FIRST BANKING CENTER, INC.
400 Milwaukee Avenue
Burlington, Wisconsin 53105
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
April 16, 1996
The Annual Meeting of Stockholders of First Banking Center, Inc. (the
"Corporation") will be held at 1:30 P.M. on April 16, 1996, at First
Banking Center, Inc., 400 Milwaukee Avenue, Burlington, for the purposes
set forth in the attached Notice of Annual Meeting. The accompanying Proxy
is solicited on behalf of the Board of Directors of the Corporation in
connection with such meeting or any adjournment(s) thereof. The
approximate date on which the Proxy statement and form of Proxy are
expected to be sent to security holders is March 13, 1996.
VOTING OF PROXIES AND REVOCABILITY
When the Proxy is properly executed and returned to the Secretary of the
Corporation, it will be voted as directed by the Stockholder executing the
Proxy unless revoked. If no directions are given, the shares represented
by the Proxy will be voted FOR the election of the nominees listed in the
Proxy Statement. If additional matters are properly presented, the persons
named in the Proxy will have discretion to vote in accordance with their
own judgment in such matters. Any person giving a Proxy may revoke it at
any time before it is exercised by the execution of another Proxy bearing
a later date, or by written notification to the Secretary of the
Corporation, Mr. John S. Smith, Secretary of First Banking Center, Inc.,
400 Milwaukee Avenue, Burlington, Wisconsin 53105. Stockholders who are
present at the Annual Meeting may revoke their Proxy and vote in person if
they so desire.
VOTING SECURITIES, PERSONS ENTITLED TO VOTE AND VOTES REQUIRED
As of January 11, 1996, there were 1,468,437 shares of Common Stock ($1.00
par value) of the Corporation outstanding. The Board of Directors has
fixed March 1, 1996 as the record date and only stockholders whose names
appear of record on the books of the Corporation at the close of business
on March 1, 1996, will be entitled to notice of and to vote at the Annual
Meeting or any adjournment(s) thereof. A stockholder is entitled to one
vote for each share of stock registered in his or her name. A majority of
the outstanding Common Stock will constitute a quorum for the transaction
of business at the Annual Meeting. Abstentions will be treated as shares
that are present and entitled to vote for purposes of determining the
presence of a quorum, but as unvoted for purposes of determining the
approval of any matter submitted to the shareholders for a vote. The seven
nominees for director who receive the largest number of affirmative votes
cast at the Annual Meeting will be elected as directors.
THE COST OF SOLICITATION OF THE PROXIES WILL BE BORNE BY FIRST BANKING
CENTER, INC. IN ADDITION TO USE OF THE MAILS, PROXIES MAY BE SOLICITED
PERSONALLY BY THE OFFICERS OF FIRST BANKING CENTER, INC., AND BY
TELEPHONE.
The complete mailing address of First Banking Center, Inc. is 400
Milwaukee Avenue, P.O. Box 660, Burlington, Wisconsin, 53105.
PRINCIPAL HOLDERS OF SECURITIES
As of January 27, 1996, the Trust Department of a wholly-owned subsidiary
of the Corporation owned in a fiduciary capacity 151,905 shares of Common
Stock, constituting 10.3% of the Corporation's outstanding shares entitled
to vote. Sole voting and investment power is held with respect to 57,294
of such shares. With the exception of the persons named in Table I, no
person is known to the Corporation to own beneficially more than 5% of the
outstanding shares entitled to vote.
PROPOSAL 1
ELECTION OF DIRECTORS
It is the recommendation of the Board of Directors that 7 Directors be
elected to serve during the ensuing year and until their successors have
been duly elected and qualified. Unless authority is withheld by your
proxy, it is intended that the shares represented by the proxy will be
voted FOR the 7 nominees listed in Table I. All listed nominees are
incumbent directors. If any nominee is unable to serve for any reason, the
proxies will be voted for such person as shall be designated by the Board
of Directors to replace such nominee. The Board has no reason to expect
that any nominee will be unable to serve. There is no arrangement or
understanding between any nominee and any other person or persons (other
than officers or directors of First Banking Center, Inc., acting solely in
their capacities as such) pursuant to which such nominee has or is to be
elected as a director. No family relationship exists between any of the
nominees.
BOARD OF DIRECTORS AND COMMITTEES OF
FIRST BANKING CENTER, INC.
The Board of Directors of First Banking Center, Inc., held three meetings
during the year of 1995.
All Directors attended at least 75% of the meetings of the Board of
Directors and committees of which they were a member.
There are several committees of the Corporation's Board (membership
thereon is set forth in Table I). They meet periodically during the year,
and include the Compensation Committee, the Audit Committee, and the
Nominating Committee. In addition, Directors of the Corporation serve as
Directors and committee members of the Corporation's subsidiaries.
The Compensation Committee's function is to define personnel needs,
establish compensation and fringe benefit guidelines, and evaluate senior
management performance. The committee makes its recommendations to the
full Board for their approval. During the year 1995, the Compensation
Committee met two times.
The Audit Committee's function is to verify and evaluate operational
systems in the Corporation and to determine that proper accounting and
audit procedures are being followed as established by company policies.
Additionally, the Audit Committee makes recommendations as to the
engagement of independent auditors. During the year 1995, the Audit
Committee met two times.
The Nominating Committee is responsible for the selection of nominees to
the Board of Directors. The Nominating Committee will consider nominees to
the Board submitted by stockholders in writing to the Secretary-Treasurer
of First Banking Center, Inc. During the year 1995, the Nominating
Committee met once.
The following table sets forth information as of January 11, 1996 as to
the beneficial ownership of the Common Stock of the Corporation by all
nominees named in this Proxy Statement, along with their principal
occupation and history of service with the Corporation and its
subsidiaries.
<TABLE>
TABLE I
<CAPTION>
Capital Stock
directly, in-
directly, or
Name and Position Period of beneficially
with First Serv. as owned as of Percent of
Banking Center, Inc. Age Director 1/11/96 (1) Outstanding Committee
<S> <C> <C> <C> <C> <C>
Roman F. Borkovec 64 08/21/81 84,416 (2) 5.7% Building,
President, to date Trust,
Chairman Loan and
Chief Executive Officer Nominating
Dean A. Houlberg 43 Feb. 1988 10,266 (3) .7% Planning
to date
John S. Smith 36 Dec. 1992 11,705 (4) .8% Trust, Loan,
Secretary/Treas. to date Nominating
Richard McKinney 58 May 1988 5,665 (5) .4% Audit, CRA
to date and Loan
Melvin W. Wendt 57 Oct. 1989 7,615 (6) .5% Building and
Vice Chairman of to date Compensation
the Board
John M. Ernster 46 Apr. 1992 776 (7) .05% Trust, Comp.
to date and Examination
David Boilini 43 Dec. 1993 6,785 (8) .5% Nominating,
to date Loan, Audit
<FN>
ALL DIRECTORS AND EXECUTIVE OFFICERS OF THE CORPORATION AS A GROUP (7 IN NUMBER
INCLUDING THE ABOVE) OWN 127,228 SHARES OF COMMON STOCK OF THE CORPORATION OR
8.66% OF THE TOTAL STOCK OUTSTANDING.
NOTES TO TABLE I
<F1>
(1) Except as stated in the following footnotes, each director has sole
voting and investment powers over the shares stated as beneficially
owned by him. Share ownership includes shares issuable within 60 days
upon exercise of incentive stock options owned by certain named
individuals.
<F2>
(2) Consists of 76,747 shares held directly by Mr. Borkovec, and 7,669
shares held by his wife in which shares Mr. Borkovec disclaims voting
or investment powers.
Mr. Borkovec has been CEO of First Banking Center - Burlington, and
Chairman of the Board of First Banking Center -Burlington and First
Banking Center, Inc. since 1995. Mr. Borkovec served as President of
First Banking Center - Burlington from 1973 to 1994. He served as
Vice Chairman of the Board of First Banking Center - Burlington and
First Banking Center, Inc. from 1994 to 1995. He has served as Trust
Officer of First Banking Center - Burlington since 1973. He has been
President and CEO of First Banking Center, Inc. since 1982. Mr.
Borkovec has been Chairman of the Board of First Banking Center -
Albany since 1984.
<F3>
(3) Consists of 9,816 shares held directly by Mr. Houlberg, and 450
shares held by his wife in which Mr. Houlberg disclaims voting or
investment powers.
Mr. Houlberg has been President of First Banking Center-Albany,
Albany, Wisconsin, since December 1989. He has been a director of
First Banking Center-Albany since October 1987.
<F4>
(4) Consists of 11,705 shares held directly by Mr. Smith.
Mr. Smith has been President and Trust Officer of First Banking
Center-Burlington, Burlington, Wisconsin, since April 1994. He has
been a director of First Banking Center-Burlington since August 1992
and was Executive Vice President of First Banking Center - Burlington
from 1990 to 1994.
<F5>
(5) Consists of 2,452 shares held in joint tenancy with his wife in which
shares Mr. McKinney shares voting and investment powers, and of 3,213
shares held directly by Mr. McKinney.
Mr. McKinney has been a director of First Banking Center-Burlington,
Burlington, Wisconsin, since May 1988. He has been president of Tobin
Drugs, Inc., Burlington, Wisconsin since 1981; President of Amy's
Hallmark, Burlington, Wisconsin, since 1985 and owner of Sue's
Hallmark, Lake Geneva, Wisconsin, since 1993.
<F6>
(6) Consists of 7,438 shares held in joint tenancy with his wife in which
shares Mr. Wendt has shared voting and investment powers and 177
shares held directly by Mr. Wendt.
Mr. Wendt has been a director of First Banking Center-Burlington,
Burlington, Wisconsin, since October 1, 1989. Mr. Wendt is also
Vice-Chairman of the Board of Directors of First Banking Center-
Burlington. He had previously served on the Wind Lake (a branch of
First Banking Center-Burlington) Advisory Board. He has been Owner of
Melvin Wendt Realty, a real estate brokerage firm, since 1964.
<F7>
(7) Consists of 776 shares held directly by Mr. Ernster.
Mr. Ernster has been a director of First Banking Center-Burlington,
Burlington, Wisconsin, since May 1991. He served as Southern Regional
Manager of Wisconsin Electric Power Company from 1990-1994 and has
been Manager of Customer Services from 1994 to present. He has been
on the Board of Directors of the Racine Area Manufacturers and
Commerce (RAMAC) from 1991 to present and Chairman of the
Manufacturer's Association of that group from 1994 to present.
<F8>
(8) Consists of 4,907 shares held directly by Mr. Boilini, and 1,878
shares owned by J. Boilini Farms in which Mr. Boilini has shared
voting and investment powers.
Mr. Boilini was appointed to the Board in December of 1993. He has
been a director of First Banking Center-Burlington, Burlington,
Wisconsin, since February 1993. Since 1979 Mr. Boilini has been
President of J. Boilini Farms, a diversified commercial operation
involved in the growing of vegetables and grain, as well as the
production of mint for the flavoring industry.
</FN>
</TABLE>
COMPENSATION OF DIRECTORS
Fees
Directors of the Corporation are paid the following fees for their services:
$400.00 per directors meeting, and $25.00 per committee meeting attended. If the
Corporation's Board meetings are held in conjunction with subsidiary Company
Board meetings, the fee is $100.00 per meeting attended.
Pension Plan
First Banking Center-Burlington (the "Bank"), a wholly-owned subsidiary of the
Corporation, has entered into pension and death benefit agreements with its
directors. Pursuant to the agreement, pension benefits accrue at the rate of
$10,000 for each full year a director serves on the board for the first six
years of service. Upon completing six full years of service, the director is
entitled to ten annual payments of ten thousand dollars each. Payments will
commence in January of the year in which the director attains the age of 65
years. Payments under the plan are funded through the purchase of life
insurance. The Bank is the owner and beneficiary of such life insurance policies
and is responsible for payment of the premium on such policies. Total deferred
liability expense for the Directors' pension and death benefit agreements was
$104,000, $95,000, and $89,000, respectively, for 1995, 1994, and 1993.
Deferred Compensation Plan
The Bank has also established a deferred compensation plan for its directors
pursuant to which a director may have a portion of his/her director's fees
deferred. Upon attaining the age of 65 or normal retirement, the Bank will pay
monthly benefits for a period of 15 years. The amount of such payment is
determined in each case by the amount of fees deferred and length of
participation in the deferred compensation plan. Total deferred liability
expense was $43,000, $41,000 and $37,000, respectively, for 1995, 1994, and
1993. Deferred directors' fees in each of the respective years were $21,000.
Stock Option Plan
For a description of the Stock Option Plan see "EXECUTIVE COMPENSATION -
Incentive Stock Option Plan."
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation paid or
accrued for services rendered in all capacities to the Corporation and its
affiliates for the fiscal years ended December 31, 1995, 1994 and 1993 of the
person who was, on December 31, 1995, the Chief Executive Officer of the
Corporation.
No other executive officer received a total annual salary and bonus in excess
of $100,000 in 1995, and no disclosure is provided for such other executive
officers.
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation Long-Term
Compensation
Awards
Name and Securities All
Principal Salary Bonus Other Annual Underlying Other
Position Year ($) ($) Comp. (1) Options/SARs(#) Comp.
<S> <C> <C> <C> <C> <C>
Roman Borkovec, 1995 $159,000 $14,000 1,400 $31,000 (2)
President, CEO,* 1994 $154,000 $26,000 1,200 $29,000 (3)
and Chairman of 1993 $131,000 $26,000 -0- $27,000 (4)
the Board
<FN>
*Mr. Borkovec also serves in various capacities as an officer of the Corporation's
subsidiaries.
<F1>
(1) Aggregate amount of other annual compensation does not exceed the
lesser of $50,000 or 10% of executive officer's salary and bonus, and
therefore no disclosure is made.
<F2>
(2) Contribution to the Corporation's Defined Contribution (401(k)) Plan
of $8,000; accrued liability of $4,000 and $19,000, respectively,
under the Directors' Deferred Compensation Plan and Directors'
Pension Plan of First Banking Center-Burlington, a wholly owned
subsidiary of the Corporation.
<F3>
(3) Contributions to the Corporation's Defined Contribution (401(k)) Plan
of $7,000; accrued liability of $4,000 and $18,000, respectively,
under the Directors' Deferred Compensation Plan and Directors'
Pension Plan of First Banking Center-Burlington.
<F4>
(4) Contribution to the Corporation's Defined Contribution(401(k)) Plan
of $6,000; accrued liability of $4,000 and $17,000, respectively,
under the Directors' Deferred Compensation Plan and Directors'
Pension Plan of First Banking Center-Burlington.
</FN>
</TABLE>
Employment Agreement and Salary Continuation Agreement
Effective July 1, 1994, First Banking Center, Inc. ("Corporation") and Roman
Borkovec entered into an employment agreement ("Employment Agreement"). Mr.
Borkovec presently serves as President, Chief Executive Officer and Chairman of
the Corporation, and as a director and officer of the subsidiaries of the
Corporation. The Employment Agreement has a term of three years.
Under the Employment Agreement, Mr. Borkovec will perform the customary duties
of the chief executive officer of the Corporation, as further set forth in the
Corporation's bylaws and as may, from time to time, be determined by the
Corporation's Board of Directors. As compensation for such service, the
Corporation will pay Mr. Borkovec the greater of $150,000 annually or
compensation as may be established from time to time during the employment
period by the Board of Directors of the Corporation. During the employment
period, Mr. Borkovec is entitled to participate in such other benefits of
employment as are generally made available to executive officers of the
Corporation and its subsidiaries.
If the Employment Agreement is terminated by the Corporation other than for
reasons of Mr. Borkovec's death, disability or retirement, or without "cause"
as defined in the Employment Agreement; or if Mr. Borkovec terminates the
Employment Agreement for "cause" as defined in the Employment Agreement; or if
Mr. Borkovec terminates the Employment Agreement following a "change in control"
as defined in the Employment Agreement, then Mr. Borkovec shall be entitled to
receive severance payments equal to the salary at the time of termination for
the unexpired term of the employment period, except that, in case of termination
due to change in control, such unexpired term shall be extended to a date three
years from the last anniversary date preceding the effective date of the change
in control. In addition to the aforementioned severance payments, Mr. Borkovec
will be entitled to fringe benefits for the remaining term of the Agreement.
If Mr. Borkovec is terminated due to disability, as defined in the Employment
Agreement, he will be entitled to payment of his salary for one year at the rate
in effect at the time notice of termination is given. If termination occurs for
any reason other than those enumerated, the Corporation would be obligated to
pay the compensation and benefits only through the date of termination.
The Employment Agreement provides that during the employment period and for (1)
year thereafter, Mr. Borkovec shall not engage in any activity which will result
in his competing with the Corporation or its subsidiaries.
To further the objective of providing continued successful operation of the
Corporation and its subsidiaries and to provide additional incentive for Mr.
Borkovec to enter into the Employment Agreement, the Corporation and Mr.
Borkovec have entered into a Salary Continuation Agreement (the "Continuation
Agreement") as of September 12, 1994. The Continuation Agreement provides for
monthly payments of $5,850.00, commencing on August 1, 1997, one month after the
expiration of the Employment Agreement. In the event of Mr. Borkovec's
termination of employment after the expiration of the Employment Agreement
("late retirement"), the aforedescribed payments will be increased by a factor
of .00416 for each month that Mr. Borkovec's employment continues beyond the
expiration of the Employment Agreement. Following retirement, payments will
continue for the remainder of Mr. Borkovec's life with a guarantee of 180 such
monthly payments to Mr. Borkovec, his surviving wife or his estate. If Mr.
Borkovec dies before July 1, 1997, payment in the amount of $5,850.00 per month
to Mr. Borkovec's beneficiary will commence immediately and will continue for
a period of 180 months.
Upon Mr. Borkovec's voluntary termination of employment prior to the expiration
of the Employment Agreement for reasons other than death or disability or upon
Mr. Borkovec's discharge for cause as defined in the Employment Agreement at any
time, the Corporation will not be obligated to pay any benefits pursuant to the
Continuation Agreement; however, if Mr. Borkovec incurs voluntary or involuntary
termination of employment prior to the expiration of the Employment Agreement
for reasons other than death, disability, or discharge for cause, but on or
after a change in control, as defined in the Employment Agreement, Mr. Borkovec
will be entitled to the benefits payable under the Continuation Plan.
The benefits provided in the Continuation Agreement will be funded through the
purchase of single premium life insurance policies with cash value sufficient
to fund the payments required under the Continuation Agreement.
The Board of Directors of the Corporation has determined that the Employment
Agreement and Continuation Agreement are in the best interest of the
Corporation, its subsidiaries and its shareholders for the following reasons:
a) Mr. Borkovec has been employed by the Corporation and its subsidiaries in an
executive capacity for a number of years; b) during his employment with the
Corporation and its subsidiaries Mr. Borkovec has contributed to the successful
and profitable operation of the Corporation and its subsidiaries; c) such
contribution by Mr. Borkovec has resulted in substantial enhancement of
shareholder value; and d) the Corporation desires to provide for management
continuity and stability by retaining an individual with a proven record of
performance.
401(k) Profit Sharing Plan
The Corporation has a trusteed 401(k) profit sharing plan covering substantially
all employees of the Corporation and its subsidiaries. The plan allows for
voluntary employee contributions. Total contributions to the 401(k) Plan by the
Corporation were $92,000 in 1995, $94,000 in 1994 and $80,000 in 1993.
Incentive Stock Option Plan
The following table presents information about stock options granted during 1995
to the executive officer named in the Summary Compensation Table.
Stock Option Grants in 1995
Individual Grants
Number of Percent of Total
Securities Options
Underlying Granted to
Options(1) Employees in Exercise Expiration
Name Fiscal Year (1) Price Date
Roman
Borkovec 1,400 11.6% $22.00 12/31/99
(1) All options granted in 1995 were granted under the 1994 Incentive
Stock Option Plan.
The following table presents information concerning stock options exercised
during 1995. Also shown is information on unexercised options as of December 31,
1995.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Value of Exercised,
Number of In-the-Money Options
Name Shares Unexercised at FY End
Acquired Value Options at FY End Exercisable
On Exercise Realized(1)(2) Exercisable Unexercisable
Unexercisable
Roman
Borkovec 2,089 $20,965 2,861 $24,161
2,200 $2,400
(1) The exercise price for each grant was 100% of the market value of the
shares on the date of grant.
(2) Represents market price at date of exercise, less option price, times
number of shares.
On August 8, 1994, the Board of Directors of the Corporation adopted the First
Banking Center, Inc. 1994 Incentive Stock Option Plan (the "Plan"), which was
approved by the shareholders on April 11, 1995.
The Plan replaced the 1984 Incentive Stock Option Plan, which terminated in
April 1994. The purpose of the Plan is to advance the interests of the
Corporation and its subsidiaries by encouraging and providing for the
acquisition of an equity interest in the Corporation by key employees and by
enabling the Corporation and its subsidiaries to attract and retain the services
of employees upon whose skills and efforts the success of the Corporation
depends. In addition the Plan is designed to promote the best interests of the
Corporation and its shareholders by providing a means to attract and retain
competent directors who are not employees of the Corporation or any of its
subsidiaries.
The following summary description of the Plan is qualified in its entirety by
reference to the full text of the Plan, a copy of which may be obtained upon
request directed to the Corporation's Secretary at First Banking Center, Inc.,
400 Milwaukee Avenue, Burlington, WI 53105.
The Plan is administered by the Compensation Committee of the Board, consisting
of not less than three (3) directors (the "Committee"). The Committee is
comprised of directors who are disinterested persons within the meaning of Rule
16b-3 as promulgated by the Securities and Exchange Commission. Subject to the
terms of the Plan and applicable law, the Committee has the authority to:
establish rules for the administration of the Plan; select the individuals to
whom options are granted; determine the numbers of shares of Common Stock to be
covered by such options; and take any other action it deems necessary for
administration of the Plan.
Participants in the Plan consist of all members of the Board of Directors of the
Corporation who are not employees of the Corporation or its subsidiaries, and
individuals selected by the Committee. Those selected individuals may include
any executive officer or employee of the Corporation or its subsidiaries and
non-employee directors of the subsidiaries who, in the opinion of the Committee,
contribute to the Corporation's growth and development.
Subject to adjustment for dividends or other distributions, recapitalization,
stock splits or similar corporate transactions or events, the total number of
shares of Common Stock with respect to which options may be granted pursuant to
the Plan is 300,000. The shares of Common Stock to be delivered under the Plan
may consist of authorized but unissued stock or treasury stock.
Options may be granted by the Committee to key employees and non-employee
directors (other than directors of the Corporation) as determined by the
Committee. The Committee has complete discretion in determining the number of
options granted to each such grantee. The Committee also determines whether an
option is to be an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code or a nonqualified stock option. Following the first
grant of options in December 1994, each director of the Corporation will
automatically be granted a nonqualified stock option to purchase 100 shares of
Common Stock in December of each succeeding year.
The exercise price for all options granted pursuant to the Plan is the fair
market value of the Common Stock on the date of grant of the option; however,
in case of options granted to a person then owning more than 10% of the
outstanding Common Stock, the option price will not be less than 110% of the
fair market value on such date. The Committee will determine the method and the
form of payment of the exercise price. The payment may be in form of cash,
common Stock, other securities or other property having a fair market value
equal to the exercise price.
Except for options granted to directors of the Corporation, options granted
pursuant to the Plan expire at such time as the Committee determines at the time
of grant, provided that no option may be exercised after the fifth anniversary
date of its grant. Options granted to directors of the Corporation expire on the
fifth anniversary of the date of grant and are exercisable in increments of one-
third on the first, second and third anniversaries of the date of grant.
Stock acquired pursuant to the Plan may not be sold or otherwise disposed of
within 5 years from the date of exercise, except by gift, bequest or inheritance
or in case of participant's disability or retirement. The Corporation also has
a "right of first refusal" pursuant to which any shares of Common Stock acquired
by exercising an option must first be offered to the Corporation before they may
be sold to a third party. The Corporation may then purchase the offered shares
on the same terms and conditions (including price) as applied to the potential
third-party purchaser.
The Board of Directors of the Corporation may terminate, amend or modify the
Plan at any time, provided that no such action of the Board, without approval
of the shareholders may: increase the number of shares which may be issued under
the Plan; materially increase the cost of the Plan or increase benefits to
participants; or change the class of individuals eligible to receive options.
The following is a summary of the principal federal income tax consequences
generally applicable to awards under the Plan. The grant of an option is not
expected to result in any taxable income for the recipient. The holder of an
Incentive Stock Option generally will have no taxable income upon exercising the
Incentive Stock Option (except that a liability may arise pursuant to the
alternative minimum tax), and the Corporation will not be entitled to a tax
deduction when an Incentive Stock Option is exercised. Upon exercising a
nonqualified stock option, the optionee must recognize ordinary income equal to
the excess of the fair market value of the shares of common stock acquired on
the date of exercise over the exercise price, and the Corporation will be
entitled at that time to a tax deduction for the same amount. The tax
consequences to an optionee upon disposition of shares acquired through the
exercise of an option will depend on how long the shares have been held and upon
whether such shares were acquired by exercising an Incentive Stock Option or by
exercising a nonqualified stock option. Generally, there will be no tax
consequences to the Corporation in connection with the disposition of shares
acquired under an option.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
General Policy
The compensation objective of the Corporation and its subsidiaries is to link
compensation with corporate and individual performance in a manner which will
attract and retain competent personnel with leadership qualities. The process
gives recognition to the marketplace practices of other banking organizations.
Toward the end of achieving long-term goals of the shareholders, the
compensation program ties a significant portion of total compensation to the
financial performance of the Corporation in relation to its peer group. The
Compensation Committee makes recommendations on the compensation of the
Corporation's officers to the Board of Directors. The Compensation Committee's
recommendations reflect its assessment of the contributions to the long-term
profitability and financial performance made by individual officers. In this
connection, the Committee considers, among other things, the type of the
officer's responsibilities, the officer's long-term performance and tenure,
compensation relative to peer group and the officer's role in ensuring the
financial success of the Corporation in the future. Financial performance goals
considered by the Committee include earnings per share, return on assets, return
on equity, asset quality, growth and expense control.
In addition to measuring performance in light of these financial factors, the
Committee considers the subjective judgment of the Chief Executive Officer in
evaluating performance and establishing salary, bonus and long-term incentive
compensation for individual officers, other than the Chief Executive Officer.
The Committee independently evaluates the performance of the Chief Executive
Officer, taking into consideration such subjective factors as leadership,
innovation and entrepreneurship in addition to the described financial goals.
Base Salary
In determining salaries of officers, the Committee considers surveys and data
regarding compensation practices of financial institutions of similar size,
adjusted for differences in product lines, nature of geographic market and other
relevant factors. The Committee also considers the Chief Executive Officer's
assessment of the performance, the nature of the position and the contribution
and experience of individual officers (other than the Chief Executive Officer).
The Committee independently evaluates the Chief Executive Officer's performance
and compares his compensation to peer group data.
Annual Bonuses
Officers and employees of the Corporation and its subsidiaries are awarded
annual bonuses at the end of each year at the discretion of the Committee. The
amount of the bonus, if any, for each officer (other than the Chief Executive
Officer) is recommended to the Committee by the Chief Executive Officer based
upon his evaluation of the achievement of corporate and individual goals and his
assessment of subjective factors such as leadership, innovation and commitment
to the corporate advancement. The Corporation's annual incentive bonus is based
on meeting specific financial performance targets pursuant to a bonus plan. The
plan provides for a range of bonus awards based, among other things, upon return
on assets. The minimum target goal for return on assets is 1%, which is required
for payment of a bonus.
Chief Executive Officer Compensation
The compensation for the Chief Executive Officer was established at a level
which the Committee believed would approximate the compensation of chief
executive officers of similar organizations and would reflect prevailing market
conditions. The Committee also took into consideration a variety of factors,
including the achievement of corporate financial goals and individual goals. The
financial goals included increased earnings, return on assets, return on equity
and asset quality. No formula assigning weights to particular goals was used,
and achievement of other corporate performance goals was considered in general.
The Committee also considered the Chief Executive Officer's years of service to
the Corporation and his past performance record. The Chief Executive Officer was
also awarded incentive stock options under the Corporation's Incentive Stock
Option Plan. Based upon its review of the Corporation's performance, the
Committee believes that the total compensation awarded to the Chief Executive
Officer for 1995 is fair and appropriate under the circumstances.
Stock Options
The Committee administers the 1994 Incentive Stock Option Plan. Stock options
are designed to furnish long-term incentives to the officers of the Corporation
to build shareholder value and to provide a link between officer compensation
and shareholder interest. The Committee made awards under the Stock Option Plan
to the officers of the Corporation and its subsidiaries in 1995. Awards were
based upon performance, responsibilities and the officer's relative position and
ability to contribute to future performance of the Corporation. In determining
the size of the option grants (except grants to the Chief Executive Officer),
the Committee considered information and evaluations provided by the Chief
Executive Officer. The award of option grants to the Chief Executive Officer was
based on the overall performance of the Corporation and on the Committee's
assessment of the Chief Executive Officer's contribution to the Corporation's
performance and his leadership.
The Committee
The Compensation Committee currently has three members. No member of the
Committee is an employee or officer of the Corporation or any of its
subsidiaries. None of the Committee members has interlocking relationships as
defined by the Securities and Exchange Commission, with the Corporation or its
subsidiaries. The Committee is aware of the limitations imposed by Section
162(m) of the Internal Revenue Code of 1986, as amended, on the deductibility
of compensation paid to certain senior executives to the extent it exceeds $1
million per executive. The Committee's recommended compensation amounts meet the
requirements for deductibility.
The Compensation Committee:
David Boilini John Ernster Richard McKinney
PERFORMANCE TABLE
The following table shows the cumulative total stockholder return on the
Company's Common Stock over the last five fiscal years compared to the returns
of the Standard & Poor's 500 Stock Index and the NASDAQ Bank Index:
Cumulative Total Return
Assumes Dividends & Capital Gains Reinvested
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
FBC, Inc. 100 118 131 162 216 242
S&P 500 100 130 140 154 157 216
NASDAQ Bank Ind. 100 164 239 272 271 402
ADDITIONAL INFORMATION ON MANAGEMENT
Transactions With Directors and Officers
Certain directors and executive officers of the Corporation, and their related
interests had loans outstanding in the aggregate amounts of $765,000 and
$1,299,000 at December 31, 1995 and 1994, respectively. During 1995, $536,000
of new loans were made and repayments totaled $1,070,000. These loans were made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the same time for comparable transactions with other persons
and did not involve more than normal risks of collectability or present other
unfavorable features. The loans to directors and executive officers and their
related business interests at December 31, 1995 represented 3.20% of
stockholders equity.
Section 16 Reports
Under Section 16(a) of the Securities Exchange Act of 1934, as amended, the
Corporation's directors and executive officers and shareholders holding more
than 10% of the outstanding stock of the Corporation (the "insiders") are
required to report their initial ownership of stock and any subsequent change
in such ownership to the Securities and Exchange Commission and the Corporation
(the "16(a) filing requirement"). Specific time deadlines for the 16(a) filing
requirements have been established by the Securities and Exchange Commission.
To the Corporation's knowledge, and based solely upon a review of the copies of
such reports furnished to the Corporation, all 16(a) filing requirements
applicable to Insiders during 1995 were satisfied on a timely basis.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Conley, McDonald and Company performed a complete audit of First Banking Center,
Inc. during 1995 and provided a certified financial statement for the years
ended December 31, 1994 and 1995.
Conley, McDonald and Company also performed a non-audit function for the
Corporation consisting of the preparation of the Corporation's 1995 Income Tax
returns. No representative of Conley, McDonald and Company will be present at
the Annual Stockholders' Meeting on April 16, 1996. The Board of Directors will
engage the services of a public accounting firm to provide a certified financial
statement for 1996. The Board will select such accounting firm at its annual
Directors Meeting.
PROPOSALS BY STOCKHOLDERS
Shareholders' proposals to be presented at the 1997 Annual Stockholders' Meeting
must be received by the Corporation at its principal office, 400 Milwaukee
Avenue, Burlington, Wisconsin, on or before November 8, 1996.
MISCELLANEOUS
Management does not intend to bring any other matters before the meeting and
knows of no matters to be brought before the meeting by others. If any other
matters properly come before the meeting, it is the intention of the persons
named in the accompanying proxy to vote said proxy in accordance with their best
judgment.
A COPY OF THE FIRST BANKING CENTER, INC. ANNUAL REPORT ON FORM 10-K INCLUDING
FINANCIAL STATEMENTS AND SCHEDULES FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF 1934 WILL BE MADE AVAILABLE TO
STOCKHOLDERS UPON WRITTEN REQUEST AT NO CHARGE. REQUESTS SHOULD BE ADDRESSED
TO: Mr. John S. Smith, Secretary, First Banking Center, Inc., 400 Milwaukee
Avenue, P.O. Box 660, Burlington, Wisconsin, 53105.
BY ORDER OF THE BOARD OF DIRECTORS
JOHN S. SMITH, SECRETARY
Burlington, Wisconsin
March 8, 1996
