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:
<PAGE>
FIRST FINANCIAL CORPORATION
800 Washington Avenue
P. O. Box 269
Waco, Texas 76703
(254) 757-2424
____________
INFORMATION STATEMENT
Relating to
ANNUAL MEETING OF SHAREHOLDERS
to be held on May 19, 1998
____________
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 19, 1998, 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 17, 1998.
The Board of Directors has fixed the close of business on
April 15, 1998, 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, 1998. Except as otherwise
indicated, the directors, nominees, and officers have sole voting
and investment power with respect to the shares beneficially
owned by them.
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percentage of All
of Beneficial Owner Of Beneficial Ownership Outstanding Shares
<S> <C> <C>
First Financial Holdings, Ltd. 92,742 53.44%
800 Washington Ave.
Waco, Texas 76701
FFC Holdings, Inc. 92,742(1) 53.44%
800 Washington Ave.
Waco, Texas 76701
Walter J. Rusek 9(2) .01%
2121 Lake James
Waco, Texas 76710
David W. Mann 78(3) .04%
800 Washington Ave.
Waco, Texas 76701
Bluebonnet Investments, Ltd. 9,255 5.33%
800 Washington Ave.
Waco, Texas 76714-8436
Robert A. Mann 101,997(4) 58.77%
P. O. Box 8436
Waco, Texas 76714-8436
Bluebonnet Enterprises, Inc. 9,255(5) 5.33%
800 Washington Ave.
Waco, Texas 76701
David W. Mann 1990 Trust 101,997(6) 58.77%
P. O. Box 8436
Waco, Texas 76714-8436
All directors and 102,084 58.83%
officers as a group
</TABLE>
(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 the
David W. Mann 1990 Trust, of which Robert A. Mann is trustee
and David W. Mann is one of the beneficiaries. Mary Hyden
Mann Hunter, Allen Barclay Mann and David W. Mann (see
discussion below) are limited partners of First Financial
Holdings, Ltd. As a result of a Compromise and Settlement
Agreement approved by the U.S. Bankruptcy Court for the
Western District of Texas, all non-cash assets in the
bankruptcy estate of David W. Mann were abandoned back to
David W. Mann pursuant to 11 U.S.C. Sect. 554. The effect of
the abandonment was to revest title in the non-cash assets
to David W. Mann. Thus, title to a 33.5% partnership
interest in First Financial Holdings, Ltd. revested in David
W. Mann. Robert A. Mann holds an executed and undated
assignment of a 33% limited partnership interest in First
Financial Holdings, Ltd. from David W. Mann. Under the
terms of the partnership agreement of First Financial
Holdings, Ltd., 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 by 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) Consists of 78 shares owned by Barclay, Inc. David W. Mann
is the owner of one hundred percent (100%) of the
outstanding stock of Barclay, Inc. and therefore exercises
sole voting and investment power over said 78 shares.
(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 Robert A. Mann is trustee, and
92,742 shares owned by First Financial Holdings, Ltd. (see
footnote 1 above). Robert A. Mann is the Chairman of the
Board, President and director of Bluebonnet Enterprises,
Inc. and votes the stock of Bluebonnet Enterprises, Inc. as
trustee of the David W. Mann 1990 Trust. Robert A. Mann is
also a general partner of limited partnerships which are
limited partners in Bluebonnet Investments, Ltd. The
partnership agreement of Bluebonnet Investments, Ltd.
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 as a general partner, has no voting power with
respect to the 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 investment power over
such shares. David W. Mann previously shared with Robert A.
Mann voting and investment power with respect to said 9,255
shares because he voted, as trustee of the David W. Mann
1990 Trust, the stock of Bluebonnet Enterprises, Inc.
However, as a result of the resignation of David W. Mann and
the succession of Robert A. Mann as trustee of the David W.
Mann 1990 Trust, Robert A. Mann now has sole voting and
investment power with respect to said 9,255 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. (see footnote 4 above).
(6) 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 December 26, 1997, David W. Mann resigned as Trustee of
the David W. Mann 1990 Trust and Robert A. Mann became the
successor Trustee. No consideration was paid with respect to
said resignation.
The David W. Mann 1990 Trust is the sole shareholder of FFC
Holdings, Inc., which is the sole general partner of First
Financial Holdings, Ltd. First Financial Holdings, Ltd. owns
92,742 shares, constituting 53.44 percent, of the outstanding
common stock of the Company which is voted by its general
partner, FFC Holdings, Inc. David W. Mann previously shared with
Robert A. Mann voting and investment power with respect to the
92,742 shares of the Company stock owned by First Financial
Holdings, Inc. because he voted, as Trustee of the David W. Mann
1990 Trust, the stock of FFC Holdings, Inc. Robert A. Mann is
Chairman of the Board, President and sole director of FFC
Holdings, Inc. As a result of the resignation of David W. Mann
and the succession of Robert A. Mann as Trustee of the David W.
Mann 1990 Trust, Robert A. Mann now has sole voting and
investment power with respect to said 92,742 shares of the
Company common stock.
The David W. Mann 1990 Trust is also the sole shareholder of
Bluebonnet Enterprises, Inc., which is a general partner, along
with Robert A. Mann, of Bluebonnet Investments, Ltd. Bluebonnet
Investments, Ltd. owns 9,255 shares, constituting 5.33 percent,
of the outstanding common stock of the Company. Bluebonnet
Investments, Ltd.'s partnership agreement provides that the
general partners have the sole management rights in partnership
affairs, including the 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 Bluebonnet
Investments, Ltd. to mean that Robert A. Mann, in his individual
capacity, has no voting power with respect to the 9,255 shares of
the Company owned by Bluebonnet Investments, Ltd. However,
Robert A. Mann is also the Chairman of the Board, President and
sole director of Bluebonnet Enterprises, Inc. and, thus, in his
capacity as an officer and director of Bluebonnet Enterprises,
Inc. exercises voting power and investment power with respect to
the 9,255 shares of the Company stock owned by Bluebonnet
Investments, Ltd. David W. Mann previously shared with Robert A.
Mann voting and investment power with respect to the 9,255 shares
of the Company stock owned by Bluebonnet Investments, Ltd.
because he voted, as Trustee of the David W. Mann 1990 Trust, the
stock of Bluebonnet Enterprises, Inc. However, as a result of
the resignation of David W. Mann and the succession of Robert A.
Mann as Trustee of the David W. Mann 1990 Trust, Robert A. Mann
now has sole voting and investment power with respect to said
9,255 shares of the Company common stock.
ELECTION OF DIRECTORS
Seven directors are to be elected at the meeting to serve
until the 1999 Annual Meeting of Shareholders or until their
respective successors have been elected and qualified, or until
their earlier death, resignation or removal from office. Five 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 seven (7). 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:
<TABLE>
<CAPTION>
Name and Principal Offices and
Occupation for the Served As Positions
Last Five Years Age A Director With Company
NOMINEES
<S> <C> <C> <C>
John Carl Hauser 75 Since 9-20-84 Director
Retired
David W. Mann (1)(2)(5)(6)(7) 42 Since 4-27-79 President, Director
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.
Robert A. Mann(1)(3)(4)(5)(6)(7) 67 7-1-75 to Chairman of the Board,
Chairman of the Board, First 12-27-88; Chief Executive
Financial Corporation since Since Officer, Director
July 16, 1991; Chairman of the 7-16-91
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.
Walter J. Rusek 66 Since 2-26-70 Director
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.
Barrett Smith 78 Since 7-24-79 Director
Retired
Mary Hyden Mann Hunter(1)(6)(7) 44 N/A None
Chief Financial Officer, YMCA
of Central Texas since April
25, 1988.
Allen Barclay Mann(1)(6)(7) 41 N/A None
Named partner with the firm of
Allen B. Mann & Associates,
P.C. since October 1995;
Shareholder with Mann,
Schorsch & Buckley, P.C., a
law firm, from 1992 to
September 1995. Mr. Mann's
law practice is primarily in
the business and corporate law
areas.
______________________
</TABLE>
(1) David W. Mann is the son of Robert A. Mann and the brother
of Mary Hyden Mann Hunter and Allen Barclay 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. David W.
Mann filed a Chapter 7 Bankruptcy on June 19, 1996. A
settlement agreement was reached with Mr. Mann's creditors
and the bankruptcy case was dismissed on September 15, 1997.
(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, and an
order of final decree was signed on November 5, 1997.
(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. A settlement agreement was reached
with the partnership's creditors and the bankruptcy case was
dismissed on August 12, 1997.
(6) Mary Hyden Mann Hunter is the daughter of Robert A. Mann and
the sister of David W. Mann and Allen Barclay Mann.
(7) Allen Barclay Mann is the son of Robert A. Mann and the
brother of David W. Mann and Mary Hyden Mann Hunter.
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
1997. All directors attended at least 75% of all board meetings
held in 1997. Each non-employee director who attended such
meetings (all directors during 1997 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 nominat
ing 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:
Officer
Name Age Since Current Position
Robert A. Mann(1) 67 1991 Chairman of the
Board, Chief
Executive Officer
David W. Mann(1) 42 1985 President
______________________
(1) Refer to section on Election of Directors for business
experience during last five years.
SIGNIFICANT EMPLOYEE
Gonzalo Padilla (age 49) 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 partner
ship 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 regulations to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms
furnished to the Company, or written representations that no
Forms 5 were required, other than as set forth below, the Company
believes that during the period beginning January 1, 1997 and
ending December 31, 1997, all of its officers, directors and
greater than ten percent beneficial stockholders complied with
the applicable requirements under Section 16(a).
Number of Transactions Known Failure
Number of Late Not Reported on a to File
Person Reports Timely Basis Required Form
David W. Mann 1 1 None
Annie Laurie 1 N/A None
Miller
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 $100,000 during the last three fiscal years.
<TABLE>
Annual Compensation
<CAPTION>
Other
Name Annual
and Compen- All Other
Principal sation Compensation
Position Year Salary($) Bonus($) ($) ($)
<S> <C> <C> <C> <C> <C>
Robert A. Mann, 1995 $167,850 $ 200 $30,264(1)
Chairman of the 1996 $167,850 $ 403(1)
Board and CEO 1997 $138,810(2) $ 500 $ 9,153(1)
David W. Mann, 1995 $ 72,588(3) $ 200 $ 3,719(1)
President 1996 $ 72,000 $ 1,152(1)
1997 $ 69,252(4) $ 792(5) $ 96(1)
______________________
</TABLE>
(1) In 1995, 1996 and 1997, the Company paid $1,764, $1,555 and
$499 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, $2,250 and $1,000 in 1996, and
$1,493 and $2,158 in 1997, 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.
(2) Includes $40,810 paid by Apex Lloyds Insurance Company, a
subsidiary of the Company.
(3) Includes $26,688 paid by Apex Lloyds Insurance Company.
(4) Consists of $60,000 paid by First Preference Mortgage Corp.
and $9,252 paid by Apex Lloyds Insurance Company.
(5) Consists of $500 paid by First Preference Mortgage Corp. and
$292 paid by Apex Lloyds Insurance 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 $11,285 and $10,247 for the years ended December 31,
1996 and 1997, 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 1996 and 1997, 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 $393,494 and $273,118, 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 1996 and 1997, 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 1996 and 1997, the
Company and its subsidiaries paid a total of $85,331 and
$144,035, 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 are owned by Bluebonnet Investments, Ltd. (a
limited partnership described above), and the remaining 20% of
the outstanding shares are 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 Group, 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 Robert A. Mann is
the trustee and David W. Mann is 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 1996 and 1997 was $24,848 and $20,782, 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 1996 and 1997
was $138,298 and $129,419, respectively.
Sale of Participations
The Company services certain manufactured housing
installment sales contracts and installment loan agreements for
UW General Agency, Inc. ("UWGA"). The total servicing fees paid
by UWGA to the Company during 1996 and 1997 were $11,829 and
$6,616, respectively. On or about July 18, 1997, FPMC purchased
the participation interests held by UWGA in said manufactured
housing loans for $187,562, which represented the unpaid balances
on said loans.
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 $311,650. 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 1996 and 1997
were $4,368 and $1,195, respectively.
On or about July 18, 1997, FPMC purchased the interests held
by Bluebonnet Investments, Ltd. (a partnership described above)
in a pool of manufactured housing loans for $57,565, which
represented the unpaid balance of said loans.
Sublease and Sale of 800 Washington Ave. Property
Until November 1, 1997, the Company subleased approximately
4,000 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 1996 and 1997, the sublessees paid a total of $43,337 and
$36,200, respectively, in rent to the Company.
On November 1, 1997, the Company sold to FPMC the land and
improvements located at 800 Washington Avenue, Waco, Texas, for a
purchase price of $700,000. The purchase price was payable
$100,000 in cash and the execution of a note in the principal
amount of $600,000, bearing interest at 9% per annum payable in
equal monthly installments over a period of 84 months. This
building is the principal office of the Company and its
subsidiaries (including FPMC). The note executed by FPMC is
secured by a deed of trust lien on the building. FPMC now
subleases a portion of the building to the entities listed above.
During 1997, those sublessees paid a total of $6,280 in rent to
FPMC.
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.
<TABLE>
<CAPTION>
Balance of
Original Loan
Lender Date of Loan Amount of Loan as of 12-31-96 Interest Rate
<S> <C> <C> <C> <C>
Vidor, Ltd.(2) 10-15-93 $225,000 $ -0- Wall Street Prime
Citizens Land Corp.(1) 3-94 $175,000 $ -0- 9%
UW General Agency, 3-94 $250,000 $ -0- 9%
Inc.(1) and
8-94
_____________________
</TABLE>
(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 (25.01%), 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.
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. The note matured on September 6, 1996 and remains
unpaid. If 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.
First Apex Re
In the fall of 1997, Apex Lloyds Insurance Company ("Apex"),
a wholly-owned subsidiary of the Company, initiated the process
of forming a Vermont domiciled captive insurance company, First
Apex Re ("First Apex"). To provide the required initial capital,
Apex purchased 3,000 shares of the Class A voting common stock of
First Apex for a total amount of $60,000. The Company purchased
3,250 shares of the Class B nonvoting stock of First Apex for an
aggregate purchase price of $65,000. FPMC furnished a $175,000
letter of credit issued in favor of the Commissioner of Insurance
for the state of Vermont for the benefit of First Apex. First
Apex was organized to reinsure mortgage guaranty insurance on
loans originated by FPMC and other related entities. First Apex
has agreed to pay FPMC a fee for the letter of credit equal to
the 1% fee payable to the issuing bank, plus an additional amount
equal to the difference between the amount FPMC earns on the
certificate of deposit serving as collateral for the letter of
credit and 10% per annum.
Lot Purchase
On or about October 27, 1997, Robert A. Mann acquired a
residential lot from the Company. To evidence the purchase price
for the lot, Mr. Mann has executed an unsecured note for $32,500,
bearing interest at 5.72% per annum, due on demand or, if no
demand, on October 27, 1998.
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., of the following
companies:
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, 1998.
Pattillo, Brown & Hill was the auditor for the Company for the
fiscal year ending December 31, 1997. 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 17, 1998
April 16, 1998
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 1997
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 methods of application of
those principles or practices.
Sincerely,
/s/ Robert L. Harris
Robert L. Harris
Vice President
