<PAGE>
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 1995
OR
( ) Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ______to______
Commission File No. 0-13882
FIRST WESTERN BANCORP, INC.
(Exact name of Registrant as specified in its charter)
Commonwealth of Pennsylvania 25-1461570
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
101 East Washington Street, New Castle, Pennsylvania 16101
(Address of principal executive offices) (Zip Code)
(412) 652-8550
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO_________
The number of shares outstanding of the Registrant's common stock as of August
10, 1995 was:
Common Stock, $5.00 par value - 5,195,152 shares outstanding
<PAGE>
<PAGE> 2
FIRST WESTERN BANCORP, INC.
INDEX
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Part I. Financial Information:
Page
Item 1. Financial Statements: Number
Independent Accountants' Report......................... 3
Consolidated Balance Sheets:
June 30, 1995, December 31, 1994 and
June 30, 1994.......................................... 4
Consolidated Statements of Income:
Three months ended June 30, 1995
and three months ended June 30, 1994................... 5
Consolidated Statements of Income:
Six months ended June 30, 1995
and six months ended June 30, 1994..................... 6
Consolidated Statements of Changes
in Shareholders' Equity:
Six months ended June 30, 1995
and six months ended June 30, 1994..................... 7
Consolidated Statements of Cash Flows:
Six months ended June 30, 1995
and six months ended June 30, 1994..................... 8
Notes to Consolidated Financial Statements.............. 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........... 11
Part II. Other Information:
Item 1. - Item 6................................................ 24
Signature....................................................... 25
</TABLE>
<PAGE>
<PAGE> 3
DELOITTE &
TOUCHE LLP
- ----------
------------------------------------------------------------------
2500 One PPG Place Telephone: (412) 338-7200
Pittsburgh, Pennsylvania 15222-5401 Facsimile: (412) 338-7380
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Shareholders
of First Western Bancorp, Inc.
We have reviewed the accompanying consolidated balance sheets of First Western
Bancorp, Inc. and subsidiaries as of June 30, 1995 and 1994, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for the three-month and six-month periods then ended. These financial
statements are the responsibility of the Corporation's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such consolidated financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of First Western Bancorp, Inc. and
subsidiaries as of December 31, 1994, and the related consolidated statements
of income, changes in shareholders' equity, and cash flows for the year then
ended (not presented herein); and in our report dated January 27, 1995, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying consolidated balance
sheet as of December 31, 1994 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
/s/ DELOITTE & TOUCHE LLP
July 17, 1995
- ---------------
DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
- --------------- 3
<PAGE>
<PAGE> 4
Part I. Item 1. Financial Information
FIRST WESTERN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1995 1994 1994
---------- ---------- ----------
<S> <C> <C> <C>
ASSETS:
- -------
Cash and due from banks $ 44,177 $ 42,903 $ 37,651
---------- ---------- ----------
Interest-bearing deposits with other banks 756 872 710
---------- ---------- ----------
Securities available for sale
(amortized cost of $155,425, $71,041 and $104,673) 156,903 67,670 103,341
---------- ---------- ----------
Investment securities (market value of $131,784, $128,712 and $132,959) 132,289 134,356 135,676
---------- ---------- ----------
Mortgage-backed securities (market value of $196,136, $188,258
and $207,345) 200,376 202,041 216,034
---------- ---------- ----------
Loans (net of unearned income of $41,239, $34,920 and $32,352) 1,067,307 978,562 890,253
Less: Allowance for possible loan losses 13,591 12,943 12,052
---------- ---------- ----------
Net loans 1,053,716 965,619 878,201
---------- ---------- ----------
Premises and equipment 18,769 17,900 18,716
---------- ---------- ----------
Other assets 51,564 23,212 15,737
---------- ---------- ----------
Total Assets $1,658,550 $1,454,573 $1,406,066
========== ========== ==========
LIABILITIES:
- ------------
Deposits:
Noninterest-bearing demand $ 99,860 $ 97,242 $ 93,278
Interest-bearing demand 105,823 101,659 106,375
Savings 280,188 281,953 295,309
Time 694,129 548,555 510,874
---------- ---------- ----------
Total deposits 1,180,000 1,029,409 1,005,836
---------- ---------- ----------
Borrowed funds:
Federal funds purchased and other short-term borrowings 54,373 34,847 24,255
Repurchase agreements and secured lines of credit 146,724 128,461 106,635
Advances from the Federal Home Loan Bank 133,121 128,121 120,950
---------- ---------- ----------
Total borrowed funds 334,218 291,429 251,840
---------- ---------- ----------
Long-term debt 9,237 10,318 11,095
---------- ---------- ----------
Other liabilities 20,379 17,338 35,096
---------- ---------- ----------
Total Liabilities 1,543,834 1,348,494 1,303,867
---------- ---------- ----------
SHAREHOLDERS' EQUITY:
- ---------------------
Preferred stock, no stated value, 4,000,000
shares authorized, none issued - - -
Common stock, $5.00 par value, 20,000,000
shares authorized, 5,184,905, 5,180,172 and 5,174,430 shares
issued and outstanding 25,924 25,901 25,872
Additional paid-in capital 34,429 34,431 34,457
Retained earnings 53,425 47,961 42,844
Unrealized appreciation (depreciation) in securities available for sale 961 (2,191) (865)
Unallocated common stock held by ESOP (at cost) (23) (23) (109)
---------- ---------- ----------
Total Shareholders' Equity 114,716 106,079 102,199
---------- ---------- ----------
Total Liabilities and Shareholders' Equity $1,658,550 $1,454,573 $1,406,066
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE>
<PAGE> 5
Part I. Item 1. Financial Information
FIRST WESTERN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
--------------------------
June 30, June 30,
1995 1994
------- -------
<S> <C> <C>
INTEREST INCOME:
- ----------------
Interest and fees on loans $22,705 $18,005
Interest on deposits with other banks 10 3
Interest on securities available for sale 3,112 1,570
Interest and dividends on investment securities:
Taxable interest 813 776
Tax-exempt interest 1,001 1,031
Interest on mortgage-backed securities 2,941 2,650
Interest on federal funds sold 40 3
------- -------
Total Interest Income 30,622 24,038
------- -------
INTEREST EXPENSE:
- -----------------
Interest on deposits:
Demand 508 476
Savings 2,082 1,670
Time 9,962 5,790
Interest on borrowed funds:
Federal funds purchased and other short-term borrowings 231 200
Repurchase agreements and secured lines of credit 1,994 1,068
Advances from the Federal Home Loan Bank 1,896 1,503
Interest on long-term debt 190 178
------- -------
Total Interest Expense 16,863 10,885
------- -------
NET INTEREST INCOME 13,759 13,153
Provision for possible loan losses 940 875
------- -------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE LOAN LOSSES 12,819 12,278
------- -------
OTHER INCOME:
- -------------
Trust fees 437 494
Service charges on deposit accounts 868 684
Credit card program fees 347 293
Net securities (losses) gains 302 677
Other operating income 832 373
------- -------
Total Other Income 2,786 2,521
------- -------
OTHER EXPENSES:
- ---------------
Salaries and wages 3,325 3,170
Employee benefits 1,027 1,065
Net occupancy expense 670 659
Equipment rentals, depreciation and maintenance 571 562
Federal deposit insurance 630 550
Outside examination, legal fees and consulting 262 324
Advertising and promotion 439 367
Supplies 454 332
Outside data processing services 335 323
Other operating expense 1,856 1,773
------- -------
Total Other Expenses 9,569 9,125
------- -------
INCOME BEFORE INCOME TAXES 6,036 5,674
Income Taxes 1,844 1,754
------- -------
NET INCOME $4,192 $3,920
======= =======
EARNINGS PER SHARE $0.80 $0.75
======= =======
DIVIDENDS PER SHARE $0.26 $0.22
======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING AND COMMON SHARE EQUIVALENTS 5,238 5,237
======= =======
</TABLE>
See Notes To Consolidated Financial Statements.
5
<PAGE>
<PAGE> 6
Part I. Item 1. Financial Information
FIRST WESTERN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
--------------------------
June 30, June 30,
1995 1994
------- -------
<S> <C> <C>
INTEREST INCOME:
- ----------------
Interest and fees on loans $43,930 $35,280
Interest on deposits with other banks 21 7
Interest on securities available for sale 4,771 4,342
Interest and dividends on investment securities:
Taxable interest 1,626 1,251
Tax-exempt interest 2,011 1,997
Interest on mortgage-backed securities 5,957 5,148
Interest on federal funds sold 114 6
------- -------
Total Interest Income 58,430 48,031
------- -------
INTEREST EXPENSE:
- -----------------
Interest on deposits:
Demand 1,009 967
Savings 4,053 3,379
Time 18,026 11,404
Interest on borrowed funds:
Federal funds purchased and other short-term borrowings 472 368
Repurchase agreements and secured lines of credit 3,637 2,364
Advances from the Federal Home Loan Bank 3,753 2,937
Interest on long-term debt 389 338
------- -------
Total Interest Expense 31,339 21,757
------- -------
NET INTEREST INCOME 27,091 26,274
Provision for possible loan losses 1,670 1,737
------- -------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE LOAN LOSSES 25,421 24,537
------- -------
OTHER INCOME:
- -------------
Trust fees 1,010 1,081
Service charges on deposit accounts 1,554 1,319
Credit card program fees 643 554
Net securities (losses) gains 236 1,276
Other operating income 1,562 656
------- -------
Total Other Income 5,005 4,886
------- -------
OTHER EXPENSES:
- ---------------
Salaries and wages 6,596 6,311
Employee benefits 2,057 2,131
Net occupancy expense 1,366 1,356
Equipment rentals, depreciation and maintenance 1,143 1,122
Federal deposit insurance 1,228 1,100
Outside examination, legal fees and consulting 578 618
Advertising and promotion 816 678
Supplies 785 786
Outside data processing services 655 605
Other operating expense 3,530 3,311
------- -------
Total Other Expenses 18,754 18,018
------- -------
INCOME BEFORE INCOME TAXES 11,672 11,405
Income Taxes 3,513 3,551
------- -------
NET INCOME $8,159 $7,854
======= =======
EARNINGS PER SHARE $1.56 $1.50
======= =======
DIVIDENDS PER SHARE $0.52 $0.44
======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING AND COMMON SHARE EQUIVALENTS 5,238 5,235
======= =======
</TABLE>
See Notes To Consolidated Financial Statements.
6
<PAGE>
<PAGE> 7
Part I. Item 1. Financial Information
FIRST WESTERN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended June 30, 1995
------------------------------------------------------------------------
Unrealized
Appreciation Common Stock
(Depreciation) Held by ESOP
Common Stock in Securities (at Cost)
---------------- Retained Available ----------------
Shares Amount Surplus Earnings for Sale Shares Amount
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance - January 1, 1995 5,180 $25,901 $34,431 $47,961 ($2,191) (1) ($23)
Net income - - - 8,159 - - -
Cash dividends paid ($0.52 per share) - - - (2,695) - - -
Exercise of options, net of shares redeemed 5 23 (2) - - - -
Net change in unrealized appreciation
(depreciation) in securities available for sale - - - - 3,152 - -
------------------------------------------------------------------------
Balance - June 30, 1995 5,185 $25,924 $34,429 $53,425 $961 (1) ($23)
========================================================================
</TABLE>
<TABLE>
<CAPTION>
For the Six Months Ended June 30, 1994
------------------------------------------------------------------------
Unrealized
Appreciation Common Stock
(Depreciation) Held by ESOP
Common Stock in Securities (at Cost)
---------------- Retained Available ----------------
Shares Amount Surplus Earnings for Sale Shares Amount
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance - January 1, 1994 5,153 $25,763 $34,158 $37,263 $2,925 (7) ($109)
Net income - - - 7,854 - - -
Cash dividends paid ($0.44 per share) - - - (2,273) - - -
Exercise of options 10 54 29 - - - -
Common stock issued for dividend reinvestment 11 55 270 - - - -
Net change in unrealized appreciation
(depreciation) in securities available for sale - - - - (3,790) - -
------------------------------------------------------------------------
Balance - June 30, 1994 5,174 $25,872 $34,457 $42,844 ($865) (7) ($109)
========================================================================
</TABLE>
See Notes To Consolidated Financial Statements.
7
<PAGE>
<PAGE> 8
Part I. Item 1. Financial Information
<TABLE>
FIRST WESTERN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the Six Months Ended
--------------------------
June 30, June 30,
1995 1994
-------- --------
<CAPTION>
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------
Net income $ 8,159 $ 7,854
-------- --------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,111 1,092
Amortization and accretion (198) 431
Provision for possible loan losses 1,670 1,737
Gain on sale of securities (236) (1,276)
(Gain) loss on sale of real estate owned (333) 23
Loss on sale of premises and equipment 39 12
Gain on sale of loans (364) -
Provision for deferred tax benefit (63) (333)
Increase in interest receivable (886) (442)
Increase in interest payable 2,845 949
Other - net (1,639) 87
-------- --------
Total adjustments 1,946 2,280
-------- --------
Net cash provided by operating activities 10,105 10,134
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Proceeds from sales of securities available for sale 10,110 99,346
Proceeds from maturity or paydown of securities available for sale 5,404 26,545
Purchase of securities available for sale (120,567) (1,850)
Proceeds from maturity or paydown of investment securities 16,442 23,899
Purchase of investment securities (12,784) (71,864)
Purchase of loans (29,217) (16,464)
Proceeds from sale of loans 24,047 4,934
Net increase in loans (83,574) (64,604)
Decrease in deposits with other banks 116 102
Purchase of premises and equipment (813) (1,414)
Proceeds from sale of premises and equipment 59 21
Proceeds from sale of other real estate owned 947 819
Cash received in branch purchases 88,021 13,968
-------- --------
Net cash (used in) provided by investing activities (101,809) 13,438
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
- ------------------------------------
Net increase in deposits 53,944 30,387
Net increase (decrease) in federal funds purchased and other
short-term borrowings 19,526 (11,045)
Net increase (decrease) in repurchase agreements and secured lines of credit 18,263 (40,053)
Net increase in advances from the Federal Home Loan Bank 5,000 -
Payments on long-term debt (1,081) (301)
Proceeds from exercise of stock options 21 83
Proceeds from common stock issued for dividend reinvestment plan - 325
Dividends paid on common stock (2,695) (2,273)
-------- --------
Net cash provided by (used in) financing activities 92,978 (22,877)
-------- --------
NET INCREASE IN CASH AND DUE FROM BANKS 1,274 695
CASH AND DUE FROM BANKS - Beginning of year 42,903 36,956
-------- --------
CASH AND DUE FROM BANKS - End of period $ 44,177 $ 37,651
======== ========
</TABLE>
See Notes To Consolidated Financial Statements.
8
<PAGE>
<PAGE> 9
Part I. Item 1. Financial Information
FIRST WESTERN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
------------------------
June 30, June 30,
1995 1994
--------- ---------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $28,494 $20,808
======= =======
Income taxes $ 3,901 $ 2,340
======= =======
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES:
Securities purchased settling after June 30 $ 975 $20,989
======= =======
Securities sold settling after June 30 $27,177 $ 281
======= =======
Transfers to other real estate owned $ 182 $ 872
======= =======
Net change in unrealized appreciation (depreciation) in securities
available for sale, net of income tax effects $ 3,152 ($3,790)
======= =======
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
Deposits assumed in branch acquisitions $96,681 $14,426
======= =======
See Notes To Consolidated Financial Statements.
</TABLE>
9
<PAGE>
<PAGE> 10
FIRST WESTERN BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
1. Principles of Consolidation:
The consolidated financial statements include the accounts of First Western
Bancorp, Inc. (First Western) and its wholly-owned subsidiaries, First Western
Bank, National Association (First Western Bank, N.A.), First Western Bank,
Federal Savings Bank (First Western Bank, F.S.B.), First Western Trust Services
Company (Trust Services) and Residential Mortgage Company of America. All
significant intercompany transactions have been eliminated in consolidation.
The consolidated balance sheets as of June 30, 1995 and June 30, 1994, and the
related consolidated statements of income, changes in shareholders' equity, and
cash flows for the three and six month periods ended June 30, 1995 and 1994 are
unaudited. In the opinion of management, all adjustments necessary for a fair
presentation of such financial statements have been included. Such adjustments
consisted only of normal recurring items. Interim results are not necessarily
indicative of results for a full year.
The financial statements and notes are presented as permitted by Form 10-Q.
The interim statements are unaudited and should be read in conjunction with the
financial statements and notes thereto contained in First Western's 1994 Annual
Report on Form 10-K.
2. Earnings Per Share:
Earnings per common share are based on the weighted average number of
common shares outstanding and common share equivalents in each period. Weighted
average shares outstanding include common share equivalents under First
Western's Incentive Stock Option Plan for Key Officers.
3. Recent Accounting Pronouncements:
During the second quarter of 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards ("SFAS") No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of" and SFAS No. 122 "Accounting for Mortgage Servicing Rights".
These statements are effective for financial statements for fiscal years
beginning after December 31, 1995 with earlier adoption encouraged. First
Western is reviewing the effects of adopting these statements. The effect of
adopting these statements on First Western's financial statements is not
expected to be material.
10
<PAGE>
<PAGE> 11
Part 1. Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of operations for the three and six months ended June 30, 1995 compared
with the three and six months ended June 30, 1994:
For the six months ended June 30, 1995, First Western's net income was $8.2
million, which was 3.9% greater than $7.9 million for the six months ended June
30, 1994. First Western's earnings per share were $1.56 for the six months
ended June 30, 1995, increasing 4.0% from $1.50 for the six months ended June
30, 1994. For the first six months of 1995, earnings increased from the prior
year due to increased net interest income after provision for loan losses which
was offset partially by increased operating expenses. Earnings for the six
months ended June 30, 1995 and 1994, exclusive of gains and losses on sales of
securities, and sales of loans and other real estate owned, would have been
approximately $1.44 per share and $1.34 per share, respectively. First
Western's return on average assets was 1.06% for the six months ended June 30,
1995, compared with 1.16% for the first six months of 1994. The decrease in
First Western's return on average assets was due primarily to a decline in First
Western's net interest margin for the first six months of 1995 compared with the
prior year.
For the second quarter of 1995, First Western's net income was $4.2 million
or $0.80 per share, compared with $3.9 million or $0.75 per share for the second
quarter of 1994 and $4.0 million or $0.76 per share for the first quarter of
1995. First Western's net income for the second quarter of 1995 increased from
the second quarter of 1994 due to increased net interest income and other income
which was offset partially by higher operating expenses. Most of the increase
in net interest income and other expenses was due to the acquisition of five
branch offices during the first quarter of 1995. Exclusive of the net gains on
the sales of securities available for sale, and sales of loans and other real
estate owned, First Western's net income for the second quarter of 1995 would
have been approximately $0.72 per share compared with $0.66 for the second
quarter of 1994.
11
<PAGE>
<PAGE> 12
Net Interest Income:
First Western's net interest income was $27.1 million for the six months
ended June 30, 1995, increasing by $817,000 or 3.1% from $26.3 million for the
first six months of 1994. The increase in net interest income was generated by
a $173.3 million or 13.2% increase in average earning assets which was partially
offset by a decline in First Western's net interest margin from 4.21% for the
first six months of 1994 to 3.83% for the first six months of 1995. The
increase in average earning assets was due to a $156.4 million or 18.3% increase
in average loans outstanding. Average loans outstanding increased due to strong
loan growth experienced throughout 1994 and during the first six months of 1995.
Most of the growth in average earning assets was funded by a $158.6 million or
16.3% increase in average deposits due to the deposits acquired during the first
quarter of 1995 and also due to strong growth of time deposits which resulted
from an increase in overall interest rates and a more aggressive pricing
strategy implemented by First Western during early 1995.
Net interest income for the second quarter of 1995 was $13.8 million,
increasing $606,000 or 4.6% from $13.2 million for the second quarter of 1994.
This increase in net interest income was due to an 18.0% increase in average
earning assets, partially offset by a decline in the net interest margin. First
Western's net interest income increased $427,000 or 3.2% from the first quarter
of 1995 to the second quarter of 1995 due to the growth in earning assets
resulting from the five branch offices acquired during the first quarter of
1995.
First Western's net interest margin or net interest income expressed as a
percentage of average earning assets was 3.83% for the first six months of 1995
compared with 4.21% for the first six months of 1994. First Western's net
interest margin declined as the cost of funds increased more than the yield on
earning assets during a period of rising interest rates during the last six
months of 1994 and the first few months of 1995. The growth of the loan
portfolio helped to mitigate the compression on the net interest margin since
loans generally have higher yields than other components of earning assets. The
loan portfolio accounted for 67.8% of average earning assets for the first six
months of 1995 compared with 64.9% for the first six months of 1994. First
Western's yield on average earning assets was 8.07% for the first six months of
1995 compared with 7.54% for the first six months of 1994, an increase of 53
basis points, while the cost of funds increased 98 basis points from 3.79% to
4.77%.
First Western's net interest margin for the second quarter of 1995 was
3.73%, compared with 4.21% for the second quarter of 1994 and 3.83% for the
first quarter of 1995. The decline in the margin was due primarily to an
increase in the cost of funds triggered by rising short-term interest rates
during late 1994 and early 1995. The increase in interest rates had the
greatest impact on First Western's borrowed funds and certificates of deposit.
First Western's cost of
12
<PAGE>
<PAGE> 13
short-term borrowings, repurchase agreements and Federal Home Loan Bank advances
increased to an average cost of 5.85% for the second quarter of 1995, compared
with 5.56% for the first quarter of 1995 and 4.48% for the second quarter of
1994. Similarly, the average cost of First Western's certificates of deposit
increased to 5.80% for the second quarter of 1995, compared with 5.49% for the
first quarter of 1995 and 4.64% for the second quarter of 1994. Borrowed funds
and certificates of deposit constituted 70.1% of First Western's total interest-
bearing liabilities for the first six months of 1995 compared with 65.3% for the
first six months of 1994. First Western, like many other banks, experienced
disintermediation of deposits from lower-costing, short-term deposits such as
money market, NOW and savings accounts into higher-costing certificates of
deposit primarily of six months to three years in maturity.
First Western monitors its exposure to interest rate changes by performing
simulation modeling which attempts to quantify the impact of various interest
rate scenarios on First Western's balance sheet and income statement over a 24
month period. At June 30, 1995, First Western's simulation model indicates that
First Western's balance sheet is liability sensitive, and as such, in a rising
rate environment with no changes in the balance sheet and limited reinvestment
changes, net interest income is projected to decrease modestly over a 24 month
period and within First Western's asset/liability strategy and board approved
limits.
13
<PAGE>
<PAGE> 14
Provision for Possible Loan Losses:
First Western's provision for possible loan losses was $1.7 million for
both the first six months of 1995 and 1994. Net charge-offs for the first six
months of 1995 were $1.0 million compared with $787,000 for the first six months
of 1994. First Western's net charge-offs for the first six months of 1995 are
higher than the prior year due to increased consumer loan charge-offs and also
due to a decrease in recoveries on commercial loans. Installment loan charge-
offs increased $231,000 or 28.5% from $811,000 for the first six months of 1994
to $1.0 million for the first six months of 1995 due to an increase in consumer
loans during this period. First Western's net charge-offs for the second
quarter of 1995 were $572,000, compared with $450,000 for the first quarter of
1995 and $305,000 for the second quarter of 1994. First Western's net charge-
offs by loan type are as follows (in thousands):
<TABLE>
<CAPTION>
Six months ended June 30,
-------------------------
1995 1994
------ -------
<S> <C> <C>
Commercial, financial and agricultural loans.......................... $ ( 8) $ (131)
Real estate construction loans........................................ - -
Real estate mortgage loans............................................ (12) 107
Installment loans..................................................... 1,042 811
------ -------
Total net charge-offs.............................................. $1,022 $ 787
====== =======
Net charge-offs as a percentage of
average loans...................................................... 0.20% 0.19%
====== =======
</TABLE>
Other Income and Other Expenses:
Other income increased $119,000 or 2.4% from $4.9 million for the first six
months of 1994 to $5.0 million for the first six months of 1995 due primarily
to gains on sales of loans and other real estate owned and increased service
charges on deposits, with these increases in income offset partially by a
decrease in net gains from sales of securities available for sale. The decline
in net securities gains from the second quarter of 1994 to the second quarter
of 1995 was more than offset by sales of loans which generated gains of $359,000
during the second quarter of 1995.
Trust fees were $1.0 million for the first six months of 1995, decreasing
$71,000 or 6.6% from $1.1 million for the first six months of 1994 due to lower
estate fees recognized during the first six months of 1995 compared with the
prior year. Service charges on
14
<PAGE>
<PAGE> 15
deposit accounts increased $235,000 or 17.8% for the first six months of 1995
compared with the prior year. The increase in service charges on deposit
accounts reflected an increased service charge schedule implemented by First
Western during the first quarter of 1995 and also the addition of approximately
$97 million of deposits acquired with the five branch offices purchased by First
Western during the first quarter of 1995. The increased service charge schedule
was also primarily responsible for increasing service charges on deposits by
$184,000 or 26.9% for the second quarter of 1995 compared with the second
quarter of 1994 and also for increasing service charges on deposits by $182,000
or 26.5% over the first quarter 1995 level. First Western's credit card program
fees increased $89,000 or 16.1% from $554,000 for the first six months of 1994
to $643,000 for the first six months of 1995 reflecting the growth of First
Western's credit card program.
Other operating income increased $9906,000 or 138.1% from $656,000 for the
first six months of 1994 to $1.6 million for the first six months of 1995. For
the second quarter of 1995, other income was $832,000, increasing by $459,000
or 123.1% from $373,000 for the second quarter of 1994. Most of the increase
in other operating income was due to gains realized on the sales of loans and
other real estate owned. During the first six months of 1995, gains of $364,000
were realized as a result of First Western selling its entire portfolio of
student loans and also from selling certain long-term, residential mortgage
loans. The gains on the loan sales were realized during the second quarter of
1995. Sales of other real estate owned generated gains of $333,000 for the
first six months of 1995 with $326,000 of these gains realized during the first
quarter of 1995.
Total other expenses increased $736,000 or 4.1% from $18.0 million for the
first six months of 1994 to $18.8 million for the first six months of 1995.
Total other expenses increased $444,000 or 4.9% for the second quarter of 1995
compared with the second quarter of 1994 and $384,000 or 4.2% from the first
quarter of 1995. The five branch offices acquired by First Western during the
first quarter of 1995 resulted in most of the increase in other expenses.
First Western's salary and employee benefits expense increased a combined
$211,000 or 2.5% for the first six months of 1995 compared with the first six
months of 1994 and $117,000 or 2.8% for the second quarter of 1995 compared with
the prior year. Most of the increase in salaries and employee benefits was
attributable to the additional employees resulting from the five branch offices
acquired and also due to normal salary and wage increases. The increase in
salaries and wages expense was partially offset by decreases in the costs of
certain employee benefit programs such as pension and profit sharing expense.
Occupancy and equipment expense increased a combined $31,000 or 1.3% from
the first six months of 1994 to the first six months of
15
<PAGE>
<PAGE> 16
1995. The five branch offices acquired during the first quarter of 1995
resulted in most of the increase in occupancy and equipment expense.
Federal deposit insurance expense increased $128,000 or 11.6% from $1.1
million for the first six months of 1994 to $1.2 million for the first six
months of 1995. This increase was attributable to an increase in First
Western's insured deposits. Currently, there are several proposals to change
the rates paid for deposit insurance. The recently approved rate changes for
deposits insured by the Federal Deposit Insurance Corporation's Bank Insurance
Fund ("BIF") is for the lowest premium to decrease 83%. Approximately 55% of
First Western's deposits are insured by the BIF. This rate change will be
effective when the FDIC has certified that the BIF has reached its target level
which was expected to have been reached in either May or June 1995. The
reduction in the BIF insurance rates will result in a decrease in First
Western's annual deposit insurance expense of approximately $1.2 million. Any
future decreases in insurance expense for the deposits insured by the BIF could
be offset by certain Congressional proposals for rate increases or special
assessments by the Savings Association Insurance Fund which insures the
remaining 45% of First Western's deposits.
First Western's advertising and promotion expense increased $138,000 or
20.4% from $678,000 for the first six months of 1994 to $816,000 for the first
six months of 1995. This increase in advertising and promotion expense is
primarily related to various promotions run in the market areas of the newly
acquired branches.
Other operating expenses increased $219,000 or 6.6% from $3.3 million for
the first six months of 1994 to $3.5 million for the first six months of 1995.
Other expenses increased $83,000 or 4.7% for the second quarter of 1995 compared
with the second quarter of 1994. The amortization of the intangible assets due
to the recent branch acquisitions contributed $259,000 and $184,000 of the
increase in other expenses for the six and three month periods ended June 30,
1995 compared with the prior year. Another factor increasing other operating
expense was the increase in postal rates. First Western's postage expense
increased $40,000 or 8.6% for the first six months of 1995 compared with the
first six months of 1994. Other operating expenses for the three and six months
ended June 30, 1995 were reduced by a $65,000 recovery on a fraud loss that was
discovered and expensed during the second quarter of 1994.
Income Taxes:
First Western's income tax expense was $3.5 million for the first six
months of 1995 compared with $3.6 million for the first six months of 1994.
This decrease in income tax expense was a result of an increase in First
Western's tax-exempt interest income. First Western's effective tax rate for
the first six months of 1995 was 30.1%, comparable to 31.1% for the first six
months of 1994.
16 <PAGE>
<PAGE> 17
Financial Condition as of June 30, 1995 as compared with December 31, 1994 and
June 30, 1994.
As of June 30, 1995, First Western's total assets were $1.659 billion
compared with $1.455 billion at December 31, 1994 and $1.406 billion at June 30,
1994. Most of the increase from June 30, 1994 and December 31, 1994 was due to
the growth of the loan portfolio funded by a $174.2 million or 17.3% increase
in deposits from five recently acquired branch offices and also due to a more
aggressive deposit pricing strategy employed by First Western during the first
quarter of 1995. Total average assets for the first six months of 1995 were
$1.549 billion compared with $1.369 billion for the first six months of 1994,
an increase of 13.2%.
17<PAGE>
<PAGE> 18
Loan Portfolio:
Net loans increased $88.7 million or 9.1% during the first six months of
1995. Real estate-mortgage loans increased $59.1 million during the first six
months of 1995 primarily as a result of First Western purchasing mortgage loans
and also as a result of First Western expanding its use of third-party mortgage
loan originators. Installment loans increased $16.8 million during the first
six months of 1995, which is net of the sale of $10.8 million of student loans.
During the last twelve months, most of First Western's loan growth has been in
mortgages and installment loans. Installment loans increased as a result of
First Western expanding its network of indirect auto lending into new market
areas. First Western is currently reviewing its portfolio of residential
mortgage loans with the possibility of selling or securitizing a substantial
portion of the residential mortgage loan portfolio. The following table shows
the composition of First Western's loan portfolio at June 30, 1995, December 31,
1994 and June 30, 1994:
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994 June 30, 1994
------------------------ ----------------------- ------------------------
Amount Percent Amount Percent Amount Percent
------------ -------- ----------- --------- ----------- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural:
Automobile floorplan loans....... $ 24,047 2.3 % $ 25,229 2.6 % $ 19,478 2.2 %
Loans to municipalities.......... 7,054 0.7 10,307 1.1 8,851 1.0
Other commercial loans........... 79,698 7.5 63,662 6.5 51,078 5.7
---------- ----- -------- ----- -------- -----
Subtotal....................... 110,799 10.5 99,198 10.2 79,407 8.9
---------- ----- -------- ----- -------- -----
Real estate-construction............. 19,967 1.9 18,721 1.9 14,491 1.6
---------- ----- -------- ----- -------- -----
Real estate-mortgage:
1-4 Family residential............. 426,625 40.0 370,582 37.8 349,141 39.2
Multi-family residential........... 29,223 2.7 30,923 3.2 31,474 3.5
Home equity........................ 37,823 3.5 37,129 3.8 37,088 4.2
Commercial and other............... 131,201 12.3 127,176 13.0 114,524 12.9
---------- ----- -------- ----- -------- -----
Subtotal......................... 624,872 58.5 565,810 57.8 532,227 59.8
---------- ----- -------- ----- -------- -----
Installment:
Credit cards....................... 37,808 3.5 39,412 4.0 30,223 3.4
Installment and other.............. 273,861 25.6 255,421 26.1 233,905 26.3
---------- ----- -------- ----- -------- -----
Subtotal......................... 311,669 29.1 294,833 30.1 264,128 29.7
---------- ----- -------- ----- -------- -----
Total............................ $1,067,307 100.0 % $978,562 100.0 % $890,253 100.0 %
========== ===== ======== ===== ======== =====
</TABLE>
First Western has several procedures in place to assist in maintaining the
overall quality of its loan portfolio. First Western has established
underwriting guidelines to be followed by its subsidiaries. In addition, a
formal, ongoing loan review program, which concentrates principally on
commercial credits, has been established to help monitor the loan portfolios of
the subsidiaries. First Western also regularly monitors its delinquency levels
for any
18
<PAGE>
<PAGE> 19
negative or adverse trends and particularly monitors credits which have total
exposures of $1.5 million or more.
First Western's delinquent loans, nonaccrual loans and nonperforming assets
consisted of the following at June 30, 1995, December 31, 1994 and June 30,
1994:
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1995 1994 1994
--------- ----------- ---------
(Dollars in Thousands)
<S> <C> <C> <C>
Loans delinquent and still accruing interest:
Loans past due 30 to 89 days ........................... $ 6,761 $ 7,370 $ 6,464
Loans past due 90 days or more ......................... 1,697 1,870 1,306
--------- -------- ---------
Total loan delinquencies ............................. $ 8,458 $ 9,240 $ 7,770
========= ======== =========
Nonaccrual loans ......................................... $ 4,444 $ 2,875 $ 3,409
Other real estate owned and in-substance
foreclosed ............................................. 388 1,185 1,737
--------- -------- ---------
Total nonperforming assets ............................... $ 4,832 $ 4,060 $ 5,146
========= ======== =========
Total nonperforming assets and loans
past due 90 days or more ............................... $ 6,529 $ 5,930 $ 6,452
========= ======== =========
Nonaccrual loans to total loans .......................... 0.42 % 0.29 % 0.38 %
Nonperforming assets to total loans
and other real estate owned ............................ 0.45 % 0.41 % 0.58 %
Nonperforming assets to total assets ..................... 0.29 % 0.28 % 0.37 %
Nonperforming assets and loans past due
90 days or more to total assets ........................ 0.39 % 0.41 % 0.46 %
Nonaccrual loans and loans past due
90 days or more to total loans ......................... 0.58 % 0.48 % 0.53 %
Allowance for possible loan losses
to nonaccrual loans .................................... 305.80 % 450.16 % 353.53 %
Allowance for possible loan losses
to loans past due 90 days or more
and nonaccrual loans ................................... 221.33 % 272.78 % 255.61 %
Allowance for possible loan losses to
total loans ............................................ 1.27 % 1.32 % 1.35 %
</TABLE>
In order to determine the adequacy of the allowance for possible loan
losses, management considers the risk classification of loans, delinquency
trends, charge-off experience, credit concentrations, economic conditions and
other factors. Specific reserves are established for each classified credit
taking into consideration the credit's delinquency status, current operating
status, pledged collateral and plan of action for resolving any deficiencies.
For
19
<PAGE>
<PAGE> 20
nonclassified loans and smaller loans not individually reviewed, management
considers historical charge-off experience in determining the amount to be
allocated to the allowance. An unallocated or general reserve is also
established which takes into consideration, among other things, unfunded
commitments, concentrations of credit, economic conditions, delinquency and
nonaccrual trends, management experience and trends in volume and terms of
loans. The allowance is maintained at a level determined according to this
methodology by charging a provision to operations.
First Western believes that the allowance for possible loan losses of $13.6
million at June 30, 1995 is adequate to cover losses inherent in the portfolio
as of such date. However, there can be no assurance that First Western will not
sustain losses in future periods, which could be substantial in relation to the
size of the allowance at June 30, 1995.
Investment Securities, Mortgage-Backed Securities, and Securities Available for
Sale:
Investment securities and mortgage-backed securities decreased a combined
$3.7 million for the first six months of 1995 with this decrease due to
maturities and paydowns of securities offset partially by some securities
purchases. The market value of First Western's investment securities and
mortgage-backed securities held to maturity was a combined $327.9 million, $4.7
million or 1.4% below the amortized cost of $332.7 million. First Western's
portfolio of investment securities and mortgage-backed securities had a market
value below amortized cost of $19.4 million or 5.8% at December 31, 1994.
Securities available for sale increased $89.2 million or 131.9% during the
first six months of 1995 as First Western purchased securities with the funds
provided by the branch acquisitions. Securities available for sale increased
$53.6 million from $103.3 million at June 30, 1994 to $156.9 million at June 30,
1995 with most of this increase also due to the purchase of securities using the
funds provided by the branch acquisitions. At June 30, 1995, First Western had
net unrealized appreciation on securities available for sale of $1.5 million
compared with unrealized depreciation of $3.4 million at December 31, 1994 and
$1.3 million at June 30, 1994 primarily as a result of a decline in intermediate
and long-term interest rates during the first six months of 1995. First Western
sold securities available for sale at gains of $302,000 during the second
quarter of 1995 in order to provide funds for loan growth.
Deposits:
Total deposits increased $150.6 million or 14.6% from $1.029 billion at
December 31, 1994 to $1.180 billion at June 30, 1995 with
20
<PAGE>
<PAGE> 21
approximately $96.7 million of this increase due to the deposits acquired with
the five branch offices that First Western purchased during the first quarter
of 1995. Deposits also increased due to First Western implementing a more
aggressive pricing strategy for time deposit products during the first quarter
of 1995 in order to increase deposits. First Western continues to experience
a shifting in deposits from demand and savings accounts to time accounts due to
the increased rates paid on time deposits resulting from recent market interest
rate increases. First Western's deposits increased $174.2 million from June 30,
1994 to June 30, 1995 with most of this growth attributable to the deposits
acquired in the first quarter of 1995, along with the more aggressive pricing
strategy.
Borrowed Funds:
First Western's borrowed funds increased $42.8 million during the first six
months of 1995 from $291.4 million at December 31, 1994 to $334.2 million at
June 30, 1995. This increase in borrowed funds, primarily short-term borrowings
and repurchase agreements, was the result of increased loan demand, particularly
during the second quarter of 1995. Total borrowed funds increased $82.4 million
or 32.7% from June 30, 1994 to June 30, 1995 as these additional borrowings were
necessary to fund the growth of the loan portfolio.
21
<PAGE>
<PAGE> 22
Shareholders' Equity:
Shareholders' equity increased $8.6 million during the first six months of
1995 primarily as a result of the retention of earnings of $5.5 million, net of
cash dividends paid to shareholders. Also increasing shareholders' equity was
a $3.2 million increase in the market value of securities available for sale,
net of income tax effects. First Western's capital ratios declined from
December 31, 1994 to June 30, 1995 primarily as a result of the five branches
that were acquired in the first quarter of 1995. The branch acquisitions
decreased First Western's capital ratios due to the acquisition of intangible
assets which decreased First Western's Tier I capital. The branch acquisitions
also increased First Western's total assets with no additional shareholders'
equity. The following table presents First Western's capital ratios at June 30,
1995 and December 31, 1994:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---------- --------
(Dollars in Thousands)
<S> <C> <C>
Tier I:
Common shareholders' equity .............................. $ 114,716 $106,079
Non-exempt intangible assets ............................. (7,812) (504)
Unrealized (appreciation) depreciation in securities
available for sale ..................................... (961) 2,191
---------- --------
Total Tier I ......................................... 105,943 107,766
---------- --------
Tier II:
Qualifying long term debt ................................ - 301
Qualifying allowance for possible loan losses ............ 12,922 11,528
---------- --------
Total Tier II ........................................ 12,922 11,829
---------- --------
Total capital .............................................. $ 118,865 $119,595
========== ========
Risk weighted assets ....................................... $1,025,300 $922,235
========== ========
Tier I capital ratio ....................................... 10.33% 11.69%
======== ========
Required Tier I capital ratio .............................. 4.00% 4.00%
======== ========
Total capital ratio ........................................ 11.59% 12.97%
======== ========
Required total capital ratio ............................... 8.00% 8.00%
======== ========
Tier I leverage ratio ...................................... 6.61% 7.60%
======== ========
Required Tier I leverage ratio * ........................... 3.00% 3.00%
======== ========
<FN>
* For all but the most highly rated, low risk profile organizations, the
minimum Tier I leverage ratio is to be 3% plus a cushion of 100 to 200 basis
points.
</TABLE>
22
<PAGE>
<PAGE> 23
Liquidity and Cash Flows:
Liquidity is the ability to provide the cash necessary to meet customer
credit needs, satisfy depositor withdrawal requirements and to pay-off short-
term borrowings. One source of liquidity is cash and due from banks and short-
term assets such as interest-bearing deposits in other banks and federal funds
sold, which totaled $44.9 million at June 30, 1995 as compared with $43.8
million at December 31, 1994 and $38.4 million at June 30, 1994. Another source
of liquidity is borrowing capability. First Western's banking subsidiaries have
a variety of sources of short-term liquidity available to them, including
federal funds purchased from correspondent banks, sales of securities available
for sale, sales of securities under agreements to repurchase, the Federal
Reserve discount window, interbank deposits, FHLB advances and loan
participations or sales. First Western also generates liquidity from the
regular principal payments and prepayments made on its portfolio of loans and
mortgage-backed securities. First Western's banking subsidiaries had $18.1
million of unused overnight credit lines available at June 30, 1995.
First Western's operating activities provided cash flows of $10.1 million
during the first six months of 1995 and 1994. The primary source of operating
cash flows was net income combined with noncash expenses such as the provision
for possible loan losses and depreciation along with increased accrued interest
payable.
Investing activities used cash flows of $101.8 million in the first six
months of 1995 compared with providing $13.4 million for the first six months
of 1994. The five branch offices acquired during the first quarter of 1995
provided First Western with net cash flows of $88.0 million which represents the
deposit liabilities assumed by First Western net of the premium paid for the
deposits and the assets acquired. Most of the funds provided by the acquisition
of the branches were used to purchase securities available for sale. The growth
of the portfolio of securities available for sale used net cash flows of $105.1
million during the first six months of 1995. The growth of the loan portfolio
during the first six months of 1995 used net cash flows of $88.7 million.
During the first six months of 1994, sales and maturities of securities
available for sale provided cash flows of $125.9 million with these cash flows
used to fund loan growth and also to purchase investment securities held to
maturity.
Financing activities provided cash flows of $93.0 million in the first six
months of 1995 with an increase in deposits providing $53.9 million of these
cash flows and increased borrowings providing $42.8 million. During the first
six months of 1994, financing activities used cash flows of $22.8 million
primarily as a result of decreases in repurchase agreements and federal funds
purchased and other short-term borrowings. The cash flows used to decrease
borrowings during the first six months of 1994 were provided by the sales of the
securities available for sale during that time period.
23
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<PAGE> 24
Part II. Other Information
Items 1-5. Not applicable.
Item 6. Exhibits and Reports on Form 8-K:
a. Exhibits:
3.1 Bylaws
10.1 Consulting Agreement between John W. Sant and First
Western Bancorp, Inc. *
10.2 Consulting Agreement between John R. McKinley and
First Western Bancorp, Inc. *
15.1 Letter re: Unaudited Interim Financial Information.
27.1 Financial Data Schedule.
b. Reports on Form 8-K: None.
______
* Indicates exhibit is a management contract or compensation plan or
arrangement.
24
<PAGE>
<PAGE> 25
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FIRST WESTERN BANCORP, INC.
(Registrant)
August 10, 1995 /s/ Robert H. Young
Robert H. Young
Senior Vice President-Finance,
Secretary and Treasurer
(Principal Financial Officer)
25
<PAGE>
<PAGE> 26
FIRST WESTERN BANCORP, INC.
EXHIBITS TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Method of
Number Description Filing
<S> <C> <C>
3.1 Bylaws Filed
Herewith
10.1 Consulting Agreement between John W. Filed
Sant and First Western Bancorp, Inc. * Herewith
10.2 Consulting Agreement between John R. Filed
McKinley and First Western Bancorp, Herewith
Inc. *
15.1 Letter re: Unaudited Interim Financial Filed
Information herewith
27.1 Financial Data Schedule Filed
Herewith
______
* Indicates exhibit is a management contract or compensation plan or
arrangement.
</TABLE>
<PAGE>
<PAGE> 1
Exhibit 3.1
Adopted July 20, 1993
Revised April 18, 1995
FIRST WESTERN BANCORP, INC.
BY-LAWS
ARTICLE I
Meetings of Shareholders
Section 1.1 Annual Meeting. The regular annual meeting of the
shareholders to elect directors and transact whatever other business may
properly come before the meeting, shall be held at the main office of the
Corporation located at 101 East Washington Street, New Castle, Pennsylvania
16101 or such other place as the Board of Directors may designate, on such date
as the Board of Directors shall designate. Notice of such meeting shall be
mailed, postage prepaid, at least ten (10) days prior to the date thereof,
addressed to each shareholder at his address appearing on the books of the
Corporation. If, from any cause, an election of Directors is not made on the
designated day, the Board of Directors shall order the election to be held on
some subsequent day, as soon thereafter as practicable, according to the
provisions of law; and notice thereof shall be given in the manner herein
provided for the Annual Meeting.
Section 1.2 Special Meetings. Special meetings of the shareholders may
be called for any purpose at any time by the Board of Directors. Every such
special meeting, unless otherwise provided by law, shall be called by mailing,
postage prepaid, not less than ten (10) days prior to the date fixed for such
meeting, to each shareholder at his address appearing on the books of the
Corporation, a notice stating the purpose of the meeting. Special meetings may
also be called by the shareholders of the Corporation in accordance with
applicable law.
Section 1.3 Nominations for Director. Nominations for election to the
Board of Directors may be made by the Board of Directors or by any shareholder
of any outstanding class of capital stock of the Corporation entitled to vote
for the election of directors. Nominations, other than those made by or on
behalf of the Board of Directors of the Corporation, shall be made in writing
and shall be delivered or mailed to the Chairman of the Corporation no later
than January 31 for an election to be held at the annual meeting that year and
no later than forty-five (45) days prior to any other meeting of shareholders
called for the election of directors; provided however, that if less than
twenty-one (21) days notice of the other meeting is given to shareholders, such
nominations shall be mailed or
1
<PAGE>
<PAGE>2
delivered to the Chairman of the Corporation not later than the close of
business on the seventh day following the day on which the notice of meeting was
mailed. Such notification shall contain the following information to the extent
known to the notifying shareholder: (a) the name and address of each proposed
nominee; (b) the principle occupation of each proposed nominee; (c) the total
number of shares of capital stock of the Corporation that will be voted for each
proposed nominee; (d) the name and residence address of the notifying
shareholder; and (e) the number of shares of capital stock of the Corporation
owned by the notifying shareholder. Nominations not made in accordance herewith
may, in the discretion of the chairperson of the meeting, be disregarded, and
upon the chairperson's instructions, the judges of election shall disregard all
votes cast for each such nominee.
Section 1.4 Judges of Election. Every election of directors shall be
managed by three (3) judges, who shall be appointed from among the shareholders
by the Board of Directors. The judges of election shall hold and conduct the
election at which they are appointed to serve; and, after the election, they
shall file with the Secretary of the Corporation a certificate under their
hands, certifying the result thereof and the names of the directors elected.
The judges of election, at the request of the Chairperson of the meeting, shall
act as inspectors of any other vote by ballot taken at such meeting, and shall
certify the result thereof.
Section 1.5 Record Date. The Board of Directors may fix a time prior to
the date of any meeting of the shareholders as a record date for the
determination of the shareholders entitled to notice of, or to vote at, the
meeting. Except in the case of an adjourned meeting, the record date shall be
not more than ninety (90) days prior to the date of the meeting of the
shareholders. Only shareholders of record on the record date shall be so
entitled to notice of, or to vote at, the meeting notwithstanding any transfer
of shares on the books of the Corporation after the record date. When a
determination of shareholders of record has been made as provided herein for
purposes of a meeting, the determination shall apply to any adjournment thereof
unless the Board fixes a new record date for the adjourned meeting. If a record
date is not fixed by the Board of Directors: (i) the record date for determining
shareholders entitled to notice of or to vote at a meeting of the shareholders
shall be at the close of business on the day next preceding the day on which
notice is given or, if notice is waived, at the close of business on the day
immediately preceding the day on which the meeting is held; and (ii) the record
date for determining shareholders entitled to express consent or dissent to
corporate action in writing without a meeting, when prior action by the Board
of Directors is not necessary, shall be the close of business on the day on
which the first written consent or dissent is filed with the Secretary of the
Corporation.
2
<PAGE>
<PAGE> 3
Section 1.6 Quorum; Adjournments. The presence of shareholders entitled
to cast at least a majority of the votes that all shareholders are entitled to
cast on a particular matter to be acted upon at a meeting of the shareholders
shall be required in order to constitute a quorum for the purposes of
consideration and action on the matter. Adjournments of any meeting of the
shareholders may be taken even though a quorum may be present, but any meeting
at which directors are to be elected shall be adjourned only for periods not
exceeding fifteen (15) days each as the shareholders present and entitled to
vote shall direct, until the directors have been elected; and those shareholders
entitled to vote who attend a meeting called for the election of directors that
has been previously adjourned for periods of at least fifteen (15) days because
of a lack of a quorum, although less than a quorum as fixed in this Section,
shall nevertheless constitute a quorum for the purpose of electing directors.
Adjournments of any meeting of shareholders may be taken at any point in a
meeting whether or not the shareholders have acted on any or all of the matters
before the meeting.
Section 1.7 Action by Shareholders. Except as otherwise required by law
or by the Articles of Incorporation of the Corporation or these By-laws,
whenever any corporate action is to be taken by vote of the shareholders, it
shall be authorized by a majority of the votes cast at a duly organized meeting
of the shareholders by the holders of shares entitled to vote thereon. However,
unless otherwise provided in a By-law adopted by the shareholders, whenever the
By-laws require a specific number or percentage of votes in order for the
shareholders to take any action, the provision of the By-laws setting forth that
requirement shall not be amended or repealed by any lesser number or percentage
of votes. For the purposes of these By-laws, the term "cast" does not include
recording the fact of abstention or failing to vote for a candidate or for
approval or disapproval of a matter, whether or not the person entitled to vote
characterizes the conduct as voting or casting a vote. In an election of
directors, the candidates receiving the highest number of votes, up to the
number of directors to be elected, shall be elected.
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ARTICLE II
Directors
Section 2.1 Board of Directors. Except as otherwise provided by statute,
the Articles of Incorporation or a By-law adopted by the shareholders, all
powers vested by law in the Corporation shall be exercised by or under the
authority of, and the business and affairs of the Corporation shall be managed
under the direction of, the Board of Directors.
Section 2.2 Number. The board shall consist of not fewer than five (5)
persons, the exact number to be fixed and determined from time to time by
resolution of a majority of the full Board or by resolution of the shareholders
at any meeting thereof.
Section 2.3 Age. No one shall be elected as a director of this
Corporation if, at the time of the election, such person has reached his 70th
birthday, but a director reaching age 70 may complete his term of office,
serving until his successor is duly elected and qualified; provided, however,
the foregoing provisions of this section to the contrary notwithstanding, any
person who has served this Corporation in the capacity of President and/or
Chairperson of the Board of Directors may be elected to a one year term if
nominated for such position by the Board.
Section 2.4 Term. The Board of Directors of the Corporation shall be
divided into three (3) classes as nearly equal in number as may be, with the
term of office of one class expiring each year; at each succeeding Annual
Meeting of shareholders of the Corporation, successors to the class of Directors
whose term expires at such Annual Meeting shall be elected for a three year
term. The number of Directors shall be so apportioned among the classes so as
to maintain the classes as nearly equal in number as possible, and any
additional Director of any class shall hold office for a term which shall
coincide with the term of such class. The foregoing provisions to the contrary
notwithstanding, if, following reaching age 70, a former President and/or
Chairperson is elected to the Board after being nominated by the Board for such
position, the term of such former President and/or Chairperson shall be one year
and such person shall be placed in the class of directors whose term expires at
the next annual meeting.
A Director shall hold office until the Annual Meeting of the shareholders
of the Corporation for the year in which his term expires, and until his
successor shall be duly elected and qualified, subject, however, to the prior
death, resignation, retirement, disqualification or removal from office of a
Director. If any vacancy occurs in the Board of Directors of the Corporation
caused by death, resignation, retirement, disqualification or removal from
office of any Director or otherwise or by an increase in the number of
Directors, a majority of the Directors then in office, even if less than a
quorum, may choose a successor to fill such vacancy. Normally any Director
elected to fill a vacancy should have the same term as that of his predecessor,
if any, but a Director elected to fill a vacancy may be elected
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to a different class from his predecessor provided that such Director shall not
have a longer term than that of his predecessor.
Section 2.5 Regular Meetings. The regular meetings of the Board shall be
held, without notice, on the third Tuesday of each calendar quarter, such
meeting to be at the main office of the Corporation or at such other place as
the Board may designate. When any regular meeting of the Board falls upon a
holiday, the meeting shall be held on the next business day unless the Board
shall designate another day.
Section 2.6 Special Meeting. Special meetings of the Board may be called
by the Chairperson of the Board or by the President of the Corporation, or by
a majority of the Directors. Each member of the Board shall be given notice by
telegram, telefacsimile, letter, or in person, stating the time and place of
each such special meeting.
Section 2.7 Quorum. A majority of the directors shall constitute a quorum
at any meeting, except when otherwise provided by law; but a less number may
adjourn any meeting, from time to time, and the meeting may be held, as
adjourned, without further notice. A director cannot vote by proxy, or
otherwise act by proxy at a meeting of the Board.
Section 2.8 Directors Fees. Each director who is not a salaried officer
of the Corporation or any of its subsidiaries may receive a retainer and/or a
fee for attendance at each meeting of the Board, or any committee thereof, in
such amount as the Board may, from time to time, determine.
Section 2.9 Directors Emeritus. The Board may appoint, each year, such
number of directors emeritus as the Board may, from time to time, determine.
In order to qualify as a director emeritus, a person must have served as a duly
elected director and have retired as such duly elected director at age 65 or
older. Directors emeritus may, in an advisory capacity, attend the meetings of
the Board, and may, as designated by the Board or appointed by the Chairman of
the Board, attend meetings of committees of the Board, but such directors
emeritus shall not be entitled to vote nor be counted for purposes of
determining a quorum. Directors emeritus shall receive the same fees as members
of the board and, when serving on committees where a fee is provided, shall be
paid such fee during such time of service.
. . . . .
Article II, 2.3, 2.4 - Rev. 02/21/95 - Article II, 2.5 - Rev. 04/18/95
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ARTICLE III
Committees of the Board
Section 3.1 Executive Committee. There shall be an Executive Committee
composed of the President, the Chairperson of the Board, the Vice Chairperson
(if any) and one or more directors elected by the Board. The Executive
Committee shall serve at the pleasure of the Board. The Executive Committee
shall have the power to direct and transact all other business of the
Corporation which properly might come before the Board, except such as the Board
only, by law, is authorized to perform. The Executive Committee shall act as
the Nominating Committee for the Board. The Executive Committee shall report
its actions in writing at each regular meeting of the Board, which shall approve
or disapprove the report and record such action in the minutes of the meeting.
Meetings of the Committee may be called at any time by the Chairperson of the
Board or the President of the Corporation, or any other member or members
authorized by the Committee to call such meetings, and shall be held at such
time and place as may be designated by the person or persons calling the
meeting. Three members of the Executive Committee shall constitute a quorum.
The Executive Committee may adopt its own rules of procedure.
Section 3.2 Audit Committee. There shall be an Audit Committee composed
entirely of outside Directors of the Corporation and its lending subsidiaries.
The Audit Committee shall, upon the concurrence of the Boards of Directors of
the Corporation's lending subsidiaries, be a combined Audit Committee serving
the Corporation and such lending subsidiaries.
Section 3.3 Compensation Committee. There shall be a Compensation
Committee of the Board none of whose members shall be an employee of First
Western or of any subsidiary of First Western nor eligible to participate in
First Western's Incentive Stock Option Plan for Key Officers. If eligible under
the forgoing sentence, the Chairperson of the Board and the Vice-Chairperson (if
any) and one or more directors elected by the Board shall serve on the
Compensation Committee. The Compensation Committee shall serve at the pleasure
of the Board and shall review and set the compensation for all executive
officers and shall review and pass on all contracts for services with persons
serving as members of the Board of First Western or of any of its subsidiaries.
The Compensation Committee may also review all benefit programs sponsored by
First Western and/or any of its subsidiaries to determine the adequacy thereof
and shall recommend to the Board any changes, additions or deletions that it
feels are appropriate for the corporation and its employees. The Compensation
Committee shall perform such other duties as may be delegated to it by the
Board. The Compensation Committee shall report its actions in writing to the
Board. Meetings of the Compensation Committee may be called at any time by its
Chairperson, by the Chairperson of the Board of Directors or by the President
of the Corporation (even if not a member of the Compensation Committee) or by
any other member or members authorized by the Compensation Committee to call
such meetings, and such meetings shall be held at such time and place as may be
designated by the
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person or persons calling the meeting provided if such meeting place is not at
First Western's headquarters, it not be inconvenient to any member. Three (3)
members of the Compensation Committee shall constitute a quorum. The
Compensation Committee may adopt its own rules of procedure.
Section 3.4 Other Committees. The Board may appoint, from time to time,
such other committees for such purposes and with such powers as the Board may
determine; provided, however, that no committee may authorize distributions of
assets or dividends; approve actions required to be approved by the
shareholders; fill vacancies in the Board or any of its committees; amend the
Articles of Corporation; or adopt, amend or repeal these By-laws.
Section 3.5 Fees. Each member of any committee who does not receive a
salary from the Corporation or any of its subsidiaries shall be entitled to
receive for each committee meeting which he shall attend such fee as the Board
shall, from time to time, determine, or such retainer or annual fee, in lieu of
a meeting fee or in combination therewith, as the Board may determine.
Art. III Rev 05/17/94
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ARTICLE IV
Officers and Employees
Section 4.1 Chairperson and Vice Chairperson of the Board. The Board
shall appoint one of its member to be Chairperson of the Board to serve at the
pleasure of the Board. Such person shall preside at all meetings of the Board.
The Board may also designate a member to be Vice Chairperson. The Vice
Chairperson, if any, shall preside at all meetings of the Board in the absence
of the Chairperson. The Chairperson and the Vice Chairperson, if any, shall
have such other duties as assigned by the Chief Executive Officer of the
Corporation or by the Board.
Section 4.2 President. The Board shall appoint one of its members to be
President of the Corporation. In the absence of the Chairperson, and any Vice
Chairperson, the President shall preside at any meeting of the Board. The
President shall be the Chief Executive Officer of the Corporation and shall have
and may exercise any and all other powers and duties pertaining by law,
regulation, or practice, to the office of the Chief Executive Officer, or
imposed by these By-laws. The President shall also have any may exercise such
further powers and duties as from time to time may be conferred, or assigned by
the Board.
Section 4.3 Executive Vice Presidents and Senior Vice Presidents. The
Board may appoint one or more Executive Vice Presidents and/or Senior Vice
Presidents who shall have such powers and duties as may be assigned by the Board
or by the President.
Section 4.4 Secretary. The Board shall appoint a Secretary of the board
and of the Corporation, and who shall keep accurate minutes of all meetings.
The Secretary shall attend to the giving of all notices required by these By-
laws to be given; shall be custodian of the corporate seal, records, documents
and papers of the Corporation; shall provide for the keeping of proper records
of all transactions of the Corporation; shall have and may exercise any and all
other powers and duties pertaining by law, regulation or practice, to the office
of Secretary, or imposed by these By-laws; and shall also perform such other
duties as may be assigned from time to time, by the Board or by the President.
Section 4.5 Treasurer. The Board shall appoint a Treasurer who shall have
custody of the Corporation's funds and securities, keep full and accurate
accounts of the receipts and disbursements of the Corporation in books belonging
to the Corporation, shall deposit all moneys and other valuable effects of the
Corporation in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors, and shall also have
such other powers and perform such other duties as are incident to the office
of the treasurer of a corporation or as shall be prescribed from time to time
by, or pursuant to authority delegated by, the Board of Directors.
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Section 4.6 Other Officers. The President may appoint one or more Vice
Presidents, Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers, and other officers and attorneys-in-fact, and/or remove the same
from office, as from time to time may appear to the President to be required or
desirable to transact the business of the Corporation. Such officers shall
respectively exercise such powers and perform such duties as pertain to their
several offices, or as may be conferred upon, or assigned to, them by the
President.
Section 4.7 Tenure of Office. The President and all other Executive
Officers (those officers appointed by the Board) shall hold office for the
current year for which the Board was elected, unless they shall resign, are
disqualified, or are removed by the Board; and any vacancy occurring in the
office of President shall be filled promptly by the Board. All other officers
other than Executive Officers shall hold office at the pleasure of the
President.
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ARTICLE V
Stock and Stock Certificates
Section 5.1 Transfers. Shares of stock shall be transferable on the books
of the Corporation, and a transfer book shall be kept in which all transfers of
stock shall be recorded. Every person becoming a shareholder by such transfer
shall, in proportion to his shares, succeed to all rights of the prior holder
of such shares.
Section 5.2 Stock Certificates. Certificates of stock shall bear the
manual or facsimile signature of the Chairman, any Vice Chairman, the President,
any Executive Vice President or any Senior Vice President, and shall be signed
manually or by facsimile process by the Secretary, Assistant Secretary,
Treasurer or Assistant Treasurer, and the seal of the Corporation shall be
engraved thereon. Each certificate shall recite on its face that the stock
represented thereby is transferable only upon the books of the Corporation
properly endorsed.
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ARTICLE VI
Directors' Liability
Section 6.1 Directors' Personal Liability. A director of the Corporation
shall not be personally liable, as such, for monetary damages for any action
taken, or any failure to take any action; provided, however, that this provision
shall not eliminate or limit the liability of a director to the extent that such
elimination or limitation of liability is expressly prohibited by Section 1713
of the Pennsylvania Business Corporation Law of 1988 or any successor statute
as in effect at the time of the alleged action or failure to take action by such
director.
Section 6.2 Preservation of Rights. Any repeal or modification of this
Article shall not adversely affect any right or protection existing at the time
of such repeal or modification to which any director or former director may be
entitled under this Article. The rights conferred by this Article shall
continue as to any person who has ceased to be a director of the Corporation and
shall inure to the benefit of the heirs and personal representatives of such
person.
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ARTICLE VII
Indemnification
Section 7.1 Mandatory Indemnification of Directors and Officers. The
Corporation shall indemnify, to the fullest extent now or hereafter permitted
by law (including but not limited to the indemnification provided by Chapter 17,
Subchapter D, of the Pennsylvania Business Corporation Law of 1988), each
director or officer (including each former director or officer) of the
Corporation who was or is made a party to or a witness in or is threatened to
be made a party to or a witness in any threatened, pending or completed action
or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was an authorized representative of
the Corporation, against all expenses (including attorneys' fees and
disbursements), judgments, fines (including excise taxes and penalties) and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action or proceeding.
Section 7.2 Mandatory Advancement of Expenses to Directors and Officers.
The Corporation shall pay all expenses (including attorneys' fees and
disbursements) incurred by a director or officer (including a former director
or officer) referred to in Section 7.1 hereof in defending or appearing as a
witness in any action or proceeding described in Section 7.1 hereof in advance
of the final disposition of such action or proceeding upon receipt of an
undertaking by or on behalf of such person to repay all amounts advanced if it
is ultimately determined that he or she is not entitled to be indemnified by the
corporation as provided in Section 7.4 hereof.
Section 7.3 Permissive Indemnification and Advancement of Expenses. The
Corporation may, as determined by the Board from time to time, indemnify to the
fullest extent now or hereafter permitted by law, any person who was or is made
a party to or a witness in or is threatened to be made a party to or a witness
in, or was or is otherwise involved in, any threatened, pending or completed
action or proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that such person is or was an authorized representative
of the Corporation, both as to action in such person's official capacity and as
to action in another capacity while holding such office or position, against all
expenses (including attorneys' fees and disbursements), judgments, fines
(including excise taxes and penalties), and amounts paid in settlement actually
and reasonably incurred by such person in connection with such action or
proceeding. The Corporation may, as determined by the Board from time to time,
pay expenses incurred by any such person by reason of his or her participation
in an action or proceeding referred to in this Section 7.3 in advance of the
final disposition of such action or proceeding upon receipt of an undertaking
by or on behalf of such person to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the Corporation
as provided in Section 7.4 hereof.
Section 7.4 Scope of Indemnification. Indemnification under this Article
shall not be made by the Corporation in any case where a court determines that
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the alleged act or failure to act giving rise to the claim for indemnification
is expressly prohibited by Chapter 17, Subchapter D, of the Pennsylvania
Business Corporation Law of 1988 or any successor statute as in effect at the
time of such alleged action or failure to take action.
Section 7.5 Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was an authorized representative of the Corporation,
against any liability asserted against or incurred by such person in any such
capacity, or arising out of the status of such person as such, whether or not
the Corporation would have the power to indemnify such person against any
liability under the provisions of this Article.
Section 7.6 Funding to Meet Indemnification Obligations. The Board,
without approval of the shareholders, shall have the power to borrow money on
behalf of the Corporation, including the power to pledge the assets of the
Corporation, from time to time to discharge the Corporation's obligations with
respect to indemnification, the advancement and reimbursement of expenses, and
the purchase and maintenance of insurance referred to in this Article. The
Corporation may, in lieu of or in addition to the purchase and maintenance of
insurance referred to in Section 7.5 hereof, establish and maintain a fund of
any nature or otherwise secure or insure in any manner its indemnification
obligations, whether arising under or pursuant to this Article or otherwise.
Section 7.7 Miscellaneous. Each director, officer or other authorized
representative of the Corporation shall be deemed to act in such capacity in
reliance upon such rights of indemnification and advancement of expenses as are
provided in this Article. The rights of indemnification and advancement of
expenses provided by this Article shall not be deemed exclusive of any other
rights to which any person seeking indemnification or advancement of expenses
may be entitled under any agreement, vote of shareholders or disinterested
directors, statue or otherwise, both as to action in such person's official
capacity and as to action in another capacity while holding such office or
position, and shall continue as to a person who has ceased to be an authorized
representative of the Corporation and shall inure to the benefit of the heirs
and personal representatives of such person. Indemnification and advancement
of expenses under this Article shall be provided whether or not the indemnified
liability arises or arose from any threatened, pending or completed action by
or in the right of the Corporation.
Section 7.8 Definition of Corporation. For purposes of this Article,
references to "the Corporation" shall include all constituent associations
absorbed
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in a consolidation, merger or division, as well as the surviving or new
associations surviving or resulting therefrom, so that (i) any person who is or
was an authorized representative of a constituent, surviving or new association
shall stand in the same position under the provisions of this Article with
respect to the surviving or new association as such person would if he or she
had served the surviving or new association in the same capacity and (ii) any
person who is or was an authorized representative of the Corporation shall stand
in the same position under the provisions of this Article with respect to the
surviving or new association as such person would with respect to the
Corporation if its separate existence had continued.
Section 7.9 Definition of Authorized Representative. For the purposes of
this Article, the term "authorized representative" shall mean a director,
officer, employee or agent of the Corporation or of any subsidiary of the
Corporation, or a trustee, custodian, administrator, committeeman or fiduciary
of any employee benefit plan established and maintained by the Corporation or
by any subsidiary of the Corporation, or a person serving another association,
corporation, partnership, joint venture, trust or other enterprise in any of the
foregoing capacities at the request of the Corporation.
Section 7.10 Repeal or Modification. Any repeal or modification of this
Article shall not adversely affect any right or protection existing at the time
of such repeal or modification to which any person may be entitled under this
Article.
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ARTICLE VIII
Corporate Seal
Section 8.1 Corporate Seal. The Chairman, any Vice Chairman, the
President, any Executive Vice President, any Senior Vice President, any Vice
President, any Assistant Vice President, the Secretary or any Assistant
Secretary, the Treasurer or any Assistant Treasurer, or any other officer
thereunto designated by the Board or by the President, shall have authority to
affix the corporate seal to any document requiring such seal, and to attest the
same. Such seal shall be substantially in the following form:
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ARTICLE IX
Miscellaneous Provisions
Section 9.1 Fiscal Year. The fiscal year of the Corporation shall be the
calendar year.
Section 9.2 Execution of Instruments. All agreements, indentures,
mortgages, deeds, conveyances, transfers, certificates, declarations, receipts,
discharges, releases, satisfactions, settlements, petitions, schedules,
accounts, affidavits, bonds, undertakings, proxies and other instruments or
documents may be signed, executed, acknowledged, verified, delivered or accepted
in behalf of the Corporation by the Chairman, any Vice Chairman, the President,
any Executive Vice President, any Senior Vice President, any Vice President or
Assistant Vice President, the Secretary or any Assistant Secretary, or the
Treasurer or any Assistant Treasurer. Any such instruments may also be
executed, acknowledged, verified, delivered or accepted in behalf of the
Corporation in such manner and by such other officers as the Board may from time
to time direct. The provision of this Section 9.2 are supplementary to any
other provision of these By-laws.
Section 9.3 Records. The Articles of Incorporation, the By-Laws, and the
proceedings of all meetings of the shareholders, the Board, standing committees
of the Board, shall be recorded in appropriate minute books provided for the
purpose. The minutes of each meeting shall be signed by the Secretary, or by
such other officer appointed to act as Secretary of the meeting.
Section 9.4 Control-Share Acquisitions. The provisions of Subchapter G
of Chapter 25 of Title 15 Pa.C.S. (15 Pa.C.S. Sections 2561-2567) as amended by
Act No. 1990-36 (regarding Control-share Acquisitions) shall not be applicable
to this Corporation. (Originally adopted July 16, 1990.)
Section 9.5 Disgorgement by Certain Controlling Shareholders. The
provisions of Subchapter H of Chapter 25 of Title 15 Pa.C.S. (15 Pa.C.S.
Sections 2571-2575) as amended by Act No. 1990-36 (regarding Disgorgement by
Certain Controlling Shareholders Following Attempts to Acquire Control) shall
not be applicable to this Corporation. (Originally adopted July 16, 1990.)
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ARTICLE X
By-Laws
Section 10.1 Inspection. A copy of the By-laws, with all amendments
thereto, shall at all times be kept in a convenient place at the main office of
the Corporation, and shall be open for inspection to all shareholders during
business hours.
Section 10.2 Amendments. The By-laws may be amended, modified or repealed
at any regular meeting of the Board by a vote of a majority of the whole number
of the Directors, provided at least ten (10) days written notice of the proposed
amendment has been given to each director prior to the meeting. The By-laws may
be amended, modified or repealed by the shareholders of the Corporation in
accordance with applicable law.
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Exhibit 10.1
101 East Washington Street First Western Bancorp, Inc.
P.O. Box 1488 Thomas J. O'Shane
New Castle, PA 16103-1488 President and
Telephone: (412) 652-8550 Chief Executive Officer
Fax: (412) 652-0246
May 4, 1995
Mr. John W. Sant
115 Valhalla Drive
New Castle, PA 16105
Dear Jack,
After you informed me that you were willing, as former Chairperson
of First Western Bancorp, Inc., to remain a director and be available to
consult with us, I expressed my desire to incorporate the terms of your
service into a letter that would serve both as an Agreement and as a full
disclosure to First Western's Board. Your services will be to act as a
consultant and advisor to me in my capacity as President and Chief Executive
Officer of First Western, to the new chairperson, and your service as a
Director of First Western's subsidiaries and certain committees of both First
Western and its subsidiaries. The following terms and conditions will become
effective upon your election to the Board of Directors at the Board's
reorganization meeting in April this year. Your compensation for consulting
services will be $20,000 per year, which will be paid to you in equal monthly
installments beginning in May, 1995.
First Western believes that your service as an advisor and
consultant requires that you serve as a Director not only of First Western
Bancorp, but also of its three principal subsidiaries, First Western Bank,
N.A., First Western Bank, F.S.B., and First Western Trust Services Company
and that you serve on their committees; the Combined Executive Loan
Committee, First Western Bancorp's Executive Committee, the First Western
Bancorp Compensation Committee, the ALCO Committee, and the Trust Services
Executive Committee. We expect you to keep abreast of all of First Western's
activities and to be available on a consulting basis to First Western's Board
of Directors, the Boards and chief executive officers of its subsidiaries,
the First Western financial section and its independent auditors, and the
First Western legal department. For these reasons, you are expected to
attend 75% of the meetings of the boards and committees set forth herein.
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Your director fees and committee fees will be paid to you in the
same way these fees are paid to the other directors, including any
adjustments made to the fee schedule and retainer arrangements. All fees
(including consulting) are eligible to be deferred under the recently amended
Deferred Directors Compensation Plan.
Assuming your election at the reorganization meeting in April, this
Agreement for your services shall begin at that 1995 reorganization meeting
of First Western Bancorp, Inc., and shall be in force until the
reorganization meeting of First Western in April of 1996. Prior to that
meeting, we will review the Agreement, the services rendered and compensation
paid, and the need, if any, for revisions. After that time, and subject to
our mutual decision on your ongoing service, this Agreement may be extended
by either party upon written notice given one month prior to the last day of
the month in which this Agreement is to be terminated.
If the above terms are agreeable to you, will you please sign a
copy of this letter at your earliest convenience, and return it to me at your
earliest convenience.
Very truly yours,
/s/ Thomas J. O'Shane
---------------------
THOMAS J. O'SHANE
I hereby acknowledge receipt and do understand the above terms and conditions
outlined in this Agreement between First Western Bancorp, Inc., and the
undersigned individual.
/s/ John W. Sant
- ----------------
John W. Sant
May 4, 1995
- ----------------
Date
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Exhibit 10.2
101 East Washington Street First Western Bancorp, Inc.
P.O. Box 1488 Thomas J. O'Shane
New Castle, PA 16103-1488 President and
Telephone: (412) 652-8550 Chief Executive Officer
Fax: (412) 652-0246
May 4, 1995
Mr. John R. McKinley
412 Means Road
New Wilmington, PA 16142
Dear John,
After you informed me that you were willing to serve as Chairperson
of First Western Bancorp, Inc., I expressed my desire to incorporate the
terms of your service into a letter that would serve both as an Agreement and
as a full disclosure to First Western's Board. Your services will be, not
only the normal duties as Chairperson of First Western's Board, but also to
act as a consultant and advisor to me in my capacity as President and Chief
Executive Officer of First Western, and your service as a Director of First
Western's subsidiaries and certain committees of both First Western and its
subsidiaries. The following terms and conditions will become effective upon
your election as Chairperson of the Board of Directors at the Board's
reorganization meeting in April this year. Your compensation for consulting
services will be $41,000 per year, which will be paid to you in equal monthly
installments beginning in May, 1995.
First Western believes that your service as Chairperson of the
Board of Directors and as an advisor and consultant to me, requires that you
serve as a Director not only of First Western Bancorp, but also of its three
principal subsidiaries, First Western Bank, N.A., First Western Bank, F.S.B.,
and First Western Trust Services Company and that you serve or chair on their
committees; the Combined Executive Loan Committee, First Western Bancorp's
Executive Committee, the First Western Bancorp Compensation Committee, the
Loan Review Committee, the ALCO Committee, and the Trust Services Executive
Committee. Service on the Residential Mortgage Company of America Board is
included as well, if necessary. We expect you to keep abreast of all of
First Western's activities and to be available on a consulting basis to First
Western's Board of Directors, the Boards and chief executive officers of its
subsidiaries, the First Western Audit Committee, the First Western financial
section and its independent auditors, and the First Western legal department.
For these reasons, you are expected to attend 75% of the meetings of the
boards and committees set forth herein.
1
<PAGE>
<PAGE> 2
Your director fees and committee fees will be paid to you in the
same way these fees are paid to the other directors, including committee
chairperson fees as appropriate and any adjustments made to the fee schedule,
including retainer arrangements. All fees (including consulting) are eligible
to be deferred under the recently amended Deferred Directors Compensation
Plan.
Assuming your election at the reorganization meeting in April, this
Agreement for your services shall begin at that 1995 reorganization meeting
of First Western Bancorp, Inc., and shall be in force at least until the
reorganization meeting of First Western in April of 1996. Prior to that
meeting, we will review the Agreement, the services rendered and compensation
paid, and the need, if any, for revisions. After that time, this Agreement
may be terminated by either party upon written notice given one month prior
to the last day of the month in which this Agreement is to be terminated.
Other than that termination provision and the review provisions, continuation
and renewal of this contract will be on an annual basis upon your re-election
as First Western Bancorp, Inc.'s. Chairperson and as agreed upon between the
chief executive officer of First Western and yourself, subject to Board
approval.
If the above terms are agreeable to you, will you please sign a
copy of this letter at your convenience, and return it to me at your earliest
convenience.
Very truly yours,
/s/ Thomas J. O'Shane
---------------------
THOMAS J. O'SHANE
I hereby acknowledge receipt and do understand the above terms and conditions
outlined in this Agreement between First Western Bancorp, Inc., and the
undersigned individual.
/s/ John R. McKinley
- --------------------
John R. McKinley
May 4, 1995
- --------------------
(Date)
<PAGE>
<PAGE> 1
DELOITTE & Exhibit 15.1
TOUCHE LLP
- ----------
- -----------------------------------------------------------------
2500 One PPG Place Telephone: (412) 338-7200
Pittsburgh, Pennsylvania 15222-5401 Facsimile: (412) 338-7380
August 4, 1995
To the Shareholders and
Board of Directors
First Western Bancorp, Inc.
New Castle, Pennsylvania 16103
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of First Western Bancorp, Inc. and subsidiaries for the periods
ended June 30, 1995 and 1994, as indicated in our report dated July 17, 1995;
because we did not perform an audit, we expressed no opinion on that
information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995, is
incorporated by reference in the Registration Statements of First Western
Bancorp, Inc. on Form S-8 (No. 33-46923) for the First Western Bancorp, Inc.
401(k) Profit-Sharing and Stock Bonus Plan, on Form S-8 (No. 33-50372) for
the First Western Bancorp, Inc. Incentive Stock Option Plan for Key Employees
and on Form S-3 (No. 33-40596) for the First Western Bancorp, Inc. Dividend
Reinvestment and Additional Stock Purchase Plan.
We also are aware that the aforementioned report, pursuant to Rule 436(c)
under the Securities Act of 1933, is not considered a part of the Registration
Statements prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that
Act.
/s/ DELOITTE & TOUCHE LLP
- ---------------
DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
- ---------------
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