<PAGE> 1
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(E)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
First Western Bancorp, Inc.
-----------------------------------------------------
(Name of Registrant as Specified in its Charter)
First Western Bancorp, Inc.
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------
(5) Total fee paid:
------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------
(3) Filing Party:
--------------------------------------------------
(4) Date Filed:
----------------------------------------------------
[ X ] No fee required
<PAGE> 2
101 East Washington Street
P.O. Box 1488
New Castle, PA 16103-1488
Telephone: (412) 652-8550
Fax: (412) 652-0246
FIRST WESTERN LOGO
March 17, 1997
To Our Shareholders:
You are cordially invited to attend the 1997 Annual Meeting of Shareholders of
First Western Bancorp, Inc., to be held on Tuesday, April 15, 1997, beginning at
10:30 a.m., local time, at the New Englander, 3009 Wilmington Road, New Castle,
Pennsylvania. In the back of this Proxy are directions to the New Englander; if
you need additional assistance, please contact the corporate office at (800)
696-2572.
In addition to our regular business, we will present summary performance
information for 1996 and discuss how we are positioning First Western for the
future. New lending initiatives and a restructuring of our balance sheet as a
result of our successful sale of credit card loans in 1996 will also be
reviewed. Following the meeting, a light lunch will be served to all attending
shareholders to provide an opportunity to meet informally with the directors and
management of First Western and its subsidiaries. Please accept this invitation
to attend the meeting and join us for the luncheon afterwards.
The formal Notice of Annual Meeting and Proxy Statement, which follow, include a
listing and discussion of the matters upon which you will act.
Whether or not you plan to attend the meeting, we urge you to mark, sign, date
and return the enclosed Proxy Card in the accompanying postage-paid envelope so
that as many shares as possible may be represented at the meeting. Your vote is
important and your cooperation in executing and returning the Proxy Card
promptly will be appreciated.
Sincerely,
/s/ THOMAS J. O'SHANE
Thomas J. O'Shane
Chairman, President and Chief Executive
Officer
Subsidiaries: First Western Bank, N.A. - First Western Bank, F.S.B. - First
Western Trust Services Company
<PAGE> 3
101 East Washington Street
P.O. Box 1488
New Castle, PA 16103-1488
Telephone: (412) 652-8550
Fax: (412) 652-0246
FIRST WESTERN LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO OUR SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of Shareholders of First Western
Bancorp, Inc. ("First Western") will be held at the New Englander, 3009
Wilmington Road, New Castle, Pennsylvania 16101, on Tuesday, April 15, 1997 at
10:30 a.m., local time, for the purpose of considering and voting upon the
following:
1. The election of three directors whose terms will expire in 2000 and one
director whose term will expire in 1998; and
2. Such other business as may properly be brought before the meeting and any
adjournment or adjournments thereof.
Only shareholders of record of First Western at the close of business on March
10, 1997 are entitled to notice of and to vote at the Annual Meeting.
Enclosed herewith are a Proxy Statement and form of Proxy. We urge you to mark,
date, sign and return the Proxy as promptly as possible whether or not you plan
to attend the meeting in person. If you do attend the meeting, you may, if you
wish, withdraw your Proxy and vote in person. In any event, you may revoke your
Proxy prior to its exercise.
By Order of the Board of Directors,
/s/ ROBERT H. YOUNG
Robert H. Young
Executive Vice President-Chief
Financial Officer,
Secretary and Treasurer
New Castle, Pennsylvania
March 17, 1997
-1-
Subsidiaries: First Western Bank, N.A. - First Western Bank, F.S.B. - First
Western Trust Services Company
<PAGE> 4
[THIS PAGE INTENTIONALLY LEFT BLANK]
-2-
<PAGE> 5
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
FIRST WESTERN BANCORP, INC.
GENERAL INFORMATION
The accompanying Proxy is being solicited by the Board of Directors of First
Western Bancorp, Inc. ("First Western") for use at the Annual Meeting of
Shareholders of First Western to be held April 15, 1997, 10:30 a.m., local time,
at the New Englander, 3009 Wilmington Road, New Castle, Pennsylvania and for use
at any adjournment or adjournments thereof.
The Proxy may be revoked at any time prior to its exercise by written notice of
revocation or by a later dated Proxy sent to the Secretary of First Western at
its principal executive offices, provided such notice is received prior to
exercise. Shareholders who attend the meeting may, if they wish, withdraw their
Proxy and vote in person.
The Board of Directors has fixed the close of business on March 10, 1997, as the
record date for the determination of shareholders entitled to notice of and to
vote at the Annual Meeting. As of that date First Western had issued and
outstanding 7,651,902 shares of its common stock, par value $5.00 per share
("Common Stock"), eligible to vote at the Annual Meeting. First Western's
authorized capital consists of 20,000,000 shares of Common Stock and 4,000,000
shares of preferred stock, without par value ("Preferred Stock"). No shares of
preferred stock have been issued. Holders of Common Stock are entitled to one
vote for each share of Common Stock held on all matters, except with respect to
the election of directors, for which shareholders have the right to cumulate
their votes.
First Western is a Pennsylvania business corporation and is registered with the
Federal Reserve Board as a bank holding company and with the Office of Thrift
Supervision as a savings association holding company. Its wholly-owned banking
subsidiaries are First Western Bank, National Association ("FW Bank") and First
Western Bank, Federal Savings Bank ("FW Savings") (FW Bank and FW Savings are
sometimes referred to herein as the "Banks"). First Western has three
non-banking subsidiaries: First Western Trust Services Company ("Trust
Services"), which provides trust, estate management and financial services to
customers in the market areas of the Banks, First Western Investment Services
Company, a Delaware investment company which holds investment securities for
First Western, and First Western Capital Trust I, a Delaware business trust.
The principal executive offices of First Western are located at 101 East
Washington Street, New Castle, Pennsylvania 16101 (mailing address: P. O. Box
1488, New Castle, Pennsylvania, 16103-1488). This Proxy Statement and the
accompanying Notice of Meeting and Proxy Card are first being mailed to
shareholders on or about March 17, 1997. A copy of First Western's Annual Report
for the fiscal year ended December 31, 1996, which includes First Western's
consolidated financial statements, accompanies this mailing.
All expenses of this solicitation, including the cost of mailing, will be borne
by First Western. First Western will not pay any compensation for the
solicitation of proxies, but upon request will reimburse banks, brokers, and
other nominees, fiduciaries and custodians for their reasonable expenses
incurred in sending these proxy materials to beneficial owners and obtaining
their instructions. In addition, proxies may be solicited by directors, officers
and management personnel of First Western and its subsidiaries. Solicitations
may be made by mail, telephone, facsimile or in person.
-3-
<PAGE> 6
ELECTION OF DIRECTORS
The Bylaws of First Western provide that the Board of Directors shall consist of
not fewer than five persons, the exact number to be fixed and determined from
time to time by a resolution of the Board or of the shareholders. The Board's
current size is set at twelve members. In December, 1996, two directors resigned
from the Board for personal reasons, resulting in a reduction in the total size
of the Board from fourteen to twelve members. Pursuant to First Western's
Bylaws, as amended, nominations for directors other than those made by the Board
must be in writing and delivered or mailed to the Chairman of First Western no
later than January 31 for an election to be held at the annual meeting of
shareholders that year and no later than 45 days prior to any other meeting of
shareholders called for the election of directors; provided, however, that if
less than 21 days notice of such other meeting is given to shareholders, then
nominations for directors shall be mailed or delivered to the Chairman of First
Western no later than the close of business on the seventh day following the day
on which such notice of meeting was mailed. Nominations by shareholders shall
contain the following information to the extent known by the nominating
shareholder: (i) the name and address of the proposed nominee; (ii) the
principal occupation of the proposed nominee; (iii) the total number of shares
of Common Stock to be voted for the proposed nominee; (iv) the name and resident
address of the nominating shareholder; and (v) the number of shares of Common
Stock held by the nominating shareholder.
The Board, prior to the 1997 Annual Meeting, is currently divided into three
classes of four members each. The term of office of one class expires each year.
Nominees to the class of directors whose term expires at each Annual Meeting are
generally elected for a three-year term. However, in the event the number of
directors is changed, any increase or decrease is to be so apportioned among the
classes so as to maintain the classes as nearly equal in number as possible. Any
additional director of a class shall hold office for a term which shall coincide
with the term of such class.
In February 1995, the Board adopted an amendment to the Bylaws which permits a
former President or Chairman to be nominated to the Board for a one-year term
without regard to any age limitation in the Bylaws. Section 2.3 of the Bylaws
generally requires retirement from the Board at the expiration of a director's
term after reaching age 70. In adopting the amendment, the Board recognizes that
a former President or Chairman of First Western would provide experience,
expertise and historical continuity to First Western and would provide
significant and substantial value in continuing to be represented on the Board,
subject to election at each Annual Meeting of Shareholders that such person
continues to be nominated. John W. Sant, age 76, former Chairman, President and
Chief Executive Officer, is being nominated by the Board for an additional
one-year term to expire in 1998. At the Annual Meetings in 1995 and 1996, Mr.
Sant was nominated for and reelected to the Board for successive one-year terms.
The class whose term will expire as of the date of the 1997 Annual Meeting of
Shareholders consists of four directors, all of whom are nominees for
reelection. The Board has nominated three persons for election as directors for
a three-year term expiring in 2000--James M. Campbell, Floyd H. McElwain and
Thomas J. O'Shane as continuing directors, and John W. Sant as a continuing
director for a one-year term expiring in 1998. Assuming the election of these
three nominees to the 2000 class and Mr. Sant to the 1998 class, the 2000 class
of directors will consist of three members, the 1999 class of directors will
consist of four members, and the 1998 class of directors will consist of five
members.
Each nominee has advised First Western of his willingness and ability to serve
if elected. If however, prior to the election of directors at the 1997 Annual
Meeting, any of the nominees becomes unavailable or proves unable to serve for
any reason, proxies will be voted for the election of such other person or
persons as the Board of Directors may select to replace such nominee. MANAGEMENT
AND THE BOARD RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTORS.
The Articles of Incorporation of First Western provide that in all elections of
directors, each shareholder has the right to vote the number of shares owned by
him for as many persons as there are directors to be elected, or to cumulate
such votes and give one candidate as many votes as equals the number of
directors multiplied by the number of shares, or to distribute his total votes
among as many candidates as desired. Unless otherwise specified, execution of a
Proxy will confer discretionary authority to the persons named therein as
proxies to cumulate votes.
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<PAGE> 7
First Western is organized under the laws of the Commonwealth of Pennsylvania.
Pursuant to the provisions of the Pennsylvania Business Corporation Law of 1988,
as amended, the affirmative vote of a plurality of the votes cast by the
shareholders at an annual meeting of a corporation is required to elect the
directors of that corporation. Accordingly, abstentions and broker non-votes
have no effect on the outcome of the election of directors. Proxies solicited by
the Board of Directors will be voted in favor of the nominees for directors
unless otherwise indicated thereon.
The following tables set forth certain information about the nominees for
election as directors and about the continuing directors of First Western. The
information includes the number of shares of Common Stock which each of them
owned beneficially as of January 31, 1997, and the percentage which those shares
represented of the total outstanding Common Stock in any instance where the
percentage equaled or exceeded one percent. Each nominee or director has been
engaged in the principal occupation listed for five years or more, except as
otherwise indicated in the table. Except as noted below, there are no family
relationships among current directors, nominees for directors, executive
officers or nominees for executive officers of either First Western or its
subsidiaries.
NOMINEES FOR DIRECTORS WHOSE TERMS WILL EXPIRE IN 2000
<TABLE>
<CAPTION>
SHARES OF PERCENT
COMMON STOCK OWNED
NAME, PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE BENEFICIALLY (IF 1%
DURING PAST FIVE YEARS AND DIRECTORSHIPS (1) AGE (1) OWNED(2) OR MORE)
- -------------------------------------------------- ---------- ------------ --------
<S> <C> <C> <C>
James M. Campbell 53 33,292(4) --
President, Shenango Steel Buildings, Inc. (steel
fabrication company); Director, FW Savings;
Member, Compensation and Asset/Liability
Committees of First Western; Director of First
Western since 1990(3)
Floyd H. McElwain 50 6,512 --
President, McElwain Oldsmobile-Cadillac, Inc.;
Chairman, Audit Committee and Member, Policy and
Oversight Committee of First Western; Director
of First Western since 1990
Thomas J. O'Shane 49 141,375(5) 1.85%
Chairman, First Western since April, 1996 and
President and Chief Executive Officer; Director,
Nobel Insurance Limited; Director, Federal
Reserve Bank of Cleveland-Pittsburgh Branch;
Chairman, FW Bank and FW Savings and Vice
Chairman, Trust Services; Chairman,
Asset/Liability Committee and Member, Loan
Review Committee of First Western; Director of
First Western since 1988
</TABLE>
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<PAGE> 8
NOMINEE FOR DIRECTOR WHOSE TERM WILL EXPIRE IN 1998
<TABLE>
<CAPTION>
SHARES OF PERCENT
COMMON STOCK OWNED
NAME, PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE BENEFICIALLY (IF 1%
DURING PAST FIVE YEARS AND DIRECTORSHIPS (1) AGE (1) OWNED(2) OR MORE)
- ------------------------------------------------- ---------- ------------ --------
<S> <C> <C> <C>
John W. Sant 76 64,313 --
Retired; Chairman, First Western through April
1995; President and Chief Executive Officer,
First Western through 1990; Director, Trust
Services; Member, Compensation and
Asset/Liability Committees of First Western;
Director of First Western since 1966(3),(6)
</TABLE>
CONTINUING DIRECTORS WHOSE TERMS WILL EXPIRE IN 1998
<TABLE>
<CAPTION>
SHARES OF PERCENT
COMMON STOCK OWNED
NAME, PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE BENEFICIALLY (IF 1%
DURING PAST FIVE YEARS AND DIRECTORSHIPS (1) AGE (1) OWNED(2) OR MORE)
- ------------------------------------------------- ---------- ------------ --------
<S> <C> <C> <C>
Wendell H. Boyd 57 6,838 --
Partner, D.M. Boyd Co. (manufacturer of
modified soils for golf course industry);
Member, Audit and Loan Review Committees of
First Western; Director of First Western since
1995
Robert C. Duvall 54 17,923(7) --
Vice President of Finance, Wampum Hardware Co.
(explosives distributor for the blasting
industry); Director, Nobel Insurance Limited;
Officer and Director of IRECO Midwest, Inc.
(affiliated with Wampum Hardware Co.);
Chairman, Compensation Committee and Member,
Policy and Oversight Committee of First
Western; Director of First Western since 1995
Louis J. Kasing, Jr. 68 5,748 --
President, Kasing Auto Sales, Inc.; Member,
Asset/Liability and Loan Review Committees of
First Western; Director of First Western since
1990
John P. O'Leary, Jr. 50 4,840 --
President and Chief Executive Officer,
Tuscarora Incorporated (manufacturer of custom
molded products); Director, Matthews
International; Member, Compensation and Policy
and Oversight Committees of First Western;
Director of First Western since 1992
</TABLE>
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<PAGE> 9
CONTINUING DIRECTORS WHOSE TERMS WILL EXPIRE IN 1999
<TABLE>
<CAPTION>
SHARES OF PERCENT
COMMON STOCK OWNED
NAME, PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE BENEFICIALLY (IF 1%
DURING PAST FIVE YEARS AND DIRECTORSHIPS (1) AGE (1) OWNED(2) OR MORE)
- ------------------------------------------------- ---------- ------------ --------
<S> <C> <C> <C>
John W. Lehman, M.D. 64 44,756 --
Physician, Beaver Valley Orthopedics
Association; Director, FW Bank; Member, Audit
and Asset/Liability Committees of First
Western; Director of First Western since
1986(3)
Thomas S. Mansell 57 62,082(8), (9) --
Senior Vice President, Assistant Secretary and
Legal Counsel of First Western; Director, Trust
Services; Director of First Western since 1990
Richard C. McGill 60 37,567 --
Managing Partner, McGill, Power, Bell and Co.,
Certified Public Accountants; Director, FW
Savings; Chairman, Loan Review Committee and
Member, Audit Committee of First Western;
Director of First Western since 1990(3)
Harold F. Reed, Jr. 69 29,290 --
Partner, Reed, Luce, Tosh, Wolford and Douglass
(law firm); Director, Tuscarora Incorporated
(manufacturer of custom molded products);
Chairman, Trust Services; Member, Policy and
Oversight and Compensation Committees of First
Western; Director of First Western since
1986(3)
</TABLE>
- ---------
<TABLE>
<C> <S>
(1) As of January 31, 1997.
(2) Includes shares of Common Stock owned by immediate families (spouses, minor children and
relatives sharing the same home) of the respective persons and, if applicable, shares of
Common Stock held in the First Western Bancorp, Inc. 401(k) Profit-Sharing and Stock Bonus
Plan, an individual grantor trust related to the First Western Bancorp, Inc. Supplemental
Executive Retirement Plan, or the First Western Bancorp, Inc. Deferred Compensation Plan
for Directors.
(3) Years served as a director of First Western include years served as director of FW Bank or
its predecessor, or FW Savings.
(4) Includes 661 shares of Common Stock held beneficially in the name of Shenango Steel
Buildings, Inc., with authority to vote such shares.
(5) Includes options to purchase 82,208 shares of Common Stock which are exercisable within 60
days of January 31, 1997.
(6) John W. Sant is the uncle of Stephen R. Sant, President and Chief Executive Officer of FW
Bank and Executive Vice President-Chief Operating Officer of First Western.
(7) Includes 14,620 shares of Common Stock held beneficially in the name of Wampum Hardware
Co., with authority to vote such shares.
(8) Thomas S. Mansell disclaims beneficial ownership of 1,869 shares of Common Stock owned by
his spouse and his children which are included in the total shares indicated.
(9) Includes options to purchase 16,403 shares of Common Stock which are exercisable within 60
days of January 31, 1997.
</TABLE>
-7-
<PAGE> 10
All directors and officers of First Western as a group (23 persons) owned
beneficially 671,458 shares of Common Stock of First Western (including options
to acquire 224,069 shares which are exercisable within 60 days of January 31,
1997), or 8.51% of the 7,890,752 shares of Common Stock outstanding and options
which are exercisable within 60 days of January 31, 1997.
MEETINGS AND COMMITTEES
The Board of Directors of First Western met 9 times in 1996. All incumbent
directors named above attended 75% or more of the aggregate number of Board of
Directors meetings and, if applicable to their service, committee meetings held
in 1996. The Board of Directors currently has a Policy and Oversight Committee,
a Compensation Committee and an Audit Committee. The Board currently has no
Executive or Nominating Committee, with either the full Board or the Policy and
Oversight Committee serving in such capacities. The Compensation Committee met
four times in 1996 and is comprised solely of non-employee directors, including
Robert C. Duvall (Chairman), James M. Campbell, John P. O'Leary, Jr., Harold F.
Reed, Jr. and John W. Sant. The Policy and Oversight Committee met four times in
1996 and is comprised of Robert C. Duvall, Floyd H. McElwain, John P. O'Leary,
Jr. and Harold F. Reed, Jr.
The Audit Committee is comprised solely of independent directors, and for 1996,
included Floyd H. McElwain (Chairman), Wendell H. Boyd, John W. Lehman, M.D. and
Richard C. McGill. The Audit Committee's duties include, but are not limited to,
engaging and terminating independent auditors and approving fees charged,
reviewing the audit plan, the results of the auditing engagement, any
disagreements with management, their letter of recommendations and the adequacy
of internal accounting controls for First Western, and supervising the internal
audit function. First Western's internal audit department reports to the Audit
Committee. The Audit Committee met five times in 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
Mr. Thomas J. O'Shane, Chairman, President and Chief Executive Officer of First
Western, is a director and a member of the Compensation Committee of Nobel
Insurance Limited. Mr. Robert C. Duvall, a director of Nobel Insurance Limited,
is also a director of First Western, and is Chairman of First Western's
Compensation Committee. Mr. John W. Sant, formerly Chairman, President and Chief
Executive Officer of First Western, is a member of the Compensation Committee.
Mr. Harold F. Reed, Jr., a member of the Compensation Committee, is Chairman of
Trust Services. Mr. Reed is also a director of Tuscarora Incorporated and is a
member of the Compensation Committee of Tuscarora Incorporated. Mr. John P.
O'Leary, Jr. is a director of First Western and a member of the Compensation
Committee and is President and Chief Executive Officer and a director of
Tuscarora Incorporated.
DIRECTORS' COMPENSATION
Directors of First Western who are not employees of First Western or its
subsidiaries receive $750 for each meeting of the Board of Directors attended
and $350 for each committee meeting attended, with the chairperson of each
committee receiving $700 for each committee meeting attended. An annual retainer
of $3,000 is currently paid to all Board members. Occasionally, individual
directors are asked to meet with the Chairman of First Western on matters of
interest or importance or requiring the consultative services of such director.
In such situations, the per meeting rates applicable to a board member or
committee chairperson, as the case may be, are paid to the individual.
Directors of FW Bank and FW Savings who are not employees of First Western or
its subsidiaries receive $400 for each Board meeting attended and $350 for each
committee meeting attended, with the chairperson of each committee receiving
$700 for each committee meeting attended. An annual retainer of $2,400 per
member is also paid. The law firm of Reed, Luce, Tosh, Wolford and Douglass, of
which Harold F. Reed, Jr., a director, is a partner, served as an outside legal
counsel for FW Bank, for which such firm received a retainer of $20,000 plus
fees for special legal work on an as-billed basis in 1996.
Directors of Trust Services who are not employees of First Western or its
subsidiaries receive $300 for each Board meeting attended and $250 for each
committee meeting attended, with the chairperson of each
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<PAGE> 11
committee receiving $500 for each committee meeting attended. An annual retainer
of $2,400 per member is also paid.
All Directors of First Western and/or its subsidiaries may defer the receipt of
their fees, according to the terms of the First Western Bancorp, Inc. Deferred
Compensation Plan for Directors, until the earlier of their retirement from
First Western and/or a subsidiary board or their death. The director may choose
to have deferred fees accrued with interest credited at market rates, or to have
such fees, plus prior plan balances, funded through a grantor trust agreement,
with Trust Services serving as trustee, and invested in First Western Common
Stock.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth the compensation for services rendered during the
years ended December 31, 1996, 1995 and 1994 paid by First Western or its
subsidiaries to the Chief Executive Officer and the four other most highly
compensated executive officers of First Western whose annual salary and bonus
exceeded $100,000 for the year ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------- OTHER
YEAR ENDED ANNUAL ALL OTHER COMMON STOCK
DECEMBER SALARY BONUS COMPENSATION COMPENSATION OWNERSHIP
NAME, AGE AND PRINCIPAL POSITION (1) 31 (2) (3) (4) (5) (1), (6), (7), (8)
- ------------------------------------------- ---------- -------- -------- ------------ ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas J. O'Shane (49)
Chairman, President and Chief 1996 $281,000 $ 94,837 $ -- $ 47,597 141,375
Executive Officer, First Western 1995 266,500 119,925 -- 12,724
1994 260,000 122,850 -- 14,952
Robert H. Young (40)
Executive Vice President-Chief 1996 135,800 38,610 -- 11,397 27,616
Financial Officer, Secretary 1995 130,800 41,312 -- 12,724
and Treasurer, First Western 1994 128,000 39,375 -- 14,952
Stephen R. Sant (50)
President and Chief 1996 135,800 33,555 -- 11,497 51,433
Executive Officer, FW Bank 1995 128,100 40,659 -- 12,724
and Executive Vice President- 1994 125,000 37,500 -- 14,952
Chief Operating Officer, First Western
Robert E. Cimini (50)
Senior Vice President- 1996 117,275 17,349 -- 11,214 47,503
Marketing, First Western 1995 122,000 37,515 -- 12,724
1994 119,000 37,485 -- 14,952
Donald D. Wehn (42)
Senior Vice President-Mortgage and 1996 103,200 29,533 -- 9,821 7,356
Consumer Lending, First Western 1995 97,400 29,571 -- 10,778
1994 95,000 29,925 -- 12,200
</TABLE>
- ---------
(1) As of January 31, 1997.
(2) Includes salary only. Officers who are also Directors received no
compensation for acting as Directors or for attendance at Committee
meetings in 1996.
(3) Includes payments under the Incentive Compensation Plan, which are made in
cash as soon as practicable after the close of the fiscal year. Payments to
executive officers listed in the table above for 1996 included the amount
of bonus accrued for 1996 as determined in January 1997, and excluded the
bonus paid in January 1996 for 1995.
(4) Noncash compensation, in the case of each individual for each of the three
years in the table, did not exceed the lesser of $50,000 or 10% of total
compensation.
(5) Includes 401(k) Profit-Sharing and Stock Bonus Plan contributions only,
which includes a total of 148 shares (excluding forfeitures) of Common
Stock with a cost (and market value) of $8,531 as of December 31, 1996.
Messrs. O'Shane, Young and Sant each received 68 shares, Mr. Cimini
received 61 shares, and Mr. Wehn received 60 shares. Also includes company
contributions to a Supplemental
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<PAGE> 12
Executive Retirement Plan (described below) determined and made in 1996 on
behalf of Messrs. O'Shane, Young, Sant and Cimini totaling $38,100 for 1995
and prior years (no contributions were made in prior years).
(6) Includes shares of Common Stock owned by immediate families (spouses, minor
children and relatives sharing the same home) of the respective persons,
shares of Common Stock held in the 401(k) Profit-Sharing and Stock Bonus
Plan, and shares of Common Stock held by individual grantor trusts related
to the Supplemental Executive Retirement Plan.
(7) Includes options to purchase shares of Common Stock which are presently
exercisable or exercisable within 60 days of January 31, 1997 as follows:
82,208 shares, Mr. O'Shane; 20,331 shares, Mr. Young; 36,641 shares, Mr.
Sant; 26,533 shares, Mr. Cimini; and 2,000 shares, Mr. Wehn.
(8) Except for Mr. O'Shane, whose Common Stock beneficial ownership represents
1.85% of the total shares of Common Stock outstanding and options which are
exercisable within 60 days of January 31, 1997, no other executive officer
named in the table beneficially owns 1% or more of such total shares of
Common Stock.
INCENTIVE COMPENSATION PLAN
The Incentive Compensation Plan (the "Incentive Plan") is administered by the
Compensation Committee of the Board of Directors and provides for annual cash
bonus payments to all First Western and subsidiary officers generally at the
assistant vice president or branch officer level and above. Cash bonus payments
are based on the achievement of predetermined corporate, departmental, and
individual performance goals. For a description of the Incentive Plan, see
"Compensation Committee Report on Executive Compensation."
401(K) PROFIT-SHARING AND STOCK BONUS PLAN
The First Western Bancorp, Inc. 401(k) Profit-Sharing and Stock Bonus Plan has
the following features: (1) First Western or its subsidiaries makes
profit-sharing type (discretionary) contributions for the benefit of its
employees, (2) there is a cash or deferred (401(k)) arrangement which permits
contributions to be made by employees on an elective, pre-tax basis, (3) First
Western or its subsidiaries matches the 401(k) contributions for its employees
at the rate of $.50 for each $1.00 contributed by an employee, up to a maximum
employee contribution of 4% of salary, and (4) there are employee stock
ownership plan ("ESOP") provisions which enable the plan to borrow money in
order to acquire stock of First Western.
Any full-time employee of First Western or its subsidiaries who is at least 19
years old and who completes at least 1,000 hours of service within his first
twelve months of employment is eligible to participate. Profit-sharing type and
ESOP contributions are subject to a vesting schedule. Employees are 100% vested
after attaining five years of service. Employee 401(k) and matching
contributions are 100% vested immediately.
Profit-sharing type contributions are made by First Western and each subsidiary
and are allocated to all participating employees based upon the ratio of each
employee's compensation to the total compensation of all participants eligible
to share in the allocation. Contributions, including the cost of ESOP
contributions and 401(k) matching contributions, were determined for all
employees based on a percentage of First Western's pre-tax net income for 1996.
During 1996, 40,000 shares of First Western Common Stock were purchased on the
open market by the ESOP at a cost of $26.25 per share. The plan borrowed
$1,050,000 from an unrelated bank and will make principal payments over seven
years, beginning December 31, 1996. The shares will be allocated over the same
seven year period. A total of 5,714 shares (excluding forfeitures) were
allocated under the ESOP to participating employees for 1996 based upon the
ratio of each employee's earnings to the total earnings of all participating
employees of First Western. There are 34,286 unallocated shares held by the ESOP
as of December 31, 1996.
PENSION PLAN
The First Western Bancorp, Inc. Pension Plan (the "Pension Plan") covers all
full-time employees of First Western and its subsidiaries who have completed
1,000 hours of service within one calendar year and who have attained the age of
21. The Pension Plan provides for normal retirement at age 65, and early
retirement at age 55. Retirement benefits for normal retirement are 1% of the
employee's average monthly earnings
-10-
<PAGE> 13
(5 highest consecutive years divided by 60) times the years of credited service.
Monthly earnings are defined as current earnings including any bonuses and
elective employee salary deferrals under First Western's 401(k) Profit-Sharing
and Stock Bonus Plan. Employees who terminate their employment with 5 or more
years of credited service have a vested right to receive a pension upon normal
retirement at age 65. Employees who terminate their employment with 10 or more
years of credited service may also elect to receive their pension upon early
retirement at age 55. The Pension Plan provides for one-time early retirement
benefits for certain eligible employees. These one-time benefits included adding
years of service, eliminating the normal early retirement penalty and providing
an additional supplemental benefit for a limited period of time. Certain highly
compensated employees have similar one-time early retirement benefits provided
to them under a special non-qualified plan. None of the officers named in the
Summary Compensation Table are participants in this early retirement program.
Benefits which accrued to qualified employees of companies previously acquired
by First Western have been grandfathered through the dates at which such pension
plans were merged with the Pension Plan and may result in higher benefits than
those reported in the following table for certain individuals who have years of
service with such companies. Directors who are not also employees do not receive
retirement benefits. Retirement benefits under the Pension Plan are payable to
participants in the form of a joint and survivor annuity for married
participants who do not elect otherwise and in the form of a single annuity for
all other participants.
The following table shows annual pension benefits payable upon retirement at age
65, in various remuneration and years-of-service classifications, assuming the
election of a retirement allowance payable as a straight life annuity with
retirement on January 1, 1997. Remuneration for these purposes is the same as
the total of salary and bonus as disclosed in the Summary Compensation Table.
Annual benefits payable are not subject to any deduction for Social Security or
other offset amounts.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------------
REMUNERATION(1)(2) 15 20 25 30 35
- ------------------------------------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000............................. $18,750 $25,000 $ 31,250 $ 37,500 $ 43,750
150,000............................. 22,500 30,000 37,500 45,000 52,500
175,000............................. 26,250 35,000 43,750 52,500 61,250
200,000............................. 30,000 40,000 50,000 60,000 70,000
225,000............................. 33,750 45,000 56,250 67,500 78,750
250,000............................. 37,500 50,000 62,500 75,000 87,500
300,000............................. 45,000 60,000 75,000 90,000 105,000
350,000............................. 52,500 70,000 87,500 105,000 122,500
400,000............................. 60,000 80,000 100,000 120,000 140,000
450,000............................. 67,500 90,000 112,500 135,000 157,500
500,000............................. 75,000 100,000 125,000 150,000 175,000
</TABLE>
- ---------
(1) Section 401(a)(17) of the Internal Revenue Code contains an annual limit on
the amount of compensation covered for purposes of accruing benefits under
the Pension Plan. For 1996, this limit was $150,000. Since such limit is
subject to future adjustments, the benefit amounts shown in the table have
been calculated without regard to this limit.
(2) Thomas J. O'Shane, Robert H. Young, Stephen R. Sant, Robert E. Cimini and
Donald D. Wehn have 24, 10, 6, 22 and 17 whole years of service under the
plan, respectively, as of January 31, 1997. All such persons are fully
vested in their accrued benefits as of January 31, 1997.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Effective January 1, 1996, First Western adopted a Supplemental Executive
Retirement Plan (the "SERP"), which is a nonqualified defined contribution plan.
The SERP is intended to provide deferred compensation for
-11-
<PAGE> 14
certain highly compensated employees as described in Section 401(a)(1) of the
Employment Retirement Income Security Act of 1974, as amended.
The Compensation Committee administers the SERP, determines eligible
participants, the amount of any contribution to be made on an annual basis to a
grantor trust established for the benefit of the participant, the occurrence of
an event giving rise to the payment of benefits and such other matters as are
necessary to interpret the SERP and related trust.
As of January, 1996, the Committee determined that First Western would make a
contribution on behalf of Thomas J. O'Shane in the amount of $36,500 in
accordance with a formula intended to reflect pension benefits in excess of
current legislative limits which Mr. O'Shane could have accrued except for such
limits under First Western's qualified retirement plan. Messrs. Young, Sant and
Cimini are also eligible participants under the SERP, and contributions during
1996 were $300, $400 and $900, respectively. Such amounts are included in the
Summary Compensation Table for 1996. As of January, 1997, the Committee
determined that First Western would make a contribution for each of Messrs.
O'Shane, Young, Sant and Cimini under the SERP in the amount of $24,800, $800,
$1,100 and $100, respectively, with respect to 1996. Adjustments were also made
to the prior year's contribution due to a change in certain assumptions,
resulting in an additional contribution of $48,300, $600, $600 and $1,000,
respectively, for Messrs. O'Shane, Young, Sant and Cimini. Amounts contributed
in January, 1997 for 1996 and prior years are not included in the Summary
Compensation Table. Contributions to the individual grantor trusts are currently
invested in shares of Common Stock. There is no guaranteed benefit provided by
the SERP, and the ultimate benefit provided by the SERP will depend on the
Committee's annual determination of First Western's discretionary contribution
and actual earnings of the participant's individual account as determined under
the relative trust agreement.
OPTION PLAN
The Option Plan authorizes the granting of stock options to purchase up to
566,335 (including an additional 225,000 shares authorized under the Plan
amendment approved April 18, 1995) shares of Common Stock (as adjusted for stock
dividends and splits) to eligible officers or key employees at an exercise price
of not less than the fair market value on the date the options are granted (or
110% of fair market value for a ten percent or greater shareholder).
Unless otherwise designated by the Board of Directors, the Option Plan is
administered by the Compensation Committee of the Board of Directors (the
"Committee"). The Committee has the sole discretion to grant options, to set the
price to be paid for the Common Stock subject to the option, to prescribe the
terms of and conditions upon any such award of options, to determine the
exercise period, to adopt, amend and rescind the rules and regulations of the
Option Plan, to interpret the Option Plan and option agreements with
participants, and to make all other determinations and take all other actions
necessary or advisable for the implementation and administration of the Option
Plan. In determining the amount, form, limitations and other terms and
conditions of an award, the Committee will consider the functions and
responsibility of the awardee, his or her potential contributions to
profitability, sound growth and shareholder value, and such other facts as the
Committee may deem relevant. No more than 75,000 shares can be subject to
options granted to any one employee during any calendar year. The Committee may
grant options under the Option Plan to any officer or key employee of First
Western or any subsidiary of First Western.
In the discretion of the Committee, options granted under the Option Plan may be
intended to qualify as incentive stock options within the meaning of Section 422
of the Internal Revenue Code or may be intended to be options which do not so
qualify (i.e., nonqualified stock options). Unless the Committee determines
otherwise, no option may be exercised prior to six months following the date on
which such option was granted. The option price may be paid either in cash,
whole shares of Common Stock already owned by the optionee (valued at fair
market value on the day immediately preceding the exercise date), a combination
of cash and Common Stock or other consideration deemed acceptable by the
Committee.
If an optionee ceases to be employed by First Western for any reason other than
retirement, disability or death, unless such termination is with permission of
First Western or follows a "change in control" event described below, such
optionee's options automatically terminate on such date unless the Committee
determines otherwise. Options will become immediately exercisable upon the
occurrence of a change in control, and
-12-
<PAGE> 15
options will remain exercisable for at least three months following termination
of employment if such termination occurs after a change in control. The
Committee may include in a stock option agreement such terms as it deems
advisable with respect to retirement, termination or disability; provided,
however, that the exercise period after (i) retirement or termination with
consent of First Western may not exceed three months from the date of such event
and (ii) disability may not exceed twelve months. In no event, however, may an
option be exercised after the expiration date of such option fixed in the
applicable option agreement. If an optionee engages in competition with First
Western, the Committee may terminate all of such optionee's outstanding options.
The Board of Directors may, without further shareholder approval, terminate or
amend the Option Plan in any way; however, any amendment that would materially
increase the rights of a grantee of an option must be approved by the
shareholders. Termination or amendment of the Option Plan may not adversely
affect an optionee's rights under an award previously granted.
In 1991, options to purchase an aggregate of 95,724 shares of Common Stock (as
adjusted for stock dividends and splits) were granted to eligible officers which
remain outstanding as of January 31, 1997. On January 16, 1995, options to
purchase an aggregate of 133,250 shares of Common Stock were granted to current
eligible officers which remain outstanding as of January 31, 1997. Options to
purchase 125,680 shares of Common Stock (as adjusted for stock dividends and
splits) have been exercised or cancelled as of January 31, 1997. On November 4,
1996, options to purchase 15,000 shares of Common Stock were granted to a newly
hired executive officer, Richard L. Stover, Executive Vice President-Chief
Lending Officer, which remain outstanding as of January 31, 1997. All of the
1991 and 1996 option grants and 105,000 of the 1995 option grants are incentive
stock options and the remaining 45,000 of the 1995 stock options are
nonqualified stock options. The option period may not exceed five years from the
date of grant for a ten percent or greater shareholder and ten years from the
date of grant for all other shareholders.
AGGREGATED OPTION EXERCISES IN 1996 AND YEAR-END OPTION VALUES
The following table sets forth the aggregated option exercises during the year
ended December 31, 1996, and the year-end value of options held by each of the
named executive officers of First Western in the Summary Compensation Table.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT YEAR-END AT YEAR-END
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED (1) UNEXERCISABLE (#) UNEXERCISABLE ($)(2)
- ------------------- --------------- ------------ ------------------- ----------------------
<S> <C> <C> <C> <C>
Thomas J. O'Shane -- -- 69,806/12,402 $ 764,967/$241,839
Robert H. Young -- -- 14,856/ 6,345 175,013/ 39,656
Stephen R. Sant -- -- 31,166/ 8,640 523,467/ 54,000
Robert E. Cimini -- -- 21,058/ 6,345 295,952/ 39,656
Donald D. Wehn 5,602 $73,163 5,000/ 0 31,250/ 0
</TABLE>
- ---------
(1) Value realized for options exercised but not sold was determined based on
the average of the high and low price of the Common Stock on the day prior
to exercise minus the exercise price, multiplied by the number of shares
acquired. If shares were sold simultaneously upon exercise, value realized
was determined based upon the sales price.
(2) The value of unexercised in-the-money options is calculated by determining
the difference between the fair market value of the securities underlying
the options at year-end ($26.25 per share based on the closing price of the
Common Stock at year-end) and the exercise price of the options ($6.75 per
share for 1991-granted options and $20.00 per share for 1995-granted
options), multiplied by the number of underlying securities.
-13-
<PAGE> 16
CHANGE IN CONTROL AGREEMENTS
Certain executive officers of the Company, including three named in the Summary
Compensation Table (Messrs. O'Shane, Young and Sant), have entered into change
in control agreements with the Company (the "Agreements"). The Agreements
operate only upon the occurrence of a "change in control" as described below.
Absent a "change in control," the Agreements do not require the Company to
retain the executives in its employ or to pay them any specified level of
compensation or benefits.
Each Agreement provides that if a change in control of the Company or any of its
bank subsidiaries (collectively, the "Subsidiary") occurs, the Company and the
Subsidiary will be obligated to continue to employ the executive during the time
period starting upon the occurrence of a change in control and ending three
years thereafter (or, if earlier, at the executive's early retirement date or
attainment of age 65) (the "Term of Employment"). The Agreement specifies the
compensation and benefits required to be provided to the executive during the
Term of Employment.
If, during the Term of Employment, the executive is discharged by the Company or
the Subsidiary without cause or resigns for good reason, then the executive
shall receive within 30 days of the date of termination a lump sum payment equal
to the present value of monthly payments, calculated using an appropriate
discount rate, from the date of termination until the earlier of (a) the date
that is 36 months after the change in control and (b) the executive's attainment
of age 65 (the "Calculation Period"), of (i) salary at a rate equal to the
highest salary in effect during the 12 months immediately preceding the change
in control or the date of termination and (ii) bonus at a rate equal to the
greater of the annual bonuses received during the three calendar years
immediately preceding the change in control or the date of termination.
If the executive is terminated during the Term of Employment for any reason
other than cause, then until the executive reaches or would have reached normal
retirement age, (a) the executive and/or his spouse will continue to receive
insurance and health care benefits equivalent to those in effect immediately
prior to the date of termination or the date of the change in control (whichever
is more favorable), subject to reduction to avoid duplication with benefits of a
subsequent employer, (b) at and after normal retirement age, health and life
insurance benefits equivalent to those afforded retired executives under
programs in effect immediately prior to the date of termination or the date of
the change in control (whichever is more favorable) and (c) the executive will
also receive supplemental retirement benefits equal to the extra pension
benefits he would have earned had employment been continued for the entire
Calculation Period.
Generally, and subject to certain exceptions, a "change in control" shall be
deemed to have occurred if (a) final regulatory approval is obtained for any
party to acquire securities of the Company and/or the Subsidiary representing
20% or more of the combined voting power of the Company's or the Subsidiary's
then outstanding securities; (b) there is a significant change in the Company's
or the Subsidiary's board of directors not approved by the incumbent board; or
(c) final regulatory approval is obtained for a plan of complete liquidation or
dissolution or sale of all or substantially all of the Company's or the
Subsidiary's assets or certain significant reorganizations, mergers and similar
transactions involving the Company or the Subsidiary.
-14-
<PAGE> 17
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of First Western (the
"Committee") determines the specific forms and levels of compensation for the
executive and other officers of First Western and administers the compensation
plans of First Western, subject to the approval of the Board of Directors. The
Committee is currently comprised of five members, all of whom are non-employee
directors.
COMPENSATION POLICIES
The compensation policies established and administered by the Committee are
intended to provide compensation to First Western's executive officers at
competitive levels in order to attract and retain qualified executive officers,
to award executive officers based on First Western's annual and long-term
performance, and to enhance shareholder value. Executive compensation is
generally set at levels that the Committee believes to be within the mid-range
for executive compensation for bank holding companies which are comparable in
size, geographic location and performance to First Western. The Committee views
stock options and stock ownership by executive officers as important components
of performance-based compensation as the value of stock options directly relates
to the price of the Common Stock of First Western and provides executive
officers with an additional incentive to enhance shareholder value. In January
1995 the Committee adopted a policy with respect to executive compensation under
Section 162(m) of the Internal Revenue Code. The policy states that, in general,
First Western will not adopt plans or pay compensation to its key executives in
excess of the deductible limits to First Western specified under Section 162(m);
however, it is recognized there may be circumstances in which it is necessary or
appropriate to pay compensation in excess of such limits and First Western
expressly reserves the right to compensate executives in a manner it deems
appropriate.
ELEMENTS OF EXECUTIVE COMPENSATION
Compensation of the executive officers of First Western and its subsidiaries
consists of the following three elements: base salary, cash payments under the
Incentive Plan and stock option awards under the Option Plan.
Base Salary. The Committee establishes base salaries for executive and other
officers of First Western by utilizing salary data obtained from a variety of
sources, including outside consultants and publicly available information. The
Committee undertakes an annual review of the base salary level of each executive
officer of First Western, including the Chief Executive Officer. It is the
intention of the Committee that the executive officers of First Western be paid
base salaries that are approximately in the mid-range of base salaries for
executive officers at bank holding companies comparable in size, geographic
location and performance to First Western. The Committee considers a variety of
factors in determining base salaries for individual executive officers,
including among others, the level of duties and responsibilities inherent in
each individual's position with First Western and the individual's performance
of these duties, First Western's financial performance, general economic
conditions and compensation trends in bank holding companies.
Incentive Plan. The Incentive Plan is intended to provide executive and other
officers of First Western and its subsidiaries with compensation tied to the
achievement of certain corporate, departmental and individual performance goals,
as approved by the Committee at the beginning of the year. If the goals
established by the Committee are achieved, the incentive award added to the base
salary paid is intended to provide to each executive officer total cash
compensation that year in approximately the mid-range of the upper half of total
cash compensation paid to executive officers at bank holding companies
comparable to First Western. If the goals established by the Committee are not
achieved, the incentive award may be reduced.
Corporate earnings goals, as measured by earnings per share, constitute a
significant component of each incentive award so that incentive awards are
directly dependent upon the achievement of corporate goals. The corporate
earnings component of an incentive award will be increased or reduced at a rate
equal to two and one-half times the percentage increase or shortfall, as the
case may be, in such goal. In addition to the corporate earnings goals,
individual goals for a particular year vary for each officer participating in
the Incentive Plan and are mainly based on the achievement of certain
predetermined departmental and individual goals for the particular fiscal year,
including among others, goals related to the following: the department's
operating budget; goals of the business unit in which the individual participant
is performing the majority of his duties;
-15-
<PAGE> 18
specific job-related goals; and individual performance. Past performance, peer
group performance and perceived future opportunities are considered when
establishing departmental and individual goals.
Incentive awards for each individual executive or other officer are determined
as a percentage of that individual's base salary. Such percentages vary with the
officer's position and responsibilities and range in amount from 10% to 45% of
base salary. The actual amount of each individual incentive award may be
modified by the Committee to recognize outstanding performance or additional
effort when certain goals may not have been achieved due to changing business
priorities or conditions, and also may be modified to reflect an unsatisfactory
performance by an individual despite the achievement of certain goals. No
payouts will be made to any participant if one or more of the following
conditions exist: (a) earnings of the Corporation are less than 60% of budgeted
earnings, (b) cash dividends are not at least equal to non-special cash
dividends paid in the prior year, or (c) the ratio of the allowance for possible
loan losses to nonaccrual loans is less than 85%. To further protect shareholder
interests, the aggregate amount of awards to all Plan Participants for a Plan
Year may not exceed 8% of First Western's pre-tax earnings. Incentive awards
earned, if any, are paid annually in cash as soon as practicable after the end
of each fiscal year.
Options. The grant of stock options is intended to provide long-term
performance-based compensation to the executive officers of First Western.
Options also are intended to provide executive officers with an incentive to
increase and promote shareholder value. Options have previously been granted to
individual executive officers of First Western based on the performance of each
individual and their contributions to First Western's long-term growth and
profitability. Options to purchase an aggregate of 155,039 shares of Common
Stock of First Western (as adjusted for stock dividends and splits) were granted
in 1991 to certain current executive officers of First Western. Options to
purchase 95,724 shares remain outstanding as of January 31, 1997. Additional
options to purchase 150,000 shares of Common Stock (as adjusted for stock
dividends and splits) were granted under the Option Plan as of January 16, 1995
to certain key executives who are primarily responsible for earnings performance
and shareholder value. Options to purchase 133,250 shares remain outstanding as
of January 31, 1997. These options were granted with an option price of $20.00
per share (as adjusted), which was higher than the fair market value per share
as of such date of $18.25 (as adjusted), with vesting terms of six months to
three years and a term of ten years. Options for 105,000 shares are intended to
qualify as incentive stock options under Section 422 of the Internal Revenue
Code and options for 45,000 shares are considered nonqualified stock options.
Options for 15,000 shares, intended to qualify as incentive stock options, were
granted at fair market value ($26.63) on November 4, 1996 to a new executive and
remain outstanding. The Committee will continue to review compensation through
stock options.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The compensation of Thomas J. O'Shane, Chief Executive Officer of First Western,
is determined by the Committee based on the same criteria and elements of
compensation as the other executive officers of First Western. The Committee
believes that Mr. O'Shane's base salary of $281,000 for 1996 is consistent with
First Western's general compensation policies. The Committee believes that Mr.
O'Shane's current base salary is approximately at the mid-range of base salaries
for bank holding companies comparable to First Western, based on independent
compensation studies made available throughout the year to the Committee.
Incentive compensation is provided to Mr. O'Shane through his participation in
the Incentive Plan and is based on the achievement of specific performance goals
for a particular fiscal year as described above under "Incentive Plan." The
Committee may also modify an award under the Incentive Plan for Mr. O'Shane (or
any other executive officer) by considering additional factors believed to be
relevant in determining the incentive compensation of the Chief Executive
Officer for a particular fiscal year, such as the performance of other duties
that enhanced First Western's overall financial performance for a given year. A
significant portion of Mr. O'Shane's total compensation is dependent upon the
achievement of the corporate earnings goal as measured by earnings per share,
and thus, a significant portion of his total compensation is at risk. The
corporate earnings per share goal under the Incentive Plan for fiscal 1996 was
determined in January 1996. In January 1997, based on the measurement of
achieving the earnings per share goal under the Incentive Plan, the Committee
determined that Mr. O'Shane should receive an incentive award of $94,837 for
fiscal 1996. This award was reduced from the prior year's $119,925 as First
Western did not fully achieve the earnings per share goal in 1996, primarily due
to increased consumer loan losses.
-16-
<PAGE> 19
Mr. O'Shane participates in the Option Plan described above and was granted
options to purchase an aggregate of 74,418 shares of Common Stock of First
Western (as adjusted for stock dividends and splits) in 1991, of which 37,208
shares remain outstanding. On January 16, 1995, he was granted options to
purchase an additional 45,000 shares of Common Stock, all of which are
nonqualified and which are exercisable after six months for any time up to ten
years from the date of grant at an exercise price of $20.00 per share. These
options are included in the total grant of 150,000 options to all executives
noted above. The grant of these options, as with the options granted to other
executive officers of First Western, is intended to provide Mr. O'Shane with a
long-term incentive to enhance and improve shareholder value.
The foregoing report has been furnished by the members of the Compensation
Committee of the Board of Directors.
Robert C. Duvall, Chairman
James M. Campbell
John P. O'Leary, Jr.
Harold F. Reed, Jr.
John W. Sant
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total shareholder return on the Common Stock against the cumulative total return
of the NASDAQ Composite Market (U.S. Companies) and NASDAQ Bank Stocks for the
period of five years from December 31, 1991 through December 31, 1996.
<TABLE>
<CAPTION>
NASDAQ Stock
Measurement Period First Western Market (U.S. NASDAQ Bank
(Fiscal Year Covered) Bancorp, Inc. Companies) Stocks
--------------------- ------------- ------------ -----------
<S> <C> <C> <C>
12/31/91 100.0 100.0 100.0
12/31/92 197.6 116.4 145.6
12/31/93 203.0 133.6 166.0
12/30/94 197.5 130.6 165.4
12/29/95 301.4 184.7 246.3
12/31/96 296.3 227.2 325.6
</TABLE>
<TABLE>
<CAPTION>
12/31/91 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
First Western Bancorp, Inc........... 100.0 197.6 203.0 197.5 301.4 296.3
NASDAQ Stock Market (U.S.
Companies)......................... 100.0 116.4 133.6 130.6 184.7 227.2
NASDAQ Bank Stocks................... 100.0 145.6 166.0 165.4 246.3 325.6
</TABLE>
The information in the graph was provided by The University of Chicago Graduate
School of Business--Center for Research in Security Prices. It assumes an
initial investment of $100 and reinvestment of dividends during the period
presented in the graph.
-17-
<PAGE> 20
TRANSACTIONS WITH DIRECTORS,
NOMINEES, OFFICERS AND ASSOCIATES
The following table lists the only known entity to the knowledge of the
management of First Western which owns of record or beneficially 5% or more of
the outstanding Common Stock (7,666,683 shares) as of January 31, 1997:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
NAME AND ADDRESS BENEFICIAL OF
CLASS OF BENEFICIAL OWNER OWNERSHIP CLASS
- ------- ------------------------------------ ---------- -------
<C> <S> <C> <C>
Common First Western Trust Services Company 787,430(1) 10.27%
101 East Washington Street
New Castle, Pennsylvania 16101
</TABLE>
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(1) Trust Services has sole voting power with respect to 159,617 shares and
shared voting power with respect to 45,093 shares and no voting power with
respect to 582,720 shares. Trust Services has sole investment power with
respect to 242,430 shares, shared investment power with respect to 63,274
shares, and no investment power with respect to 481,726 shares.
Certain directors, nominees and officers of First Western and its subsidiaries
and their associates were customers of the Banks during 1996. Transactions which
involved loans or commitments by the Banks were made in the ordinary course of
business and with substantially similar terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, and did not involve more than normal risk of collectibility or
present other unfavorable features.
Under the federal securities laws, First Western's directors, its executive
officers, and any persons holding more than ten percent of the Common Stock are
required to report their initial ownership of the Common Stock and any
subsequent changes in that ownership to the Securities and Exchange Commission
and NASDAQ. Specific due dates for these reports have been established and First
Western is required to disclose in this proxy statement any failure to file by
those dates during or for 1996. All of these filing requirements were satisfied
during 1996, except that one transaction during the month of October, 1996 for
John W. Lehman, M.D. was not timely reported on Form 4 or Form 5, which was
corrected by filing a Form 4 in February, 1997. In making the foregoing
disclosure, First Western has relied solely on representations of its directors
and executive officers and copies of the reports that they have filed with the
Commission.
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP served as independent public accountants for First Western
and its subsidiaries for the year ended December 31, 1996. The Board of
Directors, at its February 25, 1997 meeting, based upon an Audit Committee
recommendation, appointed Deloitte & Touche LLP, independent public accountants
to audit the consolidated financial statements of First Western and its
subsidiaries for the year ending December 31, 1997. Representatives of Deloitte
& Touche LLP will be present at the Annual Meeting and will be available to
respond to appropriate shareholder questions, and to make a statement if they
desire to do so.
ANNUAL REPORT ON FORM 10-K
UPON WRITTEN REQUEST TO ROBERT H. YOUNG, SECRETARY OF FIRST WESTERN (AT THE
ADDRESS SPECIFIED BELOW), BY ANY SHAREHOLDER WHOSE PROXY IS SOLICITED HEREBY,
FIRST WESTERN WILL FURNISH TO SUCH SHAREHOLDER WITHOUT CHARGE A COPY OF ITS 1996
ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
TOGETHER WITH CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES THERETO.
SHAREHOLDER PROPOSALS
If any shareholder wishes to present a proposal at the 1998 Annual Meeting of
Shareholders, the proposal will be considered for inclusion in the Proxy
material only if received no later than November 17, 1997. Any such proposal
should be addressed to Robert H. Young, Secretary, P. O. Box 1488, New Castle,
PA 16103-1488.
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<PAGE> 21
ADDITIONAL INFORMATION
First Western knows of no other business to be presented at this time. If any
matters come before the meeting, the persons named in the Proxy will vote in
accordance with the recommendations of the Board. WE URGE YOU TO SIGN AND RETURN
THE ENCLOSED PROXY AS SOON AS POSSIBLE WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING IN PERSON. If you do attend the meeting, you may then withdraw your
Proxy. In any event, you may revoke your Proxy prior to its exercise. The
revocation of a proxy will not be effective, however, until written notice of
the revocation has been given to the Secretary of First Western.
/s/ ROBERT H. YOUNG
Robert H. Young
Executive Vice President - Chief
Financial
Officer, Secretary and Treasurer
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<PAGE> 22
DIRECTIONS TO THE NEW ENGLANDER
3009 WILMINGTON ROAD, NEW CASTLE, PA
South of New Castle
North on Route 60. Take the Mitchell Road exit. Proceed to stop light at Route
18. Turn right heading south on Route 18. Proceed approximately one mile and the
New Englander is on the right.
North of New Castle
South on Route 60. Take the Mitchell Road exit. Proceed to stop light at Route
18. Turn right heading south on Route 18. Proceed approximately one mile and the
New Englander is on the right.
East of New Castle
West on Route 422. Take the Route 422 bypass around New Castle. Proceed on Route
422 west bypass as it becomes Route 60 north. Take the Mitchell Road exit.
Proceed to stop light at Route 18. Turn right heading south on Route 18. Proceed
approximately one mile and the New Englander is on the right.
West of New Castle
Route 80 east to Route 60 south. Take the Mitchell Road exit. Proceed to stop
light at Route 18. Turn right heading south on Route 18. Proceed approximately
one mile and the New Englander is on the right.
or
East on Route 422 to Route 60 north. Take the Mitchell Road exit. Proceed to
stop light at Route 18. Turn right heading south on Route 18. Proceed
approximately one mile and the New Englander is on the right.
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<PAGE> 23
FIRST WESTERN BANCORP, INC.
NEW CASTLE, PENNSYLVANIA
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 15, 1997
The undersigned hereby appoints Thomas S. Mansell, Richard C. McGill and
Harold F. Reed, Jr. and each of them, with full power of substitution in
each, as proxies to represent the undersigned and to vote all shares of
Common Stock of First Western which the undersigned would be entitled to
vote if personally present and voting at the Annual Meeting of First
Western's shareholders to be held on April 15, 1997 at 10:30 a.m. (local
time), at the New Englander, 3009 Wilmington Road, New Castle,
Pennsylvania 16101, and at any adjournment or adjournments thereof, upon
all matters coming before the meeting. Said proxies are directed to vote
as set forth below and, in their discretion, upon such other matters as
may properly come before the meeting.
1. ELECTION OF DIRECTORS. Nominees for three-year term: James M.
Campbell, Floyd H. McElwain and Thomas J.
O'Shane.
Nominee for one-year term: John W. Sant.
[ ] VOTE FOR all nominees; except authority to vote is withheld from
the following individual nominees (if any):
---------------------------------------------------------------------
[ ] VOTE WITHHELD from all nominees.
2. OTHER BUSINESS. The proxies shall vote on any other business properly
brought before the meeting and any adjournment thereof in accordance
with the recommendations of management of First Western.
(over)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FIRST WESTERN.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES AND FOR ANY OTHER BUSINESS IN ACCORDANCE WITH THE RECOMMENDATIONS
OF MANAGEMENT.
Dated , 1997
--------------------------------
--------------------------------
Signatures
Please sign EXACTLY as your
name appears hereon. When
signing as executor, trustee,
etc., or as officer of a
corporation, give full title
as such. For joint accounts,
please obtain both signatures.
NOTE: IF THE ADDRESS AS NOTED HEREON IS NOT CORRECT, KINDLY NOTE ANY CHANGE
NECESSARY.
PLEASE CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING [ ] TOTAL NUMBER
ATTENDING ____.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED POSTAGE-PAID ENVELOPE.
