FIRST FINANCIAL BANCORPORATION
204 East Washington Street
Iowa City, Iowa 52240
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
First Financial Bancorporation
The Annual Meeting of the Shareholders of First Financial Bancorporation will be
held at the Main Office of the First National Bank, Iowa City, Iowa, at 204 East
Washington Street, Iowa City, Iowa 52240, at 4:30 P.M. local time, on Tuesday,
April 9, 1996, for the purposes herein stated.
(1) To elect directors to serve for the ensuing year.
(2) To consider and act upon any other matter which may properly come
before the meeting.
The Board of Directors has fixed the close of business on February 29, 1996, as
the record date for the determination of the shareholders entitled to receive
notice of, and to vote at, the meeting. Accordingly, only shareholders of record
at the close of business on that date will be entitled to vote at the meeting,
or any adjournments thereof.
TO ENSURE YOUR REPRESENTATION AT THE MEETING, THE BOARD OF DIRECTORS OF THE
CORPORATION SOLICITS YOU TO MARK, SIGN, DATE, AND RETURN THE ACCOMPANYING PROXY
IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. YOUR
PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED AND, IF YOU ARE ABLE TO
ATTEND THE MEETING AND WISH TO VOTE YOUR SHARES PERSONALLY, YOU MAY REVOKE OR
WITHDRAW YOUR PROXY AT ANY TIME BEFORE IT IS EXERCISED.
DATE: MARCH 7, 1996.
BY ORDER OF THE BOARD OF DIRECTORS.
//s// Robert M. Sierk
Robert M. Sierk
President and Chief Executive Officer
<PAGE>
FIRST FINANCIAL BANCORPORATION
204 East Washington Street
Iowa City, Iowa 52240
PROXY STATEMENT FOR THE
1996 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 9, 1996
GENERAL INFORMATION
The Annual Meeting of the Shareholders of First Financial Bancorporation
(Company) will be held at the Main Office of the First National Bank, Iowa City,
Iowa, at 204 East Washington Street, Iowa City, Iowa 52240, at 4:30 P.M. local
time, on Tuesday, April 9, 1996.
The Company is a two-bank holding company engaged in commercial banking through
its wholly-owned subsidiaries, First National Bank, Iowa City, Iowa (Iowa City
Bank), and First National Bank, Cedar Rapids, Iowa (Cedar Rapids Bank).
The principal executive offices of the Company are located at the Main Office of
the First National Bank, Iowa City, Iowa, at 204 East Washington Street, Iowa
City, Iowa 52240.
The approximate date on which the Proxy Statement and the accompanying form of
Proxy will first be sent to the shareholders entitled thereto is March 7, 1996.
If the accompanying Proxy is properly signed and returned and is not revoked or
withdrawn, the shares represented thereby will be voted in accordance with the
specifications thereon. If the manner of voting such shares is not indicated on
the Proxy, the shares will be voted FOR the election of the nominees for
directors named herein.
SOLICITATION BY BOARD OF DIRECTORS; REVOCATION OF PROXIES;
EXPENSES OF SOLICITATION
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of the Company to be voted at the Annual Meeting of
Shareholders or any adjournment or adjournments thereof for the purposes stated
in the accompanying Notice of the Annual Meeting of Shareholders. Any
shareholder giving a written proxy may revoke or withdraw the same at any time
before it shall have been exercised by giving written notice of revocation or
withdrawal to the Company, or by attending the meeting and voting his or her
shares in person.
The expenses of soliciting proxies and the cost of preparing, assembling and
mailing material in connection with the solicitation of proxies will be paid by
the Company. In addition to the use of the mails, certain directors and officers
of the Company, or certain directors, officers or regular employees of the
subsidiary banks who receive no compensation for their services other than their
regular salaries or regular director's fees, may solicit and tabulate proxies
personally. Otherwise, the Company does not expect to pay any compensation for
the solicitation of proxies, but may reimburse persons holding shares of stock
in their name or in the names of nominees for others, for their reasonable
expenses incurred for sending proxy materials to principals and obtaining their
proxies.
The Board of Directors of the Company has fixed the close of business on
February 29, 1996, as the record date for the determination of shareholders
entitled to notice of, and to vote at the Annual Meeting of Shareholders. At the
close of business on such date there were outstanding and entitled to vote at
the Annual Meeting 2,393,066 shares, par value $1.25 per share, of the Company's
common stock (its only authorized class of stock) which were held by
approximately 887 shareholders of record. Every shareholder of the Company
entitled to vote at the Annual Meeting shall have the right to vote, in person
or by proxy, the number of shares owned by the shareholder for as many persons
as there are directors to be elected. Cumulative voting for directors is not
permitted under the Company's Restated Articles of Incorporation. As of February
1, 1996, 71,012 shares of outstanding common stock of the Company were held by
the Iowa City Bank as fiduciary under various fiduciary arrangements in which
the Bank as fiduciary has the sole power to vote the shares. Management of the
trust department of the Iowa City Bank, in consultation with management of the
Iowa City Bank and management of the Company, has determined to vote all of
those shares FOR the election of the nominees for directors of the Company named
herein.
1
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS
As of February 29, 1996, the person named in the following table was the only
beneficial owner of more than five percent of the total shares of the Company's
outstanding common stock:
================================================================================
(1) (2) (3) (4)
Title Name & Address Amount & Nature of Percent
of Class of Beneficial Owner Beneficial Ownership of Class
- --------------------------------------------------------------------------------
Common Mary Lee Nagle Duda (*) 145,294 Shares 6.07%
461 Oak Knoll Road
Barrington Hills, IL 60010
================================================================================
(*)145,294 shares held of record by Mary Lee Nagle Duda, as Trustee of MLND
Interests U/T/D November 17, 1981. Mary Lee Nagle Duda possesses shared
investment and voting power of such shares with her husband, Fritz L. Duda.
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
As of February 29, 1996, all directors and officers of the Company (5
individuals, 3 of whom are nonemployee directors and 2 of whom are executive
officers) as a group beneficially owned shares of the Company's outstanding
common stock as follows:
================================================================================
(1) (2) (3)
Title of Amount of Percent of
Class Beneficial Ownership Class
- --------------------------------------------------------------------------------
Common 118,637 shares 4.96%
================================================================================
ELECTION OF DIRECTORS OF THE COMPANY
Under the Articles of Incorporation and Bylaws of the Company, the Board of
Directors of the Company shall consist of not less than five nor more than
fifteen directors with the exact number of directors within such minimum and
maximum numbers to be determined by a resolution adopted by the Board of
Directors. The Board of Directors has adopted a resolution determining that the
Board shall consist of five directors effective April 9, 1996. The management of
the Company proposes the re-election of four directors from the present Board of
Directors, all of whom were elected at the 1995 Annual Meeting of the
Shareholders, and the initial election of Fritz L. Duda to the Board of
Directors. Two Directors elected at the 1995 Annual Meeting are not standing for
re-election. George Nagle retired from the Board effective November 3, 1995, and
Director Linda Muston is leaving the Board in April concurrent with her
acceptance of a professional opportunity outside the area.
Absent a contrary direction by the shareholder, the enclosed proxy will be voted
for the election of the nominees for directors listed below. In the event any
nominee is unable or for good reason declines to serve as a director at the time
of the annual meeting, the proxy will be voted for such substitute nominee, if
any, as may be selected by the Board of Directors of the Company. The management
of the Company has no reason to believe that the persons named will be unable to
serve or will decline to serve if elected.
<PAGE>
NOMINEES FOR ELECTION AS DIRECTORS
Four of the nominees for election as directors are presently directors of the
Company, and nominee Duda has been nominated for initial election to the Board
of Directors at the Annual Meeting. Each of the nominees has furnished to the
Company the following information with respect to principal occupation or
employment during the past five years, other directorships held, and beneficial
ownership of the common stock of the Company as of February 29, 1996.
Name, Occupation & Position Shares of the Company's Percent
with the Company Director Common Stock Owned of
and the Bank(s) Age Since Beneficially as of February 29, 1996 Class
- --------------------------------------------------------------------------------
FRITZ L. DUDA 57 145,394 (1) 6.08%
- --------------------------------------------------------------------------------
is the owner of the Fritz Duda Company, a privately held real estate investment
building and development company. The Company owns and manages commercial real
estate in Texas, Illinois and California. Mr. Duda also serves as managing
partner of a family investment company. Mr. Duda is a shareholder, member of the
Board of Directors and Chairman of the Audit Committee of The Vons Companies,
Inc. (NYSE), based in Arcadia, California, and several privately-held companies.
He is a Trustee of the University of California's Hastings 1066 Foundation and
is Chairman of the College's real estate advisory committee. He also serves as a
member of the University of Notre Dame's College of Engineering and Architecture
Advisory Council and is a former member of the Board of the Jesuit College
Preparatory School of Dallas Foundation.
================================================================================
Name, Occupation & Position Shares of the Company's Percent
with the Company Director Common Stock Owned of
and the Bank(s) Age Since Beneficially as of February 29, 1996 Class
- --------------------------------------------------------------------------------
RALPH J. RUSSELL 49 1993 800 (2) .03%
- --------------------------------------------------------------------------------
has been the President and CEO of Howard R. Green Company since 1983 and has
been the President and CEO of Green Environmental Services, Inc., a wholly-owned
subsidiary of Howard R. Green Company, since January 1990. He has served as a
Director of the Company since December 22, 1993, and he has been a Director of
the Cedar Rapids Bank since August 16, 1992.
<PAGE>
================================================================================
Name, Occupation & Position Shares of the Company's Percent
with the Company Director Common Stock Owned of
and the Bank(s) Age Since Beneficially as of February 29, 1996 Class
- --------------------------------------------------------------------------------
A. RUSSELL SCHMEISER 46 1985 34,991 (3) 1.46%
- --------------------------------------------------------------------------------
has been Executive Vice President and Chief Operating Officer of the Company
since April 1993, and he has served as Secretary since June 1995 and Treasurer
since September 1995. He served as Executive Vice President, Treasurer and
Principal Financial Officer of the Company from February 13, 1990, to April 13,
1993. He has been Executive Vice President and Chief Operating Officer of the
Iowa City Bank since December 10, 1991, and from February 13, 1990, served as
Executive Vice President. He also held the position of Vice President and
Cashier of the Cedar Rapids Bank from its inception in February 1991 to January
1992. He has been a Director of the Company since its inception in 1985. He has
been a Director of the Iowa City Bank since 1987, and a Director of the Cedar
Rapids Bank from its inception on February 1, 1991.
================================================================================
Name, Occupation & Position Shares of the Company's Percent
with the Company Director Common Stock Owned of
and the Bank(s) Age Since Beneficially as of February 29, 1996 Class
- --------------------------------------------------------------------------------
ROBERT M. SIERK 54 1985 11,602 (4) .48%
- --------------------------------------------------------------------------------
has been President and Chief Executive Officer of the Company and of the Iowa
City Bank since March 13, 1990. He served as Secretary of the Company from its
inception in 1985 to April 12, 1988. He served as President of the Company and
President and Chief Operating Officer of the Iowa City Bank from April 12, 1988,
to March 13, 1990. He has been a Director of the Company since its inception in
1985. He has been a Director of the Iowa City Bank since 1974. He has served as
Chairman of the Board of Directors of the Cedar Rapids Bank from its inception
on February 1, 1991.
================================================================================
Name, Occupation & Position Shares of the Company's Percent
with the Company Director Common Stock Owned of
and the Bank(s) Age Since Beneficially as of February 29, 1996 Class
- --------------------------------------------------------------------------------
LARRY D. WARD 51 1990 69,788 (5) 2.92%
- --------------------------------------------------------------------------------
has served on the faculty of The University of Iowa College of Law since 1972,
and has been the Aliber Distinguished Professor of Law since 1986. He has been
Chairman of the Board of the Company and the Iowa City Bank since April 1993, a
Director of the Company since April 17, 1990, a Director of the Iowa City Bank
since September 13, 1988, and a Director of the Cedar Rapids Bank from its
inception on February 1, 1991.
(1) Nominee Duda owns 100 shares of record and possesses shared voting power
over 145,294 shares owned of record by Mary Lee Nagle Duda, as Trustee of MLND
Interests U/T/D November 17, 1981.
(2) Director Russell owns 800 shares of record and possesses sole voting power
over those shares.
(3) Director Schmeiser owns 25,462 shares of record and possesses shared voting
power over 500 shares held of record jointly with his wife, Cynthia B.
Schmeiser. In addition, Director Schmeiser possesses shared voting power, to the
extent of his pro-rata-one-third interest, over 3,000 shares held of record by
Burr Oak Farm, a general partnership, and he possesses sole investment power
over 2,391 shares held of record by Firnaticia as the nominee of the First
National Bank, Iowa City, Iowa, as the trustee of the A. Russell Schmeiser
Individual Retirement Account Trust. Director Schmeiser also possesses shared
voting power as to 1,000 shares held of record by his wife, Cynthia B.
Schmeiser, as to 2,318 shares held of record by Firnaticia as the nominee of the
First National Bank, Iowa City, Iowa, as trustee of the Cynthia B. Schmeiser
Individual Retirement Account Trust, as to 1,518 shares held of record by
Cynthia B. Schmeiser as Custodian for Allyson Schmeiser (the minor daughter of
Director Schmeiser and Cynthia B. Schmeiser) under the Iowa Uniform Transfer to
Minors Act, and as to 802 shares held of record by Cynthia B. Schmeiser as
Custodian for Peter Schmeiser (the minor son of Director Schmeiser and Cynthia
B. Schmeiser) under the Iowa Uniform Transfer to Minors Act.
<PAGE>
(4) Director Sierk owns 9,272 shares of record and possesses shared voting power
over 2,330 shares owned of record by his wife, Bonnie J. Sierk.
(5) Director Ward owns 54,798 shares of record and possesses shared voting power
over 300 shares held by his wife, Trudy G. Ward, and 10 shares held of record by
Trudy G. Ward as Custodian for Jeffrey G. Ward. In addition, Director Ward
possesses both investment power and voting power over 5,600 shares held as
Custodian for his son, Laurence Curtis Ward; 2,120 shares held as Custodian for
his son Jeffrey G. Ward; 4,700 shares held of record in the name of Firnaticia
as the nominee of the First National Bank, Iowa City, Iowa, as trustee of the
Larry D. Ward Money Purchase Pension Plan; and 2,260 shares held of record in
the name of Firnaticia as the nominee of the First National Bank, Iowa City,
Iowa, as trustee of the Larry D. Ward Individual Retirement Account Trust.
Director Ward disclaims beneficial ownership as to 2,320 shares held of record
by his wife, Trudy G. Ward, and June L. Graves as joint tenants with right of
survivorship.
DIRECTORS' MEETINGS AND COMMITTEES
During the calendar year 1995, The Board of Directors of the Company met seven
times. Only Director Nagle attended fewer than 75% of the aggregate of the total
number of meetings of the Board and the total number of meetings held by all
committees on which he served.
The Company has no standing audit, nominating or compensation committees of the
Board of Directors, but does have two Stock Option Plan Committees.
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning compensation
for 1995, 1994, and 1993 of the Company's Chief Executive Officer and each of
the most highly compensated executive officers of the Company and its subsidiary
banks whose total annual salary and bonus exceeded $100,000. The policies and
practices of the Company and its subsidiary banks pursuant to which the
compensation set forth in the Summary Compensation Table was paid or awarded is
described under the section, "Compensation Committee Reports on Executive
Compensation."
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
Awards All Other
Options Compensation
Name & Principal Position (5) Year Salary ($) Bonus ($)(4) Number of Shares ($)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert M. Sierk, President & 1995 $161,710 $17,194 4,000 $23,302(1)
Chief Executive Officer
1994 $157,000 $ - - 4,000 $17,894
1993 $157,000 $ - - 4,000 $19,407
A. Russell Schmeiser, 1995 $138,020 $12,283 3,200 $14,678(2)
Executive Vice President,
Chief Operating Officer & 1994 $134,000 $ - - 3,200 $10,001
Chief Financial Officer
1993 $134,000 $ - - 3,200 $11,505
William H. Burger, 1995 $ 94,500 $ 6,553 1,000 $ 9,273(3)
Senior Vice President &
Senior Trust Officer 1994 $ 91,500 $ - - 1,000 $ 6,081
1993 $ 91,500 $ - - 1,000 $ 7,456
- -----------------------------------------------------------------------------------------------
<FN>
(1) The values listed includes compensation earned, paid and accrued in the
years 1995, 1994 and 1993, respectively, for Mr. Sierk for the following: a)
Salary Continuation Plan contributions totaling $9,683, $8,896 and $8,174; b)
401(k) Plan contributions totaling $!0,500, $6,000 and $9,659; c) membership
dues of $1,170, $1,161 and none; and group and dependent life insurance premiums
paid of $1,949, $1,837 and $1,574.
5
<PAGE>
(2) The values listed includes compensation earned, paid and accrued in the
years 1995, 1994, and 1993, respectively, for Mr. Schmeiser for the following:
a) Salary Continuation Plan contributions totaling $2,783, $2,558 and $2,350; b)
401(k) Plan contributions totaling $9,662, $5,360 and $8,576; c) membership dues
of $936, $927 and none; and group and dependent life insurance premiums paid of
$1,297, $1,156 and $579.
(3) The values listed includes compensation earned, paid and accrued in the
years 1995, 1994, and 1993, respectively for Mr. Burger for the following: a)
Salary Continuation Plan contributions totaling none, none and none; b) 401(k)
Plan contributions of $6,615, $3,660 and $5,856; c) membership dues of $995,
$827 and none; and group and dependent life insurance premiums of $1,663, $1,594
and $1,600.
(4) Amounts paid under the Executive Incentive Compensation Plan are listed in
this column.
(5) The positions stated for Messrs. Sierk and Schmeiser are their principal
positions with First National Bank, Iowa City, Iowa and with the Company. Mr.
Burger is an officer of the Iowa City Bank, but is not an officer of the
Company. The indicated compensation for all three officers was paid by the Iowa
City Bank.
</FN>
</TABLE>
STOCK OPTION TABLES
The following tables provide information with respect to stock option grants and
exercises for the individuals named in the Summary Compensation Table.
<TABLE>
<CAPTION>
========================================================================================================
OPTIONS GRANTED IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------------------------------
Individual Grants
--------------------------------------------------------
% of Total Potential Realizable Value
Options of Assumed Annual Rate of
Number Granted to Exercise or Stock Price Appreciation
of Options Employees Base Price Expiration for Option Term(2)
Name Granted(1) in Fiscal Year (Per Share) Date @ 5% @10%
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert M. Sierk 4,000 26.0% $ 24.125 06/22/00 $ 26,661 $ 58,914
A. Russell Schmeiser 3,200 20.8% $ 24.125 06/22/00 $ 21,329 $ 47,131
William H. Burger 1,000 6.5% $ 24.125 06/22/00 $ 6,665 $ 14,729
All Shareholders n/a n/a n/a n/a $15,884,994 $35,101,691
========================================================================================================
<FN>
(1) Under the Company's stock option plan, options are granted at an exercise
price of 100 percent of fair market value. The stock options granted to the
executive officers above on June 22, 1995, became exercisable the last business
day of January, 1996.
(2) Represents gain that would be realized assuming the options were held for
the entire five-year period and the stock price increased at annually compounded
rates of 5% and 10% from a base price of $24.125 per share. The potential
realizable values per option or per share under such rates of stock price
appreciation would be $6.67 and $14.73, respectively. Potential realizable
values for all shareholders as a group are based on 2,383,241 shares outstanding
as of December 31, 1995. These amounts represent assumed rates of appreciation
only. Actual gains, if any, on stock option exercises and common stock holdings
will be dependent on overall market conditions and on future performance of the
Company and its common stock. There can be no assurance that the amounts
reflected in this table will be achieved.
</FN>
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
Shares Number of Securities Underlying Value of In-The-Money
Acquired Value Realized Options at Fiscal Year-End Options at Fiscal Year-End
Name on Exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert M. Sierk - - - - 16,600/4,000 $86,950/$4,500
A. Russell Schmeiser - - - - 12,400/3,200 $62,300/$3,600
William H. Burger - - - - 4,000/1,000 $20,500/$1,125
================================================================================================================
</TABLE>
RETIREMENT BENEFITS
DEFINED BENEFIT PENSION PLAN
The table below illustrates the estimated annual pension benefit upon retirement
in 1996 at specified compensation levels and years of service classifications.
================================================================================
DEFINED BENEFIT PENSION PLAN TABLE
- --------------------------------------------------------------------------------
5-Year Average Annual Pension After Years of Service
Annual Salary 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years 45 Years
- --------------------------------------------------------------------------------
$ 50,000 $ 11,250 $ 15,000 $ 18,750 $ 22,500 $ 26,250 $ 30,000 $ 33,750
$100,000 $ 22,500 $ 30,000 $ 37,500 $ 45,000 $ 52,500 $ 60,000 $ 67,500
$150,000 $ 33,750 $ 45,000 $ 56,250 $ 67,500 $ 78,750 $ 90,000 $101,250
$200,000 $ 45,000 $ 60,000 $ 75,000 $ 90,000 $105,000 $120,000 $135,000
$250,000 $ 56,250 $ 75,000 $ 93,750 $112,500 $131,250 $150,000 $168,750
================================================================================
First National Bank, Iowa City, Iowa, maintains a defined benefit pension plan
for all participants of both Banks. The plan is supplemented by a Non-Qualified
Excess Benefit Plan which was adopted by the Iowa City Bank on February 28,
1995. Operating together, the plans provide retirement benefits for all
participants of both Banks computed on an actuarial basis under a benefit
formula which provides for fixed benefits payable upon retirement at a specified
age after a specified number of years of service. The plans cover all employees
who have met the one year of service eligibility requirement and provides a
normal retirement pension at age 65 equal to 1.5% of average monthly earnings
multiplied by the number of years of participation less one-half the
participant's primary Social Security benefit. The amounts shown are to be
reduced by one-half of the participant's primary Social Security benefit. An
actuarially reduced pension is available at age 55 after 15 years of
participation. A deferred vested pension, or in certain cases a discounted lump
sum payment is provided if a participant terminates employment with the Banks
after at least five years of participation.
The remuneration covered by the Bank's defined benefit pension plan and
non-qualified excess benefit plan for which the above table is provided includes
salary and executive incentive compensation as set forth in the Summary
Compensation Table. The qualifying remuneration paid in 1995 and the estimated
years of benefit service as of normal retirement at age 65 for the executive
officers named in the Summary Compensation Table are: Robert M. Sierk, $178,904,
44.5 years; A. Russell Schmeiser, $150,303, 42.6 years; and William H. Burger,
$101,053, 12.2 years.
7
<PAGE>
DEFINED CONTRIBUTION PLAN
The Banks also provide a defined contribution Profit Sharing Trust with an
Internal Revenue Code 401(k) option (401(k) Plan). Under the provisions of the
401(k) Plan, employees with one year of service may become participants with all
contributions to the plan to be 100% vested with the employee.
Contributions to the 401(k) Plan for the benefit of the participants can be made
in two ways. First, the participant can enter into a Salary Reduction Agreement
whereby up to 12% of the employee's salary will be contributed to the 401(k)
Plan. Secondly, an employer contribution will be made to the plan equal to 1% of
the participant's salary plus an additional contribution of 1/2% of the
participant's salary for each 1% of salary contributed by the participant to a
maximum employer matching contribution equal to 3% of the participant's salary.
In addition, an employer contribution will be made of up to an additional 1/2%
for each 1% of salary contributed by the employee, not to exceed an additional
3% of the participant's salary, determined by the extent to which the Banks'
earnings performance targets are met for the year. The target earnings levels
for the Banks and the corresponding amount of additional matching contribution
for different levels of achievement is set by the Board of Directors of the
Banks and may be changed from time to time. Effective January 1, 1996, the
employer 1% of salary contribution and the performance-based employer
contribution of an additional 1/2% for each 1% of salary contributed by the
employee, not to exceed an additional 3% of the participant's salary, will be
deferred until the last business day of the calendar year and will be made only
on behalf of participants who are still actively employed on that date. For
purposes of the 401(k) Plan, salary includes regular base pay only, and does not
include any other forms of compensation such as overtime, taxable fringe
benefits or executive incentive compensation. The contributions made for the
executive officers named in the Summary Compensation Table for the years 1995,
1994 and 1993, respectively are as follows: Mr. Sierk. $10,500, $6,000 and
$9,659; Mr. Schmeiser, $9,662, $5,360 and $8,576; and Mr. Burger, $6,615, $3,660
and $5,856.
SALARY CONTINUATION PLAN
Certain executive officers were participants in a Salary Continuation Plan
during 1995. Under the terms of the Salary Continuation Plan, the participants
will be paid a fixed amount per year as a continuation of salary for a period of
ten years beginning with normal retirement at age 65 or after. In the event of
the death of the participant after retirement but before the end of the ten-year
period, the remainder of the salary continuation benefits are to be paid to the
participant's surviving spouse. In the event of preretirement death, the
benefits under the Salary Continuation Plan would begin immediately being paid
to the participant's surviving spouse over a ten-year period. If the participant
has no surviving spouse or in the event the surviving spouse dies prior to
receiving all payments, then a commuted value of the unpaid payments would be
paid to the estate of the participant or the estate of the surviving spouse,
respectively. At age 65, or after, the amounts to be received each year, for ten
years, by the individuals named in the Summary Compensation Table are as
follows: Mr. Sierk, $25,000; Mr. Schmeiser, $20,000 and Mr. Burger, none.
The expense of these benefits are charged to operating expense each year until
the participants attain full eligibility, or until the participant attains the
age of 55 and has completed 15 years of service, if sooner, which would range
from one to eleven years. The amounts charged to operating expense in 1995, 1994
and 1993 for the individuals named in the Summary Compensation Table were as
follows: Mr. Sierk, $9,683, $8,896 and $8,174; Mr. Schmeiser, $2,783, $2,558 and
$2,350; and Mr. Burger, none, none and none. In addition, life insurance
policies were purchased on the lives of the participants. The policies are owned
by the Iowa City Bank and the beneficiary of the policies is the Iowa City Bank.
In the event of the death of the participant, the Iowa City Bank will receive
all death benefits from the policy. In the event of the preretirement death of
the participant, it is anticipated that the amount to be received from the
policy will be sufficient to cover all payments under the plan to the surviving
spouse or to pay the commuted value of the payments to the estate of the
participant on an after-tax cost basis to the Iowa City Bank. Through these life
insurance policies, it is projected that there will be a complete recovery to
the Iowa City Bank of all premiums paid and benefits paid to retired individuals
assuming normal actuarially determined mortality experience.
COMPENSATION OF DIRECTORS
Directors of the Company who are not employees of either entity (nonemployee
directors) were paid $350 for attendance at each meeting of the Board of
Directors and $175 for attendance at each meeting of a Committee of the Board of
Directors. During 1995, the nonemployee directors of the Iowa City Bank received
a $2,000 per year retainer paid at the rate of $500 per calendar quarter, with
fees paid for attendance at meetings of the Board of Directors at a rate of $350
per meeting
8
<PAGE>
to the Chairman and $300 per meeting to other nonemployee directors. In
addition, each nonemployee director was paid $175 for attendance at each meeting
of a Committee of the Board of Directors. Nonemployee directors of the Cedar
Rapids Bank were paid $250 for attendance at each meeting of the Board of
Directors and $125 for attendance at each meeting of a Committee of the Board of
Directors in 1995. As of February 29, 1996, the Company had no employees who
received compensation from the Company. Other than the compensation paid to
nonemployee directors of the Company, there is no present plan to provide
additional compensation to directors and officers of the Company or either Bank
for services rendered by them as directors and officers of the Company or either
Bank. The aggregate of the fees paid to nonemployee directors of the Company and
its subsidiary banks by the Company and its subsidiary banks in 1995 was
$112,125.
As a long-term incentive, the Company annually grants stock options to
nonemployee directors for the purposes of retaining and motivating nonemployee
directors to improve long-term stock market performance. These stock options are
actually granted by the Directors' Stock Option Committee of the Company in
accordance with the provisions of the Stock Option Plan. All stock options are
granted at the fair market value.
Stock options were granted for the purchase of 7,700 shares of common stock on
February 1, 1995, to nonemployee directors at a purchase price of $25.125 per
share, which was the fair market value of the stock on the date of grant. These
options expire five years from the date of the grant and are exercisable on the
last business day of January of each year until expiration. During 1995, stock
options were exercised for the purchase of 3,050 shares of common stock by
nonemployee directors and no stock options expired, leaving unexercised stock
options outstanding for nonemployee directors for the purchase of 22,650 shares
of common stock as of December 31, 1995.
EMPLOYMENT, TERMINATION AND CHANGE-IN-CONTROL ARRANGEMENTS
Neither the Company nor the individual Banks had employment, termination or
change-in-control arrangements with key employees or executive officers during
1995.
COMPENSATION COMMITTEE REPORTS ON EXECUTIVE COMPENSATION
The Company has no employees and, therefore, has no Compensation Committee. The
Company does have an Officers' Stock Option Committee (discussed below) which
administers the Stock Option Plan as it pertains to the officer participants of
the Plan. Each of the subsidiary Banks has its own Compensation Committee.
FIRST NATIONAL BANK, IOWA CITY, IOWA
The Compensation Committee of the Board of Directors was established in
September 1991 and is responsible for the general compensation policies of the
Bank as well as the compensation plans and specific compensation levels for
executive officers. In conjunction with management, it reviews the performance
appraisals of all executive officers, and it conducts performance appraisals
directly with the Chief Executive Officer (CEO) and the Chief Operating Officer
(COO). The Compensation Committee is currently composed of three independent,
nonemployee directors.
The Compensation Committee believes that the compensation of the executive
officers, including that of the CEO, should be influenced by the Company's
performance. Executive compensation consists of three components, each of which
is intended to serve this overall compensation philosophy. The first component
(base salary) is based in part on the financial performance of the Bank and
Company. The second component (annual incentives) is based entirely on Bank
performance as measured by certain key performance indicators. The third
component (long-term incentives) utilizes stock performance through the Stock
Option Plan.
BASE SALARY: Salaries for executive officers are reviewed annually by the
Compensation Committee. In its review, the Compensation Committee considers: (1)
the salaries of executive officers in similar positions in similarly sized
banking organizations (as obtained from data published by the Iowa Bankers
Association, Sheshunoff and Company and the Bank Administration Institute), (2)
the Bank's and Company's financial performance for the past year and (3) the
achievement of performance objectives set by the Compensation Committee for the
particular executive officer. For 1995, the CEO's base salary was $161,710, an
increase of $4,710 or 3% over 1994.
9
<PAGE>
ANNUAL INCENTIVES: The Executive Incentive Compensation Plan reflects the
Company's belief that management's contribution to shareholder returns (i.e.,
increased stock prices and dividends) comes from maximizing earnings and the
quality of those earnings. Under the Plan, a portion of the compensation paid to
the executive officers is determined by Bank performance as measured by certain
key performance indicators.
The Plan utilizes key performance indicators (KPIs) in the areas of growth,
profitability, quality, and productivity. All KPIs have objectively stated
goals, the achievement of which would result in increased earnings over the
budgeted amount. A certain percentage of these increased earnings is allocated
to an executive incentive compensation pool for the payment of incentive
compensation to the executive officers.
Based upon Bank performance for 1995, executive incentive compensation of
$17,194 was awarded to the CEO for 1995 (which was paid to him in 1996). As no
executive incentive compensation was awarded for 1994, the amount awarded for
1995 reflects an increase of $17,194 over the prior year.
LONG-TERM INCENTIVES: Long-term incentives are provided through the periodic
granting of stock options to the executive officers for the purpose of retaining
executive officers and motivating them to improve long-term stock market
performance. The Compensation Committee makes recommendations with respect to
stock options to be granted to the executive officers under the Stock Option
Plan. Stock options are actually awarded by the Officers' Stock Option Committee
of the Company (composed of three or more independent, nonemployee directors of
the Company), which considers the recommendations of the Compensation Committee
and the Board. One of the principal factors considered in granting stock options
to the executive officers of the Bank is the executive's ability to influence
the Company's long-term growth and profitability.
All options are granted at the current market price. Since the value of an
option bears a direct relationship to the Company's stock price, the
Compensation Committee believes that options motivate executive officers to
manage the Company in a manner that benefits shareholders. The Company therefore
views stock options as an important component of its long-term,
performance-based compensation philosophy.
On June 22, 1995, stock options exercisable for 4,000 shares of common stock
were granted to the CEO at a purchase price of $24.125 per share, which was the
fair market value of the stock on the date of grant. The options expire five
years from the date of the grant and are exercisable on the last business day of
January of each year until expiration.
FIRST NATIONAL BANK, CEDAR RAPIDS, IOWA
The Compensation Committee was formed in 1992 and is currently composed of two
independent, nonemployee directors plus the CEO and COO of First National Bank,
Iowa City, who also serve as nonemployee directors of the Bank. Executive
compensation consists of base salary, annual incentive compensation and stock
options.
The Compensation Committee follows the same principles as those followed by the
Compensation Committee of First National Bank, Iowa City. The Compensation
Committee utilizes the same sources for peer group information in setting base
salary and awarding executive incentive compensation. The CEO-CR receives
executive incentive compensation based on the Bank's achievement level as
measured by key performance indicators (KPIs) in the areas of growth,
profitability, quality and productivity. The Compensation Committee also makes
recommendations with respect to stock options to be granted to the executive
officers under the Stock Option Plan. The beliefs of the Compensation Committee
are identical to those outlined above with respect to First National Bank, Iowa
City.
COMPENSATION COMMITTEE COMPENSATION COMMITTEE
FIRST NATIONAL BANK, IOWA CITY, IOWA FIRST NATIONAL BANK, CEDAR RAPIDS, IOWA
Linda K. Muston Wendy L. Dunn
Member, Compensation Committee Member, Compensation Committee
Director of Bank & Company Director of Bank
Richard J. Schwab Robert J. Latham
Member, Compensation Committee Member, Compensation Committee
Director of Bank Director of Bank
10
<PAGE>
Larry D. Ward A. Russell Schmeiser
Member, Compensation Committee Member, Compensation Committee
Director of Bank & Company Director of Bank & Company
Robert M. Sierk
Member, Compensation Committee
Director of Bank & Company
The Report of Compensation Committees shall not be deemed to be incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
STOCK PRICE PERFORMANCE TABLE
The Stock Price Performance Table below shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
The table below compares cumulative total return* of First Financial
Bancorporation, the S&P 500 Index and the Media General Financial Services' West
North Central Bank Index (Industry Index). A five year comparison of total
return* among First financial Bancorporation, the S&P 500 Index and the
Published Media General Financial Services' Central Bank Index** is presented in
tabular form below for the years ending:
12-31-90 12-31-91 12-31-92 12-31-93 12-31-94 12-31-95
- --------------------------------------------------------------------------------
First Financial $100.00 $106.79 $132.77 $177.50 $175.28 $176.49
S & P 500 Index $100.00 $130.48 $140.46 $154.62 $156.66 $215.54
Industry Index $100.00 $171.08 $216.40 $241.23 $246.24 $364.81
- --------------------------------------------------------------------------------
*Total return assumes annual reinvestment of dividends.
** Industry Index is the published Media General Financial Services' West North
Central Bank Index.
================================================================================
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, Robert M. Sierk, President and Chief Executive Officer of both the
Company and the Iowa City Bank, and A. Russell Schmeiser, Executive Vice
President and Chief Operating Officer of both the Company and the Iowa City
Bank, served as voting members of the Compensation Committee of the Cedar Rapids
Bank.
From time to time and in the ordinary course of business, the Iowa City Bank has
made loans to and conducted banking transactions with Messrs. Sierk, Schmeiser
and Burger and their respective associates on substantially the same terms,
including interest rates, collateral and repayment terms, as those prevailing at
the same time for comparable transactions with others. Any loans made by the
Iowa City Bank to any of Messrs. Sierk, Schmeiser and Burger, or to their
respective associates, do not involve more than the normal risk of
collectibility, nor do such loans present any other features unfavorable to the
lender.
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
Both Banks have had, and expect to have in the future, banking transactions in
the ordinary course of business with the directors, officers, principal
shareholders of the Banks and the Company, and their associates on substantially
the same terms including interest rates, collateral and repayment terms on
extensions of credit as those prevailing at the same time for comparable
transactions with others. It is the judgment of the Board of Directors of the
Company that the loans to directors, officers, principal shareholders and their
associates do not involve more than the normal risk of collectibility, nor do
such loans present any other unfavorable features.
11
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
McGladrey & Pullen, LLP, Iowa City, Iowa, certified public accountants have
provided audit and accounting services as the principal accountants for both
Banks and the Company for the calendar year 1995, including an audit of the
consolidated financial statements of the Company at December 31, 1995.
Representatives from McGladrey & Pullen, LLP, are expected to be present at the
Annual Meeting of the Shareholders of the Company and will be given the
opportunity to make a statement if they desire to do so. Such representatives
are expected to be available to respond to questions at an appropriate time
during the course of the Annual Meeting of the Shareholders.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of shareholders owning a majority of the outstanding common
stock of the Company is required in order to elect the directors to serve on the
Board of Directors for the ensuing year.
DATE BY WHICH SHAREHOLDER PROPOSALS TO BE PRESENTED AT THE 1997 ANNUAL MEETING
MUST BE RECEIVED IN ORDER TO BE INCLUDED IN PROXY STATEMENT AND FORM OF PROXY
Any proposal which a shareholder intends to present for action at the 1997
Annual Meeting of the Shareholders currently scheduled to be held on April 8,
1997, must be received by the Chief Executive Officer of the Company at 204 East
Washington Street, Iowa City, Iowa 52240 on or before 3:00 P.M. local time, on
November 7, 1996, for inclusion in the Company's Proxy Statement and form of
Proxy relating to that meeting.
OTHER MATTERS
As of the date of printing of this Proxy Statement, the Board of Directors of
the Company knows of no business other than that described herein that will be
presented for action at the 1996 Annual Meeting of Shareholders. If, however,
any other matters properly come before the meeting, it is intended that the
proxies will be voted in accordance with instruction given by the Board of
Directors of the Company to the person or persons voting such proxies.
ANNUAL REPORT AND FORM 10K
A copy of the Company's Annual Report to its Shareholders for the calendar year
1995, including financial statements, has been mailed to all shareholders
concurrent with the mailing of this Proxy Statement and the enclosed Proxy, but
such Annual Report is not intended to be a part of this Proxy Statement.
COPIES OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
(FORM 10K) WILL BE MAILED TO SHAREHOLDERS UPON WRITTEN REQUEST MADE TO: A.
RUSSELL SCHMEISER, EXECUTIVE VICE PRESIDENT, SECRETARY AND TREASURER, FIRST
FINANCIAL BANCORPORATION, 204 EAST WASHINGTON STREET, IOWA CITY, IOWA 52240.
BY ORDER OF THE BOARD OF DIRECTORS
//s// A. Russell Schmeiser
A. Russell Schmeiser
Executive Vice President, Secretary and Treasurer
Iowa City, Iowa
March 7, 1996
12
<PAGE>
(The information below appears on the front of the Proxy Voting Card)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
FIRST FINANCIAL BANCORPORATION
FOR ANNUAL MEETING OF SHAREHOLDERS
ON APRIL 9, 1996
The undersigned shareholder(s) of the First Financial Bancorporation (Company),
appoint(s) Margaret N. Keyes and Richard M. Hyman, Sr. and each of them with
power to act alone if the other of them fails or ceases to act, and each of them
with power to appoint his or her substitute, but in the event both of them fails
or ceases to act without appointing substitute(s) then such person(s) as may be
named by the Board of Directors of the Company, to be the proxies or proxy of
the undersigned at the Annual Meeting of Shareholders of the Company to be held
on April 9, 1996, at 4:30 P.M. local time, and any adjournments thereof, to vote
all shares of the Company which the undersigned is entitled to vote, As to the
following matters, detailed in the Proxy Statement dated March 7, 1996, this
proxy shall be voted as follows:
(1) Election of Directors:
[ ] FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY TO VOTE FOR
(Except as marked to the contrary below.) NOMINEES LISTED BELOW
INSTRUCTION: To withhold authority for any individual nominee, strike a
line through the nominee's name in the list below.
Fritz L. Duda Robert M. Sierk
Ralph J. Russell Larry D. Ward
A. Russell Schmeiser
(2) The proxies are authorized to vote in accordance with instructions given by
the Board of Directors upon any other matter which may properly come before
the meeting.
<PAGE>
(The information below appears on the back of the Proxy Voting Card)
Receipt of Notice of the Annual Meeting and Proxy Statement is acknowledged.
DATED:___________________, 1996
________________________________
________________________________
Signature of Shareholder(s), including title when
signing as attorney, executor, administrator,
trustee, guardian or corporate officer. All co-
owners must sign.
