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Allied First Bancorp. Inc.
----------------------------------
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ALLIED FIRST BANCORP, INC.
387 Shuman Boulevard
Suite 120W
Naperville, Illinois 60563
(630) 778-7700
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Allied First Bancorp,
Inc., you are cordially invited to attend Allied First Bancorp's Annual Meeting
of Stockholders. The meeting will be held at 8:30 a.m., Naperville, Illinois
time, on Thursday, October 23, 2003, at the office of Allied First Bank, located
at 387 Shuman Boulevard, Naperville, Illinois.
An important aspect of the meeting process is the annual stockholder vote
on corporate business items. I urge you to exercise your rights as a stockholder
to vote and participate in this process. Stockholders are being asked to
consider and vote upon (1) the election of two directors of Allied First Bancorp
and (2) the ratification of the appointment of Crowe Chizek and Company LLC as
Allied First Bancorp's auditors. In addition, the meeting will include
management's report to you on our 2003 financial and operating performance.
We encourage you to attend the meeting in person. Whether or not you plan
to attend, however, please read the enclosed proxy statement and then complete,
sign and date the enclosed proxy card and return it in the accompanying postpaid
return envelope as promptly as possible. This will save Allied First Bancorp
additional expense in soliciting proxies and will ensure that your shares are
represented at the meeting.
Your Board of Directors and management are committed to the success of
Allied First Bancorp and the enhancement of the value of your investment. Thank
you for your confidence and support.
Very truly yours,
/s/ Kenneth L. Bertrand
-------------------------------------
Kenneth L. Bertrand
President and Chief Executive Officer
September 25, 2003
Naperville, Illinois
DC 126971 v 6, 54831.00003
ALLIED FIRST BANCORP, INC.
387 Shuman Boulevard
Suite 120W
Naperville, Illinois 60563
(630) 778-7700
___________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 23, 2003
___________________
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Allied First
Bancorp, Inc. will be held as follows:
TIME ...........8:30 a.m. Naperville, Illinois time
DATE ...........Thursday, October 23, 2003
PLACE...........387 Shuman Boulevard, Naperville, Illinois
ITEMS OF BUSINESS
(1) To elect two directors, each
for a term of three years;
(2) To ratify the appointment of Crowe Chizek and Company LLC as
Allied First Bancorp's independent auditors for the fiscal year
ending June 30, 2004; and
to transact any other business that may properly come before the
meeting and any adjournment or postponement of the meeting.
RECORD DATE.... Holders of record of Allied First Bancorp's common stock
at the close of business on September 8, 2003 will be
entitled to vote at the meeting or any adjournment of the
meeting.
ANNUAL REPORT.. Allied First Bancorp's Annual Report to Stockholders is
being mailed with this proxy statement.
PROXY VOTING... It is important that your shares be represented and voted
at the meeting. You can vote your shares by completing
and returning the enclosed proxy card. Regardless of the
number of shares you own, your vote is very important.
Please act today.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Kenneth L. Bertrand
-------------------------------------
Kenneth L. Bertrand
President and Chief Executive Officer
Naperville, Illinois
September 25, 2003
ALLIED FIRST BANCORP, INC.
387 Shuman Boulevard
Suite 120W
Naperville, Illinois 60563
(630) 778-7700
___________________
PROXY STATEMENT
___________________
ANNUAL MEETING OF STOCKHOLDERS OCTOBER 23, 2003
TABLE OF CONTENTS PAGE
Introduction......................................................................1
Information about the Annual Meeting..............................................2
What is the purpose of the Annual Meeting?........................................2
Who is entitled to vote?..........................................................2
What if my shares are held in "Street Name" by a broker?..........................2
How many shares must be present to hold the meeting?..............................2
What if a quorum is not present at the meeting?...................................3
How do I vote?....................................................................3
Can I change my vote after I submit my proxy?.....................................3
How does the Board of Directors recommend I vote on the proposals?................3
What if I do not specify how my shares are to be voted?...........................4
Will any other business be conducted at the meeting?..............................4
How many votes are required to elect the director nominees?.......................4
What happens if a nominee is unable to stand for election?........................4
How many votes are required to ratify the appointment of Allied First Bancorp's
independent auditors?..........................................................4
How will abstentions be treated?..................................................5
How will broker non-votes be treated?.............................................5
Stock ownership...................................................................6
Stock ownership of significant stockholders, directors and executive officers.....6
Proposal 1 - Election of directors................................................7
General...........................................................................7
Nominees..........................................................................7
Board of directors meetings and committees........................................9
Directors' compensation..........................................................10
Executive compensation...........................................................11
Summary compensation table.......................................................11
Employment agreement.............................................................11
Benefits.........................................................................12
Report of the audit committee of the Board of Directors..........................13
Loans and other transactions with officers and directors.........................14
Proposal 2 - Auditors...........................................................14
Section 16(a) beneficial ownership reporting compliance..........................15
Stockholder proposals for 2004 Annual Meeting....................................16
Other matters....................................................................16
ALLIED FIRST BANCORP, INC.
387 Shuman Boulevard
Suite 120W
Naperville, Illinois 60563
(630) 778-7700
___________________
PROXY STATEMENT
___________________
INTRODUCTION
------------
The Board of Directors of Allied First Bancorp, Inc. is using this proxy
statement to solicit proxies from the holders of the Allied First Bancorp's
common stock for use at Allied First Bancorp's upcoming Annual Meeting of
Stockholders. The meeting will be held on Thursday, October 23, 2003 at 8:30
a.m., Naperville, Illinois time, at the office of Allied First Bank, located at
387 Shuman Blvd., Naperville, Illinois. At the meeting, stockholders will be
asked to vote on two proposals: (1) the election of two directors of Allied
First Bancorp, each to serve for a term of three years; and (2) the ratification
of the appointment of Crowe Chizek and Company LLC as Allied First Bancorp's
independent auditors for the fiscal year ending June 30, 2004. These proposals
are described in more detail below. Stockholders also will consider any other
matters that may properly come before the meeting, although the Board of
Directors knows of no other business to be presented. Some of the information in
this proxy statement relates to Allied First Bank, a wholly owned subsidiary of
Allied First Bancorp.
By submitting your proxy, you authorize Allied First Bancorp's Board of
Directors to represent you and vote your shares at the meeting in accordance
with your instructions. The Board of Directors also may vote your shares to
adjourn the meeting from time to time and will be authorized to vote your shares
at any adjournments or postponements of the meeting.
Allied First Bancorp's Annual Report to Stockholders for the fiscal year
ended June 30, 2003, which includes Allied First Bancorp's annual financial
statements, is being mailed with this proxy statement. Although the Annual
Report is being mailed to stockholders with this proxy statement, it does not
constitute a part of the proxy solicitation materials and is not incorporated
into this proxy statement by reference.
This proxy statement and the accompanying materials are being mailed to
stockholders on or about September 25, 2003.
Your vote is important. Whether or not you plan to attend the meeting,
please submit your proxy promptly in the enclosed envelope.
INFORMATION ABOUT THE ANNUAL MEETING
------------------------------------
What is the purpose of the annual meeting?
At the annual meeting, stockholders will be asked to vote on the following
proposals:
Proposal 1. Election of two directors of Allied First Bancorp, each for a
term of three years; and
Proposal 2. Ratification of the appointment of Crowe Chizek and Company LLC
as Allied First Bancorp's independent auditors for the fiscal year ending
June 30, 2004.
The stockholders also will act on any other business that may properly come
before the meeting. Members of our management team will be present at the
meeting to respond to your questions.
Who is entitled to vote?
The record date for the meeting is September 8, 2003. Only stockholders of
record at the close of business on that date are entitled to notice of and to
vote at the meeting. The only class of stock entitled to be voted at the meeting
is Allied First Bancorp's common stock. Each outstanding share of common stock
is entitled to one vote for all matters before the meeting. At the close of
business on the record date, there were 558,350 shares of common stock
outstanding.
What if my shares are held in "Street Name" by a broker?
If your shares are held in "Street Name" by a broker, your broker is
required to vote your shares in accordance with your instructions. If you do not
give instructions to your broker, your broker will nevertheless be entitled to
vote your shares with respect to "discretionary" items, but will not be
permitted to vote your shares with respect to "non-discretionary" items. In the
case of non-discretionary items, your shares will be treated as "broker
non-votes." Proposals 1 and 2 are both expected to be considered "discretionary"
items.
How many shares must be present to hold the meeting?
A quorum must be present at the meeting for any business to be conducted.
The presence at the meeting, in person or by proxy, of the holders of at least
one-third of the shares of common stock outstanding on the record date will
constitute a quorum. Proxies received but marked as abstentions or broker
non-votes will be included in the calculation of the number of shares considered
to be present at the meeting.
2
What if a quorum is not present at the meeting?
If a quorum is not present at the scheduled time of the meeting, the
stockholders who are represented may adjourn the meeting until a quorum is
present. The time and place of the adjourned meeting will be announced at the
time the adjournment is taken. An adjournment will have no effect on the
business that may be conducted at the meeting.
How do I vote?
YOU MAY VOTE BY MAIL. If you properly complete and sign the accompanying
proxy card and return it in the enclosed envelope, it will be voted in
accordance with your instructions.
YOU MAY VOTE IN PERSON AT THE MEETING. If you plan to attend the annual
meeting and wish to vote in person, we will give you a ballot at the annual
meeting. Note, however, that if your shares are held in the name of your broker,
bank or other nominee, you will need to obtain a proxy from the holder of your
shares indicating that you were the beneficial owner of those shares on
September 8, 2003, the record date for voting at the meeting. You are encouraged
to vote by proxy prior to the meeting even if you plan to attend the meeting.
Can I change my vote after I submit my proxy?
Yes, you may revoke your proxy and change your vote at any time before the
polls close at the meeting by:
o signing another proxy with a later date;
o giving written notice of the revocation of your proxy to the
Secretary of Allied First Bancorp prior to the annual meeting; or
o voting in person at the annual meeting. Your proxy will not be
automatically revoked by your mere attendance at the meeting; you must
actually vote at the meeting to revoke a prior proxy.
How does the Board of Directors recommend I vote on the proposals?
Your Board of Directors recommends that you vote:
o FOR election of the two nominees to the Board of Directors; and
o FOR ratification of the appointment of Crowe Chizek and Company LLC
as Allied First Bancorp's independent auditors.
3
What if I do not specify how my shares are to be voted?
If you submit an executed proxy but do not indicate any voting
instructions, your shares will be voted:
o FOR election of the two nominees to the Board of Directors; and
o FOR ratification of the appointment of Crowe Chizek and Company LLC
as Allied First Bancorp's independent auditors.
Will any other business be conducted at the meeting?
The Board of Directors knows of no other business that will be presented at
the meeting. If, however, any other proposal properly comes before the
stockholders for a vote at the meeting, the Board of Directors, as holder of
your proxy, will vote your shares in accordance with its best judgment.
How many votes are required to elect the director nominees?
The affirmative vote of a plurality of the votes cast at the meeting is
required to elect the two nominees as directors. This means that the two
nominees will be elected if they receive more affirmative votes than any other
persons nominated for election. No persons have been nominated for election
other than the two nominees named in this proxy statement. If you vote
"Withheld" with respect to the election of one or more nominees, your shares
will not be voted with respect to the person or persons indicated, although they
will be counted for purposes of determining whether there is a quorum.
What happens if a nominee is unable to stand for election?
If a nominee is unable to stand for election, the Board of Directors may
either reduce the number of directors to be elected or select a substitute
nominee. If a substitute nominee is selected, the Board of Directors, as holder
of your proxy, will vote your shares for the substitute nominee unless you have
withheld authority to vote for the nominee replaced.
How many votes are required to ratify the appointment of Allied First Bancorp's
independent auditors?
The ratification of the appointment of Crowe Chizek and Company LLC as
Allied First Bancorp's independent auditors requires the affirmative vote of a
majority of the votes cast on the matter.
4
How will abstentions be treated?
If you abstain from voting, your shares will still be included for purposes
of determining whether a quorum is present. Because directors will be elected by
a plurality of the votes cast, abstaining is not offered as a voting option for
Proposal 1. If you abstain from voting on Proposal 2, the ratification of the
appointment of Crowe Chizek and Company LLC as Allied First Bancorp's
independent auditors, your shares will not be included in the number of shares
voting on the proposal and, consequently, your abstention will have no effect on
the proposal.
How will broker non-votes be treated?
Shares treated as broker non-votes on one or more proposals will be
included for purposes of calculating the presence of a quorum but will not be
counted as votes cast. Consequently, broker non-votes will have no effect on
Proposal 1 or Proposal 2. If, as expected, Proposals 1 and 2 are considered
"discretionary items," there will be no broker non-votes on these proposals.
5
STOCK OWNERSHIP
---------------
Stock Ownership of Significant Stockholders, Directors and Executive Officers
The following table shows, as of September 8, 2003, the beneficial
ownership of Allied First Bancorp's common stock by:
o any persons or entities known by management to beneficially own
more than five percent of the outstanding shares of Allied First
Bancorp common stock;
o each director and director nominee of Allied First Bancorp;
o each officer of Allied First Bancorp and Allied First Bank
named in the "Summary Compensation Table" appearing below; and
o all of the executive officers and directors of Allied First
Bancorp and Allied First Bank as a group.
The address of each of the beneficial owners, except where otherwise
indicated, is the same address as Allied First Bancorp's. As of September 8,
2003, there were 558,350 shares of Allied First Bancorp common stock issued and
outstanding.
Beneficial Owner Shares Beneficially Owned Percent of Class
---------------- ------------------------- ----------------
Five Percent Beneficial Owners
------------------------------
Jeffrey L. Gendell(1) 52,500 9.40%
55 Railroad Avenue, 3rd Floor
Greenwich, Connecticut 06830
John R. Brick 1990 Revocable Trust(2)
1400 Abbott Road
East Lansing, Michigan 48823 41,000 7.34%
Named Officers and Directors
----------------------------
Kenneth L. Bertrand, President, Chief Executive Officer
and Director 36,893 6.61%
John G. Maxwell Jr., Chairman of the Board 30,000 5.37%
William G. McKeown, Director 500 0.09%
Brien J. Nagle, Director 2,500 0.45%
Paul F. Renneisen, Director 5,000 0.90%
Frank K. Voris, Director 5,000 0.90%
All directors and executive officers as a group (9 persons) 88,780 15.90%
_______________
(1) The above information is as reported in a Schedule 13-D filed on May 15,
2003, by Tontine Financial Partners, L.P., Tontine Management, L.L.C. and
Jeffrey L. Gendell. These three parties reported shared voting and
dispositive power with respect to all 52,500 shares.
(2) The above information is as reported in a Schedule 13-D filed on January
10, 2002, by the John R. Brick 1990 Revocable Trust. The Trust reported
shared voting and dispositive power with Mr. Brick's spouse's personal
trust with respect to 15,000 shares. The Trust has sole voting and
dispositive power with respect to the remaining shares.
6
PROPOSAL 1 - ELECTION OF DIRECTORS
----------------------------------
General
Allied First Bancorp's Board of Directors consists of six directors divided
into three classes. Directors in each class are elected to serve for three-year
terms that expire in successive years. The term of one of the classes of Allied
First Bancorp's directors will expire at the annual meeting.
Nominees
Allied First Bancorp has nominated Frank K. Voris and Brien J. Nagle for
election as directors for three-year terms expiring at the Annual Meeting of
Stockholders to be held in 2006. Each nominee currently serves as a director of
Allied First Bancorp and Allied First Bank. Each nominee has consented to being
named in this proxy statement and has agreed to serve if elected. If a nominee
is unable to stand for election, the Board of Directors may either reduce the
number of directors to be elected or select a substitute nominee. If a
substitute nominee is selected, the Board of Directors, as holder of your proxy,
will vote your shares for the substitute nominee, unless you have withheld
authority to vote for the nominee replaced.
The affirmative vote of a plurality of the votes cast at the meeting is
required to elect the two nominees as directors. Your Board of Directors
recommends that you vote "FOR" the election of each of the nominees.
7
The following table sets forth, with respect to each nominee and each
continuing director, his name and age, the year in which he first became a
director of Allied First Bank, and his principal occupation and business
experience during the past five years. Each director has served as a director of
Allied First Bancorp since its formation in 2001.
Positions-Held-With Director Term
Name Age(1) Allied-First-Bancorp, Inc. Since(2) Expire
------------------------------- --------- ---------------------------- ------------- -------
NOMINEES
--------
Frank K. Voris 63 Director 2001 2006
Brien J. Nagle 53 Director 2001 2006
CONTINUING DIRECTORS
--------------------
John G. Maxwell, Jr. 58 Chairman of the Board and 1994 2004
Director
Paul F. Renneisen 49 Director 1994 2004
William G. McKeown 55 Director 1994 2005
Kenneth L. Bertrand 46 President, Chief Executive 1996 2005
Officer and Director
--------------------------------------------------------------------------------------------------
_________________________
(1) As of June 30, 2003.
(2) Excepting Messrs. Nagle and Voris, includes time as a director of Allied
Pilots Association Federal Credit Union, the predecessor to Allied First
Bank.
The business experience of each director for at least the past five years
is set forth below.
Kenneth L. Bertrand. Mr. Bertrand has served as President and Chief
Executive Officer of Allied First Bank and its predecessor Allied Pilots
Association Federal Credit Union since its founding in 1994. Prior to joining
the credit union, he served as Vice President and Chief Operating Officer of
Zenith Federal Credit Union and served in various capacities during his 12 year
tenure. He is a certified public accountant in the State of Illinois.
William G. McKeown. Mr. McKeown has been employed as a pilot with American
Airlines since 1985.
Frank K. Voris. Mr. Voris served as an Executive Vice President and the
Chief Operating Officer of Merchants National Bank of Aurora, located in Aurora,
Illinois, from 1985 until 2000 when the bank was acquired by Old Kent Financial,
Inc.
Brien J. Nagle. Mr. Nagle has been a partner is the law firm of Nagle &
Higgins, P.C., located in Naperville, Illinois, since 1992. Mr. Nagle served as
a Director of Old Kent Bank located in Elmhurst, Illinois from 1988 to 1998.
John G. Maxwell, Jr. Mr. Maxwell has been employed as a pilot with American
Airlines since 1987.
8
Paul F. Renneisen. Mr. Renneisen has been employed as a pilot with American
Airlines since 1985. He is a certified public accountant in the State of
Florida.
Board of Directors Meetings and Committees
Board and Committee Meetings of Allied First Bancorp. Allied First
Bancorp's Board of Directors meets monthly. During the fiscal year ended June
30, 2003, the Board of Directors held four meetings. No director attended fewer
than 75% of the total meetings of the Board of Directors and committees on which
such Board member served during this period. Allied First Bancorp currently has
standing Audit and Executive Committees. Allied First Bancorp does not have a
standing Nominating Committee; rather, the Executive Committee performs this
function.
The Audit Committee is comprised of Messrs. Renneisen, McKeown and Voris
with Mr. Voris serving as chairman. The Audit Committee meets semi-annually or
more frequently as needed. The Audit Committee recommends the independent
auditors and reviews the audit report prepared by the independent auditors. This
committee met four times in fiscal 2003.
The Executive Committee is comprised of Messrs. Maxwell, Bertrand and Voris
with Mr. Maxwell serving as chairman. The committee meets on an as needed basis.
The committee is generally authorized to oversee management or special projects
on behalf of the full Board of Directors. The Executive Committee did not meet
in fiscal 2003.
The Executive Committee performs the functions of a nominating committee
for purposes of selecting nominees for election to the Board of Directors. The
Executive Committee generally meets once per year to make nominations. While the
Executive Committee will consider nominees recommended by stockholders, the
Executive Committee has not actively solicited such nominations.
Pursuant to Allied First Bancorp's bylaws, nominations for election as
directors by stockholders at an annual meeting must be made in writing and
delivered to Allied First Bancorp's Secretary not less than 90 days nor more
than 120 days prior to the first anniversary of the preceding year's annual
meeting date. If, however, the date of an annual meeting is advanced by more
than 30 days or delayed by more than 60 days from the preceding year's annual
meeting date, then nominations must be received by Allied First Bancorp no
earlier than the 120th day prior to the meeting and no later than the 90th day
prior to the meeting or the tenth day following the day on which notice of the
date of meeting was mailed or public announcement of the date of the meeting was
first made.
Board of Directors and Committee Meetings of Allied First Bank. Allied
First Bank's Board of Directors meets monthly. During the fiscal year ended June
30, 2003, the Board of Directors held 12 meetings. No director attended fewer
than 75% of the total meetings of the Board of Directors and committees on which
such Board member served during this period.
9
Allied First Bank currently has standing Audit, Loan, Compensation,
Executive and Asset Liability Management Committees. We do not have a standing
Nominating Committee; rather, the Executive Committee performs this function.
The Audit Committee is comprised of Messrs. Renneisen, McKeown and Voris
with Mr. Voris serving as chairman. The Audit Committee meets semi-annually or
more frequently as needed. This committee oversees the audit and loan review
activities of Allied First Bank. The committee recommends the independent
auditors and reviews the audit report prepared by the independent auditors. This
committee met four times in fiscal 2003.
The Loan Committee consists of the entire Board of Directors and oversees
all loan activities. The committee approves all loans that exceed management's
loan authority, periodically reviews loans within the officer's loan authority
and reviews all past due loans on a monthly basis. This committee meets monthly
or more frequently as needed. This committee met twelve times in fiscal 2003.
The Compensation Committee is composed of Messrs. McKeown, Nagle, Voris and
Maxwell. The committee makes recommendations on employee compensation. The
Compensation Committee met one time in fiscal 2003.
The Executive Committee is comprised of Messrs. Maxwell, Bertrand and Voris
with Mr. Maxwell serving as chairman. The Committee meets on an as needed basis.
The committee is generally authorized to oversee management or special projects
on behalf of the full Board of Directors. The Executive Committee did not meet
in fiscal 2003.
The Executive Committee performs the functions of a nominating committee
for purposes of selecting nominees for election to the Board of Directors. The
Executive Committee generally meets once per year to make nominations.
The Asset Liability Management Committee consists of the entire Board of
Directors and determines the investment strategy of Allied First Bank. This
Asset Liability Management Committee met four times in fiscal 2003.
Directors' Compensation
The non-employee members of Allied First Bancorp's and Allied First Bank's
Boards of Directors receive a $250 fee for each board meeting they attend while
the Chairman of the Board receives $400. Each non-employee director also
receives a fee of $150 for each committee meeting they attend.
10
Executive Compensation
The following table sets forth a summary of information concerning the
compensation paid by Allied First Bank, including amounts deferred to future
periods, for services rendered in all capacities during the year ended June 30,
2003 to the President and Chief Executive Officer of Allied First Bank. No other
officer of Allied First Bank received salary and bonus exceeding $100,000.
Summary Compensation Table
--------------------------
Long Term
Annual Compensation Compensation Awards
------------------------------------- --------------------
Other Restricted
Annual Stock
Fiscal Compensation Award Options All Other
Name and Principal Position Year Salary Bonus ($)(1) ($)(2) (#)(2) Compensation
--------------------------- ---- ------ ----- ------ ------ ------ ------------
Kenneth L. Bertrand 2003 $158,500 $ 21,000 -- -- -- $ 32,353(3)
President and Chief Executive 2002 $129,500 $ 19,280 -- -- -- $ 25,471(4)
Officer 2001 $115,000 $ 13,320 -- -- -- $ 25,201(5)
____________
(1) This amount does not include personal benefits or perquisites which did not
exceed the lesser of $50,000 or 10% of the named individual's salary and
bonus.
(2) Allied First Bancorp, Inc. does not have any stock option or restricted
stock plans.
(3) Amount represents contributions under Allied First Bank's pension plan in
the amount of $16,478, a 401(k) plan contribution of $6,875 and a
contribution of $9,000 under a non-qualified deferred compensation plan for
the fiscal year ended June 30, 2003.
(4) Amount represents contributions under Allied First Bank's pension plan in
the amount of $11,967, a 401(k) plan contribution of $5,504 and a
contribution of $8,500 under a non-qualified deferred compensation plan for
the fiscal year ended June 30, 2002.
(5) Amount represents contributions under Allied First Bank's pension plan in
the amount of $13,302, a 401(k) plan contribution of $4,399 and a
contribution of $7,500 under a non-qualified deferred compensation plan and
for fiscal year ended June 30, 2001.
Employment Agreement
Employment Agreement for Kenneth L. Bertrand. Mr. Bertrand has an
employment agreement with Allied First Bank for a term ending on December 31,
2003. Mr. Bertrand's base salary under the agreement is $156,000, and the
agreement also provides for equitable participation by Mr. Bertrand in Allied
First Bank's employee benefit plans. The agreement may be terminated by mutual
agreement of the parties. In addition, Mr. Bertrand is eligible for an annual
bonus of up to 20% of his salary. Mr. Bertrand's agreement also contains a
deferred compensation provision whereby Allied First Bank will establish an
annual book reserve in the amount of $9,000 for the benefit of Mr. Bertrand.
This amount will be invested at the discretion
11
of the Board of Directors of Allied First Bank. Mr. Bertrand will generally
begin to receive payments upon attaining the age of 65.
Benefits
General. Allied First Bank currently provides health and welfare benefits
to its employees, including hospitalization and comprehensive medical insurance,
subject to deductibles and copayments by employees.
401(k) Plan. Allied First Bank provides its employees a qualified,
tax-exempt pension plan with a "cash-or-deferred arrangement" qualifying under
Section 401(k) of the Internal Revenue Code. Employees who have attained age 18
and who have completed one year of employment, during which they worked at least
1,000 hours, are eligible to participate in the 401(k) Plan as of the first day
of the month following their eligible date. Eligible employee are permitted to
contribute up to 10% of their compensation to the 401(k) Plan on a pre-tax
basis, up to a maximum of $12,000. The Allied First Bank matches 50% of each
participant's salary reduction contribution to the 401(k) Plan. Participants in
the 401(k) Plan may use the funds to purchase the stock of Allied First Bancorp,
Inc.
Participants' contribution to the 401(k) Plan are fully and immediately
vested, whereas contributions by Allied First Bank vest over a five year period.
Withdrawals are not permitted before age 59 1/2 except in the event of death,
disability, termination of employment or reasons of proven financial hardship.
With certain limitation, participants may make withdrawals from their accounts
while actively employed. Upon termination of employment, the participant's
accounts will be distributed, unless he or she elects to defer the payment.
The 401(k) Plan may be amended by the Board of Directors, except that no
amendment may be made which would reduce the interest of any participant in the
401(k) Plan trust fund or divert any of the assets of the 401(k) Plan trust fund
to purposes other than the benefit of participants or their beneficiaries.
Pension Plan. Allied First Bank previously made available to all full-time
employees who had attained the age of 18 and completed at least one year of
service with the institution, a defined contribution pension plan. Allied First
Bank contributed up to 15% of the employee's compensation to the plan, and such
contributions vested over a five year period. The pension plan provided for
monthly payments to or on behalf of each covered employee upon the employee's
retirement at age 65. The pension plan was terminated and became part of the
401(k) Plan on October 1, 2001. Any contribution made by Allied First Bank under
this component of the 401(k) Plan is discretionary with the Board of Directors
and in no event can exceed 15% of the employees' compensation.
Staff Bonus Plan. Allied First Bank maintains a bonus plan for vice
presidents and above. They are eligible for a bonus up to 5% of their salary,
excluding Mr. Bertrand. All other employees are eligible for such bonuses as are
granted by the Board of Directors.
12
Report of the Audit Committee of the Board of Directors
Notwithstanding anything to the contrary set forth in any of Allied First
Bancorp's previous or future filings under the Securities Act of 1933, as
amended or the Securities Exchange Act of 1934, as amended, that might
incorporate this Proxy Statement, in whole or in part, the following report
shall not be deemed to be incorporated by reference into any such filing.
Membership and Role of the Audit Committee. The Audit Committee consists of
the following members of Allied First Bancorp's Board of Directors: Messrs.
Renneisen, McKeown and Voris. The Board of Directors has determined that each of
the members of the Audit Committee is independent as defined under the National
Association of Securities Dealers' listing standards. The Audit Committee does
not operate under a written charter.
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities regarding accounting, tax
and legal compliance. The Audit Committee's primary duties and responsibilities
are to:
(1) serve as an independent and objective party to monitor the Allied
First Bancorp's financial reporting process and internal control
system;
(2) review and appraise the audit efforts of Allied First Bancorp's
independent accountants and internal audit department;
(3) evaluate Allied First Bancorp's quarterly financial performance
as well as its compliance with laws and regulations; and
(4) provide an open avenue of communication among the independent
accountants, financial and senior management, counsel, the
internal audit department and the Board of Directors.
Review of Allied First Bancorp's Audited Financial Statements for the
Fiscal Year ended June 30, 2003. The Audit Committee has reviewed and discussed
the audited financial statements of Allied First Bancorp for the fiscal year
ended June 30, 2003 with Allied First Bancorp's management. The Audit Committee
has discussed with Crowe Chizek and Company LLC, Allied First Bancorp's
independent public accountants, the matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit Committees).
The Audit Committee has received the written disclosures and the letter
from Crowe Chizek and Company LLC required by Independence Standards Board
Standard No. 1 (Independence Discussion with Audit Committees) and the Audit
Committee has discussed the independence of Crowe Chizek and Company LLC with
that firm.
13
Based on the Audit Committee's review and discussions noted above, the
Audit Committee recommended to the Board of Directors that Allied First
Bancorp's audited financial statements be included in its Annual Report on Form
10-KSB for the fiscal year ended June 30, 2003, for filing with the Securities
and Exchange Commission.
Paul F. Renneisen William G. McKeown Frank K. Voris
Loans and Other Transactions with Officers and Directors
Allied First Bank has followed a policy of granting loans to officers and
directors, which fully complies with all applicable federal regulations. In
accordance with the requirements of applicable law, loans to directors and
executive officers are made in the ordinary course of business and on the same
terms and conditions as those of comparable transactions with unaffiliated third
parties prevailing at the time, in accordance with its underwriting guidelines,
and do not involve more than the normal risk of collectibility or present other
unfavorable features. In addition, all loans and forgiveness of loans to, and
transactions with, directors and executive officers have been approved in the
past and will be approved in the future, by at least a majority of the
independent, disinterested members of the Board of Directors. Directors have
access to independent counsel at Allied First Bank's expense regarding any such
loan or transaction.
All loans we make to, or transactions with, our directors and executive
officers are subject to regulations restricting loans and other transactions
with such persons of Allied First Bank. Loans to all directors and executive
officers and their associates totaled approximately $106,448 at June 30, 2003,
which was 1.08% of our equity at that date. All loans to directors and executive
officers were performing in accordance with their terms at June 30, 2003.
PROPOSAL 2 - AUDITORS
---------------------
The Board of Directors has renewed Allied First Bancorp's arrangement for
Crowe Chizek and Company LLC to be its independent auditors for the fiscal year
ending June 30, 2004, subject to the ratification of the appointment by
stockholders at the annual meeting. A representative of Crowe Chizek and Company
LLC is expected to attend the annual meeting to respond to appropriate questions
and will have an opportunity to make a statement if he or she so desires.
14
The following table sets forth the fees billed to Allied First Bancorp by
Crowe Chizek and Company LLC, its independent auditor for each of the last two
fiscal years.
Name of Fees Fiscal 2002 Fiscal 2003
----------------------------------------------------------------------------
Audit Fees $ 38,000 $ 59,500
(includes review of SEC reports)
Other Audit Related Fees $ 103,350 $ -0-
(includes other services related to audit)
Tax Related Fees $ 5,000 $ 12,800
All other fees $ 12,350 $ 1,300
----------------------------------------------------------------------------
Under the current policy of the Audit Committee, all services provided by
the independent auditor must first be preapproved by the Audit Committee. The
Audit Committee determined that the provision of services covered under the
caption "Tax Related Fees" above was compatible with maintaining the
independence of Crowe Chizek and Company LLC.
The Board of Directors recommends that you vote "FOR" the ratification of
the appointment of Crowe Chizek and Company LLC as Allied First Bancorp's
independent auditors for the fiscal year ending June 30, 2004.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
-------------------------------------------------------
Section 16(a) of the Exchange Act requires Allied First Bancorp's directors
and executive officers, and persons who beneficially own more than 10% of the
common stock, to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of the common stock.
Officers, directors and greater than 10% beneficial owners are required by SEC
regulations to furnish Allied First Bancorp with copies of all Section 16(a)
forms they file.
To Allied First Bancorp's knowledge, based solely on a review of the copies
of such reports furnished to Allied First Bancorp and written representations
that no other report were required, during the fiscal year ended June 30, 2003,
all Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were met.
15
STOCKHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
---------------------------------------------
If you intend to present a stockholder proposal at the next year's annual
meeting, your proposal must be received by Allied First Bancorp at its executive
offices, located at 387 Shuman Blvd., Suite 120W, Naperville, Illinois, no later
than June 25, 2004 to be eligible for inclusion in Allied First Bancorp's proxy
statement and form of proxy for that meeting. Your proposal will be subject to
the requirements of the proxy rules adopted under the Securities Exchange Act of
1934, as amended, and the Allied First Bancorp's articles of incorporation and
bylaws and Maryland law.
To be considered for presentation at the 2004 annual meeting, but not for
inclusion in the Allied First Bancorp's proxy statement and form of proxy for
that meeting, stockholder proposals must be received by Allied First Bancorp no
earlier than June 25, 2004 and no later than July 25, 2004. If, however, the
date of the next annual meeting is before September 23, 2004 or after December
22, 2004, proposals must instead be received by Allied First Bancorp no earlier
than the 120th day prior to the date of the next annual meeting and no later
than the 90th day before the meeting or the tenth day after the day on which
notice of the date of the meeting is mailed or public announcement of the date
of the meeting is first made. If a stockholder proposal that is received by
Allied First Bancorp after the applicable deadline for presentation at the next
annual meeting is raised at that meeting, the holders of the proxies for that
meeting will have the discretion to vote on the proposal in accordance with
their best judgment and discretion, without any discussion of the proposal in
the Allied First Bancorp's proxy statement for the meeting.
OTHER MATTERS
-------------
The Board of Directors knows of no other business that will be presented at
the meeting. If any other matter properly comes before the stockholders for a
vote at the meeting, the Board of Directors, as holder of your proxy, will vote
your shares in accordance with its best judgment.
Allied First Bancorp will pay the costs of soliciting proxies. Allied First
Bancorp will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Allied First Bancorp's common stock. In addition to
solicitation by mail, directors, officers and employees of Allied First Bancorp
may solicit proxies personally or by facsimile, telegraph or telephone, without
additional compensation.
16
REVOCABLE PROXY
Allied First Bancorp, Inc.
[X]PLEASE MARK VOTES AS IN THIS EXAMPLE
Annual Meeting of Stockholders
October 23, 2003
The undersigned hereby appoints the Board of Directors of Allied First
Bancorp, Inc. (the "Company"), with full powers of substitution, to act as
attorneys and proxies for the undersigned to vote all shares of the capital
stock of the Company which the undersigned is entitled to vote at the Annual
Meeting of Stockholders (the "Meeting") to be held at the office of Allied First
Bank located at 387 Shuman Blvd., Naperville, Illinois, on October 23, 2003 at
8:30 a.m. and at any and all adjournments and postponements thereof.
With- For All
For hold Except
[ ] [ ] [ ]
1. The election as directors of all nominees listed (except as marked to the
contrary below): Frank K. Voris and Brien J. Nagle
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
For Against Abstain
[ ] [ ] [ ]
2. The ratification of the appointment of Crowe Chizek and Company LLC as
auditors for the fiscal year ending June 30, 2004. In their discretion, the
proxies are authorized to vote on any other business that may properly come
before the Meeting or any adjournment or postponement thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE PROPOSAL AND NOMINEES LISTED ABOVE. IF ANY OTHER
BUSINESS IS PRESENTED AT 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
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
The Board of Directors recommends a vote "FOR" the proposal and the election of
the nominees listed above.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Detach above card, sign, date and mail in postage paid envelope provided.
Allied First Bancorp, Inc.
Should the above signed be present and choose to vote at the Meeting or at any
adjournments or postponements thereof, and after notification to the Secretary
of the Company at the Meeting of the stockholder's decision to terminate this
proxy, then the power of such attorneys or proxies shall be deemed terminated
and of no further force and effect. This proxy may also be revoked by filing a
written notice of revocation with the Secretary of the Company or by duly
executing a proxy bearing a later date.
The above signed acknowledges receipt from the Company, prior to the execution
of this proxy, of notice of the Meeting and a Proxy Statement.
Please sign exactly as your name(s) appear(s) above. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If
shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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