<PAGE>
FIRST COMMONWEALTH FINANCIAL CORPORATION
Old Courthouse Square, 22 North Sixth Street
Indiana, Pennsylvania 15701
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 23, 1994
TO THE SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of Shareholders
of First Commonwealth Financial Corporation (the "Corporation")
will be held at Folger Dining Hall, Indiana University of
Pennsylvania, Indiana, Pennsylvania on Saturday, April 23, 1994, at
12:00 noon, local time, for the following purposes:
1. To elect six Directors to serve for terms expiring in
1997.
2. To act on the proposed amendments to Article 5 of the
Corporation's Articles of Incorporation to authorize
creation of an additional 75,000,000 shares of Common
Stock, and to change the Common Stock of the Corporation
by changing each issued and outstanding share of Common
Stock, par value $5 per share, into one share of Common
Stock, par value of $1 per share.
3. To act on such other matters as may properly come before the
meeting.
Only shareholders of record as of the close of business on
March 16, 1994 are entitled to notice of and to vote at the Annual
Meeting and any adjournments thereof. The Annual Report to
Shareholders for the year ended December 31, 1993, which includes
consolidated financial statements of the Corporation, is enclosed.
YOU ARE URGED TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY
CARD AS PROMPTLY AS POSSIBLE WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING IN PERSON. IF YOU ATTEND THE MEETING YOU MAY, IF YOU WISH,
WITHDRAW YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors,
David R. Tomb, Jr.
Secretary
Indiana, Pennsylvania
March 25, 1994<PAGE>
<PAGE>
FIRST COMMONWEALTH FINANCIAL CORPORATION
Old Courthouse Square, 22 North Sixth Street
Indiana, Pennsylvania 15701
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
April 23, 1994
GENERAL INFORMATION
The accompanying proxy is solicited by the Board of Directors
of First Commonwealth Financial Corporation (the "Corporation" or
"FCFC") in connection with its Annual Meeting of Shareholders to be
held on Saturday, April 23, 1994, 12:00 noon, local time, and any
adjournments thereof.
If the accompanying proxy is duly executed and returned, the
shares of Common Stock of the Corporation represented thereby will
be voted and, where a specification is made by the shareholder as
provided therein, will be voted in accordance with that
specification. A proxy may be revoked by the person executing it
at any time before it has been voted by notice of such revocation
to David R. Tomb, Jr., Secretary of the Corporation.
The three persons named in the enclosed proxy have been
selected by the Board of Directors and will vote shares represented
by valid proxies. They have indicated that, unless otherwise
specified in the proxy, they intend to vote to elect as Directors
the six nominees listed on page 6.
The Board of Directors has no reason to believe that any of the
nominees will be unable to serve as Directors. In the event, however,
of the death or unavailability of any nominee or nominees the proxy to
that extent will be voted for such other person or persons as the Board
of Directors may recommend. The Board of Directors unanimously
recommends that the shareholders approve the amendments to the Articles
of Incorporation described herein, to change the capital stock of the
Corporation.
The Corporation has no knowledge of any other matters to be
presented at the meeting. In the event other matters do properly come
before the meeting the persons named in the proxy will vote in
accordance with their judgment on such matters.
The approximate date on which this proxy statement is first to be
mailed to the shareholders of the Corporation is March 25, 1994. The
cost of the solicitation of proxies will be paid by the Corporation. In
addition to the solicitation of proxies by the use of the mails,
management and regularly engaged employees of the Corporation may,
without additional compensation therefore, solicit proxies on behalf of
1<PAGE>
<PAGE>
the Corporation by personal interviews, telephone, telegraph or other
means, as appropriate. The Corporation will, upon request, reimburse
brokers and others who are only record holders of the Corporation's
Common Stock ("Common Stock") for their reasonable expenses in
forwarding proxy material to, and obtaining voting instructions from,
the beneficial owners of such stock.
As of the close of business on March 16, 1994, there were
18,642,024 shares of Common Stock issued and outstanding. Three million
(3,000,000) shares of Preferred Stock have been authorized; however,
none of the preferred shares are outstanding. Only shareholders of
record as of the close of business on March 16, 1994 are entitled to
receive notice of and to vote at the Annual Meeting.
Shareholders are entitled to one vote for each share held on all
matters to be considered and acted upon at the Annual Meeting. The
Articles of Incorporation of the Corporation do not permit cumulative
voting. An affirmative vote of a majority of the shares present and
voting at the meeting is required for approval of all items being
submitted to the shareholders for their consideration. Abstentions and
broker non-votes are each included in the determination of the number of
shares present and voting, but are not counted for purposes of
determining whether a proposal has been approved.
The Corporation conducts business through eight banking
subsidiaries, National Bank of the Commonwealth ("NBOC"), Deposit Bank
("Deposit"), Central Bank ("Central"), Cenwest National Bank
("Cenwest"), First National Bank of Leechburg ("Leechburg"), Peoples
Bank and Trust Company ("Peoples"), Peoples Bank of Western Pennsylvania
("Peoples of W. PA"), First Commonwealth Trust Company ("FCTC"), and
through Commonwealth Systems Corporation ("CSC"), a data processing
subsidiary. The Corporation also jointly owns Commonwealth Trust Credit
Life Insurance Company ("CTCLIC"), a reinsurer of credit life and
accident and health insurance. NBOC, Deposit, Central, Cenwest,
Leechburg, Peoples, Peoples of W. PA and FCTC are herein collectively
called the "Subsidiary Banks."
COMMON STOCK OWNERSHIP BY MANAGEMENT
The Corporation is not aware of any person who, as of March 16,
1994, was the beneficial owner of more than 5% of the Common Stock,
except for Fairman Drilling Company, DuBois, PA, which held 1,154,764
shares. The following table sets forth information concerning
beneficial ownership by all directors and nominees, by each of the
executive officers named in the Summary Compensation Table on page 11
(the "Summary Compensation Table") and by all directors and executive
officers as a group.
2
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Amount and nature of Percent of
Name Beneficial Ownership(1) Class
E. H. Brubaker 10,031 (2) *
Sumner E. Brumbaugh 145,990 (2) (3) *
Edward T. Cote 100,400 (5) *
Thomas L. Delaney 41,206 (2) *
Clayton C. Dovey, Jr. 23,134 *
Ronald C. Geiser 18,544 (3) *
Johnston A. Glass 18,901 (3) *
A. B. Hallstrom 10,644 (3) *
Thomas J. Hanford 48,258 *
H. H. Heilman, Jr. 21,500 *
David F. Irvin 63,204 *
David L. Johnson 6,794 (2) *
Robert F. Koslow 15,420 (3) (10) *
Dale P. Latimer 609,508 (3) (5) (9) 3.27%
William Miksich 21,755 *
Joseph E. O'Dell 5,412 (2) *
Joseph W. Proske 8,968 (2) *
Charles J. Szewczyk 269,755 (8) 1.45%
Gerard M. Thomchick 6,293 (2) (3) *
David R. Tomb, Jr. 295,420 (2) (3) (5) (6) 1.58%
E. James Trimarchi 325,526 (2) (3) (5) (6) (7) 1.75%
John I. Whalley, Jr. 54,360 (4) *
All directors and 1,669,705 (2-10) 8.96%
executive officers
as a group (24
persons)
3
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(1) Under regulations of the Securities and Exchange Commission,
a person who has or shares voting or investment power with
respect to a security is considered a beneficial owner of the
security. Voting power is the power to vote or direct the
voting of shares, and investment power is the power to dispose
of or direct the disposition of shares. Unless otherwise
indicated in the other footnotes below, each director has sole
voting power and sole investment power over the shares
indicated opposite his name in the table, and a member of a
group has sole voting power and sole investment power over the
shares indicated for the group.
(2) Does not include the following shares held by spouses, either
individually or jointly with other persons, as to which voting
and investment power is disclaimed by the director or officer:
Mr. Brubaker, 29,258; Mr. Brumbaugh, 132; Mr. Delaney, 8,616; Mr.
Johnson, 809; Mr. O'Dell, 1,658; Mr. Proske, 31,530; Mr.
Thomchick, 1,719; Mr. Tomb, 264; Mr. Trimarchi, 20,000; and all
Directors and executive officers as a group, 93,986.
(3) Includes the following shares held jointly with spouses, as to
which voting and investment power is shared with the spouse: Mr.
Brumbaugh, 15,400; Mr. Geiser, 14,364; Mr. Glass, 10,793; Mr.
Hallstrom, 9,468; Mr. Koslow, 9,400; Mr. Latimer, 11,486; Mr.
Thomchick, 2,527; Mr. Tomb, 31,846; Mr. Trimarchi, 8,482, and all
Directors and executive officers as a group 113,766.
(4) Includes 53,860 shares held by the J. Irving Whalley Testamentary
Trust, of which John I. Whalley, Jr. is co-trustee.
(5) Includes 100,000 shares owned by Berkshire Securities
Corporation. Berkshire is a Pennsylvania corporation organized in
1976 for the purpose of acquiring and holding the securities of
Pennsylvania banks. The officers, directors or stockholders of
Berkshire include Messrs. Cote, Latimer, Tomb and Trimarchi, each
of whom is an officer or director of the Corporation, among
others. The shares were acquired by Berkshire when its shares of
Dale National Bank (now Cenwest) were converted into shares of
the Corporation as a result of the Dale merger in 1985. Each of
the foregoing persons may be deemed to share voting and
investment power of these shares.
(6) Includes 159,338 shares held by County Wide Real Estate, Inc., of
which Messrs. Tomb and Trimarchi are each 50% owners and as to
which they share voting and investment power.
(7) Includes 29,652 shares held by family interests of which Mr.
Trimarchi exercises sole voting and investment power.
(8) Mr. Szewczyk became a member of the Board of Directors on the
occasion of the merger of Peoples into the Corporation in May 1990.
(9) Includes 90,632 shares held by the R&L Development Company Pension &
Profit Sharing Plan of which Mr. Latimer is Trustee.
(10) Mr. Koslow became a member of the Board of Directors on the occasion
of the merger of Peoples of W. PA into the Corporation in December
1993.
4
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As of February 25, 1994, FCTC, acting in a fiduciary capacity for
various trusts and estates, including the Corporation Employee Stock
Ownership Plan ("ESOP"), and the Corporation 401(k) Retirement Savings and
Investment Plan ("401(k) Plan") held an aggregate of 1,891,931 shares of
Common Stock (10.1% of the outstanding shares). Of these shares, FCTC had
sole voting power with respect to 194,193 shares, shared voting power with
respect to 1,697,737 shares, had sole investment power with respect to
674,314 shares and shared investment power with respect to 1,016,977
shares. FCTC votes the shares over which it has voting power and, where
voting power is shared, shares are voted by FCTC in consultation with the
other persons having voting power.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and persons who own more
than ten percent of a registered class of the Corporation's equity
securities, to file with the Securities and Exchange Commission (the
"Commission") an initial report of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Corporation.
Executive officers, directors and greater than ten percent shareholders
are required by Commission regulation to furnish the Corporation with
copies of all Section 16(a) forms which they file. The Corporation is
aware of one late filing with respect to one transaction by Mr. Hallstrom
and one late filing with respect to one transaction by Mr. Whalley in
1993.
5
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<PAGE>
ELECTION OF DIRECTORS
Article 10 of the By-Laws of the Corporation provides that the number
of Directors shall be not less than 3 nor more than 25. The Board of
Directors has, in accordance with the By-Laws, fixed the number of
directors at 20 (one class of 6 and two classes of 7).
A successor for the vacancy in the class of directors whose terms
expire in 1996 occurring on the death of Roy R. Fairman in December 1993
has not been named.
As of March 16, 1994, each director and nominee for election as a
director of the Corporation owned beneficially the number of shares of
Common Stock set forth in the preceding table. The information in the
table and the footnotes thereto is based upon data furnished to the
Corporation by, or on behalf of, the persons named or referred to in the
table.
Six Directors will be elected at the Annual Meeting to serve for
terms of three years expiring with the Annual Meeting of Shareholders in
1997. Each Director elected will continue in office until a successor has
been elected. If any nominee is unable to serve, which the Board of
Directors has no reason to expect, the persons named in the accompanying
proxy intend to vote for the balance of those named and, if they deem it
advisable, for a substitute nominee. The names of the nominees for
Directors and the names of Directors whose terms of office will continue
after the Annual Meeting are listed in the following table.
Information about the nominees, each of whom is presently a member of
the Board of Directors, and about the other directors whose terms of
office will continue after the Annual Meeting, is set forth in the table
below. The nominees and other directors have held the positions shown for
more than five years unless otherwise indicated.
6
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<PAGE>
Principal Occupation or
Director Employment; Other
Name Since Directorships; Age
Nominees for a Term Ending in 1997:
E. H. Brubaker 1984 Chairman of the Board and
Director of Deposit; Age 63
A. B. Hallstrom 1986 Chairman, Hallstrom Construction
Inc.; Director of Deposit; Age 65
Thomas J. Hanford 1984 Investor; formerly President,
Coca-Cola Bottling Co. of DuBois,
Inc.; Director 1st United BANCORP
(BANCORP), Boca Raton, FL;
Age 55
H. H. Heilman, Jr. 1985 Chairman of the Board and
Director of Leechburg; previously
President and Chief Executive
Officer of Leechburg; Partner,
Heilman & McClister (attorneys
-at-law); Age 77
Charles J. Szewczyk 1990 (pronounced and sometimes known
as Charles J. Sheftic) Chairman
of the Board of Peoples; Managing
Partner of County Amusement Co.
(real estate holdings) and
formerly Director of Westview,
Inc. (motion picture theatre
service company); Age 65
John I. Whalley, Jr. 1986 President, Whalley Group Inc.
(various business enterprises);
Age 48
7
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<PAGE>
Continuing Directors Whose Terms End in 1996:
Sumner E. Brumbaugh 1992 Chairman of the Board and CEO of
Central; President, Brumbaugh
Insurance Group; Board Member,
Pennsylvania National Mutual
Casualty Insurance Co., Central
Pennsylvania Health Systems
("CPHS"), Advisory Board-Penn
State University (Altoona
Campus); President, Lexington One
and Lexington Two (subsidiaries
of CPHS); Age 65
Edward T. Cote 1984 Associate, The Wakefield Group
(Investment Banking); Formerly
President, Benefits and Services
Company (insurance holding
company); Director of NBOC and
New Mexico Banquest Investors
Corp. (NMB); Age 57
Clayton C. Dovey, Jr. 1985 Chairman of the Board of Cenwest;
Age 69
Johnston A. Glass 1986 President and Director of NBOC;
Age 44
Dale P. Latimer 1984 President, R & L Development
Company (heavy construction);
Director of NBOC; Director of
NMB; Age 63
David R. Tomb, Jr. 1983 Partner, Tomb and Tomb
(attorneys-at-law); Vice
President, Secretary and
Treasurer of the Corporation;
Director of NBOC, Leechburg,
FCTC, CSC and CTCLIC; Age 62
8
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<PAGE>
Continuing Directors Whose Terms End in 1995:
Thomas L. Delaney 1984 Private Investor; formerly
Chairman, Petrolec,Inc.
(petroleum wholesalers); Director
of Deposit; Director of BANCORP;
Age 63
Ronald C. Geiser 1985 President and Director of
Cenwest; Age 64
David F. Irvin 1984 Sole Owner, The Irvin/McKelvy
Company (sales and engineering
for mining and industrial
services); Director of NBOC;
Age 75
David L. Johnson 1984 Retired; Previously Vice
President and Corporate
Secretary, Pennsylvania
Manufacturers' Corporation
(insurance holding company);
Director of NBOC; Age 64
Robert F. Koslow 1993 Chairman of the Board, President
and Chief Executive Officer of
Peoples; Director, Pennsylvania
Bankers Association, Pennsylvania
Independent Bank and Wheeling
Jesuit College; Member of the
Advisory Board to the President
of the Federal Reserve Bank of
Cleveland; Age 58
Joseph W. Proske 1984 Vice President-Engineering,
Stackpole Magnet Division
(manufacturer of magnetic
components); Director of Deposit
and CSC; Age 57
E. James Trimarchi 1982 Chairman of the Board, President
and Chief Executive Officer of
the Corporation; Director of
NBOC, Central, FCTC, CSC and
CTCLIC; Director of NMB; Age 71
9
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<PAGE>
Board Committees
During 1993 there were 4 meetings of the Board of Directors of the
Corporation. All directors attended at least 75% of the total number of
meetings of the Board of Directors of the Corporation and all committees
of which they were members.
The Board of Directors of the Corporation has established four
standing committees: Executive, Audit, Personnel and Compensation and
Executive Compensation. The Board has no standing Nominating Committee.
When the Board of Directors is not in session, the Executive
Committee, which is comprised of Messrs. Trimarchi (Chairman), Tomb
(Secretary), Brubaker, Brumbaugh, Delaney, Geiser, Glass, Heilman, Latimer
and Szewczyk possesses and exercises all the powers of the Board, except
for matters which are required by law to be acted upon by the full Board.
The Executive Committee considers major policy matters and makes reports
and recommendations to the Board. The Committee met 4 times in 1993.
The Audit Committee is comprised of Messrs. Latimer (Chairman),
Hallstrom, Irvin, Cote and Proske and reviews the internal auditing
procedures and controls of the Corporation and its subsidiaries. The
Audit Committee also reviews reports of examinations of the Subsidiary
Banks received from state and federal regulators, as well as reports from
internal and external auditors. The Audit Committee formally reports to
the full Board of Directors its evaluations, conclusions and
recommendations with respect to the condition of the Corporation, the
Subsidiary Banks and CSC and the effectiveness of their policies,
practices and controls. The Committee met 4 times in 1993.
The Personnel and Compensation Committee is comprised of Messrs.
Cote, Dovey, and Glass. Roy R. Fairman, deceased director, was chairman
of this committee. A new chairman has not been appointed at this time.
The Personnel and Compensation Committee reviews the general salary
administration and employee benefit programs of the Corporation and its
subsidiaries and makes recommendations relating thereto to the Board of
Directors. The Committee met 1 time in 1993.
The Executive Compensation Committee is comprised of Messrs. Johnson
(Chairman), Cote, Irvin and Latimer. The Committee met four times in
1993. (See Report of the Executive Compensation Committee.)
The By-Laws of the Corporation require that any shareholder who
intends to nominate or cause to have nominated any candidate for election
to the Board of Directors (other than a candidate proposed by the
Corporation's then existing Board of Directors) must notify the Secretary
of the Corporation in writing not less than 120 days in advance of the
date of the Corporation's proxy statement released to its shareholders in
connection with the previous year's annual meeting of shareholders called
for the election of directors (for the 1994 meeting of shareholders, such
notification must have been received by the Secretary on or before
November 16, 1993). Such notification must contain (to the extent known
10
<PAGE>
by the notifying shareholder) the name, address, age, principal occupation
and number of shares of the Corporation owned by each proposed nominee;
the name, residence address and number of shares of the Corporation owned
by the notifying shareholder; the total number of shares that, to the
knowledge of the notifying shareholder, will be voted for each proposed
nominee; a description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons pursuant to
which the nomination or nominations are to be made by the shareholder;
such other information regarding each nominee proposed by such shareholder
as would be required to be included in a proxy statement filed pursuant to
the proxy rules of the Securities and Exchange Commission had the nominee
been nominated by the Board of Directors; and the written consent of each
nominee, signed by such nominee, to serve as a director of the Corporation
if so elected. The Board of Directors as a whole would consider
nominations submitted by a shareholder if submitted in accordance with the
By-Laws and otherwise in time for such consideration.
COMPENSATION OF DIRECTORS
Directors are compensated at the rate of $500 per quarterly meeting
attended for Board members presently serving in a management or Board
capacity at any FCFC affiliate and $1,000 per quarterly meeting attended
for all other Board members. Committee members receive $150 per committee
meeting attended.
11
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COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information regarding
compensation received by the Chief Executive Officer and the remaining
four most highly compensated named executive officers of the Corporation.
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation
<CAPTION>
Name and All Other1,3
Principal Position Year Salary Bonus Other1, 2 Compensation
<S> <C> <C> <C> <C> <C>
$ $ $ $
E. James Trimarchi 1993 305,000 0 21,006 6,800
Chairman of the Board, 1992 270,000 32,500 28,122 12,000
President and Chief 1991 262,750
Executive Officer of
First Commonwealth
Financial Corporation
Joseph E. O'Dell 1993 180,000 0 21,190 5,400
Senior Executive Vice 1992 145,000 30,000 19,737 5,700
President and Chief 1991 135,000
Operating Officer of
First Commonwealth
Financial Corporation
Johnston A. Glass 1993 156,500 0 19,210 6,500
President and Chief 1992 143,100 0 18,693 6,050
Executive Officer 1991 135,000
of National Bank of the
Commonwealth
Gerard M. Thomchick 1993 145,000 0 17,800 16,200
Executive Vice President 1992 110,000 25,000 15,050 15,200
of First Commonwealth 1991 100,000
Financial Corporation
William Miksich, President 1993 132,900 0 16,339 2,400
and Chief Executive Officer 1992 124,720 0 16,253 3,600
of Deposit Bank 1991 105,600
</TABLE>
(1) In accordance with the transitional provisions applicable to the
revised rules on executive officer and director compensation
disclosure adopted by the Securities and Exchange Commission, as
informally interpreted by the Commission's Staff, amounts of Other
Annual Compensation and All Other Compensation are excluded for the
Corporation's 1991 fiscal year.
(2) Includes the matching and automatic contribution by the
Corporation to the individual's account in the Corporation's 401(k)
Plan as well as the allocation of shares to the individual's account
in the ESOP.
12
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(3) Includes compensation for services on boards and committees of the
Corporation and/or various subsidiaries.
Notwithstanding anything to the contrary set forth in any of
the Corporation's previous filings under the Securities Act of
1933, as amended, or the Securities and Exchange Act of 1934, as
amended, that might incorporate future filings, including this
Proxy Statement in whole or in part, the following report and the
Performance Graph on page 18 shall not be incorporated by reference
into any such filings.
13
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<PAGE>
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
TO: Board of Directors
The following is a report by the Executive Compensation
Committee of the Board of Directors of First Commonwealth Financial
Corporation. The objectives of the report are to meet all proxy
disclosure rules relating to executive compensation established by
the Securities and Exchange Commission (SEC), and to provide
shareholders with an explanation of the overall executive
compensation philosophy, strategies, and specific executive
compensation plans.
EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee is comprised of four (4)
non-employee, independent directors selected from the Board of
Directors of First Commonwealth Financial Corporation. The
Committee met four (4) times in 1993.
The Committee seeks to achieve and maintain a position of
"equity" with respect to balancing the interests of the shareholder
with those of executive officers.
During 1993, the Executive Compensation Committee developed a
formal Executive Compensation Program. Within the parameters of
this Program, the Committee acts out its role by performing a
variety of tasks of which the following are illustrative.
1. Developing and documenting an executive compensation
philosophy.
2. Identifying relevant peer groups; collecting and
analyzing comparative executive compensation
information.
3. Defining an executive compensation plan that addresses
base salary and benefits, incentive-based compensation,
and supplemental benefits.
4. Ensuring that all regulatory requirements pertaining to
executive compensation are met.
5. Maintaining the Executive Compensation Program on an
ongoing basis.
Executive officers of the Corporation may, at the request of
the Committee, be present at meetings of the Committee for input
and discussion purposes. However, the executive officers have no
direct involvement with the decisions of the Executive Compensation
Committee, nor do they have a vote in any matters brought before
the group. Consultants and other independent outside advisors may
also be utilized by the Committee from time to time in a similar
manner.
Business conducted by the Executive Compensation Committee at
each meeting is documented in the form of minutes and submitted to
the Board of Directors on a timely basis.
14
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<PAGE>
EXECUTIVE COMPENSATION PHILOSOPHY AND POLICY
The written executive compensation philosophy expresses the
attitude of the Board of Directors toward participation, relevant
peer comparisons, plan design, etc. and, as such, represents an
important part of the Executive Compensation Program. The
philosophy provides guidance to the deliberations of the Executive
Compensation Committee and, within the overall objectives of equity
and regulatory compliance, acts as a standard against which plan
performance can be measured.
The Executive Compensation Program is designed to encourage
decisions and actions that have positive impact on the
Corporation's overall performance. For that reason, program
participation is limited to those individuals who have the greatest
opportunity to influence the achievement of strategic corporate
objectives.
As part of the overall Program, the compensation philosophy
defines what the organization will pay for, e.g., job worth,
competitive comparisons, etc. The Executive Compensation Committee
has established the following parameters for the pay philosophy
under the current program.
1. An overall Program that is not particularly complex;
one that is readily communicated and easily understood
by participants and shareholders.
2. Base salary that is at least at the fiftieth percentile
of the competitive rate for the position, as defined by
the selected peer group.
3. Base salary adjustments that are based upon maintaining
external competitiveness.
4. Performance-based compensation adjustments that are
subjective and discretionary on the part of the
Executive Compensation Committee. These discretionary
adjustments, however, will be made taking into account
such factors as performance versus budget, return on
shareholder equity, etc.
5. Utilization of IRS "qualified" plans whenever they are
in the best interests of both the executive officer and
the Corporation.
The Executive Compensation Committee utilized several factors
to define an appropriate competitive peer group including the type
of company from which executive talent might be recruited, a
logical geographic region, the size, complexity, and performance of
the institution, and the ability to "match" the executive officer
positions.
The 1993 peer group was developed utilizing this methodology
and philosophy and, in the opinion of the Committee, represents a
fair and reasonable standard against which executive pay may be
compared. The peer group included Pennsylvania commercial banks
and bank holding companies of asset sizes and characteristics
similar to those of the Corporation and its affiliates.
15
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<PAGE>
EXECUTIVE COMPENSATION PROGRAMS
The primary components of the Corporation's Executive
Compensation Program are base salaries and base benefits. Base
salaries are defined by taking into account the job
responsibilities of the positions and competitive salary data, as
defined by the selected peer group.
Executives participate in the normal benefits programs
available to employees of the Corporation and its affiliates.
With respect to performance-based compensation, affiliate
Presidents may be eligible to participate in an Incentive
Compensation Plan. The purpose of the plan is to provide
incentives and awards to affiliate Presidents who, through high
levels of performance, contribute to the success and profitability
of their respective affiliates and the Corporation.
The plan provides an opportunity for an affiliate president to
earn up to 25% of his/her base salary in the form of a cash
incentive award. The incentive award would be paid by the
Corporation subject to the performance of the affiliate against an
established budget and the participant's contribution to the
Corporation's profitability.
Executive officers of the Corporation may be granted cash
bonuses in recognition of their individual and collective
contributions to the performance of the Corporation. These bonus
awards are totally subjective and discretionary on the part of the
Executive Compensation Committee.
CHIEF EXECUTIVE OFFICER COMPENSATION
The base salary of the Corporation's Board Chairman, President
and Chief Executive Officer, E. James Trimarchi, was increased from
$270,000 in 1992 to $305,000 in 1993. This 13% increase was given
to recognize Mr. Trimarchi's outstanding contribution to the growth
and performance of First Commonwealth Financial Corporation. In
addition, Mr. Trimarchi received compensation for services as a
Director of the Corporation and various affiliates, and as a result
of contributions to his account in the Corporation's 401(k) Plan
and ESOP.
16
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<PAGE>
1993 EXECUTIVE COMPENSATION ACTIONS
As part of the continuing process of maintaining an equitable
Executive Compensation Program, the Executive Committee took
several actions in 1993, the most notable of which are:
1. Developed a comprehensive Executive Compensation
Program manual to document the important elements of
the Program including the philosophy, peer group data,
program content, etc.
2. Compiled and analyzed competitive information from a
selected group of Pennsylvania peer banks and bank
holding companies.
3. Established an Incentive Compensation Plan for
affiliate Presidents.
4. Developed an Executive Officer Loan/Stock Purchase Plan
for executive officers of the Corporation to be
implemented in 1994 subject to regulatory approvals.
Submitted by the Executive Compensation Committee:
David L. Johnson, Chairman David Irvin
Edward T. Cote Dale P. Latimer
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PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly
percentage change in the cumulative total shareholder return on the
Corporation's Common Stock against the cumulative total return of
the S&P 500 Index and an Index for Pennsylvania Bank Holding
Companies with assets between one and three billion dollars
including F.N.B. Corporation, First Eastern Corp., First Western
Bancorp Inc., Fulton Financial Corp., Independence Bancorp Inc., US
BANCORP Inc., S&T Bancorp Inc. and Susquehanna Bancshares Inc. for
the five years commencing January 1, 1989 and Bancshares ending
December 31, 1993.
First Commonwealth Financial Corporation
Peer
Year Group FCF S&P
1988 100.00 100.00 100.00
1989 113.16 108.39 131.69
1990 86.10 111.78 127.60
1991 111.55 115.91 166.47
1992 157.00 175.14 179.15
1993 198.68 208.50 197.21
Assumes that the value of the investment in FCFC Common Stock and
each index was $100 on January 1, 1989 and that all dividends
were reinvested.
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EXECUTIVE COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The Executive Compensation Committee consists of Messrs. Johnson,
Cote, Latimer and Irvin. No member was an officer or employee of the
Corporation during 1993 nor has ever been a former officer or employee
of the Corporation or a subsidiary during 1993 nor has a transaction
or relationship required to be disclosed under Item 404 of Regulation
S-K. Further, during 1993, no executive officer served on a
compensation committee (or other board committee performing equivalent
functions) or Board of Directors of any entity related to the above
named Committee members.
INTERESTS OF NOMINEES, DIRECTORS AND OFFICERS IN CERTAIN TRANSACTIONS
Mr. Geiser serves as President of Cenwest pursuant to an
employment agreement providing that he shall continue to serve in that
position until 1994. The agreement provides that his salary shall not
be less than $69,363 and is reviewed annually in accordance with
Cenwest's past practices. Mr. Geiser has agreed that during the term
of his employment and for a period of ten years thereafter, he will not
engage in any competing business within 10 miles of any of the banking
facilities of the Corporation or its subsidiaries or solicit any of
their then-existing customers.
Mr. Brumbaugh serves as Chairman of the Board and Chief Executive
Officer of Central pursuant to an employment agreement for a period of
7 years, commencing May 1, 1992 and ending April 30, 1999. The
agreement provides that Mr. Brumbaugh shall serve in an executive
capacity and shall be the Chairman of the Board of Directors and Chief
Executive Officer of Central and shall also perform such services for
FCFC as from time to time are requested. As compensation to Mr.
Brumbaugh for all services rendered to Central and to FCFC as an
officer, director or member of any committee of Central or any of
FCFC's subsidiaries or affiliates, FCFC has agreed, in addition to
director's fees and committee meeting fees, to pay or cause Central to
pay to Mr. Brumbaugh a salary at an annual rate of $100,000, which sum
shall be adjusted upward at the annual rate of 5%. Should Mr.
Brumbaugh retire after at least one year of continuous service under
the agreement, thereafter he shall be paid his retirement compensation
for the remaining term of the agreement at an annual rate of $50,000,
adjusted upwards annually for cost of living at the rate of 5%. Should
Mr. Brumbaugh die at any time during the agreement, in lieu of the
foregoing payments, FCFC shall pay his wife the sum of $25,000 per year
if she is living at the time each payment is made. As a part of the
agreement and for a period of ten years thereafter, Mr. Brumbaugh will
not engage in any competing business within 10 miles of any of the
banking facilities of the Corporation or solicit any of their then-
existing customers.
Mr. Koslow serves as Chairman of the Board, President and Chief
Executive Officer of Peoples Bank of W. PA under an employment
agreement with Peoples extending to July 19, 1998. The agreement
provides that Mr. Koslow will serve in such executive capacity as may
be designated from time to time by the Board of Directors. As
compensation to Mr. Koslow, Peoples agrees to pay him a minimum annual
salary equal to the annual salary in effect on July 20, 1988, such
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annual salary to be subject to annual review for possible increase. If
Mr. Koslow's employment is terminated other than for cause, he is
entitled to be paid annually in equal monthly amounts, for the greater
of two years or the remaining term of the agreement, the annual salary
and bonus paid to him for the full calendar year immediately preceding
the year in which such termination occurs, plus the insurance premiums
provided in a split dollar life insurance agreement between Peoples and
Mr. Koslow. If there is a change in control of Peoples, such minimum
annual salary shall be increased on January 1 of each year thereafter
by an amount equal to the percentage increase in the Consumer Price
Index for the preceding calendar year. If there is a change of control
of Peoples and thereafter Mr. Koslow's responsibilities are changed
without his consent, Mr. Koslow is entitled to resign within twelve
months of such change of control, in which case he is entitled to
receive annually in equal monthly amounts, for the greater of three
years or the remaining term of the agreement, but not beyond his age
65, the annual salary and bonus paid to him for the full calendar year
immediately preceding such resignation, plus the split dollar life
insurance premiums. As part of the agreement, Mr. Koslow has agreed
that during the term of his employment and for a period of 10 years
thereafter, he will not engage in any business in competition with
Peoples or any of its subsidiaries within 20 miles of any of their
banking facilities or solicit any of their then existing customers.
During 1993, David R. Tomb, Jr. attorney-at-law and the law firm
of Tomb and Tomb of which Mr. Tomb is a partner performed legal
services for the Corporation, NBOC and CSC. Mr. Tomb is a Director and
executive officer of the Corporation. The fees paid for services
during 1993 were $65,000.
One or more of the Subsidiary Banks (Lending Bank or Banks), have
extended credit to several directors and executive officers of the
Corporation, to members of their families and to corporations or
organizations in which such persons have a beneficial interest or with
which such persons are associated as officers, partners, directors, or
trustees. In all cases, except as described in the following
paragraphs, these transactions were made in the ordinary course of
business and on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable
transactions with other persons and do not involve more than the normal
risk of collectibility or present other unfavorable features. Total
loans as of December 31, 1993 to the Corporation's or its subsidiaries'
directors, executive officers, principal shareholders and their related
interests whose loan balances exceeded $60,000 during 1993 were
$25,234,000.
Mr. John I. Whalley, Jr. became an FCFC director in December 1986
and was reelected a director in 1990. Since January 1, 1992 there has
been outstanding from the Lending Banks to Mr. Whalley and his related
interests four loans having an aggregate original principal balance of
$2,223,631, which bear interest rates from the Lending Bank's prime
rate (currently 7%) to 11.5% and are partially collateralized with real
estate, marketable securities and motor vehicles. These loans were
incurred principally to consolidate outstanding loans from the Lending
Banks and other financial institutions and to strengthen the Lending
Banks' collateral position.
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In his examination of the Lending Bank on September 30, 1992, the
Comptroller of the Currency ("Comptroller") classified $621,092 of
these loans as Substandard and $209,147 as Doubtful, leaving an
aggregate unclassified balance of $554,164 secured by the marketable
securities. At the Comptroller's instruction $1,138,291 of these loans
was placed in a nonaccrual status by the Lending Bank. Subsequent
reexamination by the Comptroller of the Currency in 1993 resulted in
$1,101,182 being classified Substandard and with the balance remaining
in non-accrual. It is the opinion of the Lending Bank's management
that the Comptroller has classified this indebtedness as Substandard
due to the cessation of operations of Mr. Whalley's related business
and the fact that loan collateral is being sold by the borrower to
repay the indebtedness. The largest aggregate amount of indebtedness
outstanding at any time from Mr. Whalley and his related interests
since January 1, 1993 was $1,469,895, and the aggregate amount
outstanding was $1,411,811 as of February 28, 1994.
In June 1986 the Lending Bank granted credit of $600,000 to the
purchasers of commercial real estate, the proceeds of which were paid
to David F. Irvin, a Director of FCFC. To facilitate the granting of
this credit, Mr. Irvin gave a mortgage to the Lending Bank on a
property and building adjacent to the subject real estate. In his
September 30, 1992 examination, the Comptroller classified as
Substandard $486,279 of the $518,279 balance of this loan. This loan
was rewritten on August 31, 1993 at an interest rate of 8%. The loan
balance was $497,786 as of February 28, 1994.
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AUTHORIZATION OF COMMON STOCK/CHANGE OF PAR VALUE
As of the date of this Proxy Statement, the authorized capital
stock of the Corporation consists of 25,000,000 shares of Common stock
of which 18,642,024 shares are issued and outstanding, and 3,000,000
shares of Preferred Stock of which no shares are issued and
outstanding. The Board of Directors has proposed amendments to Article
5 of the Articles of Incorporation, the full text of which appears as
Appendix I to this Proxy Statement, which would provide that the
aggregate number of shares of the Corporation's authorized capital
stock will consist of 100,000,000 shares of Common Stock, par value of
$1 per share ("Common Stock"), and 3,000,000 shares of Preferred Stock,
par value of $1 per share ("Preferred Stock"). Holders of the
Corporation's Common Stock have no preemptive or other rights to
subscribe for any securities of the Corporation.
By reducing the par value of the Common Stock from $5 to $1 per
share, your Board of Directors believes that it will have greater
flexibility in the future in considering the declaration of stock
dividends or stock splits because it will not have to capitalize as
much of the Corporation's Earned Surplus (Retained Earnings) in
connection with such transactions.
It is contemplated that if the shareholders approve the proposal,
the amendments will be made effective on April 26, 1994. Thereafter,
each outstanding certificate representing shares of Common Stock, par
value $5 per share, of the Corporation will be deemed to be a
certificate for exactly the same number of shares of Common Stock, par
value $1 per share, of the Corporation; and $74,568,096 ($4 per share)
will be transferred from the Corporation's Common Stock account to the
Corporation's Capital Surplus account. Thus, there will be no increase
or decrease in the proportionate equity or interest of any shareholder
in the Corporation.
It will not be necessary for shareholders to surrender presently
outstanding stock certificates.
If the amendments are adopted, the Board of Directors of the
Corporation may in the future issue the additional 75,000,000
authorized shares of Common Stock for any proper corporate purpose,
including the sale of stock to provide for additional capital, stock
dividends and (subject to required government regulatory approvals) the
issuance of stock in connection with the acquisition by merger or
otherwise of the assets or stock of other banking institutions or
certain other businesses. Such authorized shares of stock could be
issued by the Board of Directors without further action by the
shareholders.
Approval of the amendments require the affirmative vote of a
majority of the votes cast by all shareholders. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE TO APPROVE THE
AMENDMENTS.
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ACCOUNTANTS
Jarrett Stokes & Co. was selected by the Board of Directors to
serve as the Corporation's independent certified public accountant for
its 1993 fiscal year. The Board of Directors also has selected Jarrett
Stokes & Co. as the Corporation's independent certified public
accountant for the 1994 fiscal year. A representative of Jarrett
Stokes & Co. is expected to be present at the Annual Meeting and will
have an opportunity to make a statement, if he desires to do so, and to
respond to appropriate questions.
ANNUAL REPORT
A copy of the Corporation's Annual Report for the fiscal year
ended December 31, 1993 is enclosed with this Proxy Statement.
A COPY OF THE CORPORATION'S FORM 10-K ANNUAL REPORT FOR 1993 AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION MAY BE OBTAINED
WITHOUT CHARGE UPON WRITTEN REQUEST TO: DAVID R. TOMB, JR.,
SECRETARY/TREASURER, BOX 400, INDIANA, PENNSYLVANIA 15701.
SHAREHOLDER PROPOSALS
Proposals of Corporation shareholders intended to be presented at
the 1995 Annual Meeting of Shareholders must be received by the
Secretary of the Corporation not later than November 29, 1994 in order
to be considered for inclusion in the Corporation's proxy statement for
that meeting.
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APPENDIX I
RESOLVED, that the Board of Directors of this Corporation deems it
advisable and therefore proposes to the shareholders that the Articles
of Incorporation of the Corporation, as amended, be further amended to
change the authorized capital stock of the Corporation from 3,000,000
shares of Preferred Stock, par value $1 per share, and 25,000,000
shares of Common Stock, par value $5 per share, to 3,000,000 shares of
Preferred Stock, par value $1 per share and 100,000,000 shares Common
Stock par value $1 per share, and to reclassify the Common Stock, by
changing each issued and outstanding share of Common Stock, par value
$5 per share, into one share of Common Stock, par value $1 per share;
and
RESOLVED, that to consummate the foregoing, the Board of Directors
of this Corporation deems it advisable and therefore directs that the
following resolutions be submitted to a vote of the shareholders
entitled to vote thereon at their annual meeting to be held on April
23, 1994 or any adjournment or adjournments thereof:
"RESOLVED, that Article 5 of the Articles of Incorporation
of the Corporation be and it hereby is amended to read in its
entirety as follows:
5.The aggregate number of shares that the corporation
shall have authority to issue is 3,000,000 shares of
Preferred Stock, par value $1 per share (the "Preferred
Stock"), and 100,000,000 shares of Common Stock, par value
$1 per share (the "Common Stock").
The Board of Directors shall have the full authority
permitted by law to divide the authorized and unissued
shares of Preferred Stock into classes or series, or both,
and to determine for any such class or series its
designation and the number of shares of the class or series
and the voting rights, preferences, limitations and special
rights, if any, of the shares of the class or series."
"RESOLVED, that upon the filing of Articles of Amendment in
the Pennsylvania Department of State for the foregoing
amendments, the shares of Common Stock, par value $5 per share,
then issued and outstanding shall be and they hereby are
reclassified and changed into fully paid and nonassessable
shares of Common stock, par value $1 per share, at the rate of
one share of Common Stock, par value $1 per share, for each share
of Common Stock, par value $5 per share; and the certificates for
shares of Common Stock of the Corporation then issued and
outstanding shall without any change or notation thereon continue
to represent the same number of shares of Common Stock of the
Corporation but with a par value of $1 per share."
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EXHIBIT 20.1
March 25, 1994
Dear Shareholder:
It is my pleasure to enclose our 1993 Annual Report which
details First Commonwealth's 11th consecutive year of increased
earnings since the Corporation's inception in 1983. Please take a
few moments to review this important document. At First
Commonwealth, we honor tradition and we pioneer change. It is this
philosophy which has led to our excellent earnings -- 13% better
than 1992; shareholder dividend growth - up every year First
Commonwealth has been in existence; and the exceptional growth in
the long term value of your investment.
Our Annual Shareholder Meeting and Luncheon will convene at
12:00 noon, Saturday, April 23, 1994 at Folger Dining Hall, Indiana
University of Pennsylvania. I encourage you to join us for this
opportunity to learn firsthand of First Commonwealth's exciting
plans for continuing to build long term shareholder value. A
number of important documents are enclosed in preparation for the
meeting.
* The Proxy Statement - detailing information pertinent
to the Annual Meeting
* The Proxy Card - (located in the window of the
envelope containing this letter.) Note that this card
should be returned directly to The Bank of New York,
our Transfer Agent. Please mark, sign, date and
return this card regardless of whether or not you plan
to attend the meeting in person. If you wish to
change your vote after the proxy card has been
returned, you may do so at any time before the vote is
taken at the meeting.
* Annual Meeting, Luncheon Card and Map - If you plan to
attend the luncheon, please complete and return the
luncheon card by April 13, 1994 so that we may
properly prepare. The luncheon card should be sent
directly to First Commonwealth, not enclosed with the
materials sent to The Bank of New York.
Thank you for your continued confidence and support. If you
have any questions about the enclosed material, please call our
toll free number 1-800-331-4107.
Sincerely,
<PAGE>
EXHIBIT 20.2
FIRST COMMONWEALTH FINANCIAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 23, 1994
This Proxy is Solicited on Behalf of the Board of Directors of
First Commonwealth Financial Corporation
The undersigned shareholder of First Commonwealth Financial
Corporation ("the Corporation") hereby appoints Frank Finui,
William E. Kepple, and R. Kay Thompson, and each of them, as
proxies of the undersigned to vote at the Annual Meeting of
Shareholders of the Corporation which the undersigned would be
entitled to vote if then personally present on the following
matters and such other matters as may properly come before the
meeting.
This proxy when properly executed will be voted in the manner
directed herein. If no direction is made, this proxy will be voted
FOR Proposal 1 and Proposal 2.
The undersigned hereby revokes all previous proxies for the
Annual Meeting of Shareholders, hereby acknowledges receipt of the
Notice of Annual Meeting and Proxy Statement furnished therewith
and hereby ratifies all that the said proxies may do by virtue
hereof.
1. election of the following nominees as Directors to serve for
terms ending in 1997
[Inert Voting Blocks]
E. H. Brubaker, A. B. Hallstrom, Thomas J. Hanford, H. H. Heilman,
Jr., Charles J. Szewczyk, and John I Whalley.
(To withhold authority to vote for any individual nominee, write
that nominee's name on the line below)
_________________________________________________________________
____
[Insert voting blocks]
2. the proposal to adopt and approve the resolutions amending
the Articles of Incorporation of the Corporation which are attached
as Appendix 1 to, and described in, the Proxy Statement for the
Annual Meeting of Shareholders to be held on April 23, 1994.
