629
W. State Street
Hastings,
Michigan 49058-1643
(269)
945-9561
April
18, 2008
Dear
Fellow Shareholder:
On
behalf of the Board of Directors and management of MainStreet Financial
Corporation, I cordially invite you to attend the 2008 Annual Meeting of
Shareholders. The meeting will be held at 7:00 p.m. local time, on
May 20, 2008, at our main office located at 629 W. State Street, Hastings,
Michigan 49058-1643.
A
Proxy Statement describing the business to be conducted at the Annual Meeting
and a proxy card enabling you to vote without attending the meeting is
enclosed. Our Annual Report to Shareholders for the year ended
December 31, 2007, also is included. The Annual Meeting will include
management’s report to you on the Company’s 2007 financial and operating
performance.
An
important part of the Annual Meeting is the shareholder vote on corporate
business items. I urge you to exercise your rights as a shareholder
to vote and participate in this process. Shareholders are being asked
to consider and vote upon: (1) the election of two directors of the
Company; and (2) the ratification of the appointment of Crowe Chizek and Company
LLC, as the Company’s independent registered public accounting
firm.
We
encourage you to attend the meeting in person. Whether or not you
plan to attend the meeting,
please read the enclosed Proxy
Statement, sign and date the enclosed proxy card and return the proxy card in
the accompanying postage-paid return envelope as promptly as
possible
. This will ensure that your shares are represented at
the meeting.
Your
Board of Directors and management are committed to the continued success of
MainStreet Financial Corporation and the enhancement of the value of your
investment. As President, I want to express my appreciation for your
confidence and support.
Sincerely,
/s/ David L. Hatfield
David
L. Hatfield
President
and Chief Executive Officer
MAINSTREET
FINANCIAL CORPORATION
629
W. STATE STREET
HASTINGS,
MICHIGAN 49058-1643
(269)
945-9561
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD MAY 20, 2008
NOTICE IS
HEREBY GIVEN that the annual meeting of shareholders of MainStreet Financial
Corporation will be held as follows:
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TIME
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Tuesday, May 20,
2008, at 7:00 p.m.
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PLACE
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MainStreet Savings
Bank
629 W. State Street
Hastings, Michigan 49058-1643
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BUSINESS
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(1)
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The election of two
directors of MainStreet Financial Corporation.
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(2)
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The
ratification of the appointment of Crowe Chizek and Company LLC as
MainStreet Financial Corporation’s independent registered public
accounting firm for the fiscal year ending December 31,
2008.
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(3)
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Such
other business as may properly come before the annual meeting, or any
adjournment or postponement thereof.
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RECORD
DATE
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Holders
of record of MainStreet Financial Corporation common stock at the close of
business on March 31, 2008, are entitled to receive this Notice and to
vote at the meeting, or any adjournment or postponement
thereof.
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PROXY
VOTING
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It
is important that your shares be represented and voted at the annual
meeting. You can vote your shares by completing and returning
the enclosed proxy card or by submitting a ballot at the annual
meeting.
To
ensure that your shares are represented at the meeting, please take the
time to vote by signing, dating and mailing the enclosed proxy card, which
is solicited on behalf of the Board of Directors. That proxy
will not be used if you attend and vote at the annual meeting in
person. Regardless of the number of shares you own, your vote
is very important. Please act
today.
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BY ORDER
OF THE BOARD OF DIRECTORS
/s/ David L. Hatfield
David L.
Hatfield
President
and Chief Executive Officer
Hastings,
Michigan
April 18,
2008
Important: The
prompt return of proxies saves us the expense of further requests for
proxies. A pre-addressed envelope is enclosed for your
convenience. No postage is required if mailed within the United
States.
MAINSTREET
FINANCIAL CORPORATION
629
W. State Street
Hastings,
Michigan 49058-1643
(269)
945-9561
PROXY
STATEMENT
INTRODUCTION
The Board
of Directors of MainStreet Financial Corporation is using this Proxy Statement
to solicit proxies from the holders of common stock of MainStreet Financial
Corporation for use at our upcoming annual meeting of
shareholders. The annual meeting of shareholders will be held at 7:00
p.m. local time on Tuesday, May 20, 2008 at our main office, located at 629 W.
State Street, Hastings, Michigan, 49058-1643. At the annual meeting,
shareholders will be asked to vote on two proposals: (1) the election
of two directors of the Company for a term of three years each; and (2) the
ratification of the appointment of Crowe Chizek and Company LLC, as our
independent registered public accounting firm for the fiscal year ending
December 31, 2008. These proposals are described in more detail
below. Shareholders 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. MainStreet Financial Corporation is
referred to in this Proxy Statement from time to time as “MainStreet Financial”
or the “Company.” Certain of the information in this Proxy Statement
relates to MainStreet Savings Bank, FSB, a wholly owned subsidiary of the
Company, which is referred to in this Proxy Statement from time to time as the
“Bank.”
By
submitting your proxy, you authorize the Company’s Board of Directors to
represent you and vote your shares at the annual meeting in accordance with your
instructions. The Board of Directors also may vote your shares to
adjourn the annual meeting from time to time and will be authorized to vote your
shares at any adjournments or postponements of the annual meeting.
The
Company’s Annual Report to Shareholders for the fiscal year ended December 31,
2007, which includes the Company’s audited financial statements, is being
provided with this Proxy Statement. Although the Annual Report is
being mailed to shareholders 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 shareholders
on or about April 18, 2008.
Your
vote is important. Whether or not you plan to attend the annual
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, shareholders will be asked to vote on the following
proposals:
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Proposal
1.
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Election
of two directors of MainStreet Financial Corporation.
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Proposal
2.
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Ratification
of the appointment of Crowe Chizek and Company LLC as MainStreet Financial
Corporation’s independent registered public accounting firm for the fiscal
year ending December 31, 2008.
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The
shareholders also will transact any other business that may properly come before
the annual meeting. Members of our management team will be present at
the annual meeting to respond to appropriate questions from
shareholders.
Who
is entitled to vote?
The
record date for the meeting is March 31, 2008. Only shareholders 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 MainStreet Financial common stock. Each outstanding
share of common stock is entitled to one vote for all matters before the annual
meeting. At the close of business on the record date, there were
756,068 shares of common stock outstanding and entitled to vote at the annual
meeting.
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
those shares in accordance with your instructions. If you do not give
instructions to your broker, your broker nevertheless will be entitled to vote
the shares with respect to “discretionary” items but will not be permitted to
vote your shares with respect to any “non-discretionary” items. In
the case of non-discretionary items, the shares will be treated as “broker
non-votes.” Whether an item is discretionary is determined by the exchange rules
governing your broker. The proposals to elect directors and ratify
auditors described in this Proxy Statement are considered “discretionary”
items.
What
if my shares are held in MainStreet Financial’s employee stock ownership
plan?
We
maintain an employee stock ownership plan that owns 28,428 shares, or 3.8% of
the Company’s common stock. Employees of the Company and the Bank
participate in the employee stock ownership plan. Each participant
instructs the trustee of the plan how to vote the shares of common stock
allocated to his or her account under the employee stock ownership
plan. If a participant properly executes the voting instruction card
distributed by the trustee, the trustee will vote the participant’s shares in
accordance with the instructions. Where properly executed voting
instruction cards are returned to the trustee with no specific instruction as to
how to vote at the annual meeting, the trustee will vote the shares “FOR” each
of the proposals set forth in this Proxy Statement. In the event the
participant fails to give timely voting instructions to the trustee with respect
to the voting of the common stock that is allocated to his or her employee stock
ownership plan account, the trustee will vote such shares “FOR” each of the
proposals set forth in this Proxy Statement. The trustee will vote
the shares of MainStreet Financial common stock held in the employee stock
ownership plan but not allocated to any participant’s account in the same
proportion as directed by the participants who directed the trustee as to the
manner of voting their allocated shares in the employee stock ownership plan
with respect to each proposal. As of the voting record date, 3,642
shares had been allocated to participants.
How
many shares must be present to hold the annual meeting?
A quorum
must be present at the annual meeting for any business to be
conducted. The presence at the annual meeting, in person or by proxy,
of the holders of a majority 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. Our holding
company, MainStreet Financial Corporation, MHC, which is referred to in this
Proxy Statement as “MHC,” owns 53% of our shares. Its presence alone
at the annual meeting would constitute a quorum.
What
if a quorum is not present at the meeting?
If a
quorum is not present at the scheduled time of the meeting, the shareholders 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, and no other notice will be
given unless the adjourned meeting is set to be held after June 19,
2008. An adjournment will have no effect on the business that may be
conducted at the meeting.
How
do I vote?
1.
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.
2.
You
may vote in person at the annual meeting
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If you plan to
attend the annual meeting and wish to vote in person, we will give you a ballot
at the meeting. However, if your shares are held in the name of your
broker, bank or other nominee, you will need to obtain a proxy form from the
holder of your shares indicating that you were the beneficial owner of those
shares on the record date in order to vote at the annual 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 annual meeting by:
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signing
another proxy with a later date;
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giving
written notice of the revocation of your proxy to the Company’s Secretary
prior to the annual meeting; or
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voting
in person at the annual meeting.
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Your
proxy will not be automatically revoked by your mere attendance at the annual
meeting; you must actually vote at the meeting to revoke a prior
proxy.
If you
have instructed a broker, bank or other nominee to vote your shares, you must
follow directions received from your nominee to change those
instructions.
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:
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FOR
the election of the two director nominees to the Company’s Board of
Directors; and
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FOR
ratification of the appointment of Crowe Chizek and Company LLC as the
Company’s independent registered public accounting firm for the fiscal
year ending December 31, 2008.
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Will
any other business be conducted at the annual meeting?
The Board
of Directors knows of no other business that will be conducted at the annual
meeting. If any other proposal properly comes before the shareholders
for a vote at the meeting, however, the proxy holders will vote your shares in
accordance with their best judgment.
How
many votes are required to approve Proposal 1: Election of
Directors.
Directors
are elected by a plurality of the votes cast, in person or by proxy, at the
annual meeting by the holders of MainStreet Financial common
stock. Votes may be cast for or withheld from each
nominee. Votes that are withheld and broker non-votes have no effect
on the election of directors. MHC, which owns 53% of the Company’s
outstanding common stock, intends to vote its shares in favor of each of the
director nominees, ensuring the election of the Board’s nominees.
How
many votes are required to approve Proposal 2: Ratification of the Appointment
of Our Independent Registered Public Accounting Firm.
Ratification
of the appointment of Crowe Chizek and Company LLC, as our independent auditors
for the fiscal year ending December 31, 2008, requires the affirmative vote of
the majority of shares cast, in person or by proxy, at the annual meeting by
holders of the Company’s common stock. Abstentions from voting on the
proposal will have the same effect as a vote against the
proposal. Broker non-votes will have no effect on this
proposal. MHC, which owns 53% of the Company’s outstanding common
stock, intends to vote its shares in favor of this proposal, ensuring the
ratification of Crowe Chizek and Company LLC as our independent auditors for the
fiscal year ending December 31, 2008.
How
does the Board of Directors recommend I vote on the proposals?
Your
Board of Directors recommends that you vote:
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FOR
the election of the two director nominees to the Board of Directors for
three-year terms;
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FOR
ratification of the appointment of Crowe Chizek and Company LLC as the
Company’s independent registered public accounting
firm.
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STOCK
OWNERSHIP
Stock
Ownership of Significant Shareholders, Directors and Executive
Officers
The
following table shows, as of March 31, 2008, the voting record date, the
beneficial ownership of the Company’s common stock by:
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any
persons or entities known by management to beneficially own more than five
percent of the outstanding shares of the Company’s common
stock;
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each
director and director nominee of the
Company;
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each
executive officer of the Company, including those named in the 2007
Summary Compensation Table appearing below;
and
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all
of the directors and executive officers of MainStreet Financial as a
group.
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Beneficial
ownership is determined in accordance with the rules of the SEC. The
address of each of the beneficial owners, except where otherwise indicated, is
the Company’s address. An asterisk (*) in the table indicates that an
individual beneficially owns less that 0.1% of the outstanding common stock of
the Company. As of March 31, 2008, there were 756,068 shares of
Company common stock issued and outstanding.
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Name
of Beneficial Owner
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Number
of Shares
Beneficially
Owned
(1)
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Percent
of Common
Stock
Outstanding
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Significant
Shareholders
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MainStreet Financial
Corporation, MHC
(2)
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400,716
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53.00%
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Directors
and Executive Officers
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Gordon F. Fuhr,
Director
and Chairman of the Board
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5,000
(3)
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0.7%
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David L. Hatfield,
President,
Chief Executive Officer and Director
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7,465
(4)
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1.0%
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Eric T. Dreisbach,
Director
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---
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----
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Mary Lou Hart,
Director
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1,000
(5)
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0.1%
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David L. Jasperse,
Director
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5,000
(6)
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0.7%
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Carl A. Schoessel,
Director
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1,000
(7)
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0.1%
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James R. Toburen,
Senior
Vice President, Treasurer and Director
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5,332
(8)
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0.7%
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Melody K. Bowman,
Senior
Vice President
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5,289
(9)
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0.7%
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Sandra K. Nichols,
Senior
Vice President and Secretary
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5,198
(10)
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0.7%
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Patricia A. Woods,
Senior
Vice President
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1,300
(11)
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0.2%
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Directors
and executive officers of MainStreet Financial as a group (10
persons)
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36,584
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4.8%
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____________________
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1
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Except
as otherwise noted in these footnotes, the nature of beneficial ownership
for shares reported in this table is sole voting and investment
power. Does not include 28,428 shares in the MainStreet
Financial Corporation Employee Stock Ownership Plan. Messrs.
Hatfield and Toburen and Ms. Nichols serve as co-trustees of that
plan. The ESOP has sole dispositive power over those 28,428
shares, sole voting power over 24,786 shares and shared voting power over
3,642 shares. As trustees, these individuals also may be deemed
to beneficially own these shares; however they expressly disclaim
beneficial ownership of the ESOP shares.
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2
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MHC
is a federally chartered mutual holding company, the principal business of
which is to hold at least a majority of the outstanding shares of
MainStreet Financial. It filed a Schedule 13D beneficial
ownership report with the SEC on December 27, 2006. The
executive officers and directors of MHC also are shareholders and
executive officers and/or directors of MainStreet
Financial.
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3
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Shares
are held in Mr. Fuhr’s IRA.
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4
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Includes
2,000 shares owned jointly with his sister, 5,000 shares held in the IRA
of Mr. Hatfield’s spouse and 465 shares allocated to him in the
ESOP. Mr. Hatfield is one of three co-trustees of the Company’s
ESOP, which owns 3.8% of the Company’s shares. Mr. Hatfield
disclaims beneficial ownership of the ESOP shares, except for the 465
shares allocated to him as a participant.
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5
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Shares
are held in the IRA account of Ms. Hart’s spouse.
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6
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Shares
are held jointly with Mr. Jasperse’s spouse.
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7
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Shares
are held jointly with Mr. Schoessel’s spouse.
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8
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Includes
5,046 shares held in Mr. Toburen’s account in the Bank’s 401(k) plan, 25
shares in a UTMA account, of which Mr. Toburen is trustee and 261 shares
allocated to him in the ESOP. Mr. Toburen is one of three
co-trustees of the Company’s ESOP, which owns 3.8% of the Company’s
shares. Mr. Toburen disclaims beneficial ownership of the ESOP
shares, except for the 261 shares allocated to him as a
participant.
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9
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Includes
5,064 shares held in Ms. Bowman’s account in the Bank’s 401(k) plan and
225 shares allocated to her as a participant in the
ESOP.
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10
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Includes
4,973 shares held in Ms. Nichols’ account in the Bank’s 401(k) plan and
225 shares allocated to her in the ESOP. Ms. Nichols is
one of three co-trustees of the Company’s ESOP, which owns 3.8% of the
Company’s shares. Ms. Nichols disclaims beneficial ownership of
the ESOP shares, except for the 225 shares allocated to her in the
ESOP.
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11
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Includes
847 shares held in Ms. Wood’s account in the Bank’s 401(k) plan, 200
shares held in a trust, 75 shares held jointly with her daughters and 178
shares allocated to her as a participant in the
ESOP.
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Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s
directors and executive officers, and persons who own more than 10% of the
Company’s common stock to report to the SEC their initial ownership of the
Company’s common stock and any subsequent changes in that
ownership. Specific due dates for these reports have been established
by the SEC, and MainStreet Financial is required to disclose in this Proxy
Statement any late filings or failures to file.
To the
Company’s knowledge and based solely on a review of the copies of reports
furnished to the Company and written representations relative to the filing of
certain forms, all Section 16(a) filing requirements applicable to our executive
officers, directors and greater than 10% beneficial owners were
met.
PROPOSAL
1
ELECTION
OF DIRECTORS
General
Our Board
of Directors consists of seven members. Approximately one-third of
the directors are elected annually to serve for a three-year period or until
their respective successors are elected and qualified.
The
Company has nominated Gordon F. Fuhr and David L. Jasperse for election as
directors, each for a three-year term expiring at the annual meeting of
shareholders in 2011. These two individuals currently serve as
directors of the Company and the 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 your proxy holders, will vote your shares for the
substitute nominee, unless you have withheld that authority. At this
time, we are not aware of any reason why a nominee might be unable to serve if
elected. There are no arrangements or understandings between any
nominee and any other person pursuant to which such nominee was
selected.
The
affirmative vote of a plurality of the votes cast at the annual meeting is
required to elect the two nominees as directors.
The Board of Directors recommends you
vote “FOR” each of the director nominees
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Name
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Age
(1)
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Positions
With MainStreet Financial
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Director
Since
(2)
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Term
Expires
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Nominees
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Gordon
F. Fuhr
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71
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Chairman
of the Board and Director
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1973
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2011
(3)
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David
L. Jasperse
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64
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Director
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1987
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2011
(3)
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Other
Directors
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Eric
T. Dreisbach
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45
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Director
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2007
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2010
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Mary
Lou Hart
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65
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Director
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1991
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2009
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David
L. Hatfield
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59
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President,
Chief Executive Officer and Director
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2000
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2010
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Carl
A. Schoessel
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63
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Director
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1994
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2009
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James
R. Toburen
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61
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Director,
Senior Vice President, Treasurer and Chief Financial
Officer
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1982
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2009
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____________________
1. At
December 31, 2007.
2. Includes
years of service on the board of the Bank.
3. If
elected at the annual meeting.
The
business experience of each director of MainStreet Financial for at least the
past five years is set forth below.
Eric T.
Dreisbach.
Mr. Dreisbach is the President and owner of
Dreisbach Pontiac-GMC in Hastings, Michigan. He and his family moved
to the Hastings area when he purchased the dealership in 1998. He
previously worked at his father’s Cadillac dealership in Detroit. Mr.
Dreisbach is active in the Hastings community. He currently serves on
the Barry County Chamber of Commerce, Leadership Barry County, Michigan
Automobile Dealers Association and West Michigan Pontiac-GMC Marketing
Group.
Gordon F.
Fuhr.
Mr. Fuhr has served as Chairman of the board of
directors since 2002. Prior to that, he served as Vice Chairman from
1998 until 2002 and as Acting President and Chief Executive Officer from
December 1999 through April 2000. Mr. Fuhr conducts construction
appraisals for the Bank. Mr. Fuhr is retired from Hastings
Manufacturing, producers of a variety of automotive components and accessories,
where he served as Sales Manager – National Accounts. Mr. Fuhr served
as a member of the Barry County Board of Commissioners for six years and
continues to serve as the chairman of its compensation committee. He
was a member of the Hastings City Council for 15 years and also served as
chairman of its Planning Commission.
Mary Lou
Hart.
Ms. Hart is a marketing representative for WBCH Radio in
Hastings, Michigan. She served for eight years on the Hasting City
Council before being elected Mayor of Hastings, a position she also held for
eight years until retiring in 1995. Since 1982, she has served on the
Board of Directors of the City of Hastings Downtown Development
Authority. Ms. Hart also has served as director of the Michigan
Municipal League, director and president of the Michigan Mayors Association and
Chairman of the Municipal Property & Liability Insurance Pool.
David L.
Hatfield.
Mr. Hatfield has served as President and Chief
Executive Officer since May 2000. He is responsible for all of our
commercial lending. Prior to that, Mr. Hatfield was President and
Chief Executive Officer of Keystone Community Bank in Kalamazoo, Michigan for
two years. Mr. Hatfield began his banking career in 1972 with
Fidelity Federal Savings and Loan Association of Kalamazoo, where he held
various management positions before being named Chairman, President and Chief
Executive Officer in 1981. Fidelity Federal Savings and Loan
Association was acquired by Standard Federal Bank in 1996, after which Mr.
Hatfield served as the organization’s regional manager in southwest
Michigan. Mr. Hatfield has served on numerous committees of both
state and national trade associations and as chairman of the Michigan League of
Savings Institutions. He has also served in advisory capacities to
the Federal Reserve Board of Governors and the Federal Deposit Insurance
Corporation and as director and vice chairman of the Federal Home Loan Bank of
Indianapolis. He is President of the Barry County Chamber of
Commerce, Director and past Campaign Chair of the Barry County United
Way. Mr. Hatfield also is a board member of the Hastings Rotary Club
and the Charlton Park Village Foundation.
David L.
Jasperse
. Mr. Jasperse is a pharmacist and the owner of Bosley
Pharmacy in Hastings, Michigan. He is a member of the Hastings City
Council and served as Mayor Pro Tem for 10 years. He also serves as
Chairman of the Hastings Planning Commission and previously served as President
of the Hastings Area Chamber of Commerce, member of the board of the Barry
County United Way and as United Way Campaign Chairman.
Carl L.
Schoessel
. Mr. Schoessel has retired after 20 years of service
as Superintendent of the Hastings Area School System, however, in November 2006,
he returned to that position on an interim basis. Mr. Schoessel is
Vice President of WBPB, Corp. and J&G Hospitality Group, LLC, which owns and
operates a restaurant in Hastings. He currently serves on the board
of directors of the Barry County Area Chamber of Commerce and the Barry County
United Way. He also is a trustee of the Pierce Foundation and is
active in the Hastings Rotary Club, and the Exchange Club of
Hastings.
James R.
Toburen
. Mr. Toburen became Senior Vice President and
Treasurer in 2002 and is responsible for all financial and building
operations. Mr. Toburen has been a board member of the Bank since
1982 and served as Chairman of the Board from 1991 through 2001. He
is a Certified Public Accountant and member of the Michigan Association of
Certified Public Accountants and American Institute of Certified Public
Accountants. Prior to joining the Bank, Mr. Toburen was employed by
Flexfab, a manufacturer of specialty hoses and ducting for the aerospace,
automotive and heavy duty truck industry, from 1972 until his retirement as Vice
President–Corporate Services in 2001. He continues to serve on
Flexfab’s strategic planning team. Mr. Toburen is currently a member
of the Board of Directors for Hastings Mutual Insurance Company, a former member
and President of the Hastings Area School Board and a former board member for
Pennock Hospital in Hastings, Michigan.
BOARD
OF DIRECTORS’ MEETINGS AND COMMITTEES
AND
CORPORATE GOVERNANCE MATTERS
Board
Meetings, Independence and Ethics Codes
The Board
applies the independence standard of its federal banking regulator to its
directors. A director must be independent of our executive officers
and is deemed independent if the director is not an employee of the Bank or
related to any executive officer or employee. The Board has
determined that payments to Mr. Fuhr for construction inspections and commercial
loans to businesses owned and managed by directors do not impact
independence. As a result, the Board has determined that Directors
Dreisbach, Fuhr, Hart, Jasperse and Schoessel, constituting a majority of the
Board members, are “independent directors.” Shareholders may
communicate directly with the Board of Directors by sending written
communications to Gordon F. Fuhr, Chairman of the Board of the Company, 629 W.
State Street, Hastings, Michigan, 49058-1643.
The Board
of Directors has adopted a Code of Business Conduct and Ethics that applies to
all directors, officers and employees. The Code of Business Conduct
and Ethics, which applies to all employees and directors, addresses conflicts of
interest, the treatment of confidential information, general employee conduct
and compliance with applicable laws, rules and regulations. In
addition, the Code is designed to deter wrongdoing and to promote honest and
ethical conduct, the avoidance of conflicts of interest, full and accurate
disclosure and compliance with all applicable laws, rules and
regulations. You may obtain a copy of the Code of Business Conduct
and Ethics free of charge by writing to the Corporate Secretary of the Company,
629 W. State Street, Hastings, Michigan 49058-1643 or by calling
(269) 945-9561. In addition, the Code of Business Conduct and Ethics
has been filed with the SEC as an exhibit to our Form 10-QSB for the quarter
ended September 30, 2006, and is available on our website at
www.mainstreetsavingsbank.com.”
Meetings
and Committees of the Board of Directors
The board
of directors of MainStreet Financial meets monthly. During the year
ended December 31, 2007, the board of directors of MainStreet Financial held 12
regular meetings and no special meetings. No director of MainStreet
Financial attended fewer than 75% of the total meetings of the board of
directors and committees on which the board member served during this
period. The board of directors of the Bank has a number of committees
that are responsible for different aspects of our operations. The
board of directors of MainStreet Financial has established Audit, Compensation
and Nominating Committees, none of which operate under a formal
charter. The Company’s policy is for all directors to attend its
annual meeting of shareholders.
The Audit
Committee of MainStreet Financial is comprised of Directors Schoessel (Chair),
Dreisbach, Hart and Jasperse, each of whom is “independent” as that term is
defined for audit committee members in the NASD Rules. The Board of
Directors has determined that Director Schoessel is an “audit committee
financial expert” as defined in Item 407(e) of Regulation S-K of the Securities
and Exchange Commission and that all of the Audit Committee members meet the
financial literacy requirements under FINRA standards. This Audit
Committee also serves as the audit committee of the Bank. The Audit
Committee is scheduled to meet at least quarterly and on an as-needed
basis. The Audit Committee hires an independent auditor and reviews
the audit report prepared by the independent auditors. In addition,
the Audit Committee reviews the results of our internal compliance evaluations
of MainStreet Financial and the Bank and meets with our independent registered
public accounting firm. The Audit Committee met four times during
2007.
The Audit
Committee is responsible for hiring, terminating and/or reappointing the
Company’s independent auditor and for reviewing the annual audit report prepared
by our independent registered public accounting firm. The functions
of the Audit Committee also include:
|
·
|
approving
non-audit and audit services to be performed by the independent registered
public accounting firm ;
|
|
·
|
reviewing
and approving all related party transactions for potential conflict of
interest situations;
|
|
·
|
reviewing
significant financial information for the purpose of giving added
assurance that the information is accurate and timely and that it includes
all appropriate financial statement
disclosures;
|
|
·
|
ensuring
the existence of effective accounting and internal control systems;
and
|
|
·
|
overseeing
the entire audit function of the Company, both internal and
independent.
|
The
Compensation Committee of MainStreet Financial is comprised of Directors
Jasperse (Chair), Fuhr and Schoessel. All members of the Compensation
Committee are considered independent. The Board has determined that
payments to Mr. Fuhr for construction inspections and commercial loans to
businesses owned and managed by directors do not impact
independence. The Compensation Committee administers a deferred
compensation plan for directors and executive officers. The
Compensation Committee reviews all compensation policies and issues and
determines the compensation to be paid to all executive officers. The
Compensation Committee does not designate its authority to any one of its
members or any other person, however, Mr. Hatfield does make recommendations to
the Committee for all compensation, except his own.
The
Compensation Committee is responsible for:
|
|
determining
compensation to be paid to its executive officers, which are based on the
recommendation of Mr. Hatfield, except that compensation paid to Mr.
Hatfield is determined based on the recommendation of a majority of the
independent directors, and Mr. Hatfield is not present during voting or
deliberations concerning his
compensation;
|
|
|
overseeing
the administration of the employee benefit plans covering employees
generally; and
|
|
|
reviewing
our compensation policies and the compensation disclosure included in this
Proxy Statement.
|
The
Nominating Committee is comprised of the non-management directors whose terms
are not expiring at the upcoming annual meeting. For this next annual
meeting, Directors Dreisbach, Hart and Schoessel served as our Nominating
Committee. It is responsible for the annual selection of management’s
nominees for election as directors and officers of MainStreet
Financial. The Nominating Committee will consider nominees
recommended by shareholders but has not actively solicited such
nominations. The Nominating Committee has the following
responsibilities:
|
·
|
recommend
to the Board the appropriate size of the Board and assist in identifying,
interviewing and recruiting candidates for the
Board;
|
|
·
|
recommend
candidates (including incumbents) for election and appointment to the
Board of Directors, subject to the provisions set forth in the Company’s
charter and bylaws relating to the nomination or appointment of directors,
based on the following criteria: business experience, education, integrity
and reputation, independence, conflicts of interest, diversity, age,
number of other directorships and commitments (including charitable
obligations), tenure on the Board, attendance at Board and committee
meetings, stock ownership, specialized knowledge (such as an understanding
of banking, accounting, marketing, finance, regulation and public policy)
and a commitment to the Company’s communities and shared values, as well
as overall experience in the context of the needs of the Board as a
whole;
|
|
·
|
consider
and evaluate nominations from shareholders using the same criteria as all
other nominations;
|
|
·
|
annually
recommend to the Board committee assignments and committee chairs on all
committees of the Board, and recommend committee members to fill vacancies
on committees as necessary; and
|
|
·
|
perform
any other duties or responsibilities expressly delegated to the Committee
by the Board.
|
Nominations,
other than those made by the Nominating Committee, must be made pursuant to
timely notice in writing to the Corporate Secretary as set forth in Article I,
Section 13 of the Company’s bylaws. In general, to be timely, a
shareholder’s notice must be received by the Company not less than five days
prior to the annual meeting; however, if the Nominating Committee does not post
its nominations at least 20 days before the meeting, a shareholder may make a
nomination at the meeting. Any shareholder’s nomination must provide
the following:
|
·
|
as
to each person whom a shareholder proposes to nominate for election as a
director: all information relating to the proposed nominee that is
required to be disclosed in the solicitation of proxies for election as
directors or is otherwise required pursuant to Regulation 14A under the
Securities Exchange Act of 1934;
and
|
|
·
|
as
to the shareholder giving the notice: the name and address of the
shareholder as they appear on the Company’s books and the number of shares
of the Company’s common stock beneficially owned by the
shareholder.
|
This
description is a summary of our nominating process. Any shareholder
wishing to propose a director candidate to the Company should review and must
comply in full with the procedures set forth in the Company’s charter and
bylaws. During the fiscal year ended December 31, 2007, the
Nominating Committee received no shareholder nominations and met two times with
respect to the selection of director nominees.
EXECUTIVE
OFFICERS AND TRANSACTIONS WITH MANAGEMENT
Executive
Officers of the Company
The
Company has three executive officers who are not directors. Melody K.
Bowman, Sandra K. Nichols and Patricia A. Woods are all Senior Vice Presidents
of the Company. Ms. Nichols also serves as the Company’s
Secretary. The business experience of each executive officer of
MainStreet Financial, who is not also a director, for at least the past five
years is set forth below.
Melody K.
Bowman.
Ms. Bowman has served as the Senior Vice President of
the Bank since 1990. She is responsible for all aspects of real
estate and consumer lending by the Bank. She has been employed with
the Bank since 1973 in various positions.
Sandra K.
Nichols
. Ms. Nichols is currently Senior Vice President and
oversees operations and information technology. She is responsible
for human resources, security, disaster recovery, computer operations and
compliance functions. She has been employed with the Bank since 1972
in various positions and also is the Corporate Secretary for MainStreet
Financial and the Bank.
Patricia L.
Woods
. Since 2005, Ms. Woods has served as Senior Vice
President overseeing branch and deposit servicing operations for the
Bank. Prior to that, she was Vice President of Operations beginning
in 1998. Before joining the Bank in 1998, she was with Great Lakes
National Bank for 20 years.
Business
Relationships and Transactions with Executive Officers, Directors and Related
Persons
The
Company and the Bank may engage in a transaction or series of transactions with
our directors, executive officers and certain persons related to
them. Except for loans by the Bank, which are governed by a separate
policy, these transactions that qualify as “related party” transactions under
applicable regulations of the SEC are subject to review and approval of the
Audit Committee and ratification by the Board of Directors.
All other transactions
with executive officers, directors and related persons are approved by the Board
of Directors. Except for Bank loans, there were no transactions of
this nature, the amount of which exceeded $120,000, during 2007.
The Bank
has a written policy of granting loans to officers and directors, which fully
complies with all applicable federal regulations. Loans to directors
and executive officers are made in the ordinary course of business and on
substantially the same terms and conditions, including interest rates and
collateral, as those of comparable transactions with non-insiders prevailing at
the time, in accordance with the Bank’s underwriting guidelines, and do not
involve more than the normal risk of collectibility or present other unfavorable
features. Commercial loans to directors and executive officers are
not made with preferential rates or terms. Personal loans to
directors and executive officers may be made with preferential rates and terms
in the same fashion as available to all employees as authorized by applicable
federal banking law. During 2007, two executive officers had
aggregate indebtedness to the Bank exceeding $120,000 since December 31, 2006,
at below market interest rates. Senior Vice President and Director
Toburen had a mortgage loan with a 1.0% rate discount, which had a year-end
principal balance of $199,187 and a largest principal balance during the year of
$327,387. Senior Vice President Bowman had a mortgage loan with a
0.875% rate discount, which had a year-end principal balance of $211,167 and a
largest principal balance during the year of $215,312. Loans to all
directors and executive officers and their associates totaled approximately $1.8
million at December 31, 2007, which was approximately 24.6% of the Company’s
consolidated shareholders’ equity at that date. All loans to
directors and executive officers were performing in accordance with their terms
at December 31, 2007.
EXECUTIVE
COMPENSATION
The
Compensation Committee oversees and administers all Company and Bank
compensation plans and reviews Mr. Hatfield’s performance on an annual
basis. Though the overall responsibility for setting compensation
belongs to the Compensation Committee, Mr. Hatfield assists the Committee in
establishing compensation levels and forms for all executive officers, except
himself. Mr. Hatfield reviews all the other executive officers and
provides the Compensation Committee with those reviews and compensation
recommendations for all other executive officers. Only the Committee
establishes Mr. Hatfield’s compensation.
The
Company uses cash compensation to attract and retain qualified persons to serve
as executive officers of the Company and the Bank. Each executive
officer of the Company also is an executive officer of the
Bank. Executive officers are not compensated for their service to the
Company. The Compensation Committee considers the significant amount
of time and level of skill required to perform the required duties of each
person’s position, taking into account the complexity of our business as a
regulated public company and financial institution.
General.
The
Bank currently provides health and welfare benefits to employees, including
hospitalization, comprehensive medical insurance and dental, life and short-term
and long-term disability insurance, subject to certain deductibles and
copayments by employees.
Retirement
Plans.
The Bank provides a qualified defined benefit pension
plan for all eligible employees, including the named executive officers, through
the Financial Institutions Retirement Fund. To be eligible, an
employee must be at least 21 years old and have worked at least 1,000 hours over
the prior year. There is not a separate valuation of plan benefits or
any segregation of plan assets specifically for the Company, because the plan is
a multi-employer plan. Our required annual contributions to the plan
are calculated by the Financial Institutions Retirement Fund, based on the
compensation of participating individuals and actuarial
assumptions.
The Bank
offers its employees a 401(k) plan, which is a qualified, tax-exempt savings
plan with a cash or deferred feature qualifying under Section 401(k) of the
Internal Revenue Code. All employees who have attained age 21 and
completed one year of continuous employment, during which they worked at least
1,000 hours, are eligible to participate.
Participants
are permitted to make salary reduction contributions to the 401(k) Plan of up to
100% of their annual salary, up to a maximum of $15,000. We match
each contribution in an amount equal to 50% of the participant’s 401(k)
deferrals for the year up to 6% of their salary. All contributions
made by participants are before-tax contributions. All participant
contributions and earnings are fully and immediately vested. All
matching contributions are vested after three years of employment with
MainStreet Financial and its subsidiaries. However, in the event of
retirement at age 65 or older, permanent disability or death, a participant will
automatically become 100% vested in the value of all matching contributions and
earnings thereon, regardless of the number of years of employment with
MainStreet Financial and its subsidiaries.
Participants
may invest amounts contributed to their 401(k) plan accounts in one or more
investment options available under the 401(k) plan. Changes in
investment directions among the funds are permitted on a periodic basis pursuant
to procedures established by the plan administrator. Each participant
receives a quarterly statement that provides information regarding, among other
things, the market value of all investments and contributions made to the 401(k)
plan on the participant’s behalf. Participants are permitted to
borrow against their account balance in the 401(k) plan. For the year
ended December, 31, 2007, the Bank made no contribution to the 401(k) plan on
behalf of Mr. Hatfield, because he made no contributions during the
year.
Deferred
Compensation Plan
. The Bank maintains a Deferred Compensation
Plan for Directors and Officers, which is an unfunded, nonqualified
plan. Under the plan, executive officers may defer up to 50% of his
or her compensation. Mr. Hatfield does not participate in this
deferred compensation plan. This deferred compensation is held in our
general funds with a book reserve account set up for each
individual. No funds are segregated and benefits under the plan are
unfunded and unsecured. Each quarter, the amount of each director’s
or officer’s reserve account is increased by an interest factor equal to
one-fourth of the Bank’s rate for 24-month certificates of deposit as of the end
of that quarter. At the later of age 65 or the individual’s
termination of service, the director or officer may elect to receive this
deferred compensation in a lump sum or in annual payments over up to ten
years. Without an election, the payment period is five
years. If the director or officer dies during the payment period, the
remainder of the reserve account is paid to the director’s or officer’s
beneficiary.
Employee Stock
Ownership Plan.
MainStreet Financial has an employee stock
ownership plan for employees of MainStreet Financial and the
Bank. The employee stock ownership plan borrowed funds from an
independent bank to purchase 8% of the common stock sold in the 2006 stock
offering. That loan will be repaid principally from the Bank’s
contributions to the employee stock ownership plan over a period of 10 years,
and the collateral for the loan will be the common stock purchased by the
employee stock ownership plan.
Shares
purchased by the employee stock ownership plan with the proceeds of the loan are
held in a suspense account and released to participants’ accounts as debt
service payments are made. Shares released from the employee stock
ownership plan will be allocated to each eligible participant’s employee stock
ownership plan account based on the ratio of each such participant’s
compensation to the total compensation of all eligible employee stock ownership
plan participants. Forfeitures will be reallocated among remaining
participating employees and may reduce any amount MainStreet Financial might
otherwise have contributed to the employee stock ownership plan. The
account balances of participants within the employee stock ownership plan will
become 100% vested after five years of service. Credit for
eligibility and vesting is given for years of service prior to adoption of the
employee stock ownership plan. In the case of a “change in control,”
as defined in the employee stock ownership plan, which triggers a termination of
the employee stock ownership plan, participants will become immediately fully
vested in their account balances. Benefits are payable upon
retirement or other separation from service. The Bank’s contributions
to the employee stock ownership plan are not fixed, so benefits payable under
the employee stock ownership plan cannot be estimated.
Messrs.
Hatfield, Toburen and Ms. Nichols serve as the trustees of the employee stock
ownership plan. Under the employee stock ownership plan, the trustees
must vote all allocated shares held in the employee stock ownership plan in
accordance with the instructions of the participating employees, and unallocated
shares will be voted in the same ratio on any matter as those allocated shares
for which instructions are given.
Retention Bonus
Plan.
On November 21, 2007, the Company and the Bank adopted a
retention bonus plan for their executive officers employed on that
date. The plan provides that each executive officer who remains
employed by the Company and the Bank until the date of any future merger or
acquisition of the Company and/or the Bank will receive a bonus equal to the
individual’s annual salary as of the payment date (which is immediately prior to
the merger or acquisition). If the bonus was paid during 2008, the
retention bonus payable to Messrs. Hatfield and Toburen would be $152,074 and
$87,500, respectively.
Employment
Agreements for Executive Officers.
We have no employment or
severance agreements with our executive officers.
Stock Benefit
Plans
. MainStreet Financial has no stock option, restricted
stock or similar stock benefit plans.
2007
Summary Compensation Table
The
following table sets forth a summary of certain information concerning the
compensation paid in 2007 and 2006 to: (i) our principal executive officer; and
(ii) the only other compensated executive officer whose total compensation
during the fiscal year ended December 31, 2007, exceeded $100,000. We
will use the term “named executive officers” in this Proxy Statement to refer to
the officers listed in the table.
|
Name
and
Principal
Position
|
Fiscal
Year
|
Salary
|
Bonus
|
Nonqualified
Deferred
Compensation
Earnings
|
All
Other
Compensation
(1)
|
Total
|
|
David
L. Hatfield
President
and Chief Executive Officer,
and
Director of MainStreet Financial and the Bank
|
2007
2006
|
$152,074
$152,074
|
$2,925
$2,925
|
---
---
|
$24,005
(2)
$26,440
|
$179,004
$181,439
|
|
James
R. Toburen
Senior
Vice President, Treasurer and Chief Financial Officer
|
2007
2006
|
$87,500
$85,400
|
$1,642
$1,642
|
(3)
(3)
|
$16,123
(2)
$17,488
|
$105,265
$104,530
|
____________________
|
1.
|
Includes
Bank contributions under its 401(k) plan, contributions under the pension
plan on their behalf and term life insurance premiums paid by the Bank on
behalf of the officers. This amount does not include personal
benefits or perquisites, because none of the named executive officers
received more than $10,000 worth of such benefits in the
aggregate.
|
|
2.
|
The
amount includes $23,425 in pension contributions and $660 in term life
insurance premiums paid by the Bank on behalf of Mr.
Hatfield. Mr. Hatfield receives a Company car, and the value of
his personal use of the car, which was less than $10,000 in 2007, is
included in his taxable income.
|
|
3.
|
None
of the earnings on executive officers’ deferred compensation accounts were
at above-market rates. The 2007 earnings on Mr. Toburen’s
deferred compensation account was $3,688 in 2007 and $3,550 in
2006.
|
|
4.
|
The
amount includes $2,562 in contributions by the Bank under its 401(k) plan,
$13,110 in pension contributions and $451 in term life insurance premiums
paid by the Bank on behalf of Mr.
Toburen.
|
DIRECTORS’
COMPENSATION
The
Company uses cash compensation to attract and retain qualified persons to serve
as non-employee directors of the Company. Each director of the
Company also is a director of the Bank. In setting director
compensation, the Board of Directors considers the significant amount of time
and level of skill required for service on the Boards of the Company and the
Bank, particularly due to the duties imposed on directors of public companies
and financial institutions. The types and levels of director
compensation are annually reviewed and set by the Compensation Committee and
ratified by the full Board of Directors. The directors of MainStreet
Financial are not compensated directly by MainStreet Financial but are
compensated by the Bank. MainStreet Financial reimburses the Bank for services
provided on its behalf.
Directors
only receive compensation for service on the board of directors and committees
of the Bank. For the fiscal year ended December 31, 2007, each
director received a $300 monthly retainer plus $600 for each board or board
committee meeting attended, except for Directors Hatfield and Toburen, who were
compensated as executive officers of the Bank and are not separately compensated
as directors. In addition, Director Fuhr, as Chairman, receives $450
per quarter plus fees for conducting construction inspections for the
Bank. During the year ended December 31, 2007, Director Fuhr received
$3,700 in fees for conducting these inspections.
The Bank
maintains a deferred compensation plan for directors, which is an unfunded,
nonqualified plan that allows directors to defer their compensation from the
Bank. Under this plan, directors can elect to defer receipt of up to
100% of that compensation. This deferred compensation is held in our
general funds with a book reserve account set up for each
individual. No funds are segregated and benefits under the plan are
unfunded and unsecured. Each quarter, the amount of each director’s
reserve account is increased by an interest factor equal to one-fourth of the
Bank’s rate for 24-month certificates of deposit as of the end of that
quarter. At the later of age 65 or the individual’s termination of
service, the director may elect to receive this deferred compensation in a lump
sum or in annual payments over up to ten years. Without an election,
the payment period is five years. If the director dies during the
payment period, the remainder of the reserve account is paid to the director’s
beneficiary.
Director
Compensation Table for 2007
The
following table provides compensation information for each member of our board
of directors during the year ended December 31, 2007 (except for Messrs.
Hatfield and Toburen whose compensation is reported as a named executive
officer).
|
Name
|
|
Fees
Earned
or
Paid
in
Cash
|
|
Non
Qualified
Deferred
Compensation
Earnings
|
|
All
Other
Compensation
(1)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Gordon
F. Fuhr
|
|
$14,400
|
|
(2)
|
|
$3,700
(3)
|
|
$18,100
|
|
Eric
T. Dreisbach
|
|
$10,800
|
|
---
|
|
---
|
|
$10,800
|
|
Mary
Lou Hart
|
|
$10,800
|
|
---
|
|
---
|
|
$10,800
|
|
David
L. Jasperse
|
|
$10,800
|
|
---
|
|
---
|
|
$10,800
|
|
Carl
A. Schoessel
|
|
$10,800
|
|
---
|
|
---
|
|
$10,800
|
___________________
|
1.
|
No
director received personal benefits or perquisites exceeding $10,000 in
the aggregate.
|
|
2.
|
Mr.
Fuhr is the only director participating in the deferred compensation
plan. None of the earnings on his directors’ deferred
compensation account was at above-market rates. The 2007
earnings on Mr. Fuhr’s deferred compensation account is
$3,250.
|
|
3.
|
Reflects
fees received for performing construction inspections on behalf of the
Bank.
|
REPORT
OF THE AUDIT COMMITTEE
The
following Report of the Audit Committee of the Board of Directors shall not be
deemed to be soliciting material or to be incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent MainStreet Financial specifically incorporates this Report
therein, and shall not otherwise be deemed filed under such Acts.
The Audit
Committee of MainStreet Financial is established under Section 3(a)(58)(A) of
the Securities Exchange Act of 1934. It is comprised of the
undersigned directors, each of whom is independent as defined under FINRA’s
standards.
Management
is responsible for the Company’s internal controls, financial reporting process
and compliance with applicable laws and regulations. Crowe Chizek and
Company LLC, our independent registered public accounting firm, is responsible
for performing an independent audit of the Company’s consolidated financial
statement in accordance with generally accepted auditing standards and issuing a
report thereon. As the members of the Audit Committee, it is our
responsibility to monitor and oversee these processes.
The Audit
Committee of MainStreet Financial, in its oversight responsibility, reviewed the
services performed by MainStreet Financial’s independent auditors and our
policies and procedures for the engagement of independent
auditors. The Audit Committee also discussed with MainStreet
Financial’s independent auditors the overall scope and plans for the
audit. The Audit Committee met with the independent auditors to
discuss the results of its audit, the evaluation of MainStreet Financial’s
internal controls and the overall quality of MainStreet Financial’s financial
reporting. The Audit Committee also reviewed and discussed with the
independent auditors the fees we paid to them. Those fees are
described under the caption “Relationship with Independent Auditors”
below.
The Audit
Committee received and reviewed the report of Crowe Chizek and Company LLC,
regarding the results of their audit of the Company’s 2007 financial
statements. We also reviewed and discussed the audited financial
statements with Company management.
The
members of the Audit Committee discussed with a representative of Crowe Chizek
and Company LLC, the independence of the accounting firm from the Company,
including the matters required to be discussed by Statement of Auditing
Standards No. 61 (Communication with Audit Committees) and 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).
In
fulfilling our oversight responsibility of reviewing the services performed by
the Company’s independent registered public accounting firm, we carefully
reviewed the policies and procedures for the engagement of the independent
registered public accounting firm. We also discussed with the
Company’s internal and independent registered public accounting firm the overall
scope and plans for their respective audits. We met with the internal
auditors and independent registered public accounting firm, both with and
without management present, to discuss the results of their examinations, the
evaluations of the Company’s internal controls, and the overall quality of the
Company’s financial reporting.
We
pre-approve all audit and permissible non-audit services provided by our
independent registered public accounting firm. These services may include audit
services, audit-related services, tax services and other services. Prior to
engaging our independent registered public accounting firm to render an audit or
permissible non-audit service, we specifically approve the engagement of our
independent registered public accounting firm to render that service.
Accordingly, the Company does not engage our independent registered public
accounting firm to render audit or permissible non-audit services pursuant to
pre-approval policies or procedures or otherwise, unless the engagement to
provide such services has been approved by the Audit Committee in
advance. As such, the engagement of Crowe Chizek and Company LLC, to
render 100 percent of the services described in the categories above was
approved by the Audit Committee in advance of the rendering of those
services.
We also
reviewed and discussed with the independent registered public accounting firm
the fees paid to the independent registered public accounting
firm. These fees are described under “Proposal 2 - Ratification of
the Appointment of Independent Registered Public Accounting Firm”
below.
The
Company’s Chief Executive Officer and Chief Financial Officer also reviewed with
the Audit Committee the certifications that each officer filed with the SEC
pursuant to the requirements of Sections 302 and 906 of the Sarbanes-Oxley Act
of 2002. Management also reviewed with the Audit Committee the policies and
procedures it has adopted to ensure the accuracy of such
certifications.
Based on
the review and discussions referred to above, we recommended to the Board of
Directors that the audited financial statements referred to above be included in
the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2007
for filing with the SEC.
MainStreet
Financial’s Chief Executive Officer and Chief Financial Officer also reviewed
with the Audit Committee the certifications that each such officer will file
with the SEC pursuant to the requirements of Sections 302 and 906 of the
Sarbanes-Oxley Act of 2002. Management reviewed with the Audit
Committee the policies and procedures it has adopted to ensure the accuracy of
such certifications.
Carl
A. Schoessel
Eric
T. Dreisbach
Gordon
F. Fuhr
Mary
Lou Hart
David
L. Jasperse
PROPOSAL
2
RATIFICATION
OF THE APPOINTMENT OF
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
During
the fiscal years ended December 31, 2007 and 2006, Crowe Chizek and Company LLC
(“Crowe Chizek”) provided various audit and non-audit services to the
Company. These services included: (1) the audit of the
Company’s annual financial statements and review of financial statements
included in the Company’s filings with the SEC; (2) consultation on accounting
matters; (3) tax advice and tax consultations; and (4) other professional
services.
The Audit
Committee preapproves all audit and permissible non-audit services to be
provided by the independent auditors and the estimated fees for these
services. All of the services provided by Crowe Chizek after the date
of the Company’s registration with the SEC at the time of the stock offering in
2006 were approved by the Audit Committee. Services provided prior to
the date of that registration did not require pre-approval.
The
aggregate fees billed to the Company by Crowe Chizek and Company LLC, and its
affiliates for the fiscal years ended December 31, 2007 and 2006 were as
follows:
|
|
Year
Ended December 31,
|
|
|
2007
|
|
2006
|
|
Audit
Fees
(1)
|
$46,575
|
|
$134,175
|
|
Audit
Related Fees
|
24,600
|
|
---
|
|
Tax
Fees
(2)
|
9,700
|
|
7,495
|
|
All
Other Fees
|
|
|
---
|
|
|
(1)
|
Includes
fees related to review of financial information in our SEC filings,
including those filed in connection with our 2006 stock
offering.
|
|
|
(2)
|
Primarily
for tax compliance, tax advice and tax return preparation
services.
|
Our Audit
Committee has appointed Crowe Chizek and Company LLC, as the independent public
accounting firm to audit the Company’s financial statements for the fiscal year
ending December 31, 2008.
In making its
determination to appoint Crowe Chizek as the Company’s independent auditors for
the 2007 fiscal year, the Audit Committee considered whether the providing of
services (and the aggregate fees billed for those services) by Crowe Chizek,
other than audit services, is compatible with maintaining the independence of
the outside accountants.
Our
shareholders are asked to ratify this appointment at the annual
meeting. If the appointment of Crowe Chizek is not ratified by the
shareholders, the Audit Committee may appoint other independent auditors or may
decide to maintain its appointment of Crowe Chizek.
In the
event our shareholders fail to ratify the selection of Crowe Chizek and Company
LLC, the Audit Committee will consider it as a direction to select other
auditors for the subsequent fiscal year. Even if the selection of
Crowe Chizek and Company LLC is ratified, the Audit Committee of our Board of
Directors, in its discretion, may direct the appointment of a different
independent accounting firm at any time during the year if our Board determines
that such a change would be in the best interest of our company and our
shareholders.
A
representative of Crowe Chizek is expected to attend the meeting to respond to
appropriate questions and will have an opportunity to make a statement if he or
she so desires.
THE
BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE
RATIFICATION OF THE APPOINTMENT OF CROWE CHIZEK AND COMPANY LLC AS INDEPENDENT
AUDITORS FOR THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31,
2008.
ADDITIONAL
INFORMATION
Proxy
Solicitation Costs
The
Company will pay the costs of soliciting proxies. The Company will
reimburse brokerage firms and
other custodians,
nominees and fiduciaries for reasonable expenses incurred by them in sending
proxy materials to
the beneficial owners of
the Company’s common stock. In addition to solicitation by mail,
directors, officers and
employees of the Company
may solicit proxies personally or by facsimile, telegraph or telephone, without
additional
compensation.
Shareholder
Proposals for 2009 Annual Meeting
In order
to be eligible for inclusion in MainStreet Financial’s proxy materials for next
year’s annual meeting of shareholders, any shareholder proposal to take action
at such meeting must be received in writing at MainStreet Financial’s main
office at 629 W. State Street, Hastings Michigan 49058-1643, no later than
December 19, 2008. Any such proposals shall be subject to the
requirements of the proxy rules adopted under the Securities and Exchange Act of
1934, as amended.
If a
shareholder proposal does not meet the above requirements for inclusion in the
Corporation’s proxy materials, it may still be considered for presentation at
the 2009 annual meeting, if it is received in writing at the Corporation’s main
office no later than five days before the date of the meeting. The
persons named in the enclosed form of proxy will have the discretion to vote on
any such submitted proposal in accordance with their best judgment.
OTHER
MATTERS
We are
not aware of any business to come before the annual meeting other than those
matters described in this Proxy Statement. However, if any other
matter should properly come before the meeting, it is intended that holders of
the proxies will act in accordance with their best judgment.
REVOCABLE PROXY
MAINSTREET FINANCIAL
CORPORATION
ANNUAL MEETING OF
SHAREHOLDERS
May 20, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
The undersigned hereby appoints the
members of the Board of Directors of MainStreet Financial Corporation, and its
survivor, with full power of substitution, and authorizes them to represent and
vote, as designated below and in accordance with their judgment upon any other
matters properly presented at the annual meeting, all the shares of MainStreet
Financial Corporation common stock held of record by the undersigned at the
close of business on March 31, 2008, at the annual meeting of shareholders, to
be held on Tuesday, May 20, 2008, and at any and all adjournments or
postponements thereof. The Board of Directors recommends a vote
"FOR"
each of the listed
proposals.
Should a director nominee be unable to
serve as a director, an event that MainStreet Financial Corporation does not
currently anticipate, the persons named in this proxy reserve the right, in
their discretion, to vote for a substitute nominee designated by the Board of
Directors.
This proxy may be revoked at any time
before it is voted by delivering to the Secretary of MainStreet Financial
Corporation, on or before the taking of the vote at the annual meeting, a
written notice of revocation bearing a later date than the proxy or a
later-dated proxy relating to the same shares of MainStreet Financial
Corporation common stock, or by attending the annual meeting and voting in
person. Attendance at the annual meeting will not in itself constitute the
revocation of a proxy. If this proxy is properly revoked as described above,
then the power of such attorneys and proxies shall be deemed terminated and of
no further force and effect.
The undersigned acknowledges receipt
from MainStreet Financial Corporation, prior to the execution of this Proxy, of
the Notice of Annual Meeting of Shareholders scheduled to be held on May 20,
2008, a Proxy Statement dated on or about April 18, 2008 and MainStreet
Financial Corporation's Annual Report to Shareholders for the fiscal year ended
December 31, 2007.
This proxy, when properly executed, will
be voted in the manner directed herein by the undersigned stockholder(s). If no
direction is made, this proxy will be voted FOR each of the proposals set forth
herein.
|
|
|
|
Please mark
your votes
like this
|
|
|
|
|
FOR
|
WITHHOLD
|
FOR ALL
EXCEPT
|
|
1.
|
The election of
Gordon F. Fuhr
and
David
L.
Jasperse
as directors of
MainStreet Financial
Corporation, each
for a term of three years.
|
|
|
|
|
|
Instructions: To vote for all
nominees mark the box "FOR" with an "X". To withhold your vote
for all nominees mark the box "WITHHOLD" with an "X". To
withhold your vote for an individual nominee mark the box "FOR ALL EXCEPT"
with an "X" and write the name of the nominee on the following line for
whom you wish to withhold your vote.
|
|
|
|
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
2.
|
The ratification of the appointment of
Crowe
Chizek
and Company
LLC
as
independent registered public
accounting firm
for the Corporation for the fiscal
year ending December 31, 2008.
|
|
|
|
|
|
THIS PROXY WILL BE VOTED AS
DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED
FOR THE PROPOSALS STATED. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH
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.
|
|
|
|
|
COMPANY ID:
PROXY NUMBER:
ACCOUNT
NUMBER:
|
|
Signature
_________________
|
|
Signature
_________________
|
|
Dated
______________,
2008
|
|
Please sign exactly as your name
appears on this card. When signing as attorney, executor, administrator,
trustee or guardian, please give your full title. If shares are held
jointly, each holder should sign.
|
|
PLEASE PROMPTLY COMPLETE, DATE,
SIGN AND MAIL THIS PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
|
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