April 28, 1997
Securities and Exchange Commission
Office of Document Control
450 5th Street N.W.
Washington, D.C. 20549
Re: Definitive Information Statement of
First Financial Corporation and
Annual Report for Annual Meeting of
Shareholders to be Held on May 20,
1997, Commission File No. 0-5559
Dear Madam or Sir:
Enclosed are the following:
1. Eight (8) definitive copies of the Information
Statement (including cover sheet) and seven (7)
copies of the Annual Report to Shareholders on
Form 10-KSB, which are being mailed to the
shareholders of First Financial Corporation (the
"Company") on or about April 28, 1997, in
connection with the annual meeting of shareholders
scheduled for May 20, 1997; and
2. Letter from the Vice President of the Company
stating that the financial statements in the
Annual Report on Form 10-KSB that are being sent
to the shareholders of the Company do not reflect
a change from the preceding year in any accounting
principles or practices or in the methods of
application of those principles or practices.
It is our understanding from our conversations with the
Fee Filing Group in your office that no filing fee is
required for this filing.
Very truly yours,
FIRST FINANCIAL CORPORATION
BY: /s/ David W. Mann
David W. Mann, President
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14c-5(d)(2))
[X] Definitive Information Statement
FIRST FINANCIAL CORPORATION
(Name of Registrant As Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14c-5(g) and 0-11.
1) Title of each class of securities to which
transaction applies:
2) Aggregate number of securities to which
transaction applies:
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee
was paid previously. Identify the previous filing
by registration statement number, or the Form or
Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed
FIRST FINANCIAL CORPORATION
800 Washington Avenue
P. O. Box 269
Waco, Texas 76703
(817) 757-2424
____________
INFORMATION STATEMENT
Relating to
ANNUAL MEETING OF SHAREHOLDERS
to be held on May 20, 1997
____________
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
This Information Statement is being furnished by the
Board of Directors of First Financial Corporation (the
"Company") to holders of shares of the Company's common
stock
in connection with the Annual Meeting of Shareholders to be
held at the principal executive offices of the Company at
800
Washington Avenue, Waco, Texas, on Tuesday, May 20, 1997, at
2:00 p.m., local time, and at any adjournment thereof for
the
purposes set forth in the accompanying Notice of Annual
Meeting. This Information Statement is being mailed on or
about April 28, 1997.
The Board of Directors has fixed the close of business
on April 14, 1997, as the record date for determination of
the shareholders entitled to notice of and to vote at the
Annual Meeting ("Record Date"). As of the Record Date,
there
were issued and outstanding 173,528 shares of common stock,
excluding 10,222 shares held as treasury stock that will not
be voted. A majority of such shares will constitute a
quorum
for the transaction of business at the Annual Meeting. The
holders of record on the Record Date of shares entitled to
be voted at the Annual Meeting are entitled to cast one vote
per share on each matter submitted to a vote at the Annual
Meeting. The affirmative vote of a majority of the shares
of common stock present, in person or by proxy, at the Annual
Meeting is required for the election of a director.
Shareholders do not have cumulative voting rights. Votes
are counted by representatives of the Company at the Annual
Meeting.
The Company will bear all Costs and expenses relating
to the preparation, printing, and mailing of this
Information Statement and accompanying materials to shareholders.
Arrangements will be made with brokerage firms and other
custodians, nominees and fiduciaries for forwarding the
Information Statement to the beneficial owners of the shares
of common stock held by such persons, and the Company will
reimburse such brokerage firms, custodians, nominees, and
fiduciaries for reasonable out-of-pocket expenses incurred
by them in connection therewith.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
To the best knowledge of the Company, the following
table presents certain information regarding the number and
percentage of shares of common stock beneficially owned by
each person who beneficially owns more than 5% of the
Company's common stock, by each director and each nominee
for election as a director, by each executive officer, and by
all directors and executive officers as a group, as of March 31,
1997. Except as otherwise indicated, the directors,
nominees, and officers have sole voting and investment power
with respect to the shares beneficially owned by them.
Name and Address
of Beneficial Owner
Amount and Nature
of Beneficial
Ownership
Percentage of All
Outstanding Shares
First Financial
Holdings, Ltd.
800 Washington Ave.
Waco, Texas 76701
92,742
53.44%
FFC Holdings, Inc.
800 Washington Ave.
Waco, Texas 76701
92,742(1)
53.44%
Walter J. Rusek
2121 Lake James
Waco, Texas 76710
9(2)
.01%
David W. Mann
800 Washington Ave.
Waco, Texas 76701
101,997(3)
58.77%
Bluebonnet
Investments, Ltd.
800 Washington Ave.
Waco, Texas 76714-8436
9,255
5.33%
Robert A. Mann
P. O. Box 8436
Waco, Texas 76714-8436
101,997(4)
58.77%
Bluebonnet
Enterprises, Inc.
800 Washington Ave.
Waco, Texas 76701
9,255(5)
5.33%
David W. Mann 1990
Trust
P. O. Box 8436
Waco, Texas 76714-8436
101,997(5)
58.77%
All directors and
officers as a group
102,006
58.78%
(1) Consists of the 92,742 shares owned by First Financial
Holdings, Ltd., a Texas limited partnership, the
general partner of which is FFC Holdings, Inc, a Texas
corporation, all of the outstanding shares of which are
owned by David W. Mann as Trustee of the David W. Mann
1990 Trust. Mary Hyden Mann Hunter and Allen Barclay
Mann are limited partners of First Financial Holdings,
Ltd. David W. Mann filed Chapter 7 Bankruptcy on June
19, 1996. As a result, Henry W. Seals, the Chapter 7
Bankruptcy Trustee for David W. Mann, is the assignee
of a limited partnership interest in First Financial
Holdings, Ltd. Under the terms of the partnership
agreement, the general partners have sole voting and
investment power with respect to the 92,742 shares of
the Company owned by the partnership; thus FFC
Holdings, Inc. (which is owned and controlled by David
W. Mann, as Trustee of the David W. Mann 1990 Trust),
as the sole remaining general partner, has voting and
investment power over such shares.
(2) Consists of 9 shares owned by the Robert A. Mann
Insurance Trust of which Mr. Rusek is trustee. In
addition, Mr. Rusek is a limited partner in a limited
partnership which owns 185 shares over which he does
not have voting or investment power.
(3) Includes 92,742 shares owned by First Financial
Holdings, Ltd. and 9,255 shares owned by Bluebonnet
Investments, Ltd. First Financial Holdings, Ltd. is a
Texas limited partnership, the general partner of which
is FFC Holdings, Inc., a Texas corporation, all of the
outstanding shares of which arc owned by David W. Mann
as Trustee of the David W. Mann 1990 Trust. Mary Hyden
Mann Hunter and Allen Barclay Mann are limited partners
of First Financial Holdings, Ltd. David W. Mann filed
Chapter 7 Bankruptcy on June 19, 1996. As a result,
Henry W. Seals, the Chapter 7 Bankruptcy Trustee for
David W. Mann, is the assignee of a limited partnership
interest in First Financial Holdings, Ltd. Under the
terms of the partnership agreement, the general
partners have sole voting and investment power with
respect to the 92,742 shares of the Company owned by
the partnership; thus FFC Holdings, Inc. as the sole
remaining general partner, has voting and investment
power over such shares. Bluebonnet Investments, Ltd.
is a Texas limited partnership, the general partners of
which are Robert A. Mann and Bluebonnet Enterprises,
Inc. a Texas corporation owned by the David W. Mann
1990 Trust, of which David W. Mann is trustee and one
of the beneficiaries. The partnership agreement
provides that the general partners have the sole
management rights in partnership affairs, including
voting of securities owned by the partnership, but the
agreement further provides that so long as Robert A.
Mann is acting as the individual general partner, he
shall have no right to vote or determine not to vote
shares of stock of a "controlled corporation" as that
term is defined in Section 2036 of the Internal Revenue
Code and applicable regulations. This provision is
interpreted by the partnership to mean that Robert A.
Mann, in his individual capacity, has no voting power
with respect to the shares of the Company owned by the
partnership. Thus, Bluebonnet Enterprises, Inc.
currently exercises sole voting power with respect to
the 9,255 shares of the Company owned by the
partnership, and the general partners together have
sole investment power with respect to such shares.
Robert A. Mann is the Chairman of the Board, President
and sole director of Bluebonnet Enterprises, Inc.;
therefore, Robert A Mann, through Bluebonnet
Enterprises, Inc. in his capacity as an officer and
director, exercises sole voting power and shared
investment power with respect to the 9,255 shares of
the Company owned by the partnership.
(4) Consists of the 9,255 shares owned by Bluebonnet
Investments, Ltd., a Texas limited partnership, the
general partners of which are Robert A. Mann and
Bluebonnet Enterprises, Inc., a Texas corporation owned
by the David W. Mann 1990 Trust, of which David W. Mann
is trustee, and 92,742 shares owned by First Financial
Holdings, Ltd. Robert A. Mann is the Chairman of the
Board, President and director of Bluebonnet
Enterprises, Inc. Robert A. Mann is also a general
partner of limited partnerships which are limited
partners in Bluebonnet Investments, Ltd. The
partnership agreement provides that the general
partners have the sole management rights in partnership
affairs, including voting of securities owned by the
partnership, but the agreement further provides that so
long as Robert A. Mann is acting as the individual
general partner, he shall have no right to vote or
determine not to vote shares of stock of a "controlled
corporation" as that term is defined in Section 20.76
of the Internal Revenue Code and applicable
regulations. This provision is interpreted by the
partnership to mean that Robert A. Mann, in his
individual capacity, has no voting power with respect
to the shares of the Company owned by the partnership.
Thus, Robert A. Mann, in his individual capacity,
currently has shared investment power but exercises no
voting power over the 9.255 shares of the Company owned
by the partnership. However, Robert A. Mann, through
Bluebonnet Enterprises, Inc. in his capacity as an
officer and director, exercises voting power and shared
investment power over such shares. First Financial
Holdings, Ltd. is a Texas limited partnership, the
general partner of which is FFC Holdings, Inc., a Texas
corporation. Robert A. Mann is the Chairman of the
Board, President and sole director of FFC Holdings,
Inc. Under the terms of the partnership agreement, FFC
Holdings, Inc. as the sole general partner and Robert
A. Mann, in his capacity as an officer and director
have voting and investment power over said 92,742
shares.
(5) Consists of the 9,255 shares owned by Bluebonnet
Investments, Ltd., over which the David W. Mann 1990
Trust has voting and shared investment power and the
92,742 shares owned by First Financial Holdings, Ltd.,
over which the David W. Mann 1990 Trust has voting and
investment power.
CHANGE OF CONTROL
On September 30, 1996 and October 18, 1996, David W
Mann resigned as President and Director of Bluebonnet
Enterprises, Inc and FFC Holdings, Inc, respectively
Bluebonnet Enterprises, Inc is the corporate general partner
of Bluebonnet Investments, Ltd and Bluebonnet Enterprises,
Inc. exercises voting and investment power with respect to
9,255 shares of the Company. The outstanding shares of
Bluebonnet Enterprises, Inc. continue to be owned by the
David W. Mann 1990 Trust of which David W. Mann is trustee
and one of the beneficiaries. Thus, David W. Mann continues
to be considered to have voting and investment power with
respect to said 9,255 shares. On September 30, 1996, Robert
A. Mann was elected Chairman of the Board, President and
director of Bluebonnet Enterprises, Inc. Thus, in his
capacity as an officer and director, Robert A. Mann also has
voting and investment power with respect to said 9,255
shares.
FFC Holdings, Inc. is the corporate general partner of
First Financial Holdings, Ltd. and FFC Holdings, Inc
exercises voting and investment power with respect to 92,742
shares of the Company. The outstanding shares of FFC
Holdings, Inc. continue to be owned by the David W. Mann
1990 Trust of which David W. Mann is trustee and one of the
beneficiaries. Thus, David W. Mann continues to be consid-
ered to have voting and investment power with respect to
said 92,742 shares. On October 18, 1996, Robert A. Mann was
elected Chairman of the Board, President and director of FFC
Holdings, Inc. Thus, in his capacity as an officer and
director, Robert A. Mann also has voting and investment
power with respect to said 92,742 shares.
In the bankruptcy proceeding filed by David W. Mann,
the bankruptcy trustee has challenged the validity of the
David W. Mann 1990 Trust. The David W. Mann 1990 Trust is
vigorously defending such challenge. However, if the
bankruptcy trustee is successful, a change of control of the
Company could occur.
ELECTION OF DIRECTORS
Five directors are to be elected at the meeting to
serve until the 1998 Annual Meeting of Shareholders or until
their respective successors have been elected and qualified,
or until their earlier death, resignation or removal from
office. All of the nominees are currently directors of the
Company.
Each nominee has agreed to serve as a director of the
Company. The Board of Directors knows of no reason why any
of its nominees will be unable to accept election. However,
if any nominee becomes unable to accept election, the Board
will select substitute nominees. The Bylaws of the
Corporation provide that the Board shall consist of not less
than three (3) nor more than ten (10) directors. The
Company has no formal procedures for nomination of directors by
shareholders. The Board has fixed the number of directors
at five (5). Shareholders do not have cumulative voting
rights.
The following table sets forth certain information with
respect to the persons nominated by the Board of Directors
for election as directors of the Company at the Annual
Meeting:
Name and Principal
Occupation for the
Last Five Years
Age
Served As
A Director
Offices and
Positions
With Company
NOMINEES
John Carl Hauser
Retired
74
Since 9-20-84
Director
David W. Mann (1)(2)(5)(6)
President, First Financial
Corporation since October 29,
1985; President, First
Preference Mortgage Corp.
since October, 1991; Executive
Vice President, Citizens State
Bank, Woodville, Texas from
July 1, 1995 to January 28,
1997; President and Vice
Chairman of the Board,
Citizens State Bank,
Woodville, Texas since January
28, 1997; Mr. Mann is also an
officer and director of
certain insurance agencies and
companies and holds positions
with numerous other entities.
41
Since 4-27-79
President,
Director
Robert A. Mann (1)(3)(4)(5)(6)
Chairman of the Board, First
Financial Corporation since
July 16, 1991; Chairman of the
Board, First Preference
Mortgage Corp. since 1993;
Chairman of the Board of
Citizens State Bank, Wood-
ville, Texas, since 1950;
Mr. Mann is also an officer
and director of certain
insurance agencies and compa-
nies and holds positions with
numerous other entities.
66
7-1-75 to
12-27-88;
Since
7-16-91
Chairman of the
Board,
Chief Executive
Officer,
Director
Walter J. Rusek
Vice Chairman of the Board,
Citizens State Bank, Woodville
since February 1, 1993;
President and Chief Executive
Officer, Citizens State Bank,
Woodville from July 1, 1994 to
December 31, 1996; Trust
Officer, Citizens State Bank,
Woodville since August, 1996;
consultant for various enti-
ties including the Company
from October, 1990 to June 30,
1994.
65
Since 2-26-70
Director
Barrett Smith
Retired
77
Since 7-24-79
Director
______________________
(1) David W. Mann is the son of Robert A. Mann.
(2) David W. Mann was one of the defendants in a lawsuit
filed by the FDIC, as successor to United Bank of Waco,
against a number of former officers and directors of
United Bank of Waco, seeking recovery for losses
sustained by United Bank of Waco while Mr. Mann is
alleged to have been an officer or director. This
lawsuit was settled during 1994.
(3) On January 6, 1993, Robert A. Mann filed a petition for
bankruptcy under Chapter 11 of the Bankruptcy Code. A
plan of reorganization was confirmed on December 16,
1993.
(4) The FDIC, as successor to the failed First Bank & Trust
of Bryan, asserted a claim against Robert A. Mann in
his bankruptcy proceeding seeking recovery against
Mr. Mann for losses sustained by that institution while
Mr. Mann was alleged to have been an officer or
director. Prior to the hearing on this claim, the FDIC
abandoned the claim and the Bankruptcy Court has signed
an order disallowing the claim in its entirety.
(5) On June 18, 1996, United Plaza Partnership, a
partnership in which David W. Mann and Robert A. Mann
were partners, filed Chapter 7 Bankruptcy.
(6) In connection with the bankruptcy proceedings filed by
United Plaza Partnership and David W. Mann, certain
creditors and the bankruptcy trustee have commenced
adversary proceedings in which it is alleged (i) that
David W. Mann breached his fiduciary duties, committed
fraud and acted inappropriately as managing partner in
United Plaza Partnership, and (ii) that Robert W. Mann
acted as defacto managing partner of United Plaza
Partnership and breached his fiduciary duties,
committed fraud and acted inappropriately. Messrs.
Mann and Mann have denied these allegations and are
vigorously defending these matters.
CERTAIN INFORMATION ABOUT THE FUNCTION OF THE
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors held five (5) regular meetings
during 1996. All directors attended at least 75% of all
board meetings held in 1996. Each non-employee director who
attended such meetings (all directors during 1996 other than
Robert A. Mann and David W. Mann) was paid a fee of
$1,000.00
per meeting.
The Board functions as a committee of the whole to
nominate candidates for Board membership, and there is no
standing nominating committee. In addition, the Board as a
committee of the whole performs audit and executive
compensation functions. There are no standing audit and
executive compensation committees.
EXECUTIVE OFFICERS
Executive officers of the Company are elected by the
Board of Directors at the annual meeting of the board and
hold office until its next annual meeting or until their
successors are elected and qualified, or until their earlier
death, removal or resignation. The following table sets
forth, for each person who is an executive officer of the
Company and each person chosen to become an executive
officer, his name, age, business experience for the last
five years, the year he first became officer and the current
position held at the Company:
Name
Age
Officer
Since
Current
Position
Robert A. Mann(1)
66
1991
Chairman of
the Board,
Chief
Executive
Officer
David W. Mann(1)
41
1985
President
______________________
(1) Refer to section on Election of Directors for business
experience during last five years.
SIGNIFICANT EMPLOYEE
Gonzalo Padilla (age 48) serves as Executive Vice
President and Chief Operating Officer of First Preference
Mortgage Corp., a third tier subsidiary of Key Group, Ltd.,
a Texas limited partnership in which the Company has a 52.94%
limited partnership interest. Mr. Padilla has served as
Executive Vice President and Chief Operating Officer since
October, 1995. Prior to that, Mr. Padilla's principal
occupations during the last five years were as follows:
Area Manager, Norwest Mortgage Corporation, April, 1995 to
September, 1995; President and Chief Executive Officer, Bent
Tree Residential Lending Corp., April, 1994 to April, 1995;
President and Chief Executive Officer, Fintex Mortgage
Corp., April, 1991 to April, 1994.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's officers and directors, and persons
who own more than ten percent of a registered class of the
Company's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange
Commission (SEC). Officers, directors and greater than ten
percent shareholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on review of the copies of such forms
furnished to the Company, or written representations that no
Forms 5 were required, the Company believes that during the
period beginning January 1, 1996 and ending December 31,
1996, all of its officers, directors and greater than ten
percent beneficial stockholders complied with the applicable
requirements under Section 16(a).
EXECUTIVE COMPENSATION
The following table sets forth information regarding
executive compensation paid to or for the Company's chief
executive officer and each of the most highly compensated
executive officers whose cash compensation exceeds $100,000
during the last three fiscal years.
Annual Compensation
Name
and
Principal
Position
Year
Salary($)
Bonus($)
Other Annual Compensation($)
All Other Compensation($)
Robert A.
Mann,
Chairman of
the Board and
CEO
1994
1995
1996
$167,850(1)
$167,850
$167,850
$ 200
$36,728(3)
$30,264(3)
$ 403(3)
David W.
Mann,
President
1994
1995
1996
$108,758(2)
$ 72,588(4)
$ 72,000
$7,500
$ 200
$1,728(3)
$3,719(3)
$1,152(3)
______________________
(1) The salary paid to Mr. Mann in 1994 includes salary
paid by the Company and First Advisory Services, Inc.,
a wholly owned subsidiary of the Company.
(2) The salary paid Mr. Mann in 1994 includes salary paid
by the Company and its subsidiaries, First Advisory
Services, Inc., Apex Lloyds Insurance Company, First
Financial General Agency, Inc., and First Financial
Insurance Agency, Inc.
(3) In 1994, 1995 and 1996, the Company paid $1,728, $1,764
and $1,555, respectively, for group life insurance
premiums on the lives of Robert A. Mann and David W.
Mann. The Company made contributions to a 401(k)
retirement plan in the amount of $2,250 and $1,955 in
1995 and $2,250 and $1,000 in 1996, on behalf of Robert
A. Mann and David W. Mann, respectively. The balance
of this amount represents insurance premiums paid on
policies on the life of Robert A. Mann. The Company
will recover premiums paid upon the death of Robert A.
Mann or upon surrender of the policy, to the extent of
amounts received at death or upon surrender.
(4) Includes $26,688 paid by Apex Lloyds Insurance Company,
a subsidiary of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Tri-Triangle Agency, Inc,. d/b/a Triangle Insurance Agency
Certain subsidiaries of the Company pay commissions to
Tri-Triangle Agency, Inc, a corporation owned by Robert A.
Mann, on hazard insurance policies referred from Tri-
Triangle Agency, Inc. to such subsidiaries. Commissions paid by such
subsidiaries amounted to $19,212 and $11,285 for the years
ended December 31, 1995 and 1996, respectively.
Substantially all commissions paid were offset by
reimbursement to the Company or its subsidiaries from
Tri-Triangle Agency, Inc. for expenses owed by Tri-Triangle
Agency, Inc. to the Company or its subsidiaries.
Managerial and Accounting Services Provided by First
Advisory Services, Inc.
During 1995 and 1996, Bluebonnet Investments, Ltd. (a
limited partnership described above) and other entities
directly or indirectly owned or controlled by Robert A.
Mann, David W. Mann and/or members of the Mann family paid First
Advisory Services, Inc., a subsidiary of the Company, an
aggregate amount of $226,044 and $393,494, respectively, in
fees for accounting and managerial services provided by
First Advisory Services, Inc. to such entities.
Expense Sharing Agreement With UW Insurance Group, Inc.
During 1995 and 1996 the Company and certain
subsidiaries of the Company had expense sharing arrangements
with UW Service Corporation, Inc. ("UWSC"), pursuant to
which UWSC provided certain personnel, facilities, equipment and
supplies to the Company and its subsidiaries and allocated
to the Company and its subsidiaries the costs incurred by UWSC
for such personnel, facilities, equipment and supplies.
During 1995 and 1996, the Company and its subsidiaries paid
a total of $121,104 and $85,331, respectively, to UWSC
pursuant to these expense sharing arrangements. UWSC is a wholly
owned subsidiary of UW Insurance Group, Inc. ("UWIGI").
Approximately 80% of the outstanding shares of UWIGI is
owned by Bluebonnet Investments, Ltd (a limited partnership
described above), and the remaining 20% of the outstanding
shares is owned by David W. Mann's mother. It is the
intention of the parties to these expense sharing
arrangements that no party realize a profit nor incur a loss
as a result of the cost sharing covered by these
arrangements.
Transactions with Key Groups, Ltd.
The Company has a servicing agreement pursuant to which
it services certain mobile home notes the Company
contributed to Key Group, Ltd., a Texas limited partnership ("Key
Group") in exchange for a limited partnership interest. The Company
owns, as a limited partner, 52.94% of Key Group. The
general partners of Key Group are Robert A. Mann, who is Chairman of
the Board of the Company, and First Key Holdings, Inc., a
Texas corporation owned by the David W. Mann 1990 Trust, of
which David W. Mann is the trustee and one of the
beneficiaries. Robert A. Mann is Chairman of the Board,
President and sole director of First Key Holdings, Inc.
Bluebonnet Investments, Ltd. (a limited partnership
described above) is the other limited partner of Key Group, and owns
47.05% of the partnership. The aggregate amount paid to the
Company for servicing said notes during 1995 and 1996 was
$34,162 and $24,848, respectively.
First Financial Information Services, Inc. ("FFISI"),
which is owned by First Preference Holdings, Inc., a wholly
owned subsidiary of Key Group, bills out computer services
for general ledger accounting, mortgage loan servicing and
insurance policy tracking. FFISI bills other First
Preference Holdings, Inc. subsidiaries, the Company and its
subsidiaries, and affiliated insurance companies such as UW
General Agency, Inc., UW Service Corporation, Inc., and
Tri-Triangle Agency, Inc. The total amount billed by FFISI
to the Company and its subsidiaries (including Key Group,
Ltd. and its subsidiaries) in 1995 and 1996 was $119,832 and
$138,298, respectively.
The loan made by the Company in 1992 to First
Preference Mortgage Corporation ("FPMC"), a wholly owned
subsidiary of First Preference Holdings, Inc., in the
original principal amount of $386,000 was paid off in 1995.
Sale of Participations
The Company services certain manufactured housing
installment sales contracts and installment loan agreements
for UW General Agency, Inc. The total servicing fees paid
by UW General Agency to the Company during 1995 and 1996 were
$15,737 and $11,829, respectively.
On June 1, 1995, Key Group, Ltd. transferred its
participation interest in certain loans to First Preference
Holdings, Inc. as a contribution to capital. At the time,
the unpaid balance of the participation interest was
$311,65. In June 1995, First Preference Holdings, Inc transferred the
participation interest in said loans to FPMC in satisfaction
of the unpaid balance of a $388,000 note from First
Preference Holdings, Inc. to FPMC. FPMC is a second-tier
subsidiary of First Preference Holdings, Inc. First
Preference Holdings, Inc. owns 100% of Security Washington
Avenue Corp., a Delaware corporation, which owns 100% of
FPMC. The Company continues to service the manufactured
housing installment sales contracts and installment loan
agreements referenced above. The total servicing fees paid
by FPMC to the Company during 1995 and 1996 were $92,150 and
$15,737, respectively.
Sublease of 800 Washington Ave. Property
The Company subleases approximately 5,350 square feet
of its building at 800 Washington Avenue to Bluebonnet
Investments, Ltd. (a partnership described above), UW
Service Corporation, Inc. (a corporation described above), and other
entities directly or indirectly owned or controlled by
Robert A. Mann, David W. Mann and/or members of the Mann family.
During 1995 and 1996, the sublessees paid a total of $35,544
and $43,337, respectively, in rent to the Company.
Loans to FPMC
Certain related entities have made loans to FPMC
described in the table below. Each of these loans was paid
off during 1996.
Lender
Date of Loan
Original Amount of Loan
Balance of Loan
as of 12-31-96
Interest Rate
Vidor, Ltd.(2)
10-15-93
$225,000
$ -0-
Wall Street
Citizens Land Corp.(1)
3-94
$175,000
$ -0-
9%
UW General Agency, Inc.(1)
3-94
and 8-94
$250,000
$ -0-
9%
_____________________
(1) See relationship described above.
(2) Vidor, Ltd. ("Vidor") is a Texas limited partnership.
The limited partners of Vidor are the Company (24%),
Robert A. Mann (25%), Mann Group Investment Company
(25%) and The Omnibus Corporation (25%). The general
partners are David W. Mann and Shelter Resources, Inc.
(.99%), a Texas corporation and wholly owned subsidiary
of the Company. Henry W. Seals, as Chapter 7 Trustee,
is the assignee of the partnership interest formerly
held by David W. Mann.
Sale of Loans to Bluebonnet Investments, Ltd.
In December 1995, an undivided 26.63848% participation
interest held by Bluebonnet in certain mobile home loans was
repurchased by FPMC for the unpaid balance of approximately
$231,000.
Until December 1995, the Company serviced certain loans
owned by or in which Bluebonnet Investments, Ltd. had a
participation interest. The total servicing fees allocable
to the participation interests of Bluebonnet Investments,
Ltd. for 1995 was $9,100.
Note Receivable From UBI Incentive Savings Plan Liquidating
Trust Nos. 1, 2 and 3
In 1991, the Department of Labor ("DOL") initiated an
investigation with regard to certain investments made by the
United Bankers, Inc. Master Incentive Savings Plan and Trust
("UBI ISP") which was adopted by the Company as its own
incentive savings plan. David W. Mann had served as a
member and chairman (beginning in 1989) of the Administrative
Committee of UBI ISP. No formal charges were ever made by
the DOL against David W. Mann, the Company or any other
member of the Administrative Committee and there was no
finding by the DOL or any other entity of any breach of
fiduciary duty or wrongdoing by David W. Mann, the Company
or anyone else. To resolve the matter with the DOL a $40,000
payment was made to certain liquidating trusts set up to
liquidate the remaining assets of the UBI ISP, of which the
Company and David W. Mann each paid $10,000. The source of
the $10,000 paid by David W. Mann, as well as Mr. Mann's
portion of the costs involved in handling the matter before
the DOL, was an advance from the Company. A lawsuit was
filed in McLennan County, Texas, in which recovery was
sought from the UBI ISP Liquidating Trusts Nos. 1, 2 and 3 (the
"Liquidating Trusts") of the amount of the settlement, plus
all of the costs involved in handling the matter before the
DOL and the costs of the lawsuit. In September 1995, a
judgment was signed ordering the Liquidating Trusts to
reimburse the amount of the settlement, as well as the costs
to defend the matter before the DOL and the costs of the
lawsuit. The Liquidating Trusts did not have sufficient
cash to pay all such costs. Accordingly, a note was signed by
the Liquidating Trusts to David W. Mann, Trustee, for
$111,607.89, which is secured by real estate owned by the
Liquidating Trusts. David W. Mann holds this note for the
benefit of the Company and others. As the note is paid, Mr.
Mann will forward to the Company its pro rata portion of
such payments.
Preferred Stock in First Preference Holdings, Inc.
On December 27, 1996, First Preference Holdings, Inc.
("FPHI"), a wholly owned subsidiary of Key Group (a
partnership described above) issued 1,000 shares of its
Series A, 7% Non-Voting, Cumulative Preferred Stock, $0.10
par value (the "Preferred Stock") to Key Group in
satisfaction of the indebtedness owed by FPHI to Key Group
in the amount as of December 31, 1995 of $5,160,837.22. The
Preferred Stock provides for cumulative dividends of $361.27
per share per annum and a liquidation preference of $5,161
per share. The Preferred Stock may be redeemed by FPHI for
$5,161 per share.
PARENTS OF THE COMPANY AND
ITS CONSOLIDATED SUBSIDIARIES
The Company is the parent, by way of ownership of all
the outstanding securities, of the following companies:
Pre-Owned Homes, Inc.
Mobile Home Conveyers And Liquidators, Inc.
First Advisory Services, Inc.
First Financial Credit Corp.
First Financial Insurance Agency, Inc.
Apex Lloyds Insurance Co.
Shelter Resources, Inc.
Texas Apex, Inc.
The Company is also the parent, by way of ownership of a
52.94% partnership interest in Key Group, Ltd. and all of
its wholly-owned subsidiaries:
First Preference Holdings, Inc.
First Financial Information Services, Inc.
Security Washington Avenue Corp.
First Preference Financial Corp.
First Preference Mortgage Corp.
The immediate parent of the Company, by way of ownership of
approximately 53.44% of its outstanding shares, is First
Financial Holdings, Ltd.
AUDITORS
The Board of Directors has selected Pattillo, Brown &
Hill as auditors for the fiscal year ending December 31,
1997. Pattillo, Brown & Hill was the auditor for the
Company for the fiscal year ending December 31, 1996. It is
expected that a representative of Pattillo, Brown & Hill will attend
the Annual Meeting and will have an opportunity to make a
statement and be available to respond to appropriate
questions.
The Company has recently been advised by Pattillo,
Brown & Hill that, other than in its capacity as Independent
Auditors, Pattillo, Brown & Hill has no direct or indirect
financial interest in or connection with the Company, nor
has it had any such during the past three years.
ANNUAL REPORT
Accompanying this Information Statement is an annual
report to security holders on Form 10-KSB, which is being
provided to each shareholder of record without cost to
satisfy the requirement that the Company's annual report to
security holders accompany or precede this Information
Statement.
OTHER MATTERS
As of the date of this Information Statement, the Board
of Directors is not aware of any matters that will be
presented for action at the Annual Meeting other than those
described above.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ David W. Mann
David W. Mann, President
April 28, 1997
April 28, 1997
Securities and Exchange Commission
Office of Document Control
450 5th St., N.W.
Washington, D.C. 20549
Gentlemen:
Pursuant to General Instruction C, paragraph 3 of Form
10-KSB, this letter is to notify you that the financial
statements in the 1996 Annual Report (Form 10-KSB) to the
shareholders of First Financial Corporation do not reflect a
change from the preceding year in any accounting principles
or practices or in the method of applying any such
principles
or practices.
Sincerely,
/s/ Robert L. Harris
Robert L. Harris
Vice President
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,167,803
<SECURITIES> 297,481
<RECEIVABLES> 954,797
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,932,312
<DEPRECIATION> 1,124,099
<TOTAL-ASSETS> 7,862,462
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0
0
<COMMON> 1,000
<OTHER-SE> 3,173,114
<TOTAL-LIABILITY-AND-EQUITY> 7,862,462
<SALES> 0
<TOTAL-REVENUES> 5,599,016
<CGS> 0
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<OTHER-EXPENSES> 5,458,308
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<INCOME-PRETAX> 140,708
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