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 18, 1999
____________
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
18, 1999, 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 16, 1999.
The Board of Directors has fixed the close of business on April
14, 1999, 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.
<PAGE>
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, 1999. Except as otherwise indicated, the
directors, nominees, and officers have sole voting and investment
power with respect to the shares beneficially owned by them.
Amount
Name and Address and Nature of Percentage of All
of Beneficial Owner Beneficial Outstanding Shares
Ownership
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) *
2121 Lake James
Waco, Texas 76710
David W. Mann 78(3) *
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) 58.78%
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 executive 102,084 58.83%
officers as a group
*Less than 1%
<PAGE>
(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 are limited partners of First Financial
Holdings, Ltd. 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 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 and a 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 is President and a director of Bluebonnet
Enterprises, Inc. 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 and a 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. David W. Mann is President and a director of
FFC Holdings, Inc.
(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.
ELECTION OF DIRECTORS
Seven directors are to be elected at the meeting to serve until
the 2000 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 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:
<PAGE>
<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 76 Since 9-20-84 Director
Retired
David W. Mann (1)(2)(3)(4)(5) 43 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) 68 7-1-75 to Chairman of the Board,
Chairman of the Board, First Financial Corporation 12-27-88; Director
since July 16, 1991; Chairman of the Board, First Since
Preference Mortgage Corp. since 1993; Chairman of 7-16-91
the Board of Citizens State Bank, Woodville, 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 67 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 from
August 1996 until December 31, 1998; consultant for
various entities including the Company from October
1990 to June 30, 1994.
Barrett Smith 79 Since 7-24-79 Director
Retired
Mary Hyden Mann Hunter(1)(4)(5) 45 Since 5-19-98 Director
Chief Financial Officer, YMCA of Central Texas from
April 25, 1988 to July 24, 1998; Chief Executive
Officer, YMCA of Central Texas since July 25, 1998.
Allen Barclay Mann(1)(4)(5) 42 Since 5-19-98 Director
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>
<PAGE>
______________________
(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 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.
(4) Mary Hyden Mann Hunter is the daughter of Robert A. Mann and the
sister of David W. Mann and Allen Barclay Mann.
(5) 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 four (4) regular meetings during
1998. All directors attended at least 75% of all board meetings held
in 1998, except Allen Barclay Mann who attended two of the three board
meetings held in 1998 after he was elected a director in May 1998.
Each non-employee director who attended such meetings (all directors
during 1998 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 Officer
Age Since Current Position
Robert A. Mann(1) 68 1991 Chairman of the
Board
David W. Mann(1) 43 1985 President
______________________
(1) Refer to section on Election of Directors for business experience
during last five years.
<PAGE>
SIGNIFICANT EMPLOYEE
Until January 18, 1999, Gonzalo Padilla (age 51) served as
Executive Vice President and Chief Operating Officer of First
Preference Mortgage Corp. ("FPMC"), a third tier subsidiary of Key
Group, Ltd., a Texas limited partnership in which the Company has a
52.94% limited partnership interest. Effective January 18, 1999, Mr.
Padilla's relationship with the Company terminated. Mr. Padilla
served as Executive Vice President and Chief Operating Officer since
October 1995. FPMC is actively searching for a replacement for Mr.
Padilla.
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, the Company believes that during the period beginning
January 1, 1998 and ending December 31, 1998, 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 $100,000 during the last three fiscal years.
<PAGE>
<TABLE>
Annual Compensation
<CAPTION>
Other
Name Annual
and Compen- All Other
Principal sation Compensation
Position Year Salary($) Bonus($) ($) ($)
<S> <C> <C> <C> <C> <C>
Robert A. Mann, 1996 $167,850 $ * $ 403(1)
Chairman of the Board 1997 $138,810(2) $ 500 * $9,153(1)
1998 $113,645(5) $ 500 * $7,125(1)
David W. Mann, 1996 $ 72,000 $ * $1,152(1)
President 1997 $ 69,252(3) $ 792(4) * $ 96(1)
1998 $115,642(6) $ 5,791(7) * $ -0-
Gonzalo Padilla, 1996 $105,000 $15,000 * $ 576(8)
Executive Vice 1997 $115,000 $ 500 * $ 576(8)
President and Chief 1998 $136,859 $ 5,100 * $ 576(8)
Operating Officer of
First Preference
Mortgage Corp.
</TABLE>
______________________
* The named officers receive certain perquisites that do not exceed
the lesser of $50,000 or 10% of salary and bonus.
(1) In 1996 and 1997, the Company paid $1,555 and $499, respectively,
for group life insurance premiums on the lives of Robert A. Mann
and David W. Mann. In 1998, the Company paid $749 for group life
insurance premiums on the life of Robert A. Mann. The Company
made contributions to a 401(k) retirement plan in the amount of
$2,250 and $1,000 in 1996, $1,493 and $2,158 in 1997, and $1,282
and $0.00 in 1998 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) Consists of $60,000 paid by First Preference Mortgage Corp., an
indirect subsidiary of the Company, and $9,252 paid by Apex
Lloyds Insurance Company.
(4) Consists of $500 paid by First Preference Mortgage Corp. and $292
paid by Apex Lloyds Insurance Company.
(5) Includes $37,500 paid by First Preference Mortgage Corp. and
$63,645 paid by Apex Lloyds Insurance Company.
(6) Consists of $109,329 paid by First Preference Mortgage Corp. and
$6,313 paid by Apex Lloyds Insurance Company.
(7) Consists of $5,500 paid by First Preference Mortgage Corp. and
$292 paid by Apex Lloyds Insurance Company.
(8) Represents a group life insurance premium paid by First
Preference Mortgage Corp.
Each non-employee director of the Company (all directors other
than Robert A. Mann and David W. Mann) was paid a fee of $1,000.00 for
each regular meeting of the Board of Directors that such director
attended. The Company does not have any standard arrangements or
other arrangements pursuant to which any director of the Company was
compensated during the last completed fiscal year for any service as a
director, including committee participation and special assignments.
<PAGE>
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
$10,247 and $7,642 for the years ended December 31, 1997 and 1998,
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 1997 and 1998, Bluebonnet Investments, Ltd. (a limited
partnership described herein) 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 $273,118 and
$248,380, 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 1997 and 1998, 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 1997 and 1998, the Company and its subsidiaries paid a total of
$144,035 and $203,924, 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 herein), 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 herein) 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 1997 and 1998 was $20,782 and $32,987, respectively.
The Company services another portfolio of manufactured home loans
owned by FPMC. The total servicing fees paid by FPMC to the Company
with respect to these loans in 1997 and 1998 were $49,377 and $48,745,
respectively.
The Company contracts with FPMC, as subservicer, to provide the
actual servicing of certain mobile home loans. The Company paid FPMC
$71,750 and $54,280 during 1997 and 1998, respectively, as the
subservicer of these and other loans.
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
<PAGE>
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 1997
and 1998 was $129,419 and $127,979, respectively.
Sale of Participations
Until July 18, 1997, the Company serviced 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 1997 were $6,616. 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 1997 and 1998 with respect to
said loans were $1,195 and $1,515, respectively.
On or about July 18, 1997, FPMC purchased the interests held by
Bluebonnet Investments, Ltd. (a partnership described herein) 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 herein), UW Service
Corporation, Inc. (a corporation described herein), and other entities
directly or indirectly owned or controlled by Robert A. Mann, David W.
Mann and/or members of the Mann family. During 1997, the sublessees
paid a total of $36,200 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 paid off the note to the Company in December 1998.
FPMC now subleases a portion of the building to the entities listed
above. During 1997 and 1998, those sublessees paid a total of $6,280
and $37,680 in rent to FPMC.
<PAGE>
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.
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. In 1998, this fee was $7,286. In
1998, First Apex received $156,422 in premiums for reinsurance of
mortgage guaranty insurance on loans originated by FPMC.
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.
FFC Venture, Inc.
FFC Venture, Inc., a Texas corporation, owned by David W. Mann,
has an agreement with the Company to service certain notes for the
purchase of lots. The total fees paid by FFC Venture, Inc. to the
Company in 1997 and 1998 were $3,160 and $2,837, respectively.
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:
First Apex Re
Pre-Owned Homes, Inc. Mobile Home Conveyers
First Advisory Services, Inc. And Liquidators, Inc.
First Financial Credit Corp. First Financial Insurance
Apex Lloyds Insurance Co. Agency, Inc.
Shelter Resources, Inc. Texas Apex, Inc.
<PAGE>
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.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Pattillo, Brown & Hill as
principal accountant for the fiscal year ending December 31, 1999.
Pattillo, Brown & Hill was the principal accountant for the Company
for the fiscal year ending December 31, 1998. 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 principal accountants, 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 16, 1999
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 1998
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
