR OWNERSHIP(3) OF CLASS
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NOMINEES:
ARTHUR E. BYRNES 58 1997 2003 62,000 (4) 3.35%
Senior Managing Director,
Deltec Asset Management, LLC
FRANCES M. PITTS 44 1992 2003 140,953 (5) 7.55%
Executive Vice President and
Secretary of the Company; Executive
Vice President, General Counsel and
Secretary of the Savings Bank
CONTINUING DIRECTORS:
JOHN G. YEDINAK 53 1987 2004 831,311 (5) 44.65%
Chairman of the Board, President
and Chief Executive Officer of
the Company, Vice Chairman and
Chief Executive Officer of the
Savings Bank since 1987
SERGIO MARTINUCCI 68 1987 2004 368,381 (4) 19.72%
Vice President of the Company,
and Chairman of the Board of the
Savings Bank since 1987, Senior
Vice-President of Coldwell Banker
Residential, a real estate
brokerage firm.
DONALD G. WITTMER 67 1992 2005 30,004 (4) 1.60%
President and owner of Wittmer
Financial Services, Ltd.
DENNIS G. CARROLL 53 1991 2005 36,412 (4) 1.96%
CEO and owner of Carroll
Brothers Real Estate Appraisals,
Detective, Chicago Police Department
Stock ownership of all directors and
executive officers as a group
(9 persons) -- -- -- 1,690,865 (6) 86.00%
- ----------------------------
(1) Includes years of service as a director of the Savings Bank.
(2) All directors are currently directors of the Savings Bank.
(3) Each person or relative of such person whose shares are included herein,
exercises sole (or shared with spouse, relative or affiliate) voting or
dispositive power as to the shares reported.
(4) Includes 26,000, 16,000, 22,000, and 2,000 shares subject to options which
are currently exercisable and which may be acquired by Mr. Wittmer, Mr.
Carroll, Mr. Martinucci, Mr. Byrnes, respectively.
(5) Includes 16,200 and 20,200 shares subject to options which are currently
exercisable and which may be acquired by Mr. Yedinak and Ms. Pitts,
respectively.
(6) Includes 120,400 shares subject to options which are currently exercisable.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers (as
defined in regulations promulgated by the SEC thereunder) and directors, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in ownership with
the SEC. Officers, directors and greater than ten percent stockholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on a review of copies of such reports of ownership
furnished to the Company, or written representations that no forms were
necessary, the Company believes that during the past fiscal year all filing
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were complied with.
MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD
The Board of Directors met eleven times during the year ended December
31, 2002. No director described in this proxy attended fewer than 75% of the
total number of Board and Committee meetings held during this period. The Board
of Directors of the Company maintains committees, the nature and composition of
which are described below:
Executive Committee. The Executive Committee of the Company consists of
Messrs. Yedinak, Wittmer, Carroll and Martinucci. This committee exercises the
authority of the Board of Directors with respect to matters requiring action
between meetings of the Board of Directors. Any actions by this committee
require subsequent ratification by the Board of Directors at the next regular
meeting. This committee meets as needed between regular meetings of the Board.
The Executive Committee met informally 10 times in 2002.
Joint Oversight Committee of the Company and the Savings Bank. In June
2002, the Company and the Savings Bank established a Joint Oversight Committee
that is comprised of Mr. Wittmer, Mr. Byrnes, Mr. Martinucci and Mr. Carroll. It
is the mission of the Joint Oversight Committee to increase the outside
Directors' involvement in the strategic and long range planning activities of
the Company and the Savings Bank, and to further assist senior management of
both the Company and the Savings Bank in ensuring that appropriate financial and
operational controls, consistent with prudent management and regulatory
compliance, are in place with regard to existing and any significant new
activities that are undertaken. The Joint Oversight Committee also serves in an
advisory capacity to senior management of both the Company and the Savings Bank
and provides an additional forum for an independent review and oversight of
business plans, revised initiatives and/or programs. The Joint Oversight
Committee met 10 times in 2002.
Compensation Committee. The Compensation Committee of the Company
consists of Mr. Martinucci, Mr. Wittmer, Mr. Byrnes and Mr. Carroll. The Board
of Directors establishes compensation and benefits for each of the executive
officers of the Company and the Savings Bank. The Committee met 1 time in 2002.
Nominating Committee. The Company's Nominating Committee for the 2003
Annual Meeting of Stockholders consisted of the entire Board of Directors. The
Nominating Committee considers and recommends the nominees for director to stand
for election at the Company's annual meeting of stockholders. The Company's
Bylaws provide for stockholder nominations of directors. These provisions
require such nominations to be made pursuant to timely notice in writing to the
Secretary of the Company. The stockholder's notice of nomination must contain
all information relating to the nominee which is required to be disclosed by the
Company's Bylaws and by the Exchange Act. The Nominating Committee last met on
February 25, 2003.
Audit Committee. The Audit Committee of the Company is comprised of
only outside directors, and currently consists of Messrs. Wittmer, Byrnes and
Carroll. The Audit Committee is responsible for recommending independent
auditors, reviewing the audit plan, the audit report and management letter and
performing such other duties as the Board of Directors may from time to time
prescribe. The Audit Committee met 8 times in 2002.
AUDIT COMMITTEE REPORT
The incorporation by reference of this proxy statement into any document filed
with the Securities and Exchange Commission by Umbrella Bancorp shall not be
deemed to include the following report and related information unless such
report is specifically stated to be incorporated by reference to such documents.
THE AUDIT COMMITTEE ASSISTS THE BOARD IN CARRYING OUT ITS OVERSIGHT
RESPONSIBILITIES FOR THE COMPANY'S FINANCIAL REPORTING PROCESS, AUDIT PROCESS
AND INTERNAL CONTROLS. IN FULFILLMENT OF THE REQUIREMENTS OF THE SARBANES-OXLEY
ACT OF 2002, RELATING TO CONDUCT AND FUNCTION OF PUBLIC COMPANY AUDIT
COMMITTEES, ON OCTOBER 30, 2002 THE BOARD OF DIRECTORS ADOPTED THE AUDIT
COMMITTEE CHARTER FOR UMBRELLA BANCORP, INC., A COPY OF WHICH IS APPENDED AS
EXHIBIT `A' TO THIS PROXY STATEMENT. THE AUDIT COMMITTEE ALSO REVIEWS THE
AUDITED FINANCIAL STATEMENTS AND RECOMMENDS TO THE BOARD THAT THEY BE INCLUDED
IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K, ASSESSES THE EFFECTIVENESS OF
INTERNAL CONTROLS, EVALUATES THE QUALIFICATIONS OF AND OVERSEES THE PERFORMANCE
BY INTERNAL AND EXTERNAL AUDITORS, AND ANALYZES THE COMPANY'S COMPLIANCE WITH
LEGAL AND REGULATORY REQUIREMENTS. THE COMMITTEE IS COMPRISED SOLELY OF
INDEPENDENT DIRECTORS, AS DEFINED BY THE NASDAQ MARKETPLACE RULES, WITH AT LEAST
ONE MEMBER OF THE COMMITTEE CONSIDERED TO BE A "FINANCIAL EXPERT" AS DEFINED
UNDER THE RULES OF THE SEC.
THE AUDIT COMMITTEE HAS REVIEWED AND DISCUSSED THE COMPANY'S AUDITED
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 2002 WITH UMBRELLA
BANCORP'S MANAGEMENT AND CROWE CHIZEK AND COMPANY LLC ("CROWE CHIZEK"), THE
COMPANY'S INDEPENDENT AUDITORS. THE COMMITTEE HAS ALSO DISCUSSED WITH CROWE
CHIZEK THE MATTERS REQUIRED TO BE DISCUSSED BY SAS 61 (CODIFICATION FOR
STATEMENTS ON AUDITING STANDARDS) AS WELL AS HAVING RECEIVED AND DISCUSSED THE
WRITTEN DISCLOSURES AND THE LETTER FROM CROWE CHIZEK REQUIRED BY THE
INDEPENDENCE STANDARDS BOARD NO. 1 (INDEPENDENCE DISCUSSIONS WITH AUDIT
COMMITTEES). THE AUDIT COMMITTEE HAS EVALUATED THE RELATIONSHIP OF THE COMPANY'S
INDEPENDENT AUDITOR WITH
THE COMPANY INCLUDING AUDIT FEES, FEES FOR FINANCIAL INFORMATION SYSTEM DESIGN
AND IMPLEMENTATION AND FEES FOR OTHER SERVICES RENDERED. THE AUDIT COMMITTEE
DOES NOT BELIEVE THAT THE RENDERING OF THESE SERVICES BY CROWE CHIZEK IS
INCOMPATIBLE WITH MAINTAINING CROWE CHIZEK'S INDEPENDENCE. BASED ON THE REVIEW
AND DISCUSSION WITH MANAGEMENT AND CROWE CHIZEK, THE COMMITTEE RECOMMENDED TO
THE BOARD THAT THE AUDITED FINANCIAL STATEMENTS BE INCLUDED IN THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDING DECEMBER 31, 2002 FOR
FILING WITH THE SECURITIES AND EXCHANGE COMMISSION.
Submitted by the members of the Audit Committee of the Board of Directors:
Donald G. Wittmer, (Chairman), Dennis G. Carroll and Arthur Byrnes
ACCOUNTANT FEES
Audit Fees
The Company's independent auditor during 2002 was Crowe Chizek and
Company LLC. The aggregate fees and expenses billed by Crowe Chizek in
connection with the audit of the Company's annual financial statements as of and
for the year ended December 31, 2002 and for the required review of Umbrella
Bancorp's financial information included in its Form 10-Q filings for the year
2002 was $155,700.
Financial Information Systems Design and Implementation Fees
There were no fees or expenses billed by Crowe Chizek for services
relating to design or implementation of financial information systems for the
year ended December 31, 2002.
All Other Fees
The aggregate fees and expenses billed by Crowe Chizek for all other
services rendered during 2002 were $221,901. These services consisted of the
following:
Assistance to management in preparation of the Form 10-K $18,600
Loan Management Services, including review $11,200
Tax return preparation and tax planning services $31,200
Employee benefit plan services $8,357
Other services, including internal audit, network security testing,
marketing assistance and website development $152,544
--------
Total - All Fees $377,601
========
DIRECTORS' COMPENSATION
Directors' Fees. The Company and Savings Bank together pay each
director a total quarterly retainer of $3,750 for services rendered to the
Company and the Savings Bank and a fee of $1,000 ($500 if such director's
attendance is via teleconference) for each day of meetings of the Boards of
Directors attended. Directors are also compensated for service to and attendance
at meetings of the committees of the Board on which they serve at the rate of
$400 ($475 for the Chairman) for each committee meeting attended, with a per
diem cap of $1,000/day. Directors are also compensated, at the
rate of $1,000/day, for work on projects and consulting review that may arise in
addition to regular duties as a director. Umbrella Bancorp and the Savings Bank
share, pro rata, reimbursement to each director for ordinary and necessary
travel expenses related to such director's attendance at meetings of the Boards,
committee meetings and business travel. Nonemployee directors are also eligible
for stock option grants under the Stock Option Plan.
EXECUTIVE COMPENSATION
The report of the Compensation Committee and the stock performance
graph shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933 (the "Securities Act") or the Exchange Act, except as to
the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. Under rules
established by the SEC, the Company is required to provide certain data and
information in regard to the compensation and benefits provided to the Company's
Chief Executive Officer and the other executive officers of the Company. The
disclosure requirements for the Chief Executive Officer and other executive
officers include the use of tables and a report explaining the rationale and
considerations that led to fundamental compensation decisions affecting those
individuals. In fulfillment of this requirement the Compensation Committee for
the Company (the "Committee"), has prepared the following report for inclusion
in this proxy statement:
The Company's Compensation Committee has responsibility for reviewing
the compensation policies and plans for the Company and its subsidiaries. The
policies and plans established are designed to enhance both short-term and
long-term operational performance of the Company and to build stockholder value
through appreciation in the price of the Company's Common Stock.
The Company provides certain benefits to all officers and employees who
meet certain minimum requirements, regardless of position. These benefits
include health insurance, vacation allowances, and life and long-term disability
insurance. Officers are also provided the opportunity to participate in the
Company's 401(k) Plan and are eligible for awards of Options under the Company's
1998 Incentive Stock Option Plan. In past years, officers have also been paid
discretionary bonuses based on the successful operations of the Company and
subsidiaries.
One of the Committee's primary objectives is to develop and maintain
compensation plans which provide the Company with the means of attracting and
retaining high quality executives at competitive compensation levels and
implement compensation plans which seek to motivate executives to perform to the
fullest extent of their abilities by aligning the financial interests of the
Company's senior management with those of its stockholders, thereby enhancing
stockholder value. The Committee considers the level of compensation paid to
executive officers of companies with operations and affiliates similar to that
of the Company's, and reviews market trends in annual increases awarded to
senior management. Adjustments to base salaries are made annually for all senior
officers and employees of the Company, and have averaged 4% annually in the last
three years, based on the Committee's consideration of comparable industry and
market place averages, and assessment of the individual contributions of
executives to the Company's overall operational success and performance.
Two of the named Executive Officers of the Company, President and Chief
Executive Officer
John G. Yedinak and Executive Vice President, Secretary and Corporate Counsel
Frances M. Pitts, remain subject to the unexpired term of Employment Agreements
previously provided by the Company as described in this proxy statement. In
addition to establishing the mechanism for annual adjustment to base salary
compensation for all of the executives, these Employment Agreements also provide
for the payment of Profit Sharing bonuses, as defined in the Employment
Agreements, based on the results of operations of the Company for Mr. Yedinak
and Ms. Pitts. Profit Sharing bonuses have been paid under the terms of each of
the Employment Agreements in four of the last five years. No such bonuses were
paid in 2002.
The compensation of the Company's Chief Executive Officer is set based
on the method described above. For 2002, Mr. Yedinak earned approximately
$430,000 in salary and bonus. Although few, if any, financial services holding
companies' operations mirror that of the Company's, the Committee believes that,
given the level of his responsibilities and the diverse nature of the Company's
operations, Mr. Yedinak's 2002 compensation falls within the midrange of similar
companies.
Section 162(m) of the Internal Revenue limits tax deductions for
executive compensation to $1 million. There are several exemptions to Section
162(m), including one for qualified performance-based compensation. To be
qualified, performance-based compensation must meet various requirements,
including stockholder approval. The Committee intends to consider annually
whether it should adopt a policy regarding 162(m) and to date has concluded that
it is not appropriate to do so. One reason for this conclusion is that, assuming
current compensation policies remain in place, Section 162(m) will not be
applicable in the near term to any executive's compensation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDE PARTICIPATION
Sergio Martinucci, Vice President of the Company and Chairman of the
Board of the Savings Bank, is a member of the Compensation Committee. Mr.
Martinucci does not participate in the Committee's consideration of his own
compensation. No other member of the Committee is a current or former officer or
employee of the Committee. No member of the Committee or executive officer of
the Company has a relationship that would constitute an interlocking
relationship with executive officers or directors of another entity.
Submitted by the members of the Compensation Committee of the Board of
Directors: Sergio Martinucci, Donald G. Wittmer, Arthur E. Byrnes and Dennis G.
Carroll.
STOCK PERFORMANCE GRAPH
The graph on the following page draws a five-year comparison of stockholder
return on the Company's Common Stock based on the market price of the Common
Stock assuming reinvestment of dividends, with the cumulative total returns of
companies on the Nasdaq Stock Market Index and the SNL Midwest Thrift Index
supplied by SNL Securities, LC.
[UMBRELLA BANCORP, INC. TOTAL RETURN PERFORMANCE GRAPH]
PERIOD ENDING
-----------------------------------------------------------------------------------
INDEX 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
---------- ---------- ---------- ---------- ---------- ---------
Umbrella Bancorp, Incorporated 100.00 113.73 156.04 184.73 128.20 49.03
NASDAQ - Total US* 100.00 140.99 261.48 157.42 124.89 86.33
SNL Midwest Thrift Index 100.00 92.39 76.81 103.59 119.14 153.58
SNL FINANCIAL LC(C) 2003
(434) 977-1600
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table shows for the fiscal
years ending December 31, 2000, 2001 and 2002, the cash compensation paid by the
Company and its subsidiaries, as well as certain other compensation paid or
accrued for those years, to the Chief Executive Officer and to the other
executive officers of the Company who received total salary and bonus in excess
of $100,000 in 2002 (the "Named Executive Officers").
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------ -------------------------------------------------------
AWARDS PAYOUTS
-------------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDER- ALL
COMPEN- STOCK LYING LTIP OTHER
NAME AND SALARY BONUS SATION AWARD(S) OPTIONS/ PAYOUTS COMPEN-
PRINCIPAL OFFICER YEAR ($)(1)(2) ($)(3) ($)(4) ($) SARS(#) ($)(5) SATION($)
- ----------------- ---- --------- ------ ------ ---------- ---------- ------- ---------
JOHN G. YEDINAK 2002 $431,122 $ -- $ -- $ -- -- None $ 5,500(6)
President and 2001 $395,938 $161,919 $ -- $ -- -- None $11,857
Chief Executive 2000 $391,453 $ 84,591 $ -- $ -- 27,000 None $23,900
Officer of the
Company and
President and
Chief Executive
Officer of the
Savings Bank
FRANCES M. PITTS 2002 $204,923 $ -- $ -- $ -- -- None $ 5,452(6)
Executive Vice 2001 $171,433 $ 84,064 $ -- $ -- -- None $11,641
President and 2000 $159,160 $ 50,260 $ -- $ -- 27,000 None $17,147
Secretary of the
Company and
Executive Vice
President,
General Counsel
and Secretary of
the Savings Bank
COLLEEN A. KITCH 2002 $189,000 $ -- $ -- $ -- -- None $ 8,074(6)
Executive Vice 2001 $154,784 $ 23,739 $ -- $ -- -- None $10,915
President of the 2000 $132,988 $ 24,100 $ -- $ -- 25,000 None $ 8,388
Company and
President of the
Savings Bank
FRANK J. SHINNICK 2002 $100,961 $ -- $ -- $ -- -- None $ --
Chief Financial
Officer of the
Company and the
Savings Bank (7)
- ----------------
(1) Includes amounts of salary deferred pursuant to the Savings Bank 401(k)
Plan. Under the Plan, participants may elect to have up to the lesser of
12% or $11,000 of annual compensation deferred for the Plan year, with an
additional amount of up to $2,000 for participants over 55 years in age.
(2) Includes directors' fees received from the Company and the Savings Bank
with respect to Mr. Yedinak and Ms. Pitts. Includes discretionary bonus in
lieu of 2002 salary increase in the amount of $6,952, $4,653, $7,000 and
$5,769 for each of Mr. Yedinak, Ms. Pitts, Ms. Kitch and Mr. Shinnick,
respectively.
(3) Includes Profit Sharing bonus amounts as described under the "Employment
Agreements" with respect to Mr. Yedinak and Ms. Pitts, and a Performance
bonus paid in connection with Company operations with respect to Ms. Kitch.
Profit Sharing and Performance bonuses were based upon the financial
results of the Company for 2000 and 2001. Profit Sharing and Performance
bonuses were not paid in 2002.
(4) For 2000, 2001 and 2002 there were no (a) perquisites over the lesser of
$50,000 or 10% of the individual's total salary and bonus for the years;
(b) payments of above market preferential earnings on deferred
compensation; (c) payments of earnings with respect to long term incentive
plans prior to settlement or maturation; (d) tax payment reimbursements; or
(e) preferential discounts on stock.
(5) The Company does not maintain a long-term incentive plan and, therefore,
there were no payouts or awards under such plan.
(6) Includes $5,500 contributed by the Savings Bank pursuant to the 401(k) Plan
for the accounts of each of Mr. Yedinak and Ms. Kitch, respectively, and
$5,452 contributed for the account of Ms. Pitts, for the year ended
December 31, 2002. Excludes $75,409 and $15,792 which represents the market
value of premiums paid on supplemental polices covering life (with proceeds
to be paid to the Company and the Bank) and long-term disability for Mr.
Yedinak and Ms. Pitts for the year ended December 31, 2002. Includes $2,574
for market value of final vesting of allocations of shares made under the
Employee Stock Ownership Plan in 2002 to Ms. Kitch.
(7) Mr. Shinnick accepted his position as Chief Financial Officer of the
Company and the Savings Bank effective May 6, 2002.
EMPLOYMENT AGREEMENTS. Effective November 1, 1999, the Savings Bank
entered into amended and restated employment agreements ("Employment
Agreements") with each of Mr. Yedinak and Ms. Pitts. The Company executed a
similar Agreement with Ms. Kitch, also effective November 1, 1999. The Savings
Bank Employment Agreements with Mr. Yedinak and Ms. Pitts, and the Company
Employment Agreement with Ms. Kitch, provide for a three year term which, after
conducting a performance evaluation of the respective officers, the respective
Board of Directors was permitted to extend for an additional year, commencing on
the first anniversary date and continuing each anniversary date thereafter, so
that the remaining term shall be three years. The Savings Bank Employment
Agreements for Mr. Yedinak and Ms. Pitts, and the Company Employment Agreement
with Ms. Kitch, were allowed to expire in November, 2002.
The Company also entered into amended and restated employment
agreements ("Company Agreements") with each of Mr. Yedinak and Ms. Pitts (the
"Executive Officers"), effective November 1, 1999. The Company Agreements
provide for a five year term that shall be extended on an annual basis, unless
written notice of non-renewal is given by the Board of the Company. On November
26, 2002, notice of non-renewal was given by the Board to each of Mr. Yedinak
and Ms. Pitts. The Company Agreements will expire on November 26, 2007.
Under the Company Agreements with the Executive Officers, base
compensation of $201,377 and with respect to Mr. Yedinak, and $39,645 with
respect to Ms. Pitts, will be paid by the Company. The salary amounts under the
Company Agreements may be increased at the discretion of the Board of Directors,
or authorized committee of the Board, but may not be decreased during the term
of the Company Agreements without the prior written consent of the Executive
Officers. In addition to the base compensation provided under the Company
Agreements, an amount equal to 2% for Mr. Yedinak and 1% for Ms. Pitts of gross
profits (the `Profit Sharing bonus') of each of the Company and Savings Bank
shall be credited as additional compensation to be paid on the earlier of
termination for other than cause, death or disability, the expiration of the
Company Agreements, or annually on the original anniversary date of the Company
Agreements. The deferred amounts will be forfeited if the Executive Officer is
terminated prior to the anniversary date of the Company Agreements for any
reason other than death or disability. The Company Agreements also provide for,
among other things, participation in stock benefits plans and other fringe
benefits applicable to executive personnel. The Company Agreements provide for
termination by the Savings Bank or the Company for cause, as defined in the
Company Agreements, at any time.
In the event the Company chooses to terminate the Executive Officers'
employment for reasons other than for cause, or in the event of the Executive
Officer's resignation from the Savings Bank and (or) the Company upon: (i)
termination of employment other than for disability, retirement or cause or (ii)
the Executive Officer's resignation upon: (a) a failure to re-elect the
Executive Officer for his current offices or failure to nominate or re-nominate
the Executive Officer to the Board; (b) a material denotive change in the
Executive Officer's functions, duties or responsibilities; (c) a relocation of
the Executive Officer's principal place of employment by more than 30 miles; (d)
a material reduction in benefits or perquisites being provided to the Executive
Officer under the Company Agreements; (e) liquidation or dissolution of the
Savings Bank or the Company; or (f) a breach of the Company Agreements by the
Savings Bank or the Company, the Executive Officer or, in the event of death,
his beneficiary would be entitled, subject to the appropriate regulatory
approval, to receive an amount equal to the base salary increased annually by
four percent (4.0%) due to the Executive Officer for the remaining term of the
Company Agreements and the contributions that would have been made on the
Executive Officer's behalf to any employee benefit plans of the Savings Bank or
the Company during
the remaining term of the Company Agreements. The Savings Bank and the Company
would also, subject to the appropriate regulatory approval, continue to pay for
the Executive Officer's life, health and disability coverage for the remaining
term of the Company Agreements.
Under the Company Agreements, if voluntary or involuntary termination
follows a change in control of (as applicable) the Savings Bank or the Company
(as defined in the Company Agreements), the Executive Officer, in the event of
his/her death, his/her beneficiary would, subject to the appropriate regulatory
approval, be entitled under the Company Agreements to a severance payment equal
to five times the average of the three preceding taxable years' annual
compensation. The Company would, subject to the appropriate regulatory approval,
also continue the life, health, and disability coverage for Mr. Yedinak and Ms.
Pitts for sixty months. Any excise taxes incurred by the Executive Officers as a
result of an "excess parachute payment" under the Company Agreements will be
reimbursed under the Agreements. Based solely on the Salary and Bonus reported
in the Summary Compensation Table for 2002 assuming all compensation was paid
under the Company Agreement with respect to Mr. Yedinak and Ms. Pitts, and
excluding any benefits under any employee plan which may be payable following a
change in control and termination of employment, Mr. Yedinak and Ms. Pitts
would, subject to the appropriate regulatory approval, be entitled to severance
payments of approximately $2,441,705 and $1,116,415, respectively.
MANAGEMENT RECOGNITION PLAN AND TRUST. The Management Recognition and
Retention Plan (the "MRP") provides stock awards to officers and key employees.
Awards made after June 1, 1995 are subject to performance goals and vest at a
rate of 16.66% on the last day of each six month period following the date of
grant. Awards made prior to June 1, 1995 were not subject to performance goals
and vested at a rate of 33.33% per year commencing on the date of grant. As of
December 31, 2002, no shares were outstanding pursuant to grants under the MRP
and 25,492 shares remain available for future grants.
STOCK OPTION PLANS. On May 20, 1998 the Stockholders of the Company
approved the Incentive Stock Option Plan. The Incentive Stock Option Plan
provides for discretionary awards of options to purchase Common Stock to
officers and key employees as determined by a committee of independent
directors. During 2002, no incentive stock options and no non-statutory stock
options were granted under the Incentive Stock Option Plan. All options
available to purchase common stock held by employees under Umbrella Bancorp,
Inc. 1991 Employee Stock Option and Incentive Plan (the "1991 Stock Option
Plan") have been granted, and the Plan is now closed. The following table
provides certain information with respect to option exercises in the previous
fiscal year by Named Executive Officers and the number of shares of Common Stock
represented by outstanding stock options held by the Named Executive Officers as
of December 31, 2002. Also reported are the values for "in-the-money" options
which represent the positive spread between the exercise price of any such
existing stock options and the year-end price of the Common Stock. As of
December 31, 2002, 292,000 options to purchase shares of Common Stock are
available for grant (all under the Incentive Stock Option Plan) and 294,134
options to purchase Common Stock had been granted under all plans and were then
currently outstanding.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FISCAL YEAR END OPTIONS/SARS
ACQUIRED ON AT FISCAL YEAR END AT FISCAL YEAR-END
NAME EXERCISE VALUE REALIZED (#)(1)(2)(3)(4) ($)(5)
- ---- ----------- -------------- -------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
John G. Yedinak 0 $ -- 112,184(6) 10,800(6) ($121,439) ($77,760)
Frances M. Pitts 0 $ -- 42,350(7) 10,800(7) ($ 98,595) ($66,960)
Colleen A. Kitch 0 $ -- 15,000(8) 10,000(8) ($ 93,000) ($62,000)
- -------------------------------
(1) All options become 100% exercisable upon death, disability, retirement or a
change in control, as defined generally under the Incentive Stock Option Plan.
In addition, vesting of non-statutory options may be accelerated by a committee
consisting of outside directors.
(2) The purchase price may be made in whole or in part through the surrender of
previously held shares of common stock.
(3) Under limited circumstances, such as death, disability or normal retirement
of an employee, the employee (or his beneficiary) may request that the Company,
in exchange for the employee's surrender of an option, pay to the employee (or
beneficiary) the amount by which the fair market value of the Common Stock
exceeds the exercise price of the option on the date of the employee's
termination of employment. It is within the Company's discretion to accept or
reject such a request.
(4) Options are subject to limited stock appreciation (SAR) rights pursuant to
which the options, to the extent outstanding for at least six months, may be
exercised in the event of a change in control of the Company. Upon the exercise
of a limited right, the optionee would receive a cash payment equal to the
difference between the exercise price of the related option on the date of grant
and the fair market value of the underlying shares of Common Stock on the date
the right is exercised.
(5) The price of the Common Stock on December 31, 2002 was $3.80.
(6) The exercise price for 95,984 options is $3.85 and the exercise price for
27,000 options is $11.00. 95,984 options were exercised March 31, 2003, and the
shares acquired are included in shares set forth under "Proposal 1 - Information
with Respect to the Nominees, Continuing Directors and Executive Officers."
(7) The exercise price for 22,150 options is $3.50, the exercise price for 4,000
options is $5.00, and the exercise price for 27,000 options is $10.00. 22,150
options were exercised March 31, 2003, and the shares acquired are included in
shares set forth under "Proposal 1 - Information with Respect to the Nominees,
Continuing Directors and Executive Officers."
(8) The exercise price for 15,000 options is $10.00 and the exercise price for
10,000 options is $10.00
INDEBTEDNESS OF MANAGEMENT AND TRANSACTIONS WITH CERTAIN RELATED PERSONS
The Financial Institutions Reform, Recovery and Enforcement Act of
1989 requires that all loans or extensions of credit to executive officers and
directors be made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with the
general public, and must not involve more than the normal risk of repayment or
present other unfavorable features. Additionally, loans made to a director or
executive officer in excess of the greater of $25,000 or 5% of the Savings
Bank's capital and surplus (up to a maximum of $500,000) must be approved in
advance by a majority of the disinterested members of the board of directors.
Any loan made by the Savings Bank to its directors and officers are
made in the ordinary course of business on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and do not involve more than the
normal risk of collectibility or present other unfavorable features. As of
December 31, 2002 the Savings Bank had no loans to either directors or officers
of the Company or the Savings Bank.
The Company remains subject to standard employment agreements with
certain members of management, which are described under "Executive
Compensation", "Employment Agreements".
PROPOSAL 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Company's independent auditors for the year ended December 31, 2002
were Crowe Chizek and Company LLC. The Board of Directors has appointed Crowe
Chizek and Company LLC as independent auditors for the Company for the fiscal
year ending December 31, 2003.
Representatives of Crowe Chizek and Company LLC will be present at the
Annual Meeting. They will be given an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions from
stockholders present at the Annual Meeting.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED PROXY
WILL BE VOTED FOR RATIFICATION OF THE APPOINTMENT OF CROWE CHIZEK AND COMPANY
LLC AS THE INDEPENDENT AUDITORS OF THE COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE
APPOINTMENT OF CROWE CHIZEK AND COMPANY LLC AS THE INDEPENDENT AUDITORS OF THE
COMPANY.
ADDITIONAL INFORMATION
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Company's next
annual meeting expected to be held in May, 2004, must be received by the Company
no later than September 30, 2003 to be considered for inclusion in the proxy
materials and form of proxy relating to such meeting. Any such proposals shall
be subject to the requirements of the proxy rules adopted by the SEC.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE ANNUAL MEETING
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy promptly. If you are present at the Annual Meeting
and wish to vote your shares in person, your proxy may be revoked by voting at
the Annual Meeting.
A COPY OF THE FORM 10-K (WITHOUT EXHIBITS) FOR THE YEAR ENDED DECEMBER
31, 2002, AS FILED WITH THE SEC WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS
OF RECORD UPON WRITTEN
REQUEST TO UMBRELLA BANCORP, INC., MS. FRANCES M. PITTS, SECRETARY, 5818 SOUTH
ARCHER ROAD, SUMMIT, ILLINOIS 60501.
By Order of the Board of Directors
Frances M. Pitts
Secretary
Summit, Illinois April 28, 2003
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER OR NOT
YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO SIGN AND PROMPTLY
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
UMBRELLA BANCORP, INC.
AUDIT COMMITTEE
CHARTER
The Board of Directors of Umbrella Bancorp, Inc. (the "Company") has
constituted and established an Audit Committee (the "Committee") with authority,
responsibility, and specific duties as described in this Audit Committee
Charter.
A. COMPOSITION
The Committee shall consist of three or more directors, each of whom is
"independent" as such term is defined in the Sarbanes-Oxley Act of 2002
(the "Act") and regulations promulgated thereunder and under the rules
of the NASDAQ National Market.
Each director shall be free from any relationship that, in the opinion
of the Board of Directors, as evidenced by its annual selection of such
Committee members, would interfere with the exercise of independent
judgment as a Committee member. Each Committee member shall be able to
read and understand financial statements (including the company's
balance sheet, income statement and cash flow statement). At least one
Committee member shall have past employment experience in finance or
accounting, requisite professional certification in accounting, or
other comparable experience resulting in financial sophistication
(including having been a chief executive officer, chief financial
officer or other senior officer with financial oversight
responsibilities) such that he or she meets the definition of a
"financial expert" as such term is defined in regulations issued by the
Securities and Exchange Commission (the "SEC").
These requirements are intended to satisfy the Act and the NASDAQ
listing requirements relating to the composition of audit committees,
and shall be construed accordingly.
B. MISSION STATEMENT AND PRINCIPAL FUNCTIONS
The Committee shall have access to all records of the Company and shall
have and may exercise such powers as are appropriate to its purpose.
The Committee shall perform the following functions:
(1) Understand all significant accounting policies used by the
Company for financial reporting and tax purposes and approve
their application; it shall also consider any significant
changes in accounting policies that are proposed by management
or required by regulatory or professional authorities.
(2) Review the Company's audited financial statements and related
footnotes and the "Management's Discussion and Analysis"
portion of the annual report on Form 10-K prior to the filing
of such report, and recommend to the Board of Directors
whether such financial statements shall be included in the
Company's annual report on Form 10-K, based upon the
Committee's review and discussions with its independent public
accounting firm.
1
(3) Review the Company's unaudited financial statements and
related footnotes and the "Management Discussion and Analysis"
portion of the Company's Form 10-Q for each interim quarter
and ensure that the independent public accounting firm has
reviewed the Company's interim financial statements before the
Company files its quarterly report on Form 10-Q with the SEC.
(4) Study the format and review the timeliness of all financial
reports presented to the public, any significant reports used
internally and, when indicated, recommend changes for
appropriate consideration by management.
(5) Meet with the Company's outside legal counsel at least
annually to review any legal matters that may have a
significant impact on the Company or its financial reports.
(6) Ensure that management has been diligent and prudent in
establishing accounting reserves for probable losses or
doubtful values and in making appropriate disclosures of
significant financial conditions or events in its financial
statements.
(7) Review press releases prepared by management in connection
with the release of quarterly, annual, or special financial
statements. In respect thereto, recommend to the Chairman of
the Board any changes that appear necessary to conform
releases with appropriate professional practice.
(8) Review and reassess the adequacy of this Charter annually.
INDEPENDENT ACCOUNTANTS:
(9) Be directly responsible for the appointment, approval,
compensation and oversight of the audit work of an independent
public accounting firm employed for the purpose of preparing
or issuing an audit report with respect to the Company. Such
independent public accounting firm shall be duly registered
with the Public Accounting Oversight Board (all references
herein to a registered public accounting firm shall mean an
independent public accounting firm prior to the establishment
of the Public Accounting Oversight Board and a registered
public accounting firm following the establishment of the
Public Accounting Oversight Board). Such registered public
accounting firm shall be instructed to report directly to the
Committee.
(10) Approve in advance any non-audit service permitted by the Act,
including tax services, that its registered public accounting
firm renders to the Company, unless such prior approval may be
waived because of permitted exceptions under the Act.
(11) To the extent required by applicable regulations, disclose in
periodic reports filed by the Company approval by the
Committee of allowable non-audit services performed or to be
performed for the Company by the registered public accounting
firm performing the Company's audit.
2
(12) Delegate to one or more members of the Committee the authority
to grant pre-approvals for auditing and allowable non-auditing
services, which decision shall be presented to the full
Committee at its next scheduled meeting for ratification.
(13) Receive a timely report from its registered public accounting
firm performing the audit of the Company, which details: (1)
all critical accounting policies and practices to be used in
the audit; (2) all alternate treatment of financial
information of a material nature within generally accepted
accounting principles that have been discussed with management
officials of the Company, ramifications of the use of such
alternative disclosure and the treatment preferred by the
registered public accounting firm; and (3) other material
written communications between the registered public
accounting firm and the management of the Company, including,
but not limited to, any management letter or scheduled or
unadjusted differences.
(14) Ensure that the registered public accounting firm submits to
the Committee written disclosures and the letter from the
registered public accounting firm required by Independence
Standards Board Standard No. 1 [Independence Discussions with
Audit Committees], and discuss with the registered public
accounting firm's their independence.
(15) Discuss with the registered public accounting firm the matters
required to be discussed by SAS 61 [Communication with Audit
Committees] and SAS 90 [Audit Committee Communications].
(16) Engage independent counsel and other advisers, as the
Committee may determine in its sole discretion to be
necessary, to carry out the Committee's duties.
(17) Submit to the Chief Financial Officer of the Company an annual
budget to fund appropriate compensation to the registered
public accounting firm employed by the Company for the purpose
of rendering or issuing an audit report and for compensation
of others employed by the Committee and approve all invoices
submitted.
(18) Obtain from the registered public accounting firm, at least
annually, a formal written statement delineating all
relationships between the registered public accounting firm
and the Company, and at least annually discuss with the
registered public accounting firm any relationship or services
which may impact the registered public accounting firm's
objectivity or independence, and take appropriate actions to
ensure such independence.
INTERNAL AUDIT DEPARTMENT:
(19) Cause to be maintained an appropriate internal audit program
covering the Company and all its subsidiaries (each, a
"Subsidiary") by an internal audit function who reports both
to the Committee and the Board of Directors.
3
(20) Review and approve the audit plan and budget of the Internal
Audit Department, which shall report at least annually to the
Committee regarding the staffing plans, financial budget and
audit schedules and the adequacy thereof.
(21) Act upon management's recommendation in regard to the
selection of and/or the dismissal of the Director of Internal
Audit.
(22) Review the scope and coordination efforts of any joint
internal/external audit program with both internal auditors
and the registered public accounting firm.
(23) Review reports of any material defalcations and other
reportable incidents related to the financial statements or
financial reporting of each unit and supervise and direct any
special projects or investigations considered necessary by the
Committee.
(24) Review all written reports of internal auditors and
examinations made by regulatory agencies and management's
response to them, evaluate the reports in regard to control
and/or compliance implications and determine whether
appropriate corrective action has been implemented.
(25) Establish procedures for the receipt, retention and treatment
of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters.
REGULATORY COMPLIANCE:
(26) Cause to be maintained an appropriate regulatory compliance
program covering the Company and its Subsidiaries to aid
compliance with the laws and regulations applicable to
financial institutions.
(27) Review reports of the compliance officer covering the scope
and adequacy of the compliance program, the degree of
compliance and cooperation, and the implementation of
corrective actions (if necessary or appropriate).
(28) To the extent applicable, receive reports on a Subsidiary's
compliance with Section 112 of the Federal Deposit Insurance
Corporation Improvement Act and review the basis for the
reports issued under the rule with management, the Internal
Audit Department and the registered public accounting firm.
INTERNAL CONTROL:
(29) Review periodically the scope and implications of each unit's
internal financial procedures and consider their adequacy.
(30) Maintain direct access to the staff of each unit. If
considered necessary, require that studies be initiated on
subjects of special interest to the Committee.
4
(31) Review the written comments on internal control submitted by
the internal auditors and the registered public accounting
firm to ensure that appropriate suggestions for improvement
are promptly considered for insertion into a unit's internal
financial procedure.
(32) Establish procedures for the confidential, anonymous
submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.
REGULATORY EXAMINERS
(33) Meet as considered necessary with representatives of the
applicable regulatory examiners of the institution and discuss
matters relating to their review and supervision of the
organization.
(34) Ensure that management has taken appropriate corrective action
regarding any significant regulatory matters reported by the
examiners.
SPECIAL DUTIES:
(35) Perform special studies of matters related to the financial
operations of the Company or its Subsidiaries or to
allegations of managerial misconduct by its executives.
C. MEETINGS
Meetings of the Committee will be held at least quarterly and such
other times as shall be required by the Chairman of the Board, or by a
majority of the members of the Committee. All meetings of the Committee
shall be held pursuant to the Bylaws of the Company with regard to
notice and waiver thereof. Written minutes pertaining to each meeting
shall be filed with the Secretary and an oral report shall be presented
by the Committee at each Board meeting.
At the invitation of the Chairman of the Committee, the meetings may be
attended by the Chief Executive Officer, the Chief Financial Officer,
the representatives of the registered public accounting firm, and such
other persons whose attendance is appropriate to the matters under
consideration.
Amended by Committee
as of October 30, 2002
Approved by Board
as of October 30, 2002
5
[FRONT SIDE]
REVOCABLE PROXY
UMBRELLA BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 2003
2:00 P.M. CENTRAL TIME
The undersigned hereby appoints the official proxy committee of the
Board of Directors of Umbrella Bancorp, Inc. (the "Company"), each with full
power of substitution, to act as attorneys and proxies for the undersigned, and
to vote all shares of Commons Stock of the Company which the undersigned is
entitled to vote only at the Annual Meeting of Stockholders, to be held on May
28, 2003 at 2:00 p.m. Central Time, at 222 West Huron Street, Suite 500, Chicago
Illinois 60610 and at any and all adjournments thereof, as follows:
1. The election of directors of all nominees listed (except as
marked to the contrary below).
Arthur E. Byrnes and Frances M. Pitts
FOR VOTE WITHHELD
[ ] [ ]
INSTRUCTION: To withhold your vote for any individual nominee, write
that nominee's name on the line provided below:
--------------------------------
2. For ratification of Crowe Chizek and Company LLC as auditors
of the Company for the fiscal year ending December 31, 2003.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF
THE LISTED PROPOSALS.
[BACK SIDE]
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS
LISTED. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, INCLUDING
WHETHER OR NOT TO ADJOURN THE MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED
IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOW OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders and of a
Proxy Statement dated April 28, 2003 and of the Annual Report to Shareholders.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.
Dated:
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SIGNATURE OF STOCKHOLDER
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SIGNATURE OF STOCKHOLDER
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PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE