<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.)
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
First Place Financial Corporation
---------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
---------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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 PLACE FINANCIAL CORPORATION
100 E. BROADWAY
FARMINGTON, NEW MEXICO 87401
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FRIDAY, APRIL 30, 1999 AT 10:30 A.M.
TO OUR SHAREHOLDERS:
You are cordially invited to attend the Annual Meeting of the
Shareholders of First Place Financial Corporation (the "Company"), to be held
at the San Juan Country Club, 5775 Country Club Drive, Farmington, New
Mexico, on Friday, April 30, 1999 at 10:30 a.m., local time, for the
following purposes:
1. TO ELECT TWO DIRECTORS TO SERVE THREE-YEAR TERMS;
2. TO TRANSACT SUCH OTHER BUSINESS AS MAY BE PROPERLY BROUGHT BEFORE THE
ANNUAL MEETING OR AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
The close of business on Friday, March 12, 1999 was fixed by the Board
of Directors as the Record Date for the determination of the shareholders
entitled to notice of, and to vote at the 1999 Annual Shareholders Meeting.
In accordance with New Mexico law, a list of the Company's Shareholders
entitled to vote at the 1999 Annual Meeting will be available for examination
at the offices of the Company, 3rd Floor, 100 E. Broadway, Farmington, New
Mexico, for ten business days prior to the Annual Meeting, between the hours
of 9:00 a.m. and 5:00 p.m., and during the Annual Meeting.
The Annual Meeting is expected to conclude before 12:00 noon. We hope
you will attend the Annual Meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE IMMEDIATELY SIGN AND
COMPLETE THE ENCLOSED PROXY DESIGNATION AND INSTRUCTION CARD ("PROXY") AND
RETURN IT IN THE ENVELOPE PROVIDED SO THAT YOUR SHARES MAY BE REPRESENTED AT
THE ANNUAL MEETING. NO POSTAGE IS REQUIRED IF A PROXY IS MAILED IN THE UNITED
STATES. IF A MAJORITY OF OUTSTANDING SHARES ARE NOT PRESENT AT THE MEETING
EITHER IN PERSON OR BY PROXY, THE MEETING MUST BE ADJOURNED WITHOUT
CONDUCTING BUSINESS, AND ADDITIONAL EXPENSE WILL BE INCURRED TO RESOLICIT THE
SHAREHOLDERS FOR A NEW MEETING DATE.
Sent to you with this Notice and the accompanying Proxy Statement is the
Company's 1998 Annual Report to Shareholders, which contains the audited
financial statements of the Company and certain other information about the
Company and its operating results for 1998.
BY ORDER OF THE BOARD OF DIRECTORS
Dated April 7, 1999
/s/ JAMES C. BRADLEY
Secretary of the Company
<PAGE>
FIRST PLACE FINANCIAL CORPORATION
PROXY STATEMENT
APRIL 7, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PROPOSAL FOR SHAREHOLDER ACTION - Election of Directors . . . . . . . . . . 1
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
OTHER BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
GENERAL INFORMATION FOR SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . 2
Voting Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
MANAGEMENT OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . 5
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Occupations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Board and Committee Meetings. . . . . . . . . . . . . . . . . . . . . . 7
Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 8
COMPENSATION OF MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 8
Director Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 8
Summary of Compensation To Certain Executive Officers . . . . . . . . . 9
Stock Options and Similar Awards to Executive Officers . . . . . . . . 10
Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Severance Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 13
Compensation Committee Report on Executive Compensation . . . . . . . . 13
Compensation Committee Interlocks and Insider Participation . . . . . . 14
CERTAIN TRANSACTIONS BY AND WITH MANAGEMENT AND OTHERS . . . . . . . . . . . 15
Credit Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Compliance with Section 16 Reporting Obligations . . . . . . . . . . . 15
COMPARATIVE PERFORMANCE OF THE COMPANY'S COMMON STOCK . . . . . . . . . . . 15
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . 16
DEADLINE FOR SHAREHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE>
PROPOSALS FOR SHAREHOLDER ACTION - ELECTION OF DIRECTORS
VOTE REQUIRED
A majority of the share votes entitled to be cast at the Annual Meeting is
required for a quorum at the Annual Meeting. In the election of Directors,
the nominees receiving the highest number of votes will be elected. Holders
of shares of the Company's Common Stock are entitled to one vote on each
matter submitted to a vote at the Annual Meeting for each share held of
record at the Record Date. Abstentions and broker non-votes will not be
counted for or against the election of any nominee, although all shares
represented at the meeting will be counted towards a quorum.
If a Shareholder wishes to designate someone other than the designated
Proxy Holders as his authorized agent to vote by proxy at the Annual Meeting,
he may do so by crossing out the names of all of the designated persons
printed on the proxy card and by writing in the name of another person or
persons (not more than two (2)) to act as agent for the Shareholder in voting
his shares. Such a special proxy designation signed by the Shareholder(s)
must be presented at the Meeting by the person or persons designated on the
card by the Shareholders.
The cost of preparing, assembling, and mailing these proxy materials will
be borne by the Company. This solicitation of proxies is being made by the
Directors by mail, and may also be made by agents of the Company, in person,
by telephone, or by mail. No additional compensation will be given to
employees or Directors for such solicitation. Custodians of securities held
for Shareholders of record (for example, banks, brokers, etc.) may be paid
their reasonable out-of-pocket expenses incurred in forwarding proxy
materials to Shareholders.
The Executive Committee of the Board serves as the nominating committee
for the current Directors. Nominations for election as a Director also will
be accepted from the floor by any Shareholder at the 1999 Annual Meeting.
While no formal procedure exists with respect to nominations for Directors
outside of the Annual Meeting other than through the function of the
Executive Committee as the Board's own nominating committee, Shareholders are
free to write to the Executive Committee, c/o Richard I. Ledbetter, Chief
Executive Officer, P.O. Box 4540, Farmington, New Mexico 87499-4540, with
any suggestions concerning nominations to the Board of Directors.
The Bylaws of the Company provide for a Board of Directors of no fewer
than 9 and no more than 13 members. Directors are elected by class to
three-year staggered terms. There is one class with two (2) Directors and
there are two classes with four (4) Directors each.
The persons named below will be placed in nomination by the Board of
Directors for election as Directors of the Company at the 1999 Annual
Meeting, to serve a three year term or until their successors are elected and
qualified:
Ike Kalangis
Jack M. Morgan
1
<PAGE>
ALL DULY SIGNED AND DELIVERED PROXIES WILL BE VOTED FOR THE ELECTION OF
ALL OF THE NOMINEES LISTED ABOVE IN THE ABSENCE OF CONTRARY DIRECTION. The
Directors know of no reason why any nominee listed above may be unable to
serve as a Director. If any nominee is unable to serve, the shares present
at the 1999 Annual Meeting through proxies will be voted FOR the election of
such other person(s) as the Board of Directors may nominate at the Annual
Meeting, or the current Directors may conclude to reduce the number of
Directors to be elected.
If both nominees listed above are elected at the 1999 Annual Meeting,
the composition of the new Board will be seven (7) Directors whose principal
occupation or employment is and has been outside of the Company, and three
(3) Directors who are Executive Officers of the Company.
Mr. Morgan was elected to his present term of office by a vote of the
Shareholders at the 1996 Annual Meeting. Mr. Kalangis was elected as a
Director of the Company in May 1998 by the Board of Directors.
OTHER BUSINESS
Management does not know of any other business to be presented at the
Meeting. However, if any other business is presented, it is the intention of
the Proxy Holders to vote according to their best judgement with respect to
such other business and a duly signed and delivered proxy grants
discretionary authority for them to do so.
GENERAL INFORMATION FOR SHAREHOLDERS
This Proxy Statement is furnished by First Place Financial Corporation,
a New Mexico corporation (hereinafter called the "Company"), to its
shareholders in connection with the solicitation by the Board of Directors of
proxies for use at the Annual Meeting of Shareholders to be held at the San
Juan Country Club, 5775 Country Club Drive, Farmington, New Mexico 87402, on
April 30, 1999 at 10:30 a.m., and at any and all adjournments thereof.
This Proxy Statement and the enclosed form of proxy are being mailed to
Shareholders beginning on or about April 7, 1999. Mailed together with this
Proxy Statement is a copy of the Company's 1998 Annual Report to
Shareholders. Shareholders who do not receive a copy of the 1998 Annual
Report with this Proxy Statement, or who desire extra copies, should contact
the Secretary of the Company at (505) 324-9523.
A Proxy Designation and Instruction Form ("proxy") for your use in
connection with the Annual Meeting is enclosed. You are requested to date
and sign the enclosed proxy, and return it in the envelope provided.
VOTING SECURITIES
The Board of Directors has fixed the close of business on March 12, 1999
as the Record Date for determination of shareholders entitled to notice of
and to vote at the Annual Meeting. As of the Record Date, there were
2,170,372 outstanding shares of the Company's no par value common stock, held
of record by approximately 636 Shareholders.
2
<PAGE>
PROXIES
Shares of Common Stock which are entitled to be voted at the Annual
Meeting and which are represented by properly executed proxies will be voted
in accordance with the instructions indicated on such proxies. If no
instructions are indicated, such shares will be voted by the designated
persons named on the proxies (the "Proxy Holders") FOR the election of each
of the Director nominees and, in the discretion of the Proxy Holders as to
any other matters which may properly come before the Annual Meeting. A
Shareholder who has executed and returned a proxy may revoke it at any time
prior to its exercise at the Annual Meeting by executing and returning a
proxy bearing a later date, or by filing with the Secretary of the Company,
at the address of the principal executive offices of the Company set forth
above, a written notice of revocation bearing a later date than the proxy
being revoked, or by voting the Common Stock covered thereby in person at the
Annual Meeting.
PRINCIPAL SHAREHOLDERS
The following Table 1 provides information with respect to (i) the
common stock ownership of any person known to the Company to be the
beneficial owner of five percent (5%) or more of any class of the Company's
voting securities as of the Record Date, (ii) all directors and certain named
executive officers, and (iii) all directors and executive officers of the
Company as a group.
TABLE 1
PRINCIPAL SHAREHOLDERS OF THE COMPANY
<TABLE>
<CAPTION>
Percent of
Name and Address Beneficially Owned(1) Common Stock Outstanding(2)
- -------------------------------------------------- --------------------- ---------------------------
<S> <C> <C>
First National Bank of Farmington
100 E. Broadway
Farmington, NM 87401 167,963(3) 7.74
Richard I. Ledbetter 43,555(4) 1.97
Robert C. Culpepper 35,636(5) 1.61
Thomas C. Taylor 31,050(6) 1.40
Marlo L. Webb 26,762(7) 1.21
Roy L. Owen 23,181(8) 1.05
James D. Rose 19,433(9) *
Robert M. Goodman 4,700(10) *
J. Gregory Merrion 3,955(11) *
Jack M. Morgan 2,052(12) *
James C. Bradley 1,078(13) *
Ike Kalangis 100(14) *
Directors and Officers as a Group (11 persons) 191,502(15) 8.65
</TABLE>
3
<PAGE>
(1) Unless otherwise noted, the indicated owner has sole voting power and
sole investment power.
(2) Shares issuable to an individual or group under stock options
exercisable within 60 days of the Record Date are considered outstanding for
the purpose of calculating the percentage of total outstanding Common Stock
owned by such individual or group. Such shares are not considered outstanding
for the purpose of calculating the percentage of total outstanding Common
Stock owned by any other individual or group.
(3) Of the 351,762 shares, which the Trust Department of First National Bank
of Farmington holds in various fiduciary capacities, it has sole voting power
over 167,963 shares (7.74% of the total outstanding shares) and no voting or
investment powers over the remaining 183,799 shares.
(4) Includes 18,422 shares owned jointly by Mr. Ledbetter and his wife as to
which voting and investment powers are shared; 765 shares owned jointly by
Mr. Ledbetter's three children as to which voting and investment powers are
shared; 216 shares held in a self-directed IRA; 15,603 option shares
exercisable within 60 days of the Record Date but which were unexercised as
of the Record Date; and 3,461 shares in his account in the Company's Profit
Sharing Plan.
(5) Includes 34,436 shares held jointly in a living trust of which Mr.
Culpepper and his wife are co-trustees and share voting and investment powers
and 1,200 options exercisable within 60 days of the Record Date but which
were unexercised as of the Record Date.
(6) Includes 10,128 shares owned jointly by Mr. Taylor and his wife as to
which voting and investment powers are shared; 2,634 shares owned by Mr.
Taylor's children; 4,385 option shares exercisable within 60 days of the
Record Date but which were unexercised as of the Record Date; and 7,950
shares beneficially owned by Miriam M. Taylor and to which Thomas C. Taylor
disclaims beneficial ownership.
(7) Includes 25,762 shares held in a living trust of which Mr. Webb and his
wife are co-trustees and share voting and investment powers and 1,000 option
shares exercisable within 60 days of the Record Date but which were
unexercised as of the Record Date.
(8) Includes 4,980 shares owned jointly by Mr. Owen and his wife as to which
voting and investment powers are shared and 2,300 option shares exercisable
within 60 days of the Record Date but which were unexercised as of the Record
Date.
(9) Includes 1,050 shares held in a trust of which Mr. Rose and his wife are
co-trustees and to which voting and investment powers are shared; 150 shares
held in a trust as to which his wife shares voting and investment powers; 450
shares held in a self-directed IRA as to which Mr. Rose does not exercise
voting power; 12,806 option shares exercisable within 60 days of the Record
Date but which were unexercised as of the Record Date; and 2,577 shares in
his account in the Company's Profit Sharing Plan.
(10) Includes 1,978 shares held in a trust of which Mr. Goodman and his wife
are co-trustees and share voting and investment powers and 2,722 option
shares exercisable within 60 days of the Record Date but which were
unexercised as of the Record Date.
(11) Includes 100 shares held in a trust as to which Mr. Merrion exercises
sole voting and investment powers; 2,655 shares held in a trust as to which
his wife exercises sole voting and investment powers; and 1,200 option shares
exercisable within 60 days of the Record Date but which were unexercised as
of the Record Date.
(12) Includes 852 shares owned jointly by Mr. Morgan and his wife as to which
voting and investment powers are shared and 1,200 option shares exercisable
within 60 days of the Record Date but which were unexercised as of the Record
Date.
(13) Includes 300 shares held by Mr. Bradley in a self-directed IRA; 628
shares held in his account in the Company's Profit Sharing Plan; and 150
option shares exercisable within 60 days of the Record Date but which were
unexercised as of the Record Date.
(14) Includes 100 shares held jointly by Mr. Kalangis and his wife as to
which voting and investment powers are shared.
(15) Includes 42,566 option shares exercisable within 60 days of the Record
Date but which were unexercised as of the Record Date.
* Owns less than 1 percent.
4
<PAGE>
MANAGEMENT OF THE COMPANY
BOARD OF DIRECTORS
The business of the Company is managed under the direction of its Board
of Directors. The Board has responsibility for establishing broad corporate
policies for the overall performance of the Company and for the election and
compensation of officers of the Company. It is not, however, involved in
managing the Company and its operating units on a day-to-day basis. The
Board is kept advised of the Company's operations and results through regular
written reports from, and discussions with, the Chief Executive Officer, the
President, and other Executive Officers of the Company.
The Board of Directors meets regularly during the year to review
significant developments affecting the Company and to act on matters
requiring Board approval. It also holds special meetings when an important
matter requires Board action between scheduled meetings. Executive Officers
responsible for significant operations or supervisory activities are
regularly invited to meet with the Board of Directors to discuss their areas
of responsibility.
Set out in Table 2, below, are the two (2) nominees for election as
directors and the eight (8) other directors whose terms expire in 2000 and
2001, including the age of each person as of December 31, 1998 and the
positions each holds with the Company and its subsidiaries: First National
Bank of Farmington ("FNBF"), Burns National Bank of Durango ("BNBD"), Western
Bank, Gallup ("WBG"), and Capital Bank, Albuquerque ("CBA").
5
<PAGE>
TABLE 2
BOARD OF DIRECTORS
<TABLE>
<CAPTION>
Director Position with the Company
NOMINEES FOR ELECTION IN 1999 Age Since and Subsidiaries
- ----------------------------- ----- -------- ---------------------------------------------
<S> <C> <C> <C>
Ike Kalangis 61 1998 Director of Company and CBA
Jack M. Morgan 74 1981 Director of Company and FNBF
CLASS OF 2000
- -----------------------------
Robert S. Culpepper(2,3) 71 1983 Director of Company; Chairman of the Board
FNBF
J. Gregory Merrion(2,3) 69 1975 Vice Chairman of the Board of Company and
FNBF
Roy L. "Bunky" Owen(2) 50 1991 Director of Company and FNBF
Marlo L. Webb(1,2,3) 74 1975 Director of Company and FNBF
CLASS OF 2001
- -----------------------------
Robert M. Goodman 54 1998 Executive Vice President and Chief Credit
Officer of Company; President of CBA.
Richard I. Ledbetter(3) 61 1976 Chairman of the Board and Chief Executive
Officer of Company; Director FNBF; Director
BNBD; Director WBG; Director CBA.
James D.Rose(3) 55 1989 President and Chief Operating Officer of
Company; President and Director FNBF;
Director WBG; Director CBA.
Thomas C. Tayor(1) 50 1991 Director of Company; Director FNBF;
Director WBG.
</TABLE>
(1) Member of Audit Committee
(2) Member of Compensation Committee
(3) Member of Executive Committee
OCCUPATIONS
Following are descriptions of each director's occupational history for at least
the last five (5) years.
MR. KALANGIS is the immediate past Chairman, President and Chief Executive
Officer of Boatman's Sunwest, Inc. Previously, he served as President of
Sunwest Bank in Albuquerque and Chief Executive Officer of Sunwest holding
company.
MR. MORGAN is an attorney-at-law in private practice in Farmington, NM.
6
<PAGE>
MR. CULPEPPER is a retired insurance broker.
MR. MERRION is the retired chairman of Merrion Oil and Gas, an oil and gas
exploration and production company in Farmington, NM.
MR. OWEN is President of Woods Insurance Services, Inc., a general insurance
agency in Farmington, NM.
MR. WEBB is the Chairman of the Board of Webb Automotive Group, Inc., a new
and used car dealership in Farmington, NM.
MR. GOODMAN is Executive Vice President and Chief Credit Officer of the
Company and President of CBA. Prior to joining the Company, Mr. Goodman
served as Senior Credit Policy Executive for NationsBank New Mexico;
President of Sunwest Bank of Albuquerque and Chief Credit Officer for
Boatman's Sunwest, Inc.
MESSRS. LEDBETTER AND ROSE are principally employed by the Company and FNBF
in the positions set forth in Table 2.
MR. TAYLOR is a private investor and New Mexico Legislator.
BOARD AND COMMITTEE MEETINGS
The Board of Directors held ten (10) regular meetings and one (1)
special meeting during 1998. All Directors attended all of the meetings of
the Board, except Mr. Goodman and Mr. Merrion, who each missed one (1)
meeting.
The EXECUTIVE COMMITTEE of the Board of Directors exercises the powers
of the Board in the management of the business and affairs of the Company
between Board of Directors meetings or when the Board cannot reasonably or
timely be convened. The Executive Committee also serves as the Board's
nominating committee for the election of Directors. The Executive Committee
keeps regular minutes of its meetings and reports to the Board of Directors
at the regular meetings of the Board. The Executive Committee met four (4)
times during 1998 with all members present, except Mr. Taylor who attended
three (3) meetings.
The AUDIT COMMITTEE of the Board, which met six (6) times during 1998,
reports to the Board of Directors with respect to various auditing and
accounting matters, the scope of audit procedures, the performance of the
internal auditors and examiners, and accounting and compliance practices of
the Company. All members of the Audit Committee attended all of the
scheduled meetings.
The COMPENSATION COMMITTEE administers the various incentive award and
equity plans of the Company on behalf of the Board of Directors. The
Compensation Committee also recommends compensation for the Executive
Officers of the Company. The Compensation Committee met three (3) times
during 1998. Mr. Owen attended all of the meetings, while Mr. Webb, Mr.
Culpepper and Mr. Merrion each attend two (2) meetings.
7
<PAGE>
EXECUTIVE OFFICERS
Set forth below are the names, ages, and offices of all Executive
Officers holding office as of the Record Date except biographical information
for Messrs. Ledbetter (Chief Executive Officer) and Rose (President and Chief
Operating Officer), which is set forth in Table 2 above. Executive Officers
serve at the pleasure of the Board of Directors, although as disclosed later
in this Proxy Statement, Messrs. Ledbetter, Rose and Goodman have entered
into agreements governing the termination of their employment with the
Company.
ROBERT M. GOODMAN, 54, is Executive Vice President and Chief Credit Officer
of the Company and President of Capital Bank, Albuquerque.
JAMES C. BRADLEY, 53, is Secretary and Treasurer of the Company and Senior
Vice President of First National Bank of Farmington.
COMPENSATION OF MANAGEMENT
DIRECTOR COMPENSATION
Prior to October 1, 1998, Directors of the Company received a cash
retainer of $200 per month and a $100 fee for attendance at each meeting of
the Board of Directors. Additionally, non-officer Directors of the Company
received $350 per Loan Committee, Compensation Committee and Audit Committee
meeting attended, $300 per meeting attended for the Executive Committee and
Loan Review Committee and $100 per meeting attended for all other Committees.
All committee fees for Directors of the Company were paid by First National
Bank of Farmington.
Effective October 1, 1998, the Company revised its Director Compensation
Schedule whereby Directors receive quarterly payments of $5,000 for their
board membership. Those Directors of the Company who also serve as directors
of one or more of the Company's subsidiary banks, receive no additional
compensation from the subsidiary banks.
These quarterly payments are the total amount of compensation due to
Directors for all services performed including regular Board meetings,
special Board meetings and committee meetings.
Additionally, director fees paid by the Company and its subsidiaries to
those directors who were also full-time employees of the Company were
discontinued effective October 1, 1998. In lieu of receiving director fees,
the Board approved a recommendation of the Compensation Committee to adjust
those individuals' salaries by the approximate amount of Board fees they
would have been paid. As a result of this action, Mr. Ledbetter, Mr. Rose
and Mr. Goodman received increases in their annual salaries of $20,000,
$20,000 and $12,000, respectively, effective October 1, 1998.
8
<PAGE>
Directors of the Company may enter into a compensation deferral
agreement with the Company whereby the payment of retainers and fees
otherwise receivable by a Director for service as a Director during a
specified five-year period may be deferred and held in an account for the
benefit of the Director which earns interest at a predetermined rate.
Distribution, in the form of 120 monthly payments, begins at the later of the
end of the five-year deferral period or age 65.
The Directors also participate in one or more of the Company's three
Non-Statutory Stock Option Plans. In 1998, each Director, who was not a
full-time employee of the Company, was granted options on 200 shares of
Company stock at an exercise price of $62.47 under the Second Non-Statutory
Stock Option Plan. These options vest in one year from the date of the grant.
No options were granted to Directors under the Company's other two stock
option plans in 1998.
Mr. Goodman and Mr. Kalangis, who live in Albuquerque, New Mexico, were
reimbursed for direct out-of-pocket expenses incurred in attending the
Company's Board of Directors meetings in 1998. The total amount of
reimbursement was less than $2,000.
SUMMARY OF COMPENSATION TO CERTAIN EXECUTIVE OFFICERS
Set out in Table 3, below, is a Summary Compensation Table showing the
various elements of compensation paid during 1998 and during the previous two
years to the Company's Chief Executive Officer and to the other Executive
Officers whose compensation was in excess of $100,000 in 1998:
TABLE 3
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
----------------------------- Shares Underlying All Other
Salary Bonus(1) Other(2) Options Compensation(3)
Name and Principal Position Year ($) ($) ($) (#) ($)
- -------------------------------------- ------ ---------- --------- --------- -------------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Richard I. Ledbetter 1998 240,642 30,757 19,500 0 5,734
Chief Executive Officer of the
Company 1997 225,000 48,695 23,550 10,809 13,525
1996 205,000 45,152 22,800 0 10,850
James D. Rose 1998 214,654 30,757 19,500 0 5,432
President and Chief Operating
Officer of the Company and President 1997 200,000 41,285 23,550 9,618 21,866
of First National Bank of Farmington
1996 185,000 40,637 22,800 0 9,554
Robert M. Goodman 1998 180,785 0 2,100 8,166 5,432
Executive Vice President and Chief
Credit Officer of the Company and 1997 N/A N/A N/A N/A N/A
President of Capital Bank
1996 N/A N/A N/A N/A N/A
</TABLE>
(1) Bonuses are listed in the year earned and accrued, although such bonuses
may be paid in the following year.
9
<PAGE>
(2) Amounts shown are directors fees paid to the Executive Officer by the
Company and its subsidiary banks.
(3) Amounts shown include contributions by the Company to the account of
each of the named Executive Officers in the First Place Financial Corporation
Profit Sharing Plan, a 401(K) plan open to all regular employees of the
Company. The named Executive Officers were allowed to contribute up to 5.83%
of their salary to this plan not exceeding the IRS limitation ($10,000 in
1998) and the Company contributed a matching amount equal to 25% of the first
4% of salary up to the limit specified in Code Section 401(a)(17) deferred by
the Executive Officer. The amounts accumulating in the accounts under this
plan are invested as directed by the Executive Officer in one of several
investment choices, including a fund which invests solely in shares of the
Company's Common Stock. Participants are immediately vested in the employer
matching contributions to their account in this plan.
STOCK OPTIONS AND SIMILAR AWARDS TO EXECUTIVE OFFICERS
Stock options have been awarded to certain named Executive Officers upon
the recommendation of the Compensation Committee under either or both of the
First Place Financial Corporation Nonstatutory Stock Option Plan ("NSO Plan")
and the Third Nonstatutory Stock Option Plan ("Third NSO Plan"). Under the
NSO Plan, the Company may grant key employees stock options and stock
appreciation rights. This plan is geared to creating a unity of interest
between management and the Shareholders in looking toward maximizing the
share price of the Company's common stock. The purpose of the Third NSO Plan
is to provide a means by which the Company, through the grant of stock
options to eligible directors and officers, may attract and retain quality
personnel and motivate these persons to exert their best efforts on behalf of
the Company and the Shareholders. Tables 4, 5, and 6 below provide
information concerning the exercise of options and similar awards by these
Executive Officers during 1998:
TABLE 4
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
Number of Percent of
Shares Underlying Total Options Grant Date
Options Granted(1) Granted to Exercise Price(2) Expiration Present Value(3)
Name (#) Employees ($/Share) Date ($)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert M. Goodman 8,166 100 66.13 01/01/06 12
</TABLE>
(1) The options were granted with respect to the Company's Third
Nonstatutory Stock Option Plan.
(2) The exercise price was the fair market value of the stock as of the date
of grant, January 1, 1998.
(3) In accordance with SEC rules, the Black-Scholes option pricing model was
chosen to estimate the grant date present value of the options set forth in
this table. The Company's use of this model should not be construed as an
endorsement of its accuracy at valuing options. All stock option valuation
models, including the Black-Scholes model, require certain assumptions to be
made. The following assumptions were made for purposes of calculating the
grant date value: stock price volatility at 12.5%, dividend yield at 3.08%,
an expected term of eight years, and risk-free interest rate of 5.55%. The
real value of the options in this table depend upon the actual changes in the
market price of the Common Stock during the applicable period.
10
<PAGE>
TABLE 5
OPTION/SAR EXERCISES BY CERTAIN EXECUTIVE OFFICERS DURING 1998
AND YEAR-END OPTION/SAR VALUES(1)
NONSTATUTORY STOCK OPTIONS PLAN (WITH STOCK APPRECIATION RIGHTS)
<TABLE>
<CAPTION>
Value of Unexercised
Unexercised in-the-Money Share
Shares Options/SARs Options/SARs
Acquired Value --------------------------- ---------------------------
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard I. Ledbetter 3,000 $195,670 12,000 0 $793,080 $0
James D. Rose 2,400 156,536 9,600 0 634,464 0
</TABLE>
(1) The option price for all shares is $26.67 per share. At December 31,
1998, the average market price for a share of stock was $62.18, making the
value of each option $35.51. The value of a SAR is equal to the sum of (i)
the difference between the current formula price calculated as adjusted book
value times 1.54 ($53.47) and the option price ($26.67) plus (ii) the
cumulative increase in dividends declared versus the $.867 per share declared
in 1992. For 1993, 1994, 1995, 1996, 1997 and 1998, this cumulative increase
was $3.78, making the value of each SAR $30.58. The combined value of each
option and accompanying SAR at December 31, 1998 was $66.09.
TABLE 6
OPTION/SAR EXERCISES BY CERTAIN EXECUTIVE OFFICERS DURING 1998
AND YEAR-END OPTION/SAR VALUES(2)
THIRD NONSTATUTORY STOCK OPTION PLAN (WITHOUT STOCK APPRECIATION RIGHTS)
<TABLE>
<CAPTION>
Value of Unexercised
Unexercised in-the-Money Share
Shares Options/SARs Options/SARs
Acquired Value --------------------------- ---------------------------
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard I. Ledbetter 0 $0 3,603 7,206 $0 $0
James D. Rose 0 0 3,206 6,412 0 0
Robert M. Goodman 0 0 2,722 5,444 0 0
</TABLE>
(2) The option price is $65.50 per share issued to Mr. Ledbetter and Mr.
rose and $66.13 per share issued to Mr. Goodman at December 31, 1998, the
average market price for a share of stock was $61.84.
11
<PAGE>
RETIREMENT BENEFITS
The Company provides a RETIREMENT PLAN to its employees, including
Executive Officers, that is funded by the Company. The following Table 7
illustrates the estimated annual retirement benefits payable upon retirement
age under the current Retirement Plan.
TABLE 7
RETIREMENT BENEFITS*
(CURRENT PLAN)
<TABLE>
<CAPTION>
Career Years of Service
Average -----------------------------------------------------------------------------------------------
Earnings 15 20 25 30 35 40 45
- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$120,000 $ 24,850 $ 33,100 $ 41,350 $ 49,600 $ 57,850 $ 57,850 $ 57,850
130,000 27,100 36,100 45,100 54,100 63,100 63,100 63,100
140,000 29,350 39,100 48,850 58,600 68,350 68,350 68,350
170,000 36,100 48,100 60,100 72,100 84,100 84,100 84,100
200,000 42,850 57,100 71,350 85,600 99,850 99,850 99,850
230,000 49,600 66,100 82,600 99,100 115,600 115,600 115,600
260,000 56,350 75,100 93,850 112,600 131,350 131,350 131,350
310,000 67,600 90,100 112,600 135,100 157,600 157,600 157,600
360,000 78,850 105,100 131,350 157,600 183,850 183,850 183,850
410,000 90,100 120,100 120,100 180,100 210,100 210,100 210,100
</TABLE>
* Actual benefits will be the lesser of the amount calculated using actual
career Average Earnings or the amount calculated using IRS limitations on
salary which can be considered for benefit computation purposes.
The Company also maintains an EXECUTIVE SUPPLEMENTAL INCOME PLAN which
provides for payment to Messrs. Ledbetter and Rose (and their beneficiaries),
who were covered by the Retirement Plan prior to the most recent restatement
of the Plan effective January 1, 1990 and whose benefits under the most
recent restatement of the Plan are less than they would have been prior to
the restatement. The amount of the payment to each participant is based on
the difference between the benefit to which they would have been entitled
prior to the most recent restatement of the Plan and the benefit to which
they are entitled under the current Plan. When applicable, the Plan may
provide for payment to highly paid Executive Officers and their
beneficiaries, that portion of benefits otherwise payable under the terms of
the Retirement Plan but which cannot be paid by the Retirement Plan because
of benefit restrictions imposed on the Retirement Plan by Section 415 of the
Internal Revenue Code.
The estimated retirement benefits shown in the above table are computed
on a life only annuity basis.
Compensation to the named Executive Officers for 1998 included in the
earnings base for the purpose of calculating total retirement benefits as
shown in Table 7 is equal to the career average salary including bonus. As
of December 31, 1998, the credited years of service under the retirement plan
for the Executive Officers named in Table 3 were 40 years for Mr. Ledbetter,
16 years for Mr. Rose, and 1 year for Mr. Goodman.
12
<PAGE>
SEVERANCE AGREEMENTS
Messrs. Ledbetter, Rose and Goodman have entered into agreements with
the Company providing that in the event of a "change of control" of the
Company, or the Executive Officer's previous employer, if different, if the
Executive Officer is terminated without cause or if the Executive Officer's
duties are significantly changed, he is entitled to a special compensation
payment equal to three (3) multiplied by the Executive Officer's then base
annual compensation. Such agreements were originally for three (3) year terms
with automatic annual renewals for an additional one (1) year unless timely
notice is given. During 1998, no such notices were given. These agreements
also deal with any other termination of the employment of these officers with
the Company, other than retirement.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors consists of four
(4) non-employee Directors. The Committee meets one (1) or more times
annually to review and determine matters pertaining to the compensation of
the Executive Officers of the Company including the three (3) named Executive
Officers in Table 3, above.
To the Shareholders of First Place Financial Corporation:
The Compensation Committee annually reviews the elements of compensation
for the Executive Officers of the Company and recommends to the Board of
Directors the level of compensation for these Executive Officers for the
following year. The Committee is provided with detailed information and
proposals from management. The Committee's decisions are made within the
context of a uniform structure and set of compensation principles which apply
to all of the Company's Officers, including the Executive Officers subject to
the Committee's review.
Chief among these principles is that First Place Financial Corporation
will provide total compensation opportunities that are competitive with those
provided by comparable financial institutions and commensurate with First
Place's overall performance. The three main elements of the compensation
package are base salary, short-term (annual) incentives, and long-term
incentives. Total compensation for Executive Officers can be described as
consisting of an average or below-average base salary, an average annual cash
incentive opportunity based on performance, and an above-average long-term
equity-based incentive opportunity tied to increases in Shareholder value.
The Committee believes that this compensation mix is in the best interests of
the Shareholders and supports the business and financial objectives of the
Company.
BASE SALARY. Each year the Company reviews relevant information regarding
executive compensation in the banking industry. During 1998, the Company
performed an analysis of the compensation paid in 1997 to executive officers
of publicly traded banking companies with assets between $500 million and
$1.0 billion. While the data are analyzed from a number of different
perspectives, primary emphasis is given to compensation related to return on
equity and return on assets. So long as the Company's performance in these
two categories ranks in the top
13
<PAGE>
half, the Compensation Committee feels that the Chief Executive Officer's
base salary should approximate the median for the group.
The base salaries for the other Executive Officers are set based upon the
Committee's assessment of their respective contributions and worth to the
Company. In times of excellent corporate performance, Executive Officers may
receive substantial supplemental rewards through short-term and long-term
incentives.
CHIEF EXECUTIVE OFFICER SALARY ACTION. At Mr. Ledbetter's request, the
Committee retained his base salary for 1999 at the same level he received
in 1998.
OTHER NAMED EXECUTIVE OFFICERS. The maximum pay raise received by the other
Executive Officers was 4.3%.
SHORT-TERM INCENTIVES. All the named Executive Officers, as well as other
officers and exempt employees, participate in the Company's Annual Profit
Sharing Bonus Plan (APSBP) which is based upon each individual operating
unit's return on equity. Mr. Ledbetter and Mr. Rose participated in the
APSBP of First National Bank of Farmington while Mr. Goodman participated in
the APSBP of Capital Bank, Albuquerque. Amounts actually received by
Executive Officers are subject to the level of classified assets at year-end.
For 1998, Mr. Ledbetter and Mr. Rose earned 70% of their computed bonus
amount. Actual amounts paid to non-Executive Officer participants in the
Plan are set by management based upon their assessment of relative individual
performance.
CHIEF EXECUTIVE OFFICER BONUS. Mr. Ledbetter was eligible for a payment
equal to 10.5% of the bonus pool but actually received a payment equal to
7.3% of the bonus pool.
OTHER NAMED EXECUTIVE OFFICERS. Mr. Rose was eligible for a payment equal
to 10.5% of the bonus pool but actually received a payment of 7.3% of the
bonus pool. Mr. Goodman did not receive a bonus payment for 1998.
LONG-TERM INCENTIVES. In 1998, the Committee awarded options on 8,166 shares
under the Company's Third Nonstatutory Stock Option Plan to Mr. Goodman at an
exercise price of $66.13.
REPRICING OF OPTIONS. The Company has never repriced options. The
Compensation Committee has no such intention at this time.
Marlo L. Webb, Chairman
Robert S. Culpepper
J. Gregory Merrion
Roy L. "Bunky" Owen
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Members of the Compensation Committee have no interlocking relationships
as defined in SEC Regulations.
14
<PAGE>
Messrs. Webb, Merrion, Owen, and Culpepper, the members of the Company's
Board of Directors' Compensation Committee, through companies with whom each
of these Directors is affiliated, had borrowings and similar credit
transactions with one or more of the Company's subsidiary banks during 1998.
Each of these transactions was done in the ordinary course of the subsidiary
bank's lending business and on the same or substantially similar terms to
other similar loan or credit transactions with unrelated persons, and did not
involve more than the normal risks of collectibility or present other
unfavorable features to the Company. Specifically, Messrs. Webb, Merrion,
Owen, and Culpepper (and through their respective affiliated companies) each
had credit extensions and/or credit commitments during 1998 in excess of
$5,000 but less than $4,100,000.
CERTAIN TRANSACTIONS BY AND WITH MANAGEMENT AND OTHERS
CREDIT EXTENSIONS
Most of the Directors and Executive Officers of the Company, members of
their immediate families, and corporations and other organizations of which
they are affiliates, are borrowers from one or more of the Company's
subsidiary banks. During 1998, these persons, firms and corporations have had
loan transactions with one or more of these banks, all of which were done in
the ordinary course of business and were on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with unaffiliated persons, and did not involve more
than the normal risk of collectability or present other unfavorable features
to the Company. Specifically, Messrs. Ledbetter, Morgan, Rose, and Taylor (or
their affiliates) each had credit extensions and/or credit commitments during
1998 in excess of $5,000 but less than $200,000.
COMPLIANCE WITH SECTION 16 REPORTING OBLIGATIONS
Each Director, Executive Officer, and beneficial owner of ten percent or
more of the Common Stock of the Company is required under Section 16 of the
Securities Exchange Act of 1934 to file reports with the Securities and
Exchange Commission evidencing their ownership of, and their current
transactions in, the Company's equity securities. This is a personal
obligation of the ten percent owners, Executive Officers and Directors.
Based on a review of the reporting forms provided to the Company by its
Directors and Executive Officers, it appears that the following individuals
did not timely file Form 4 during 1998: Messrs. Culpepper, Goodman, Kalangis,
Ledbetter, Rose and Taylor each filed one Form 4 late, each of which had one
reportable transaction; Messrs. Merrion, Owen and Webb filed two Form 4's
late, each of which had one reportable transaction; and Mr. Morgan filed five
Form 4's late, four of which had one reportable transaction and one which had
two reportable transactions.
COMPARATIVE PERFORMANCE OF THE COMPANY'S COMMON STOCK
Set out in Table 8, below, is a five-year comparison and graphic display
of the relative performance of $100 invested on December 31, 1993 in the
Company's Common Stock and the same amount invested on the same day in the
S & P Major Regional Bank Index and the NASDAQ Composite Index:
15
<PAGE>
TABLE 8
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
BETWEEN FIST PLACE FINANCIAL CORPORATION, S & P MAJOR REGIONAL BANKS
INDEX AND NASDAQ COMBINED COMPOSITE INDEX
<TABLE>
<CAPTION>
Company/Index 1993 1994 1995 1996 1997 1998
- ------------------------------------- ------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
First Place Financial Corporation 100.000 117.560 136.960 194.310 249.370 226.500
S & P Major Regional Banks Index 100.000 94.791 148.303 201.640 302.050 333.280
NASDAQ Composite Index 100.000 96.800 136.340 167.746 204.892 287.105
</TABLE>
(1) Total Return Assumes Quarterly Reinvestment of Dividends
5-YEAR CUMULATIVE MARKET INDEX
[GRAPH]
The Company's Common Stock is measured against the NASDAQ Composite
Index and the S & P Major Regional Bank Index which trade on the New York
Stock Exchange. The Company's Common Stock is quoted on the NASDAQ Bulletin
Board but there is not an active market for the stock.
INDEPENDENT PUBLIC ACCOUNTANTS
In June 1998, the Audit Committee of the Board of Directors of the
Company approved the engagement of KPMG, LLP as the Company's principal
auditors for the year ending December 31, 1998. A representative of KPMG
will be in attendance at the Annual Meeting to make a statement on behalf of
the firm if they so desire and to answer appropriate questions, if any, from
Shareholders.
DEADLINE FOR SHAREHOLDER PROPOSALS
If any Shareholder wishes to present a proposal for action at the 2000
ANNUAL MEETING of the Shareholders, the Shareholder must comply with
applicable Securities and Exchange Commission Regulations, including adequate
notice to the Company. Any proposal must be submitted in writing by
Certified Mail--Return Receipt Requested, to First Place Financial
Corporation, Attention: Secretary of the Company, P.O. Box 4540, Farmington,
New Mexico 87499-4540, on or before December 26, 1999.
16
<PAGE>
PROXY CARD
(FRONT OF CARD)
PROXY DESIGNATION
AND INSTRUCTION CARD
FIRST PLACE FINANCIAL CORPORATION THIS PROXY DESIGNATION AND
POST OFFICE BOX 4540 INSTRUCTION IS SOLICITED BY
FARMINGTON, NEW MEXICO 87499 YOUR BOARD OF DIRECTORS
The undersigned shareholder of First Place Financial Corporation hereby
appoints J. GREGORY MERRION, JACK M. MORGAN, AND ROY L. "BUNKY" OWEN, or
_________________________________, or any one or more of them severally or
jointly with full power of substitution, the attorneys and agents of the
undersigned to vote as proxy with respect to all shares registered in the
name of the undersigned, or which the undersigned would be entitled to vote,
at the Annual Meeting of the Shareholders of First Place Financial
Corporation to be held at the San Juan Country Club, 5775 Country Club Drive,
Farmington, New Mexico, 87402, on Friday the 30th day of April, 1999 at 10:30
a.m., local time, and at all adjournments thereof, provided however, that
such vote shall be specified below on the proposal more fully set forth in
the First Place Financial Corporation Proxy Statement.
1. ELECTION OF DIRECTORS FOR ALL nominees listed below / /
(except as marked to the contrary below)
WITHHOLD AUTHORITY TO VOTE / /
for ALL nominees listed below
IMPORTANT
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
IKE KALANGIS JACK M. MORGAN
(Continued and to be signed on the other side)
<PAGE>
(BACK OF CARD)
THE SHARES INDICATED ON THIS PROXY INSTRUCTION CARD, WHEN THIS CARD IS
PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE ON THE PROXY CARD, THESE
SHARES WILL BE VOTED FOR ALL OF THE LISTED NOMINEES FOR DIRECTORS.
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting
PLEASE MARK, SIGN, DATE AND RETURN The undersigned acknowledges receipt
THIS PROXY INSTRUCTION CARD PROMPTLY of the Proxy Statement and the 1998
USING THE ENCLOSED ENVELOPE Annual Report, and executes this
Proxy Instruction Card.
Dated:___________________________ , 1999
P
R
O ________________________________________
X Signature of Shareholder
Y
________________________________________
Signature of Shareholder
NOTE: (a) Proxy instruction cards for
shares registered in the names
of joint tenants must be signed
by each of the joint owners or
by the survivor of them as
such.
(b) When signing as attorney,
executor, administrator, or
guardian, please give your
full title as such.
(c) Proxy instruction cards for
shares registered in the names
of trustees must be signed by
all trustees or by one trustee
as co-trustee for self and
other trustees.
