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 [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
Preliminary Proxy Statement [X]
Confidential, for Use
of the Commission Only (as permitted by Rule 14a-6(e) (2) [ ]
Definitive Proxy Statement [ ]
Definitive Additional Materials [ ]
Soliciting Material Pursuant to Rule 14a-11 (c) or Rule 14a-12
First Federal Bancshares, Inc.
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(Name of Registrant as Specified In Its Charter)
COMMITTEE TO PRESERVE SHAREHOLDER VALUE
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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 14 (a)-6(i) (4) 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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[ ] Fee paid previously with preliminary materials.
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[ ] 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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FIRST FEDERAL BANCSHARES, INC.
________________
ANNUAL MEETING OF STOCKHOLDERS
May 25, 2004
___________________
PROXY STATEMENT OF THE FIRST FEDERAL BANCSHARES, INC. COMMITTEE
TO PRESERVE SHAREHOLDER VALUE (THE "COMMITTEE")
[OPPOSES THE BOARD OF
DIRECTORS OF FIRST FEDERAL BANCSHARES, INC.]
This Proxy Statement and GREEN proxy card are being furnished to holders of the
common stock (the "Stockholders"), par value $.01 per share (the "Common Stock")
of First Federal Bancshares, Inc. (the "Company") a Delaware Corporation, in
connection with the solicitation of proxies (the "Proxy Solicitation") by the
First Federal Bancshares,Inc. Committee to Preserve Shareholder Value (the
"Committee"). The Annual Meeting of Stockholders is to be held on May 25, 2004,
at 2:00 P.M., at the Quincy Holiday Inn, located at 201 South Third Street,
Quincy, Illinois (the "Annual Meeting"). Stockholders who own the Common Stock
on April 5, 2004 will be entitled to vote ("Annual Meeting Record Date"). The
Company's principal executive offices are located at 109 East Depot Street,
Colchester, Illinois 62326.
At the Annual Meeting, the Company will be seeking (i) the election of two
Directors for a term of three years or until a successor has been elected and
qualified and (ii) ratification of the appointment of Crowe Chizek and Company,
LLC.
The Committee members own approximately 130,500 shares, which is approximately
7.05% of the Company's outstanding Common Stock, based upon the Company's Form
10-Q for the period ending September 30, 2003, and are soliciting the votes of
other Stockholders to elect two Directors at this year's Annual Meeting in
opposition to the two (2) directors nominated for election by the Company. The
Committee is soliciting your proxy in support of the election of David L. Jansen
("Jansen") and Mark Sill ("Sill") (the "Committee Nominees") to the Company's
Board of Directors.
The Committee consists of Jansen, Sill, Seidman and Associates, L.L.C. ("SAL"),
a New Jersey Limited Liability Company, Seidman Investment Partnership, L.P.,
("SIP"), a New Jersey Limited Partnership; Seidman Investment Partnership II,
L.P.("SIP II"), a New Jersey Limited Partnership; Kerrimatt, L.P. ("Kerrimatt"),
a New Jersey Limited Partnership; Federal Holdings, LLC ("Federal"), a New York
Limited Liability Company; Pollack Investment Partnership, LP ("PIP"), a New
Jersey Limited Partnership, Dennis Pollack ("Pollack") and Lawrence
Seidman("Seidman"). This Proxy Statement and GREEN proxy card are being first
mailed or furnished to Stockholders on or about April 20, 2004.
The Committee's goal is to preserve shareholder value and it is the opinion of
the Committee that one of the best ways to accomplish this goal is through the
representation of a significant shareholder on the Board of Directors. Through
representation on the Board of Directors, the Committee Nominees will attempt to
persuade the Board of Directors to: (i) accelerate the Company's share
repurchase program; and (ii)retain an investment banker to determine the value
of the Company in a sale versus remaining independent.
Remember, your last dated proxy is the only one which counts, so return the
GREEN card even if you delivered a prior proxy. We urge you not to return any
proxy card sent to you by the Company.
Your vote is important, no matter how many or how few shares you hold. If your
shares are held in the name of a brokerage firm, bank, or nominee, only they can
vote your shares and only upon receipt of your specific instructions.
Accordingly, please return the GREEN proxy card in the envelope provided by your
Bank or Broker or contact the person responsible for your account and give
instructions for such shares to be voted for the Committee Nominees.
If your shares are registered in more than one name, the GREEN proxy card should
be signed by all such persons to ensure that all shares are voted for the
Committee's Nominees.
Please refer to the Company's proxy statement for a full description of
management's proposals, the securities ownership of the Company, the share vote
required to ratify each proposal, information about the Company's Officers and
Directors, including compensation, information about the ratification of the
appointment of Crowe Chizek and Company LLC, as independent auditors and the
date by which Stockholders must submit proposals for inclusion at the next
Annual Meeting.
Holders of record of shares of Common Stock on the Annual Meeting Record Date
are urged to submit a proxy even if such shares have been sold after that date.
The number of shares of Common Stock outstanding as of the Annual Meeting Record
Date will be disclosed in the Company's proxy statement. Each share of Common
Stock is entitled to one vote at the Annual Meeting.
If you have any questions or need assistance in voting your shares, please call:
D. F. King & Co.
Att: Richard Grubaugh
48 Wall Street
New York, New York 10005
(Call Toll Free (800) ---------)
THE COMMITTEE'S GOAL:
OUR GOAL IS TO MAXIMIZE THE VALUE
OF THE COMPANY'S STOCK FOR ALL
SHAREHOLDERS
The Committee believes its fellow Shareholders have the same goal: to maximize
the value of the Company's stock they purchased. The Committee believes that the
Company should immediately retain an investment banker. The Committee will
request that the investment banker analyze the Company's value in a sale versus
remaining independent to assist the Company's Board in reaching an informed
decision on how to maximize shareholder value. In addition, the investment
banker will also evaluate whether the Company can make in-market acquisitions
that are accretive (acquisitions that will add to the earnings per share of the
Company within one year). The Committee does not believe that the value of the
Company's stock can be maximized solely through internal growth.
If the Company cannot grow through accretive acquisitions, the goal to maximize
value can be accomplished most effectively by selling or merging the Company.
The only way the Committee can be assured that its proposals receive appropriate
consideration is through Board representation. The Committee has urged
management to pursue acquisition/merger discussions with potentially interested
banks so the Company could properly compare the economic benefits of an
acquisition of other financial institutions to a sale of the Company.
No guarantee, or assurance, can be given that the Committee's proposals will
result in a maximization of shareholder value. It is simply, and solely, the
Committee's opinion that these proposals are likely to produce positive results
for all shareholders.
SEIDMAN'S NOVEMBER 20, 2003
MEETING WITH JAMES J. STEBOR
On November 20, 2003 Mr. Seidman met in Quincy, Illinois with James J. Stebor,
President and Chief Executive Officer of the Company and primary subsidiary
First Federal Bank (the "Association").
Mr. Seidman requested that the Board be enlarged by one seat and that he be
added to the Board. This suggestion would not require any present Board Member
to be removed. Based upon the Certificate of Incorporation and By-Laws of the
Company, the addition of one seat to the Board would not require an amendment to
the Certificate of Incorporation or By-Laws. However, the addition of Mr.
Seidman would require that the Company's By-Laws be amended to remove the
present residency requirement. Based upon the Certificate of Incorporation, the
number of directors shall be fixed exclusively by the Board pursuant to a
resolution adopted by a majority of the whole Board.
Mr. Seidman was informed by Mr. Stebor that his request for Board representation
was denied.
THE PRICE RECEIVED BY ALL ILLINOIS THRIFTS
IN THE LAST TWO CALENDAR YEARS COMPARED TO
THE COMPANY'S FINANCIAL RESULTS
The Company's stock, based upon its closing price of $34.82 on January 28, 2004,
is trading at 1.59 times its December 31, 2003 $21.90 book value and 24.01 times
its twelve month December 31, 2003 diluted earnings per share of $1.45. In the
opinion of the Committee, unless the Company can do an accretive acquisition, or
significantly increase its earnings per share and return on equity, a sale of
the Company at this time may be more beneficial than the Company remaining an
independent financial institution. These facts are supported by the following
chart, which reflects the mean and median price to book value, deposit premium
and price to last twelve months earnings multiple paid for Illinois banks and
thrifts acquired in 2002, 2003 and 2004.
ILLINOIS MERGER ACTIVITY 2002
Merger Activity 2002 in Excess of $15 Million Deal Value
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Franchise
Premium
Acquiror/ Announce Price/ Price/ Price/ Core
Target Date Book LTM Deposits1,3 Deposits2,3
Value Earnings
(x)
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Banks
Central Bancshares, Inc./ 1/3/02 176.73 15.27 19.88 9.58
Marquette Bank Illinois
Metropolitan Bank Group, 1/29/02 183.72 44.74 12.85 8.08
Inc./Firstcom Bancorp, Inc.
MB Financial Inc./ 11/4/02 131.28 24.06 20.35 5.74
South Holland Bancorp Inc.
Standard Bancshares Inc./ 12/19/02 127.67 47.48 15.00 7.31
East Side Bancorporation,
Inc.
Mean 154.85 32.89 17.02 7.68
Median 154.01 34.40 17.44 7.70
Thrifts
Midwest Banc Holdings Inc. 7/22/02 112.80 27.63 25.29 4.74
Big Foot Financial Corp.
MAF Bancorp, Inc./ 12/17/02 170.61 12.45 23.36 12.42
Fidelity Bancorp Inc.
Mean 141.71 20.04 24.33 8.58
Median 141.71 20.04 24.33 8.58
ILLINOIS MERGER ACTIVITY 2003
Illinois Merger Activity 2003 in Excess of $15 Million Deal Value
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Franchise
Premium
Acquiror/ Announce Price/ Price/ Price/ Core
Target Date Book LTM Deposits1,3 Deposits2,3
Value Earnings
(x)
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Banks
JW Bancorp Inc./ 1/3/03 125.34 22.14 20.56 4.84
John Warner Financial Corp.
Charter One Financial/ 1/16/03 137.29 15.38 14.71 4.52
Advance Bancorp Inc.
Bridgeview Bancorp, Inc./ 2/14/03 172.25 12.44 16.11 8.27
Upbancorp, Inc.
Wintrust Financial Corp./ 7/2/03 229.09 NM 23.23 15.75
Advantage National Bancorp
First Midwest Bancorp, Inc. 9/11/03 183.98 15.25 20.87 13.77
CoVest Bancshares, Inc.
Northern States Fin.Corp. 9/11/03 216.46 20.31 20.99 13.99
Round Lake Bankcorp, Inc.
BMO Financial Group/ 11/24/03 248.33 33.27 23.38 19.45
Lakeland Financial Corp.
Mean 187.53 19.80 19.98 11.51
Median 183.98 17.85 20.87 13.77
Thrifts
None
ILLINOIS MERGER ACTIVITY 2004
Illinois Merger Activity 2004 in Excess of $15 Million Deal Value
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Franchise
Premium
Acquiror/ Announce Price/ Price/ Price/ Core
Target Date Book LTM Deposits1,3 Deposits2,3
Value Earnings
(x)
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Banks
First Busey Corporation/ 1/5/04 300.95 23.90 26.58 34.64
First Capital Bankshares,Inc.
J.P. Morgan Chase & Co./ 1/14/04 256.10 17.29 35.94 28.40
Bank One Corporation
Mean 278.53 20.60 31.26 31.52
Median 278.53 20.60 31.26 31.52
Thrift
MB Financial, Inc./ 1/12/04 156.95 15.81 48.46 28.78
Firsst Security Financial,Inc.
___________________________________________________
1Price/Deposits: Deal value as a percentage of the entity sold's total deposits.
If buyer acquires less than 100% of the entity sold's equity, the denominator of
the ratio is multiplied by the percent acquired.
Deal Value: Aggregate price paid for the equity of the entity sold in the
transaction, as of the event in question, Where available, deal value is
calculated as the number of fully diluted shares outstanding, less the number of
shares excluded from the transaction, multiplied by the deal value per share,
less the number of "in the money" options/warrants/stock appreciation rights
times the weighted average strike price of the options/warrants/stock
appreciation rights. Deal value excludes debt assumed and employee retention
pools.
2Franchise Premium/Core Deposits: (Deal Value - Entity Sold's Tangible Book)/
Entity Sold's Core Deposits Core Deposits: Federally insured bank deposits,
excluding accounts with balances over $100,000 and brokered deposits. Tangible
Equity: Total equity less total intangible assets.
3The source for the above ratios and definitions is SNL Financial.
______________________________________________
Based upon the thrift 2002 mean and median valuations shown above, the Company
based upon a $21.90 book value, $262,887 of deposits, 226,740 core deposits and
$1.45 diluted earnings per share for the Calendar Year 2002, is worth the
following per share dollar amounts:
Franchise
Premium
Price/ Price/ Price/ Core
Book Value LTM Earning Deposit Deposits
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Mean 31.03 29.06 55.59 31.51
Median 31.03 29.06 55.59 31.51
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There were no Illinois thrifts plurchased in 2003.
Based upon the only thrift purchased in 2004, the Company would be worth the
following:
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Mean 34.37 22.92 89.92 56.29
Median 34.37 22.92 89.22 56.29
There can be no assurance or guarantee that the Company would receive a price
equal to or greater than the mean or median ratio stated above.
THEREFORE A VOTE FOR THE
COMMITTEE NOMINEES IS A VOTE
TO START THE PROCESS TO
ACCELERATE THE SHARE REPURCHASE
PROGRAM, ATTEMPT TO DO AN
ACCRETIVE ACQUISITION AND
IF NOT POSSIBLE SELL
THE COMPANY FOR A PREMIUM
PRICE WHICH IS OPPOSED BY THE
PRESENT BOARD AND MANAGEMENT
Each Shareholder should be aware that the present election is only to elect two
Directors to the Board of Directors of the Company and has nothing to do with
the election of Directors to the Association, the wholly owned banking
subsidiary of the Company. The present Directors of the Company, even if the
Committee Nominees win this election, will still be able to appoint the Board of
Directors of the Association, including the Company Nominees, even if they lose
the election. Hopefully, if Messrs. Jansen and Sill are elected to the Board of
the Company, they will also be appointed to the Board of the Association.
If a sale of the Company is not possible at a satisfactory price, the Committee
Nominees, if elected, will work to increase the Company's earnings, earnings per
share, earning assets and deposits and will strongly recommend that the Company
aggressively pursue its stock repurchase program. In addition, the Committee
Nominees will attempt to persuade the Company to pursue an accretive
acquisition. The Board of Directors of the Company would have to determine a
satisfactory price which could be either all cash or a combination of cash and
stock. (The Board would have to make the same determination with respect to the
consideration to be received in connection with a sale of the Company.) To
accomplish the Committee's goal, the Nominees, if elected, will need the
cooperation of three of the other Directors. Furthermore, the Nominee's plans
could change subject to the fiduciary duty they will owe to all shareholders, if
elected.
The Committee bases its position that the Board of Directors and Management of
the Company oppose a sale of the Company upon statements by Mr.Stebor to Mr.
Seidman during the November meeting and in two phone calls after the November
meeting. Mr. Stebor stated that at the present time the Board is not interested
in pursuing a sale of the Company and would prefer remaining independent.
Shareholders will not be afforded a separate opportunity to vote on the
implementation of a stock repurchase program. Shareholders will be required to
vote on a sale or a merger; except an acquisition for cash may not require
shareholder approval.
MR. SEIDMAN'S PAST HISTORY OF PROMOTING THE
MAXIMIZATION OF SHAREHOLDER VALUE
Seidman has been involved in proxy contests in connection with the following ten
separate companies since 1995, IBS Financial Corp.("IBSF"), Wayne Bancorp, Inc.
("WYNE"), South Jersey Financial Corp., Inc. ("SJFC"), Citizens First Financial
Corp. ("CFSB"), Yonkers Financial Corp. ("YFCB"), First Federal Savings and Loan
Association of East Hartford ("FFES"), Vista Bancorp, Inc. ("VBNJ"), Kankakee
Bancorp, Inc. ("KNK"), GA Financial, Inc.("GAF") and United National Bancorp
("UNBJ") seeking to maximize shareholder value by either an accretive
acquisition or sale of the respective companies. IBSF, WYNE, FFES, VBNJ, YFCB,
SJFC, GAF and UNBJ were sold at significant premiums to their book value and
earnings, as shown by the following chart:
Multiples [X] Director
Seller Buyer Book Value % LTM EPS [X] Nominees
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Wyne Valley National Bancorp 2.00 31.7 Seidman Nominees
IBSF Hudson United Bancorp. 1.45 31.0 Seidman
SJFC Richmond Cty. Fin. Corp. 1.14 24.1 Seidman
FFES Connecticut Bancshares,Inc. 1.37 13.5 Seidman
VBNJ United National Bankcorp 2.52 19.6 Seidman Nominees
YFCB Atlantic Bank of New York 1.52 16.20 Seidman
GAF GA Financial, Inc. 1.83 24.31 Seidman
UNBJ United National Bancorp 2.39 22.0 Seidman Nominee
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Seidman was a member of the Board of SJFC and FFES.
Seidman was not successful in his proxy contest with CFSB, VBNJ, YFCB, KNK, GAF
or UNBJ. However, Seidman was successful in having CFSB conduct a Dutch Auction
for 15% of its outstanding shares. Seidman had proposed this Dutch Auction and,
in an agreement with CFSB, agreed to tender the shares he controlled into the
auction and to execute a standstill agreement. Thus, the Dutch Auction resulted
in large measure from proposals made by, and actions undertaken, by Seidman.
With respect to YFCB Seidman continually pushed YFCB to sell. On November 14,
2001 YFCB announced a sale to Atlantic Bank of New York at $29.00 cash per
share, based upon the above ratios.
The Board of Directors of CNY Financial Corporation ("CNYF") and Ambanc Holding
Co., Inc. ("AHCI"), each agreed voluntarily to increase by one (1) the size of
the Board and Seidman was added to each respective Board. CNYF was sold to
Niagara Bancorp, Inc. at a premium price of 1.30 times book and 27.57 times its
last twelve (12) month earnings. AHCI was sold to Hudson River Bancorp, Inc. at
a premium price of 1.25 times book and 25.60 times its last twelve (12) months
earnings.
In addition, Seidman filed a Schedule 13D disclosing a plan to maximize
shareholder value through an accretive acquisition or sale of 1st Bergen
Bancorp, Inc. ("FBER"), Eagle BancGroup, Inc. ("EGLB"), and Jade Finacial
Corporation ("IGAF"). All three institutions were sold shortly after the
respective announcements. FBER was sold to Kearney Savings Bank for 1.78 % of
book value and 28.6 times earnings. EGLB was sold to First Busey Corporation
("FBC") for 1.41% of book value and 30.3 times earnings. IGAF was sold to PSB
Bancorp, Inc. for 92% of book value and 26.06 times earnings. Except for IGAF,
these companies were sold at a significant premium to book value and earnings
and its prevailing stock price.
On December 6, 2002, Michael A. Griffith was appointed to the KNK Board of
Directors. His appointment was part of an agreement with an investor group led
by Jeffrey L. Gendell, which owned apprximately 9.8% of KNK's outstanding
shares. On January 17, 2003, KNK announced, among other things the resignation
of Larry Huffman, the President and Chief Executive Officer and the election of
Mr. Griffith as the new KNK Chairman.
All of the above institutions, except VBNJ and UNBJ were thrifts. Commercial
banks normally receive multiples greater than thrifts.
There is no guarantee that the Company can be sold for a premium equal to or
greater than the premium paid for the commercial banks and thrifts mentioned in
this proxy statement.
RETURN ON AVERAGE EQUITY
The following chart reflects the Company's approximate return on average equity
for the past three calendar years. The Company became a publicly traded Company
on September 28, 2000.
2000 4.80%
2001 4.01%
2002 4.49%
2003 ---
Therefore, in a little more than three years the average return on equity has
not significantly increased until calendar year 2003. The return on average
equity was 5.22%, 6.56%, 8.22% and __ for the first, second, third and fourth
quarter of calender year 2003. Mr. Seidman filed his first Schedule 13D on or
about July 24, 2003. Shortly thereafter the return on average equity began to
significantly increase. In the Committee's opinion, the historically average
return on equity is below the average for similar sized thrifts. The present
Board and management is responsible for this sub-par performance. This fact was
noted in the January 28, 2004 SNL Bank & Thrift Daily. "Based in Western
Illinois, First Federal underperformed a peer group of midwestern thrifts with
total assets between $260 million and $360 million, with respect to return on
average assets in 2000, 2001 and 2002, according to SNL Thrift Data Sources. The
thrift's returns improved to the peer-median level in the second and third
quarters of 2003."
ELECTION OF COMMITTEE NOMINEES
When you return the Committee's proxy card you are only voting for Messrs.
Jansen and Sill. Both have consented to being named in this Proxy Statement and
have agreed to serve as Directors, if elected. The Company's By-Laws require
that Messrs. Jansen and Sill receive a plurality of the votes cast to be
elected.
David L. Jansen. Mr. Jansen from 1993 to the present has been the branch manager
of Conner Company, Quincy, Illinois and from 1984 to 1993 was the Operations
Manager for Capitol Group, Springfield, Illinois. Mr. Jansen graduated from SIU,
Carbondale, Illinois in 1975 with a Bachelor of Science degree in Business. Mr.
Jansen received an Honorable Discharge from the United States Army in 1968.
Mark Sill. Mr. Sill from 1974 to the present has been employed by Vinson & Sill
Inc.and since 1982 was a General Manager and has been a Vice President of Vinson
& Sill Inc since 1985. Mr. Sill is a graduate of Unity High School in Mendon,
Illinois and attended Western Illinois University in Macomb, Illinois. Mr. Sill
is a Member of the Christ Luthern Church in Quincy, Illinois and from 1975 -
1982 was a Member and Board Member of the Quincy Jaycees and since 1998 has been
a Member of the Quincy Elks Lodge.
The members of the Committee have agreed to act in concert; however, they have
expressly reserved the right to terminate their agreement to act in concert.
During the last ten (10) years: (i) none of the Committee members has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors); (ii) none of the Committee members, has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree, or final
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws, or finding any violation with respect to such
laws; (iii) the Committee members, other than Jansen, Sill, SIPII, Pollack, PIP
and Kerrimatt, were parties to a civil proceeding which ultimately mandated
activities that were subject to federal securities laws. Specifically, a civil
action was filed by IBSF, during a proxy contest with certain members of the
Committee, in the U.S. District Court. This litigation named the members of the
Committee, as Defendants; except, Jansen, Sill, SIPII, Pollack, PIP, and
Kerrimatt. The claim was made that three members on the Committee did not make
all of the disclosures required by the Securities Exchange Act of 1934. The
District Court entered a Judgment dismissing the claims made by IBSF. The Third
Circuit Court of Appeals reversed in part, and remanded the matter, determining
that two (2) additional disclosures should have been made. Pending the remand,
an Amended Schedule 13D was filed making additional disclosures with regard to
Seidcal Associates and Kevin Moore concerning the background, biographical and
employment information on Brant Cali of Seidcal and Kevin Moore of Federal.
Thereafter, the District Court entered a Judgment After Remand which directed
the inclusion of these disclosures in the Schedule 13D.
None of the Committee members is, or was within the past year, a party to any
contract, arrangements or understandings with any person with respect to any
securities of the registrant, including, but not limited to joint ventures, loan
or option arrangements, puts or calls, guarantees against loss or guarantees of
profit, division of losses or profits, or the giving or withholding of proxies.
In addition none of the Committee members or any associates of the Committee
members have any arrangement or understanding with any person (a) with respect
to any future employment by the Company or its affiliates; or (b) with respect
to any future transactions to which the Company or any of its affiliates will or
may be a party.
Mr. Seidman is the manager of SAL, Co-General Partner with Pollack in PIP, and
is the President of the Corporate General Partner of SIP and SIPII and the
investment manager for Kerrimatt and Federal; and, in that capacity, Mr. Seidman
has the authority to cause those entities to acquire, hold, trade, and vote
these securities and with respect to PIP, Seidman shares these functions with
Pollack. SAL, SIP, SIPII, Kerrimatt, PIP and Federal were all created to
acquire, hold, and sell publicly-traded securities. None of these entities was
formed to solely acquire, hold, and sell the Company's securities. Each of these
entities owns securities issued by one or more companies other than the Company.
The members and limited partners in SIP, SIPII, SAL, Kerrimatt, PIP and Federal
are all passive investors, who do not - and cannot - directly, or indirectly,
participate in the management of these entities, including without limitation
proxy contests. Seidman's total compensation is dependent upon the profitability
of the operations of these entities, but no provision is made to compensate
Seidman solely based upon the profits resulting from transactions from the
Company's securities. In SAL, Seidman receives a $300,000 annual salary and a
percentage of the profits, after the Members receive a return on their
investment. In SIP, Federal and PIP, Seidman receives an annual fee, which is
payable quarterly, based upon a valuation of the assets, and he receives a
percentage of the profits. In Kerrimatt, Seidman receives an annual fee, which
is payable quarterly based upon a valuation of the assets with a stated maximum
fee payable, and he receives a percentage of the profits after a return to
limited partners. In SIPII, Seidman receives a percentage of the profits and no
annual fee.
On November 8, 1995, the acting Director of the Office of Thrift Supervision
("OTS") issued a Cease and Desist Order against Seidman ("C & D"), after finding
that Seidman recklessly engaged in unsafe and unsound practices in the business
of an insured institution. The C & D actions complained of were Seidman's
allegedly obstructing an OTS investigation. The C & D ordered him to cease and
desist from (i) any attempts to hinder the OTS in the discharge of its
regulatory responsibilities, including the conduct of any OTS examination or
investigation; and (ii) any attempts to induce any person to withhold material
information from the OTS related to the performance of its regulatory
responsibilities. The Order also provides that for a period of no less than
three (3) years if Seidman becomes an institution-affiliated party of any
insured depository institution subject to the jurisdiction of the OTS, to the
extent that his responsibilities include the preparation or review of any
reports, documents, or other information that would be submitted or reviewed by
the OTS in the discharge of its regulatory functions, all such reports,
documents, and other information shall, prior to submission to, or review by the
OTS, be independently reviewed by the Board of Directors or a duly appointed
committee of the Board to ensure that all material information and facts have
been fully and adequately disclosed. In addition, a civil money penalty in the
amount of $20,812 was assessed.
The voting power over the Company's securities is not subject to any
contingencies beyond standard provisions for entities of this nature (i.e.,
limited partnerships and limited liability companies) which govern the
replacement of a manager or a general partner. Specifically, the shares held by
each of the named entities are voted in the manner that Seidman elects, in his
non-reviewable discretion; except for PIP, where the voting discretion is shared
with Pollack.
Additional Information concerning the Committee is set forth in Appendices A and
B hereto. Each of the individuals listed on Appendix A attached hereto is a
citizen of the United States.
AUDITORS
The Committee has no objection to the ratification of the appointment of Crowe
Chizek and Company, LLC , as independent accountants for the Company for the
fiscal year ending December 31, 2004.
SOLICITATION; EXPENSES
Proxies may be solicited by the Committee by mail, advertisement, telephone,
facsimile, telegraph, and personal solicitation. Phone calls will be made to
individual shareholders by Seidman, Jansen, Sill and employees of D. F. King &
Co. Seidman, Jansen and Sill will be principally responsible to solicit proxies
for the Committee and certain of Seidman's employees will perform secretarial
work in connection with the solicitation of proxies, for which no additional
compensation will be paid. Banks, brokerage houses, and other custodians,
nominees, and fiduciaries will be requested to forward the Committee's
solicitation material to their customers for whom they hold shares and the
Committee will reimburse them for their reasonable out-of-pocket expenses. The
Committee has retained D. F. King & Co. to assist in the solicitation of proxies
and for related services. The Committee will pay D. F. King & Co. a fee of up to
$25,000 and has agreed to reimburse it for its reasonable out-of-pocket
expenses. In addition, the Committee has also agreed to indemnify D. F. King &
Co. against certain liabilities and expenses, including liabilities and expenses
under the federal securities laws. The Securities and Exchange Commission deems
such an indemnification to be against public policy. Approximately ten (10)
persons will be used by D. F. King & Co.in its solicitation efforts.
The entire expense of preparing, assembling, printing, and mailing this Proxy
Statement and related materials and the cost of soliciting proxies will be borne
by SAL, SIP, PIP, Federal, Kerrimatt and SIP II. The Committee does not intend
to solicit proxies via the Internet.
Although no precise estimate can be made at the present time, the Committee
currently estimates that the total expenditures relating to the Proxy
Solicitation incurred by the Committee will be approximately $40,000 of which
$-0- has been incurred to date. The Committee intends to seek reimbursement from
the Company for those expenses incurred by the Committee, if the Committee's
Nominees are elected, but does not intend to submit the question of such
reimbursement to a vote of the Shareholders.
For the proxy solicited hereby to be voted, the enclosed GREEN proxy card must
be signed, dated, and returned to the Committee, c/o D. F. King & Co. Inc., in
the enclosed envelope in time to be voted at the Annual Meeting. If you wish to
vote for the Committee Nominees, you must submit the enclosed GREEN proxy card
and must NOT submit the Company's proxy card. If you have already returned the
Company's proxy card, you have the right to revoke it as to all matters covered
thereby and may do so by subsequently signing, dating, and mailing the enclosed
GREEN proxy card. ONLY YOUR LATEST DATED PROXY WILL COUNT AT THE ANNUAL MEETING.
Execution of a GREEN proxy card will not affect your right to attend the Annual
Meeting and to vote in person. Any proxy may be revoked as to all matters
covered thereby at any time prior to the time a vote is taken by (i) filing with
the Secretary of the Company a later dated written revocation; (ii) submitting a
duly executed proxy bearing a later date to the Committee; or (iii) attending
and voting at the Annual Meeting in person. Attendance at the Annual Meeting
will not in and of itself constitute a revocation.
Shares of Common Stock represented by a valid, unrevoked GREEN proxy card will
be voted as specified. You may vote for the Committee's Nominees or withhold
authority to vote for the Committee's Nominees by marking the proper box on the
GREEN proxy card. Shares represented by a GREEN proxy card where no
specification has been made will be voted for the Committee's Nominees and for
Crowe Chizek and Company, LLC.
Except as set forth in this Proxy Statement, the Committee is not aware of any
other matter to be considered at the Annual Meeting. The persons named as
proxies on the enclosed GREEN proxy card will, however, have discretionary
voting authority as such proxies regarding any other business that may properly
come before the Annual Meeting.
If your shares are held in the name of a brokerage firm, bank, or nominee, only
they can vote such shares and only upon receipt of your specific instructions.
Accordingly, please return the proxy in the envelope provided to you or contact
the person responsible for your account and instruct that person to execute on
your behalf the GREEN proxy card.
Only holders of record of Common Stock on the Annual Meeting Record Date will be
entitled to vote at the Annual Meeting. If you are a Shareholder of record on
the Annual Meeting Record Date, you will retain the voting rights in connection
with the Annual Meeting even if you sell such shares after the Annual Meeting
Record Date. Accordingly, it is important that you vote the shares of Common
Stock held by you on the Annual Meeting Record Date, or grant a proxy to vote
such shares on the GREEN proxy card, even if you sell such shares after such
date.
The Committee believes that it is in your best interest to elect the Committee's
Nominees as a Director at the Annual Meeting. THE COMMITTEE STRONGLY RECOMMENDS
A VOTE FOR THE COMMITTEE NOMINEES AND FOR THE PROPOSED AUDITORS.
FIRST FEDERAL BANCSHARES,INC.COMMITTEE TO PRESERVE SHAREHOLDER VALUE.
I M P O R T A N T !!!
If your shares are held in "Street Name" only your bank or broker can vote your
shares and only upon receipt of your specific instructions. Please return the
proxy provided to you or contact the person responsible for your account and
instruct them to vote for the Committee's Nominees on the GREEN proxy card.
If you have any questions, or need further assistance, please call Lawrence
Seidman at 973-560-1400, Extension 108, or, our proxy solicitor: D. F. King &
Co., Att: Richard Grubaugh, 48 Wall Street, New York, New York 10005, at
(800) --------.
APPENDIX A
THE COMMITTEE TO PRESERVE SHAREHOLDER
VALUE AND ITS NOMINEES
The participants who comprise the Committee own in the aggregate 130,500 shares
of Common Stock, representing approximately 7.05% of the shares outstanding and
are as follows:
Seidman and Associates, L.L.C. ("SAL"), is a New Jersey limited liability
company, organized to invest in securities, whose principal and executive
offices are located at 19 Veteri Place, Wayne, New Jersey 07470. Lawrence
Seidman is the Manager of SAL and has sole investment discretion and voting
authority with respect to such securities.
Seidman Investment Partnership, L.P. ("SIP"), is a New Jersey limited
partnership, whose principal and executive offices are located at 19 Veteri
Place, Wayne, NJ 07470. Veteri Place Corporation is the sole General Partner of
SIP and Lawrence Seidman is the only shareholder director and officer of Veteri
Place Corporation. Seidman has sole investment discretion and voting authority
with respect to such securities.
Seidman Investment Partnership II, L.P. ("SIPII"), is a New Jersey limited
partnership, whose principal and executive offices are located at 19 Veteri
Place, Wayne, NJ 07470. Veteri Place Corporation is the sole General Partner of
SIPII and Lawrence Seidman is the only shareholder director and officer of
Veteri Place Corporation. Seidman has sole investment discretion and voting
authority with respect to such securities.
Kerrimatt, LP (Kerrimatt), is a limited partnership formed, in part, to invest
in stock of public companies whose principal and executive offices are located
at 80 Main Street, West Orange, New Jersey 07052. Lawrence Seidman has the sole
investment discretion and voting authority with respect to such securities until
September 27, 2003
Federal Holdings L.L.C. ("Federal"), is a New York limited liability company,
organized to invest in securities, whose principal and executive offices are
located at One Rockefeller Plaza, 31st Floor, New York, NY 10020. Lawrence B.
Seidman is the Manager of Federal and has sole investment discretion and voting
authority with respect to such securities.
Pollack Investment Partnership ("PIP") is a New Jersey limited partnership whose
principal and executive offices are located at 47 Blueberry Drive, Woodcliff
Lakes, New Jersey 07677. Pollack and Seidman are co-general partners of PIP and
share the investment discretion and voting authority with respect to such
securities.
Lawrence Seidman is a private investor, with discretion over certain client
accounts and is the Manager of Federal and SAL, and the President of the
Corporate General Partner of SIP and SIP II, co-general partner of PIP and the
investment manager of Kerrimatt. See Footnote No. 1 below for information
concerning regulatory action.
Dennis Pollack is the co-general partner of PIP and shares discretion with
Seidman with respect to this entity, and is a businessman and a private
investor. In addition, Mr. Pollack is the President and Chief Executive Officer
of Pegasus Funding Group, Inc. and Executive Vice President of New York
NationalBank.
David Jansen is a private investor.
Mark Sill is a private investor.
The following sets forth the name, business address, and the number of shares of
Common Stock of the Company beneficially owned as of March --, 2004, by each of
the Committee Members [The actual stock purchase transactions are set forth on
Exhibit B.]
Number of Shares
of Common Stock
Beneficially
Name Owned & Owned Percent
Class Business Address in Record Name of
- ------------------------------------------------------------------------------
1. Seidman and Associates Lanidex Center, 41,464 2.24
L.L.C.(SAL) 100 Misty Lane
Parsippany, NJ 07054
2. Seidman Investment 19 Veteri Place 40,034 2.16
Partnership, L.P.(SIP) Wayne, NJ 07470
3. Seidman Investment 19 Veteri Place 9,655 .52
Partnership II, L.P.(SIPII)Wayne, NJ 07470
4. Lawrence Seidman & Clients 19 Veteri Place 126,500 6.83
(1) Wayne, NJ 07470
5. Federal Holdings, LLC One Rockefeller Plaza 9,413 .51
(Federal) New York, NY 10020
6. Kerrimatt, LP 80 Main St. 9,172 .49
(Kerrimatt) West Orange, NJ 07052
7. Pollack Investment 47 Blueberry Drive 10,137 .55
Partnership, L.P. (PIP) Woodcliff Lake, NJ 07677
8. Dennis Pollack (2) 47 Blueberry Drive 13,137 .71
(Pollack) Woodcliff Lake, NJ 07677
9. Mark Sill & Diane M.Sill 2115 North Sheridan Dr. 500 .02
Quincy, IL 62305
10.David L. Jansen 1811 S. 24th St., Unit H 500 .02
Quincy, IL 62301-6980
- ------------------
(1) Includes all shares owed by SAL, SIP, SIPII, Federal, Kerrimatt, PIP and
Seidman's clients.
(2) Includes shares owned by PIP.
Seidman may be deemed to have sole voting power and dispositive power as to
116,363 shares beneficially owned by SIP, SIP II, SAL, Kerrimatt and Federal and
his discretionary clients and shared voting power and dispositive power with
Pollack as to the 10,137 shares owned by PIP. Pollack has the sole voting
authority and depositive power for 3,000 shares owned by his family and him.
On November 8, 1995, the acting director of the Office of Thrift Supervision
(OTS) issued a Cease and Desist Order against Seidman ("C & D") after finding
that Seidman recklessly engaged in unsafe and unsound practices in the business
of an insured institution. The C & D actions complained of were Seidman's
allegedly obstructing an OTS investigation. The C & D ordered him to cease and
desist from (i) any attempts to hinder the OTS in the discharge of its
regulatory responsibilities, including the conduct of any OTS examination or
investigation; and (ii) any attempts to induce any person to withhold material
information from the OTS related to the performance of its regulatory
responsibilities. The Order also provides that for a period of no less than
three (3) years if Seidman becomes an institution-affiliated party of any
insured depository institution subject to the jurisdiction of the OTS, to the
extent that his responsibilities include the preparation or review of any
reports, documents, or other information that would be submitted or reviewed by
the OTS in the discharge of its regulatory functions, all such reports,
documents, and other information shall, prior to submission to, or review by the
OTS, be independently reviewed by the Board of Directors or a duly appointed
committee of the Board to ensure that all material information and facts have
been fully and adequately disclosed. In addition, a civil money penalty in the
amount of $20,812 was assessed.
EXHIBIT B
Stock Purchase Transactions
Entity Date Cost Cost Shares
Purch per
Share
- -----------------------------------------------------------------------------
11-Seidman & Assoc 11/5/01 16.0500 1,605.00 100
11-Seidman & Assoc 11/13/01 16.2000 32,400.00 2,000
11-Seidman & Assoc 6/14/02 18.2000 150,150.00 8,250
11-Seidman & Assoc 5/8/03 21.8933 41,049.94 1,875
11-Seidman & Assoc 5/12/03 21.8927 197,034.30 9,000
11-Seidman & Assoc 5/13/03 22.0000 291,500.00 13,250
11-Seidman & Assoc 7/18/03 23.5300 164,451.17 6,989
Total 878,190.41 41,464
11-SIP 5/31/02 17.4500 17,450.00 1,000
11-SIP 6/14/02 18.2000 75,075.00 4,125
11-SIP 5/8/03 21.8933 41,049.94 1,875
11-SIP 5/12/03 21.8927 197,034.30 9,000
11-SIP 5/13/03 22.0000 291,500.00 13,250
11-SIP 5/14/03 22.0900 110,450.00 5,000
11-SIP 7/18/03 23.5300 136,097.52 5,784
Total 868,656.76 40,034
11-SIP II 6/14/02 18.2000 93,275.00 5,125
11-SIP II 5/8/03 21.8933 20,535.92 938
11-SIP II 6/5/03 22.8500 15,995.00 700
11-SIP II 7/18/03 23.5300 68,048.76 2,892
Total 197,854.68 9,655
12-Federal Holdings 6/14/02 18.2000 93,275.00 5,125
12-Federal Holdings 5/8/03 21.8933 20,514.02 937
12-Federal Holdings 6/5/03 22.8500 15,995.00 700
12-Federal Holdings 7/18/03 23.5300 62,378.03 2,651
Total 192,162.05 9,413
12-Kerri-Matt 5/31/02 17.4500 17,450.00 1,000
12-Kerri-Matt 6/14/02 18.2000 75,075.00 4,125
12-Kerri-Matt 5/8/03 21.8933 20,514.02 937
12-Kerri-Matt 6/5/03 22.8500 15,995.00 700
12-Kerri-Matt 7/18/03 23.5300 56,707.30 2,410
Total 185,741.32 9,172
12-Pollack Invest Prtshp 5/31/02 17.4500 17,450.00 1,000
12-Pollack Invest Prtshp 6/14/02 18.2000 75,075.00 4,125
12-Pollack Invest Prtshp 5/8/03 21.8933 20,535.92 938
12-Pollack Invest Prtshp 6/5/03 22.8500 15,995.00 700
12-Pollack Invest Prtshp 7/18/03 23.5300 79,390.22 3,374
Total 208,446.14 10,137
Dennis Pollack 7/23/03 24.2723 72,816.84 3,000
Total 72,816.84 3,000
Seidman & Clients 5/31/02 17.4500 8,725.00 500
Seidman & Clients 6/14/02 18.2000 75,075.00 4,125
Seidman & Clients 7/24/03 24.6049 24,604.85 1,000
Seidman & Clients 7/24/03 24.6049 24,604.85 1,000
Total 133,009.70 6,625
Mark Sill & Diance M. Sill 10/24/03 33.21 16,922.51 500
Total 16,605.00 500
David L. Jansen 10/20/03 31.99 16,024.00 500
Total 16,024.00 500
Total Total 2,769,824.50 130,500
P R O X Y
THIS PROXY IS SOLICITED IN OPPOSITION TO THE BOARD OF DIRECTORS OF FIRST FEDERAL
BANKSHARES, INC. BY THE COMMITTEE TO PRESERVE SHAREHOLDER VALUE.
ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Lawrence Seidman, David L. Jansen or Mark Sill
with full power of substitution as proxy for the undersigned, to vote all shares
of common stock, par value $.01 per share of First Federal Bancshares, Inc.,
(the "Company"), which the undersigned is entitled to vote at the Annual Meeting
of Stockholders to be held on May 25, 2004, or any adjournment(s) or
postponement(s) thereof (the "Meeting"), as follows:
1. ELECTION OF DIRECTORS - To elect DAVID L. JANSEN MARK SILL
FOR VOTE WITHHOLD EXCEPTIONS
_ _ _
|_| |_| |_|
___________________
To withhold authority to vote for the election of any individual nominee, mark
the "EXCEPTIONS" box and write that nominee's name on the line provided.
2. APPOINTMENT OF CROWE CHIZEK AND COMPANY, LLC, AS INDEPENDENT ACCOUNTANTS FOR
THE FISCAL YEAR ENDING DECEMBER 31, 2004:
__ __ __
For |__| Against |__| Abstain |__|
IMPORTANT: PLEASE SIGN AND DATE ON THE REVERSE SIDE.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned Shareholder. Unless otherwise specified, this proxy will be
voted "FOR" the election of the Committee's Nominees as Directors and "FOR" the
appointment of Crowe Chizek and Company, LLC, the independent accountants. This
proxy revokes all prior proxies given by the undersigned.
In his discretion, the proxy is authorized to vote upon such other business as
may properly come before the meeting, or any adjournments or postponements
thereof, as provided in the proxy statement provided herewith.
Please sign exactly as your name appears hereon or on your proxy cards
previously sent to you. When shares are held by joint tenants, both should sign.
When signing as an attorney, executor, administrator, trustee, or guardian,
please give full title as such. If a corporation, please sign in full
corporation name by the President or other duly authorized officer. If a
partnership, please sign in partnership name by authorized person. This proxy
card votes all shares held in all capacities.
Dated:___________________________________
_________________________________________
(Signature)
_________________________________________
(Signature, if jointly held)
Title: ____________________________________
PLEASE SIGN, DATE, AND MAIL THIS PROXY CARD TODAY.