<PAGE>
TRI-STATE 1ST BANK, INC.
P.O. BOX 796
EAST LIVERPOOL, OHIO 43920
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 19, 1997
Dear Tri-State 1st Bank, Inc. Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of the
Shareholders of Tri-State 1st Bank, Inc., an Ohio corporation ("1st Bank"), on
March 19, 1997. The meeting will be held in the lobby of the main office of
1st Bank's wholly-owned subsidiary, 1st National Community Bank ("1st
National"), at 16924 St. Clair Avenue, East Liverpool, Ohio, at 7:30 p.m.
There are some important matters to be considered at this meeting. Whether or
not you will attend the Annual Meeting of the Shareholders, I urge you to
immediately sign and return the enclosed Proxy in the envelope provided
casting your vote on these very important matters.
Your are being asked to consider and vote on the following proposals:
1. To set the number of Class 1 Directors to be elected at three (3)
members of the Board of Directors and to elect three (3) Class 1 Directors
each for a term of three (3) years to serve until the year 2000 A.D., or until
the next meeting of Shareholders called for the purpose of electing Class 1
Directors. All three (3) of the current Class 1 Directors have been nominated
for reelection.
2. To approve and adopt the Tri-State 1st Bank, Inc. 1997 Stock Option
Plan.
3. To ratify the appointment of S. R. Snodgrass, A.C., as the
independent certified public accountants for 1st Bank in 1997.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on February 15, 1997, has been fixed as the record
date for the determination of Shareholders entitled to notice of and to vote
at the Annual Meeting or any adjournments thereof.
By Order of the Board of Directors
East Liverpool, Ohio
February 24, 1997
Keith R. Clutter
Secretary
YOUR VOTE IS IMPORTANT
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY SO THAT YOUR SHARES
WILL BE REPRESENTED AT THE MEETING. IF YOU CHOOSE TO ATTEND THE MEETING, YOU
MAY REVOKE YOUR PROXY AND PERSONALLY CAST YOUR VOTES.
<PAGE>
TRI-STATE 1ST BANK, INC.
P.O. BOX 796
EAST LIVERPOOL, OHIO 43920
1997 ANNUAL MEETING
PROXY STATEMENT
PROXIES, SOLICITATION AND VOTING
This Proxy Statement is furnished to the shareholders ("Shareholders") of
Tri-State 1st Bank, Inc. ("1st Bank") in connection with the solicitation by
the 1st Bank management, by order of the Board of Directors, of proxies
("Proxies") for use at the Annual Meeting of Shareholders to be held on March
19, 1997, and at any adjournment thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders.
The enclosed Proxy Card is for use at the Annual Meeting if a Shareholder
is unable to attend the Annual Meeting in person or wishes to have his shares
of common stock, no par value, of 1st Bank (the "Common Stock") voted by Proxy
even if he attends the Annual Meeting. The Proxy may be revoked by the person
giving it at any time before it is exercised, by notice to the Secretary of
1st Bank, by executing and delivering a Proxy having a later date, or by such
person appearing at the Annual Meeting and electing to vote in person. All
shares of Common Stock of 1st Bank represented by valid Proxies received
pursuant to this solicitation, and not revoked before they are exercised, will
be voted at the Annual Meeting. The execution of a Proxy will in no way
affect a Shareholder's right to attend the Annual Meeting and vote in person.
The election of Class 1 Directors, the approval of the Tri-State 1st
Bank, Inc. 1997 Stock Option Program and the appointment of S.R. Snodgrass
A.C. as the Company's auditors, all require the affirmative vote of a majority
of votes cast, at a meeting at which the holders of a majority of the
outstanding Common Stock are present in person or by proxy. Abstentions and
broker non-votes will be included in determining the number of shares present
at the Annual Meeting of Shareholders but will not be included in determining
the number of votes cast and as a result will not be considered in determining
the outcome of the vote.
Holders of Common Stock of record at the close of business on February
15, 1997 (the "Record Date") will be entitled to vote at the Annual Meeting
and at any adjournment thereof. At the close of business on the Record Date,
1st Bank had issued and outstanding 205,400 shares of Common Stock. In the
election of Class 1 Directors, and in deciding all other questions presented
at the Annual Meeting of Shareholders, each Shareholder will be entitled to
one vote for each share of Common Stock held by him.
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The cost of soliciting Proxies will be borne by 1st Bank. In addition to
the use of the mails, Proxies may be solicited by personal contact or
telephone. If applicable, banks, brokers, nominees or fiduciaries will be
required to forward the soliciting material to the principals and obtain
authorization for the execution of Proxies. 1st Bank will, upon request,
reimburse banks, brokers and other institutions, nominees and fiduciaries for
their expenses in forwarding Proxy material to the principals.
ELECTION OF DIRECTORS [PROPOSAL NO. 1]
The persons named in the accompanying Proxy will vote for the election of
the nominees named below as Class 1 Directors, unless otherwise directed by
the Shareholders giving Proxies. All nominees are now Class 1 Directors and
all have consented to be named and to serve if elected. The Bylaws of 1st
Bank provide that the number of Directors to be elected at the Annual Meeting
of the Shareholders will be determined by resolution of the Board of Directors
or the Shareholders. The number of Directors has been fixed at nine, divided
into three equal classes of three: Class 1, Class 2 and Class 3. The current
terms of the Class 1 Directors expire at the Annual Meeting and three Class 1
Directors are to be elected at the Annual Meeting, each for a three year term.
Provided a quorum is present, Class 1 Directors will be elected by the
affirmative vote of not less than a majority of all shares present in person
or represented by Proxy at the Annual Meeting. At each meeting of the
Shareholders for the election of Directors at which a quorum is present, the
persons receiving the greatest number of votes shall be deemed elected
Directors. Any Shareholder may cumulate his votes at an election of Directors
upon fulfillment of the conditions prescribed in Section 1701.55 of the Ohio
Revised Code, or any similar statute which may hereafter be enacted. Such
Section generally requires that a Shareholder desiring to cumulate voting give
advance notice in writing at least 48 hours before the Annual Meeting of his
or her desire that the voting at the Annual Meeting be cumulative and that
announcement of the giving of such notice be made at the commencement of the
Annual Meeting. Upon fulfillment of these notice requirements, each
Shareholder has the right to cumulate the voting power he or she possess and
to give one candidate as many votes as the number of Directors to be elected
multiplied by the number his or her votes equals, or to distribute his or her
votes on the same principle among two or more candidates as he or she sees
fit.
The Proxy solicited hereby cannot be voted for the election of a person
to fill a directorship for which no nomination has been duly made.
Nominations for election to the Board of Directors may be made by any
Shareholder entitled to vote for the election of Directors. Any such
nomination shall contain the following information: (i) the name and address
of the proposed nominee; (ii) the principal occupation of the nominee; (iii)
the total number of shares of Common Stock that to the knowledge of the
nominating Shareholder will be voted for the proposed nominee; (iv) the name
and residential address of each nominating Shareholder; (v) the number of
shares of Common Stock owned by
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the nominating Shareholder; (vi) the total number of shares of Common Stock
that to the knowledge of the nominating Shareholder are owned by the proposed
nominee; and (vii) the signed consent of the proposed nominee to serve on the
Board, if elected. Such nomination shall be delivered to the Secretary of 1st
Bank not later than the opening of business at the Annual Meeting.
Nominations not made in accordance herewith may be disregarded by the
chairperson of the meeting, and upon the chairperson's instructions the vote
tellers may disregard all votes cast for each such nominee. If, at the time
of the Annual Meeting of Shareholders, any of the nominees named in the Proxy
Statement should be unable or decline to serve as a Class 1 Director, the
Proxies are authorized to be voted for such substitute nominee or nominees as
the Board of Directors recommends. The Board of Directors has no reason to
believe that any nominee will be unable or decline to serve as a Class 1
Director.
Set forth below are the names of the nominees for election to the Board
of Directors as Class 1 Directors and certain information furnished by such
nominees to 1st Bank concerning themselves. The persons named below will be
nominated for election to serve until the 2000 A.D. Annual Meeting of the
Shareholders. It is the intention of the persons named in the Proxy to vote
"For" the resolution establishing the number of Class 1 Directors at three (3)
persons and to vote "For" the election of these three (3) nominees.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
PROPOSAL. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR
OF THIS PROPOSAL UNLESS A CONTRARY VOTE OR ABSTENTION IS SPECIFIED.
NOMINEES FOR THE CLASS 1 DIRECTORS
Name Age Position and Offices Director Present and Principal
Held at 1st Bank and Since Occupation for last
Subsidiaries Five years
- ---------------- --- ---------------------- ------ ----------------------
William E. Blair 61 Director-1st Bank; 1st 1991 President of Bill
National Blair, Inc. (oil and
gas exploration)
Stephen W. Cooper 53 Director-1st Bank; 1st 1989 President of Cooper
National Insurance Agency
(general insurance)
Marvin H. Feldman 51 Director-1st Bank; 1st 1987 Partner in The
National Feldman Agency (life
insurance)
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IDENTIFICATION OF OTHER DIRECTORS AND EXECUTIVE OFFICERS
The following persons are (i) current Directors of 1st Bank who are
serving as either Class 2 Directors, whose terms expire in 1998, or Class 3
Directors, whose terms expire in 1999, and/or (ii) executive officers of 1st
National.
<TABLE>
<CAPTION>
Name Age Position and Offices Director Present and Principal
Held at 1st Bank and Since Occupation for last
Subsidiaries Five years
- ---------------- --- ---------------------- ------ ----------------------
CLASS 2 DIRECTORS
<S> <C> <C> <C> <C>
Keith R. Clutter 53 Director-Secretary of 1987 Secretary of 1st Bank;
1st Bank; President 1st President 1st National
National (banking)
G. Allen Dickey 66 Director-1st Bank; 1st 1987 Chairman of D.W.
National Dickey & Son, Inc.
(construction materials)
John P. Scotford, Sr. 68 Director-1st Bank; 1st 1987 President, McBarscot
National Company (automobile dealer)
CLASS 3 DIRECTORS
Charles B. Lang 57 Director; President of 1987 President of 1st Bank; Chairman
1st Bank; Chairman and and CEO of 1st National
CEO of 1st National
R. Lynn Leggett 50 Director-1st Bank; 1st 1996 Funeral Director, Eells-
National Leggett Funeral Home
(funeral services)
John C. Thompson 70 Director-1st Bank; 1st 1987 Chairman and CEO of The Hall
National China Company (pottery manufacturing)
</TABLE>
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<TABLE>
<CAPTION>
Name Age Position and Offices Director Present and Principal
Held at 1st Bank and Since Occupation for last
Subsidiaries Five years
- ---------------- --- ---------------------- ------ ----------------------
OTHER EXECUTIVE OFFICERS
<S> <C> <C> <C>
Elah M. Daniels 61 Vice President-1st Vice President of 1st
National National since 1995;
Assistant Vice President
of 1st National Bank
from 1987 to 1992;
Assistant Cashier of 1st
National since 1987;
over 37 years of banking
experience
Lois J. Curran 55 Vice President-1st Vice President of 1st
National National since 1987;
over 27 years of banking
experience
Roger D. Sanford 48 Vice President-1st Vice President and
National Branch Manager of 1st
National since 1992;
Assistant Vice President
of 1st National from
1990 to 1992; over 26
years of banking
experience
Steven A. Mabbott 40 Assistant Vice Assistant Vice President
President-1st and Branch Manager of
National 1st National since 1994;
over nine years of
banking experience
R. Keith Broadbent 53 Vice President-1st Vice President of 1st
National National since April
1996; Loan Officer of
1st National since
October 1995; over 28
years of banking
experience
</TABLE>
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BOARD OF DIRECTOR AND COMMITTEE MEETINGS
During 1996, the Board of Directors of 1st Bank held two regular meetings
of the Board of Directors. 1st Bank has no standing audit, nominating,
compensation or other committees of the Board of Directors. The Directors of
1st Bank also constitute the entire Board of Directors of 1st National
Community Bank, a wholly owned subsidiary of 1st Bank, and there were 12
monthly meetings of the Board of Directors of 1st National. All of the 1st
Bank's Directors attended at least 75% of its Board meetings except Director
John P. Scotford, Sr., who attended 33 1/3% of the meetings. Director
Scotford travels extensively and lives at a Florida residence for a portion of
each year.
EXECUTIVE COMPENSATION
The following table reflects the compensation paid by 1st National during
1996, 1995 and 1994 for services in all capacities by the Chairman. No
employee received an annual salary and bonus in excess of $100,000. More
specific information regarding compensation is provided in the notes
accompanying the tables.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
SALARY BONUS
(A) (A)
NAME AND POSITION YEAR ($) ($)
- -----------------------------------------------------------------------------
Charles B. Lang 1996 57,647 3,235
Chairman and CEO 1995 55,455 3,772
1994 54,423 3,128
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[FN]
(A) Amounts shown include all cash compensation earned and received by the
named executive officer.
OPTIONS/SAR GRANTS/INCENTIVE PLANS
1st Bank currently does not have in place any stock option plan or stock
appreciation rights plan, nor does it have any long-term incentive plan for
its employees. Proposal 2 following in this Proxy Statement is to adopt a
Stock Option Plan for future grants.
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COMPENSATION OF DIRECTORS
For the year 1996, no compensation was paid to the Directors of 1st Bank
for their services to the holding company. No compensation was paid to
Directors Lang and Clutter, who served as Directors of 1st National and were
compensated only in their capacity as officers of 1st National. Compensation
paid to each of the remaining seven outside Directors of 1st National was as
follows: an annual retainer of $1,700; $175 for each of the 12 Board meetings
attended; and $145 for each Executive Committee attended (three outside
Directors are assigned to each of the monthly Executive Committee meetings).
Also, $145 was paid to the four members of the Audit Committee for each of the
two meetings held provided they were in attendance.
EMPLOYMENT ARRANGEMENTS
1st Bank has not entered into any employment contracts with any of its
executive officers, nor is there any arrangement, plan or agreement in effect
between 1st Bank and any executive officer providing for compensation to be
paid in the event of the resignation, retirement or termination of any such
officer or in the event of a change in control of 1st Bank.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
As of February 15, 1997, there were 205,400 shares of Common Stock issued
and outstanding. The following table sets forth information as of February
15, 1997, with respect to beneficial ownership of 1st Bank's Common Stock by:
(i) all persons known to 1st Bank to be considered to own beneficially more
than five (5%) percent of its voting securities; (ii) all Directors and
Director nominees of 1st Bank; and (iii) all of 1st Bank's officers and
Directors as a group. Unless otherwise stated, each person so named exercises
sole voting power and investment power as to the shares of Common Stock so
indicated.
Amount and
Nature of
Name and Address Beneficial
of Beneficial Owner Ownership(1) Percentage of Class
- ------------------------------------------------------------------------------
William E. Blair, Jr. 2,000(2) *
13004 Woodworth Road
New Springfield, OH 44443
Keith R. Clutter 200(3) *
2642 Carter Street
East Liverpool, OH 43920
Stephen W. Cooper 200(4) *
933 Park Boulevard
East Liverpool, OH 43920
G. Allen Dickey 6,000(5) 2.92%
6938 State Route 45
Lisbon, OH 44432
Marvin H. Feldman 9,800(6) 4.77%
932 Midway Lane
East Liverpool, OH 43920
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Amount and
Nature of
Name and Address Beneficial
of Beneficial Owner Ownership(1) Percentage of Class
- ------------------------------------------------------------------------------
Charles B. Lang 19,728(7) 9.6%
R.D. #1, Boyce Drive
Chester, WV 26034
John P. Scotford, Sr. 16,000(8) 7.79%
7316 Christopher Drive
Poland, OH 44514
John C. Thompson 2,800(9) 1.36%
913 Park Boulevard
East Liverpool, OH 43920
R. Lynn Leggett 1,432(10) *
425 Chestnut Street
Lisbon, OH 44432
Elah M. Daniels 100(11) *
3125 Harding Avenue
East Liverpool, OH 43920
R. Keith Broadbent 100(12) *
1321 Riverview Street
East Liverpool, OH 43920
All Directors and Executive 58,360 28.41%
Officers as a Group (11 persons)
- ---------------------------------------
* Indicates that the percentage of shares beneficially owned does not
exceed 1% of the class.
[FN]
(1) For purposes of this table, shares are considered "beneficially" owned
if the person directly or indirectly has the sole or shared power to
vote or direct the voting of the securities or the sole or shared power
to dispose of or direct the disposition of the securities. A person is
also considered to beneficially own shares that such person has the
right to acquire within 60 days.
(2) Includes 1,000 shares owned of record and 1,000 shares owned in the name
of his spouse.
(3) All 200 shares are owned of record.
(4) All 200 shares are owned of record.
(5) Includes 4,000 shares owned of record and 2,000 shares owned in Trust
and in the name of his spouse.
(6) Includes 200 shares owned of record and 9,600 shares owned jointly with
his spouse.
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(7) Includes 4,664 shares owned of record and 15,064 shares held in Trust,
an IRA Custodial Account and as Co-Trustee of the Francis H. Lang Trust.
(8) Includes 200 shares owned of record and 15,800 shares held in Trust from
himself and in Trust in the name of his spouse.
(9) All 2,800 shares are owned of record.
(10) Includes 200 shares owned of record and 1,232 shares owned jointly with
his spouse in broker accounts.
(11) All 100 shares are owned jointly with her spouse.
(12) All 100 shares are owned jointly with another person.
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, 1st Bank Directors, officers and
persons holding more than ten percent (10%) of 1st Bank's stock are required
to report, within specified monthly and annual due dates, their initial
ownership of Common Stock and all subsequent acquisitions, dispositions or
other transfers of beneficial interests therein, if and to the extent
reportable events occur which require reporting by such due dates. 1st Bank
is required to describe in this Proxy Statement whether, to its knowledge, any
person required to file such a report may have failed to do so in a timely
manner. In this regard, 1st Bank is not aware of any untimely filing.
STOCK OPTION PLAN [PROPOSAL NO. 2]
GENERAL
On January 23, 1997, the Board of Directors of 1st Bank unanimously
adopted the Tri-State 1st Bank, Inc. 1997 Stock Option Plan (the "Plan"). The
Plan is not subject to the provisions of the Employee Retirement Income
Securities Act of 1974 ("ERISA"), nor is it subject to or qualified under
Section 401 of the Internal Revenue Code of 1986, as amended (the "Code"). No
person may create a lien on any funds, securities or other property held under
the Plan.
A summary of the material features of the Plan is set forth below. This
summary does not purport to be complete, and reference to the full text of the
Plan should be made for further information. In addition, a copy of the Plan
will be made available to participants under the Plan upon request addressed
to Charles B. Lang, President, Tri-State 1st Bank, Inc., P.O. Box 796, East
Liverpool, Ohio 43920, telephone number (330) 385-9200.
The Board of Directors has no immediate plans to grant options under the
Plan to any qualified participant.
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SUMMARY OF THE PLAN
PURPOSE
The purpose of the Plan is to establish a means whereby 1st Bank may,
through the award of options to purchase Common Stock, no par value, of 1st
Bank, provide designated employees of 1st Bank and its affiliates and selected
non-employees with additional incentive to promote the financial success of
1st Bank and its affiliates. The Plan authorizes the granting of awards in
the form of Non-qualified Stock Options("NSOs") and Incentive Stock Options
("ISOs") (NSOs and ISOs are individually referred to herein as an "Option" and
collectively as "Options").
No Option will be granted after the tenth anniversary of the adoption of
the Plan; provided, however that the Plan and all Options under the Plan prior
to that date will remain in effect until the Options have been satisfied or
terminated in accordance with the Plan and the terms of the Options.
ELIGIBILITY
The class of persons eligible to receive awards under the Plan are
designated employees of 1st Bank and its affiliates (including executive
officers and Directors) and selected non-employees (including consultants,
agents and non-employee directors) as designated by 1st Bank's Stock Option
Committee ("Committee"). It is intended that options will be granted to
selected officers and Directors of 1st Bank although there are no present
plans to grant options to any qualified participants. Currently there are
seven eligible employees and seven eligible non-employee Directors.
ADMINISTRATION
The Plan will be administered by a Committee consisting of at least two
members of the Board of Directors of 1st Bank, who will be appointed by, and
serve at the pleasure of, the Board. Each member of the Committee will be a
"non-employee director" within the meaning of Rule 16b-3 promulgated under
Section 16 of the Securities Exchange Act of 1934, as amended, or any
successor provision.
The Committee has the power to (i) determine and designate in its sole
and absolute discretion the employees and non-employees who are eligible to
participate in the Plan and to whom Options are to be granted; (ii) authorize
the granting of (a) ISOs to employees and (b) NSOs to eligible participants;
(iii) determine the number of shares awarded with each Option, subject to
certain limitations set forth in the Plan; (iv) determine the time or times
and the manner when each Option will be exercisable and the duration of the
exercise period; and (v) impose limitations, restrictions and conditions upon
any Option as the Committee deems appropriate.
The Committee may interpret the Plan, amend and rescind any rules and
regulations necessary or appropriate for the administration of the Plan and
make other determinations and take other action as it deems necessary or
advisable, which will be final, binding and conclusive.
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SHARES SUBJECT TO PLAN
Shares of capital stock which may be issued under the Plan will be
authorized and unissued Common Stock or treasury shares of Common stock. The
maximum number of shares of Common Stock for which Options may be issued under
the Plan are 25,000, subject to adjustment in connection with stock dividends
or distributions, recapitalizations, merger, consolidation, split-up,
combination, exchange of shares or the like. If any Option granted under the
Plan terminates, expires or is canceled as to any shares, a new Option may be
granted, subject to the limitations regarding the maximum grant of Options to
any employee.
NON-QUALIFIED STOCK OPTION PRICE
Generally, the Option price per share of Common Stock deliverable upon
the exercise of a NSO will be 100% of the fair market value of a share of
Common Stock on the date the Option is granted. As used in the Plan, the
"fair market value of a share of Common Stock on the date the Option is
granted" means the closing price of the Common Stock as reported on the
primary public market on which the Common Stock is then traded on the trading
day last ended prior to the time the Non-qualified Stock Option is granted, or
if the Common Stock ceases to be traded on a public market, the last
determinable market price or value as reasonably determined by the Committee
in accordance with customarily accepted practices for determining the price or
value of stock traded in a like manner as the Common Stock is then traded.
The market value of one share of Common Stock of 1st Bank as of February 15,
1997 was $34.00.
INCENTIVE STOCK OPTION PRICE
The Option price per share of Common Stock deliverable upon the exercise
of an ISO will be 100% of the fair market value of a share of Common Stock on
the date the Option is granted, unless the Option has been granted to an owner
of 10% or more of the total combined voting power of the 1st Bank and its
subsidiaries. In that case, the Option price will be 110% of the fair market
value of a share of Common Stock on the date the ISO. The aggregate fair
market value (determined on the date the option is granted) of Common Stock
subject to all ISOs granted to an employee which are exercisable for the first
time by the employee in any calendar year can not exceed $100,000.
MANNER OF PAYMENT
The grant of an Option under the Plan will be evidenced by a written
agreement between 1st Bank and the Plan participant, stating the number of
shares of Common Stock subject to the Option. Each agreement will set forth
the procedure governing the exercise of the Option granted thereunder and will
provide that, upon exercise, the Plan participant will pay the full option
price in cash or with previously owned Common Stock.
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TAX EFFECTS OF PLAN PARTICIPATION
NON-QUALIFIED STOCK OPTIONS. Under present Federal income tax
regulations, there will be no Federal income tax consequences to either 1st
Bank or the participant upon the grant of an NSO. However, the participant
will realize ordinary income on the exercise of an NSO in an amount equal to
the excess of the Common Stock acquired upon the exercise of such Option over
the exercise price, and 1st Bank will receive a corresponding deduction. The
gain, if any, realized upon the subsequent disposition by the participant of
the Common Stock will constitute short- or long-term capital gain, depending
on the participant's holding period.
INCENTIVE STOCK OPTIONS. Under present Federal income tax regulations,
there will be no Federal income tax consequences to either 1st Bank or the
participant upon the grant of an ISO or the exercise thereof by the
participant. If the participant holds the shares of Common Stock for the
greater of two years after the date the Option was granted or one year after
the acquisition of such shares of Common Stock (the "required holding
period"), the difference between the aggregate option price and the amount
realized upon disposition of the shares of Common Stock will constitute a
long-term capital gain or loss, and 1st Bank will not be entitled to a federal
income tax deduction. If the shares of Common Stock are disposed of in a
sale, exchange or other "disqualifying disposition" during the required
holding period, the participant will realize taxable ordinary income in an
amount equal to the excess of the Common Stock purchased at the time of
exercise over the aggregate option price, and 1st Bank will be entitled to a
Federal income tax deduction equal to such amount.
RETIREMENT OR DISABILITY
Upon the termination of the participant's employment by reason of
permanent disability or retirement (as each is determined by the Committee),
the participant may, within 36 months from the date of termination of
employment, exercise any Options to the extent the Options were exercisable
during the 36 month period; provided, however, that any ISO must have been
exercisable at the date of termination of employment.
TERMINATION FOR OTHER REASONS
Except as provided above or except as otherwise determined by the
Committee, all Options shall terminate three months after the termination of
an employee participant's employment.
NON-ASSIGNABILITY
No Option under the Plan shall be assignable or transferable by the
recipient thereof, except by will or by the laws of descent and distribution.
During the life of the recipient, the Option shall be exercisable only by that
person or by that person's guardian or legal representative.
AMENDMENT TO THE PLAN
The Board of Directors of 1st Bank may, without further action by the
Shareholders and without receiving further consideration from the
participants, amend the Plan or condition or modify Options under the Plan in
response to changes in securities or other laws or rules, regulations or
regulatory interpretations thereof applicable to the Plan or to comply with
stock exchange rules or requirements.
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The Board of Directors of 1st Bank may at any time and from time to time
terminate or modify or amend the Plan in any respect, except that without
Shareholder approval the Board may not (i) increase the maximum number of
shares of Common Stock which may be issued under the Plan (other than
increases pursuant to adjustments); (ii) extend the period during which any
award may be granted or exercised; or (iii) extend the term of the Plan. The
termination or any modification or amendment of the Plan, will not affect any
participant's rights under an Option previously granted to the participant
unless the participant consents.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
PROPOSAL. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR
OF THIS PROPOSAL UNLESS A CONTRARY VOTE OR ABSTENTION IS SPECIFIED.
RATIFICATION OF S.R. SNODGRASS, A.C. [PROPOSAL NO. 3]
The Board of Directors of 1st Bank has appointed S.R. Snodgrass as
independent auditors to examine the financial statements of 1st Bank and its
subsidiaries for the fiscal year ending December 31, 1997, and have directed
that such appointment be submitted for ratification by the Shareholders at the
Annual Meeting.
The affirmative vote of the majority of the shares represented at the
Annual Meeting and entitled to vote is required for ratification. Management
recommends the appointment of S.R. Snodgrass be ratified by Shareholders.
Representatives of S.R. Snodgrass are not expected to be present at the
Annual Meeting. S.R. Snodgrass has represented 1st Bank since its formation
and has represented 1st National since its charter was granted in 1987 and has
served the Board of Directors in that capacity for 10 years.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
PROPOSAL. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR
OF THIS PROPOSAL UNLESS A CONTRARY VOTE OR ABSTENTION IS SPECIFIED.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since the beginning of the 1st Bank's 1996 fiscal year, 1st Bank has been
a party to the transactions described below with certain of its Directors,
officers or Shareholders owning more than 5% of the 1st Bank Common Stock or
business controlled by such persons or any member of the immediate family of
any of such persons:
William E. Blair, a Director of 1st Bank, has obtained two demand lines
of credit from 1st National in the maximum principal amount of $250,000. The
balance outstanding at February 15, 1997 was $249,641. The rate of interest
on the outstanding balance is the 1st National's "Base Rate" (currently 8.5%)
plus 1%.
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Stephen W. Cooper, a Director of the 1st Bank, has obtained two loans in
the aggregate principal amount of $133,025 from 1st National. The aggregate
balance outstanding at February 15, 1997 was $120,484. The rates of interest
on the loans are (i) 1st National's "Base Rate" plus 1 1/2% and (ii) 11%,
respectfully.
Marvin H. Feldman, a Director of the 1st Bank, has obtained a line of
credit in the original principal amount of $200,000 from 1st National. The
balance outstanding at February 15, 1997, was $200,000. The rate of interest
on the loan is equal to 1st National's "Base Rate" plus 1%.
G. Allen Dickey, a Director of the 1st Bank, has obtained two lines of
credit in the original principal amount of $125,000 from 1st National. There
is no balance outstanding at February 15, 1997 for either of these lines of
credit. The rate of interest on the loan is equal to 1st National's Base Rate
plus 1%.
OTHER MATTERS TO COME BEFORE THE MEETING [PROPOSAL NO. 4]
No other matters are intended to be brought before the Annual Meeting by
1st Bank, nor does 1st Bank know of any matters to be brought before the
Annual Meeting by others. If other matters properly come before the meeting,
the persons named in the Proxy will vote the shares represented therein in
accordance with the judgement of management on any such matters.
SHAREHOLDER PROPOSALS
Shareholders who desire to submit proposals at 1st Bank's 1998 Annual
Meeting of Shareholders must submit such proposals so that they are received
by 1st Bank no later than October 27, 1997 in order to be considered for
inclusion in 1st Bank's 1998 Proxy materials. Such shareholder proposals as
well as any questions relating thereto, should be submitted to Tri-State 1st
Bank, Inc., 16924 St. Clair Avenue, P.O. Box 796, East Liverpool, Ohio 43920,
Attn: Secretary.
GENERAL
UPON WRITTEN REQUEST TO 1ST BANK BY ANY SHAREHOLDER WHOSE PROXY IS
SOLICITED HEREBY, 1ST BANK WILL FURNISH A COPY OF ITS ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 1996 AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, TOGETHER WITH FINANCIAL STATEMENTS AND SCHEDULES THERETO,
WITHOUT CHARGE TO THE SHAREHOLDER REQUESTING THE SAME. REQUESTS SHOULD BE
DIRECTED TO THE ATTENTION OF KEITH R. CLUTTER, SECRETARY, AT P.O. BOX 796,
EAST LIVERPOOL, OHIO 43920.
By Order of the Board of Directors
Keith R. Clutter
Secretary
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PROXY CARD
TRI-STATE 1ST BANK, INC.
P.O. BOX 796
EAST LIVERPOOL, OHIO 43920
PLEASE CHECK THE APPROPRIATE SPACES BELOW
The undersigned hereby appoints Hazel C. Schreckengost and Nancy Thompson
Cope, and each of them, each with the power to appoint her substitute, to
represent the undersigned and to vote all of the shares of Common Stock in
Tri-State 1st Bank, Inc. ("1st Bank") held of record by the undersigned at the
close of business on February 15, 1997, at the Annual Meeting of Shareholders
of 1st Bank to be held at 1st Bank's principal office, 16924 St. Clair Avenue,
East Liverpool, Ohio, on Wednesday, March 19, 1997, at 7:30 p.m., and at any
adjournment thereof.
A vote FOR the following proposals is recommended by the Board of Directors.
The shares represented hereby shall be voted as
specified. If no specification is made, such shares
shall be voted FOR proposals 1, 2, 3 and 4. WHETHER
OR NOT YOU ARE ABLE TO ATTEND THE MEETING, YOU ARE
URGED TO SIGN AND MAIL THE PROXY IN THE RETURN
ENVELOPE PROVIDED SO THAT YOUR STOCK MAY BE REPRESENTED
AT THE MEETING.
1. ELECTION OF DIRECTORS
Election of the three (3) nominees listed below as members of 1st Bank's
Board of Directors as Class 1 Directors.
William E. Blair FOR AGAINST ABSTAIN
----- ----- -----
Stephen W. Cooper FOR AGAINST ABSTAIN
----- ----- -----
Marvin H. Feldmen FOR AGAINST ABSTAIN
----- ----- -----
2. TO APPROVE the Stock Option Plan
FOR AGAINST ABSTAIN
----- ----- -----
3. TO RATIFY the selection by the Board of Directors of S.R. Snodgrass,
A.C., as 1st Bank's independent public auditors for the 1997 fiscal year.
FOR AGAINST ABSTAIN
----- ----- -----
4. Transaction of such other business as may properly come before the
meeting or any postponements or adjournments thereof.
FOR AGAINST ABSTAIN
----- ----- -----
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF 1ST BANK.
Signature (s):
- -------------------------------
- -------------------------------
- -------------------------------
(Please print or type name [s])
Date , 1997
-----------------------------
(Be sure to date your Proxy)
NOTE: Sign exactly as your name (s) appears on your stock certificate. If
shares of stock are held of record in the names of two or more
persons or in the name of husband and wife, whether as joint tenants
or otherwise, both or all such persons should sign. If shares of
stock are held of record by a corporation, the Proxy should be
executed by the President or other authorized officer, and the
corporate seal should be affixed thereto. If shares of stock are held
of record by a partnership, the Proxy should be executed in
partnership name by an authorized person. Executors or administrators
or other fiduciaries who execute the Proxy for a deceased shareholder
should give their full title. Please date the Proxy.
