September 25, 2000
Dear Shareholder:
You are cordially invited to attend the 2000 Annual Meeting of Shareholders of
First Federal Financial Corporation of Kentucky (the "Corporation") to be held
at the Corporation's home office, 2323 Ring Road, Elizabethtown, Kentucky on
Wednesday November 8, 2000 at 5:00 p.m.
The attached Notice of Annual Meeting and Proxy Statement describe the formal
business to be transacted at the meeting. During the meeting, we will report on
the operations of the Corporation. Directors and officers of the Corporation as
well as a representative from the Corporation's independent accounting firm,
Crowe, Chizek and Company LLP, will be present to respond to appropriate
questions of shareholders.
Detailed information concerning activities and operating performance during the
fiscal year ended June 30, 2000 is contained in our Annual Report, which is also
enclosed.
Please sign, date and promptly return the enclosed proxy card to the
Corporation. If you attend the meeting, you may vote in person even if you have
previously mailed a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
B. KEITH JOHNSON
President & Chief Executive Officer
<PAGE>
FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
2323 RING ROAD
ELIZABETHTOWN, KENTUCKY 42702-5006
(270) 765-2131
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 8, 2000
The Annual Meeting of Shareholders of First Federal Financial
Corporation of Kentucky (the "Corporation") will be held at the Corporation's
home office, 2323 Ring Road, Elizabethtown, Kentucky, on Wednesday, November 8,
2000 at 5:00 p.m.
A Proxy Card and a Proxy Statement for the meeting are enclosed.
The meeting is for the purpose of considering and acting upon:
1. The election of four directors of the Corporation;
2. Such other matters as may properly come before the meeting or
any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to
come before the meeting.
Any action may be taken on any one of the foregoing proposals at the
meeting on the date specified above or on any date or dates to which, by
original or later adjournment, the meeting may be adjourned. Shareholders of
record at the close of business on September 15, 2000 are the shareholders
entitled to vote at the meeting and any adjournments thereof.
You are requested to fill in and sign the enclosed proxy card, which is
solicited by the Board of Directors, and to mail it promptly in the enclosed
envelope. The proxy card will not be used if you attend and vote at the meeting
in person.
BY ORDER OF THE BOARD OF DIRECTORS
REBECCA S. BOWLING
Corporate Secretary
Elizabethtown, Kentucky
September 25, 2000
IMPORTANT: THE PROMPT RETURN OF PROXY CARDS WILL SAVE THE CORPORATION THE
EXPENSE OF FURTHER REQUESTS FOR PROXY CARDS IN ORDER TO INSURE A QUORUM. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
<PAGE>
FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
2323 RING ROAD
ELIZABETHTOWN, KENTUCKY 42702-5006
(270) 765-2131
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 8, 2000
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation
of proxy cards by the Board of Directors of First Federal Financial Corporation
of Kentucky (the "Corporation") for use at the 2000 Annual Meeting of
Shareholders of the Corporation (the "Meeting") to be held at the Corporation's
home office, 2323 Ring Road, Elizabethtown, Kentucky, on Wednesday, November 8,
2000 at 5:00 p.m. The accompanying Notice of Annual Meeting of Stockholders and
this Proxy Statement, together with the enclosed proxy card, are being first
mailed to stockholders of the Corporation on or about September 25, 2000.
REVOCABILITY OF PROXY CARDS
Shareholders who execute proxy cards retain the right to revoke them at
any time. Unless so revoked, the shares represented by such proxy cards will be
voted at the Meeting and all adjournments thereof. Proxy cards may be revoked by
written notice to the Corporate Secretary of the Corporation or by the filing of
a later-dated proxy card prior to a vote being taken on a particular proposal at
the Meeting. A written notice of revocation of a proxy card should be sent to
the Corporate Secretary, First Federal Financial Corporation of Kentucky, 2323
Ring Road, P.O. Box 5006, Elizabethtown, Kentucky 42702-5006, and will be
effective if received by the Corporate Secretary prior to the Meeting. A
previously submitted proxy card will also be revoked if a shareholder attends
the Meeting and votes in person. Proxy cards solicited by the Board of Directors
of the Corporation will be voted in accordance with the directions given
therein. Where no instructions are indicated, the shares represented by a signed
proxy card will be voted for the nominees for director set forth below.
The accompanying proxy card confers discretionary authority on the
persons named as proxies to vote in their discretion in matters incident to the
conduct of the Meeting. If one or more persons other than the nominees named
below are nominated as directors, then the named proxies or their substitutes
will have the power, in their discretion, to vote cumulatively for some number
less than all nominees named below or for such of the other nominees as they may
choose. If any of the nominees named below becomes unwilling or unable to accept
nomination or election, then the proxies will have the right to vote for any
substitute nominee in place of the nominee who has become unwilling or unable to
accept nomination or election.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Shareholders of record as of the close of business on September 15,
2000 are entitled to one vote for each share then held, except in the election
of directors, when cumulative voting applies. As of September 15, 2000 the
Corporation had 3,755,939 shares of common stock ("Common Stock") issued and
outstanding.
Persons and groups owning more than 5% of the Common Stock are required
to file certain reports regarding their ownership pursuant to the Securities
Exchange Act of 1934. Based on such reports, the following table sets forth, as
of September 15, 2000, certain information as to those persons who were
beneficial owners of more than 5% of the outstanding shares of Common Stock as
of that date. The table also sets forth the beneficial ownership of all
executive officers and directors of the Corporation as a group.
3
<PAGE>
Amount & Nature Percent of Shares
of Beneficial of Capital Stock
Ownership Outstanding
--------------- -----------------
First Federal Financial Corporation
of Kentucky Employee Stock
Ownership Plan
2323 Ring Road
P.O. Box 5006
Elizabethtown, Kentucky 42702-5006 211,503 (1) 5.63%
All Executive Officers and
Directors as a Group (23 Persons) 460,483 (2) 12.26%
-----------------------------------
(1) As of the date of this proxy statement, all shares have been allocated.
The voting of allocated shares is directed by the employees.
(2) Includes certain shares owned by spouses, or as custodian or trustee,
over which shares all executive officers and directors as a group
effectively exercise sole voting and investment power. Also includes
30,456 shares of Common Stock which may be purchased pursuant to stock
options exercisable within 60 days from the record date, and 110,559
shares held by the Bank's ESOP which have been allocated to all
executive officer participants as a group. Each employee participant
votes shares allocated to his or her account.
CUMULATIVE VOTING
Pursuant to the Articles of Incorporation and Bylaws of the
Corporation, every stockholder voting for the election of directors is entitled
to cast a number of votes calculated by multiplying the number of shares the
stockholder is entitled to vote times the number directors to be elected. Each
stockholder will be entitled to cast his votes for one director or distribute
his votes among any number of candidates as he or she chooses. The Board of
Directors intends to vote the shares represented by completed proxy cards
solicited by it equally among the four candidates standing for election as
directors nominated by the Board of Directors. However, the Board reserves the
right, in its sole discretion, to distribute the votes among some or all of the
nominees of the Board of Directors in another manner so as to elect as directors
the maximum number of nominees possible.
PROPOSAL I - ELECTION OF DIRECTORS
The Corporation's Board of Directors is currently comprised of ten
directors, divided into three classes with staggered terms. We currently have
two classes of directors with three directors in the class and one class of
directors with four directors.
At the meeting, the Corporation will elect three directors. The Board
has nominated each of B. Keith Johnson, Diane E. Logsdon, and John L. Newcomb,
Jr. for election to a three-year term ending at the 2003 annual meeting. If any
nominee is unable to serve, the shares represented by all valid proxy cards will
be voted for election of such substitute director as the Board of Directors may
recommend. At this time, the Board knows of no reason why any nominee might be
unable to serve.
Two current directors, Irene B. Lewis and Kennard Peden, are retiring
from the Board of Directors at the 2000 annual meeting. The Board of Directors
wishes to thank Ms. Lewis and Mr. Peden for their years of service to the
Corporation.
The three persons receiving the most votes at the meeting will be
elected as directors. Votes which are not cast at the meeting, either because of
abstentions or broker non-votes, are not considered in determining the number of
votes cast for the election of a nominee.
The following table sets forth for each nominee and for each director
continuing in office such person's name, age, the year he or she first became a
director and the number of shares and percentage of the Common Stock
beneficially owned.
4
<PAGE>
NOMINEES
SHARES OF
COMMON
STOCK
YEAR FIRST BENEFICIALLY
ELECTED OWNED
AGE AT OR TERM AT PERCENT
SEPT. 15, APPOINTED TO SEPTEMBER 15, OF
NAME 2000 DIRECTOR (1) EXPIRE 2000 (2) (3) CLASS
---- ---- ------------ ------ ------------ -----
B. Keith Johnson 39 1997 2003 31,182 *
Diane E. Logsdon 57 - 2003 200 *
John L. Newcomb, Jr. 46 - 2003 8,715 *
DIRECTORS CONTINUING IN OFFICE
Robert M. Brown 60 1991 2001 16,047 *
Wreno M. Hall 81 1979 2002 82,960 2.21%
Walter D. Huddleston 74 1966 2002 74,030 1.97%
J. Stephen Mouser 51 1998 2002 4,914 *
Burlyn Pike 79 1995 2001 8,010 *
J. Alton Rider 63 1987 2001 78,608 2.09%
Michael L. Thomas 45 1998 2002 1,309 *
RETIRING DIRECTORS
Irene B. Lewis 79 1983 2000 3,200 *
Kennard Peden 84 1967 2000 24,000 *
CERTAIN NON-DIRECTOR EXECUTIVE OFFICERS
NUMBER OF SHARES OF PERCENT
COMMON STOCK BENEFICIALLY OF
NAME AGE OWNED CLASS
---- --- ----- -----
Wm. Ray Brown 51 26,167 (4) *
* Represents less than 1%
(1) Each director first elected in 1990 or earlier was first elected as a
director of the Bank and became a director of the Corporation on the date
of its incorporation in June 1990.
(2) Includes certain shares owned by spouses, or as custodian or trustee over
which shares the director or executive officer effectively exercises sole
voting and investment power, unless otherwise indicated.
(3) Includes 25,000 shares of Common Stock subject to currently exercisable
stock options. Also includes 2,288 shares under the ESOP, which has been
allocated to Mr. Johnson's account for which Mr. Johnson has voting rights.
(4) Includes 23,351 shares under the ESOP, which has been allocated to Mr.
Brown's account for which Mr. Brown has voting rights.
5
<PAGE>
Listed below is certain information about the directors and executive
officers of the Corporation. Unless otherwise noted all directors and executive
officers have held these positions for at least five years.
ROBERT M. BROWN owns and operates Brown Funeral Home, which he formed in
1972. He is a charter member of the Elizabethtown A.M. Rotary Club. Mr. Brown is
also active in the National, Kentucky and South Central Funeral Directors
Association. He is also an active member of the Chamber of Commerce and has
served as a major division chairman of Elizabethtown Community College's
Partners in Progress fund raising campaign.
WRENO M. HALL is a retired surgeon. He practiced in Elizabethtown for over
39 years.
WALTER D. HUDDLESTON is a former two-term member of the United States
Senate. Since leaving the Senate in 1985, he has owned and operated Walter D.
Huddleston Consulting, a legislative consulting firm located in Elizabethtown
and Washington, D.C. He is a member of the Chamber of Commerce.
B. KEITH JOHNSON was named President and C.E.O. of the Corporation and the
Bank on September 4, 1997. Mr. Johnson joined the Bank as Comptroller in 1993
and was appointed Executive Vice President in 1995. Before joining the
Corporation he was a principal in the accounting firm of Whelan, Johnson, Doerr,
Pike & Pawley P.S.C., where he was extensively involved in the firm's financial
institution practice. He has been a licensed CPA since 1984. He is a member of
the Board of Directors of the Kentucky Bankers Association. He serves in various
capacities on several community/charitable organization boards.
DIANE E. LOGSDON is the Vice President of planning and development at
Hardin Memorial Hospital. She currently serves as the Board Chairperson of the
Elizabethtown-Hardin County Chamber of Commerce.
STEPHEN MOUSER is President of Mouser Custom Cabinetry, LLC, a family-owned
cabinet manufacturer in Elizabethtown. He is a member of the Better Business
Bureau, the Elizabethtown-Hardin County Chamber of Commerce, and the Home
Builders Association. He is a former President of the Rineyville Optimist Club
and former Board Member of Lincoln Trail Home Builders' Association.
JOHN L. NEWCOMB, JR. is President and Financial Manager of Newcomb Oil
Company, a family-owned business, which owns and operates the Five Star Food
Marts selling Chevron, Shell, Amoco, Ashland, and Marathon gasoline. He serves
as Treasurer of the Kentucky Petroleum Marketers Association and is a member of
the National Chevron Marketers Council and the Ashland Petroleum Marketer
Council. Mr. Newcomb was elected as a director of the Bank in 1999.
BURLYN PIKE is a member of the law firm Pike & Schmidt Law Office, P.S.C.
in Shepherdsville, Kentucky. Mr. Pike also served as the President and Chief
Executive Officer of Bullitt Federal Savings Bank prior to its merger with First
Federal Savings Bank in January 1995. He was named a director of the Corporation
in January 1995.
J. ALTON RIDER has been owner and operator of Rider's Men & Women Clothing
Store in Elizabethtown since 1969. He is past President of the Hardin County
A.M. Rotary Club, former Hardin County School Board member, past Hardin County
Representative of the Kentucky Retail Association, a current member of the
National Retail Federation, and is a member of the Elizabethtown-Hardin County
Chamber of Commerce. He is also currently serving as a member of the Kentucky
Retail Federation.
MICHAEL THOMAS, DVM, has been a partner in Elizabethtown Animal Hospital
for 17 years. Dr. Thomas is an active member in the American Veterinary Medical
Association and the Kentucky Veterinary Medical Association.
CERTAIN NON-DIRECTOR EXECUTIVE OFFICERS
WM. RAY BROWN currently serves as a Senior Vice President of the
Corporation. Mr. Brown has served in many capacities since joining the Bank in
1972.
6
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings of the
Board and through its committees. During the fiscal year ended June 30, 2000,
the Board of Directors held ten meetings.
The full Board of Directors of the Corporation acts as a nominating
committee for the annual selection of nominees for election as directors. The
Board of Directors met once during the 2000 fiscal year in its capacity as
nominating committee. While the Board of Directors will consider nominees
recommended by shareholders, it has not actively solicited recommendations from
the Corporation's shareholders for nominees. Nominations must be submitted to
the Corporate Secretary of the Corporation in writing in accordance with
procedures set forth in the Corporation's Articles of Incorporation. Such
notices generally must be submitted not less than 30 days nor more than 60 days
before the date of the annual meeting and must include certain information
including (i) the name, age, address, principal occupation and Common Stock
ownership of the person to be nominated; (ii) a description of all arrangements
or understandings between the shareholder and the nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination is
to be made by the shareholder; (iii) such other information regarding the
nominee as would be required to be included in proxy materials filed under the
applicable rules of the SEC had the nominee been nominated by the Board of
Directors; and (iv) the written consent of the nominee to serve as a director of
the Corporation if so elected. The notice must also include information about
the shareholder submitting the nomination including name and address as they
appear on the Corporation's books and the number of shares of Common Stock owned
by the shareholder. Copies of the Articles of Incorporation may be obtained
without charge upon written request to Corporate Secretary, First Federal
Financial Corporation of Kentucky, 2323 Ring Road, Elizabethtown, Kentucky
42702-5006.
The Board's Risk Management Committee selects the Corporation's
independent auditors and reviews major financial, accounting and internal
auditing policies. This committee meets with the independent auditors before
scheduling the external audits to discuss the scope of work and audit findings
and reviews the finished reports. The committee also reviews Office of Thrift
Supervision examiner's reports and monitors policies pertaining to conflicts of
interest as they affect directors, officers, and employees. The Risk Management
Committee, composed of Directors Brown, Lewis, Mouser, Peden, and Rider, met
five times during the 2000 fiscal year.
The Board's Executive Compensation Committee determines issues
involving executive compensation. The compensation committee is composed of
Directors Huddleston, Hall, Mouser, and Pike. The compensation committee met
twice in 2000.
EXECUTIVE COMPENSATION
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
During fiscal 1994, the Corporation established a Compensation
Committee, comprised entirely of independent, nonemployee directors, with
responsibility for reviewing all aspects of the Corporation and Bank's executive
compensation program. The Compensation Committee's primary objective in
structuring executive compensation is to provide a means of attracting and
retaining executives with the experience and capability of providing outstanding
leadership to the Corporation and the Bank.
The Corporation's and the Bank's executive compensation program,
described in greater detail below, consists of a competitive base salary, an
incentive bonus based on the attainment of annual corporate performance
objectives, and stock-based compensation awards.
In establishing base salary levels and recommending corporate
performance objectives, the Committee reviews relevant financial results for the
Corporation, including growth in earnings, the rate of return on assets, and
various other measures of productivity and efficiency. The Compensation
Committee also believes that stock-based compensation, in the form of ESOP
awards and grants of stock options and stock appreciation rights, can provide a
longer-term incentive by giving executives, employees, and the Corporation's
shareholders a common interest in increasing long-term shareholder value.
SALARIES
The Compensation Committee has established a policy of providing base
pay for executives that approximate the median base pay provided to executives
of other thrifts and financial institutions of similar size. Base pay increases
for executives and all other employees are based on an evaluation of individual
performance.
7
<PAGE>
BONUS INCENTIVE COMPENSATION
Corporate performance objectives are established each year by the Board
of Directors, which can include specific targets for growth, return on assets,
and return on equity. When these objectives are met, all employees, including
executive officers, earn an incentive bonus equal to a percentage of base pay.
Based upon the actual financial results for the fiscal year ended June 30, 2000
all employees of the Bank earned an average incentive bonus equal to 4.0% of
base pay.
EMPLOYEE STOCK OWNERSHIP PLAN
The Corporation awards shares of the Common Stock under the ESOP to
eligible employees, including executives, based on a percentage of base pay
determined by the Board of Directors. Under the ESOP, executive officers were
awarded an aggregate of 1,308 shares of Common Stock during fiscal 2000.
STOCK OPTION AND INCENTIVE PLAN
The Corporation adopted its 1998 Stock Option and Incentive Plan as a
means of increasing the incentive and encouraging the continued employment of
key employees by facilitating their purchases of an equity interest in the
Corporation. The 1998 Plan, authorized grants of stock options and stock
appreciation rights to eligible employees. Awards under the 1998 Plan are
subject to vesting and forfeiture as determined by the Stock Option Committee,
which administers the Plan. The stock options granted under the 1998 Plan could
have various vesting schedules depending on the date of the option. During the
fiscal 2000, 45,000 shares were granted to executive officers under the 1998
Plan. The Board of Directors believes that stock options and other forms of
stock-based incentive compensation help to attract, retain and motivate
executive officers to improve long-term shareholder value.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In establishing Mr. Johnson's salary for fiscal year 2000, the Executive
Compensation Committee took into account the Corporation's success in meeting
its non-financial and financial performance goals during 2000. Mr.Johnson earned
a base salary of $157,500 for 2000. Mr. Johnson also received a performance
incentive bonus of $7,980 or 4.0% of his salary. Mr. Johnson was also awarded
241 shares of stock under the ESOP during fiscal 2000.
EXECUTIVE COMPENSATION COMMITTEE
Walter D. Huddleston, Chairperson
Wreno M. Hall
Burlyn Pike
Stephen Mouser
8
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for
each of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Corporation and the Bank. No other executive officer earned a
combined salary and bonus in excess of $100,000 during fiscal year 2000.
ANNUAL COMPENSATION
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION
-------------------- ---- ------ ----- ------------ ------------
(1) (2) (3)
B. Keith Johnson 2000 $157,500 $10,313 $2,160 $28,488
President and Chief 1999 133,000 9,410 2,160 26,915
Executive Officer 1998 108,834 9,020 2,160 24,349
------------------------
(1) Includes a performance incentive bonus and a Christmas bonus.
(2) Represents compensation related to Mr. Johnson's use of an automobile
provided by the Bank.
(3) Includes the following for the 1998, 1999 and 2000 fiscal years,
respectively: director's fees of $13,000, $15,250 and $16,750; matching
contributions under the Bank's 401(K) plan of $7,530, $7,980 and
$9,450; and amounts credited to Mr. Johnson's account under the Bank's
ESOP of $1,885, $2,047 and $2,288.
OPTIONS EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth information concerning the value of
options held by the Chief Executive Officer at the end of fiscal year 2000.
Value of
Number of Unexercised
Unexercised In-the-Money
Options Options
at Fiscal at Fiscal
Shares Acquired Value Year-End Year-End
Name on Exercise Realized (Exercisable) (1) (Exercisable)(2)
--------- ------------ -------- ----------------- --------------
B. Keith Johnson -0- -0- 25,000 $111,875
------------------
(1) Stock options granted to Mr. Johnson during fiscal year 2000 included 25,000
shares of which 5,000 is currently exercisable along with 20,000 shares granted
in prior years.
(2) Difference between fair market value of underlying Common Stock at June 30,
2000 and the exercise price of such options.
DIRECTORS' COMPENSATION
Members of the Board of Directors of the Corporation receive a monthly
fee of $350. Members of the Bank's Board of Directors receive a monthly fee of
$1,150. Advisory Board members receive a monthly fee of $550. No fees are paid
for attendance at committee meetings.
9
<PAGE>
RETIREMENT PLAN
The Bank is a participating employer in a multiple employer pension
plan sponsored by the Financial Institution Retirement Fund. All full time
employees of the Bank are eligible to participate after one year of service and
attaining age 21. Service credit for purposes of benefit accrued, eligibility
and vesting is retroactive to the date of employment.
A qualifying employee becomes fully vested in the plan upon completion
of five years' service or when the normal retirement age of 65 is attained. The
plan is intended to comply with the requirements of Section 401(a) of the
Internal Revenue Code of 1986, as amended ("Code"), as a "tax qualified"
deferred benefits plan, and with the provisions of the Employee Retirement
Income Security Act of 1974, as amended.
The plan provides for monthly payments to each participating employee
at normal retirement age. The annual allowance payable under the plan is equal
to 2% of the highest average earnings received in any five consecutive full
calendar years during the last ten years of employment before the participant's
normal retirement date multiplied by the years of credited service. A
participant who has attained the age of 45 and completed ten years of service
may take an early retirement and elect to receive a reduced monthly benefit
beginning immediately. Mr. Johnson has 6 years and 4 months of credited service
under the plan. During fiscal year 2000, the Bank had employer contributions and
administrative expenses of $5,418 for the plan.
The following table indicates the annual retirement benefit payable
under the plan based on various specified levels of plan compensation and
various specified years of credited service as calculated under the plan
assuming retirement at age 65 on December 31, 2000. The IRS maximum annual
benefit under the plan is limited to $122,727 per year.
YEARS OF SERVICE
High-5 Average -----------------
Compensation 15 20 25 30 35
------------------------------------------------------------------------
10,000 3,000 4,000 5,000 6,000 7,000
20,000 6,000 8,000 10,000 12,000 14,000
30,000 9,000 12,000 15,000 18,000 21,000
60,000 18,000 24,000 30,000 36,000 42,000
90,000 27,000 36,000 45,000 54,000 63,000
120,000 36,000 48,000 60,000 72,000 84,000
150,000 45,000 60,000 75,000 90,000 105,000
TRANSACTIONS WITH THE CORPORATION AND THE BANK
All loans to directors and executive officers are approved by the Board
of Directors and are made in the ordinary course of business on substantially
the same terms as those of comparable transactions prevailing at the time and do
not involve more than the normal risk of collectability or contain other
unfavorable terms.
10
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COMPARATIVE STOCK PERFORMANCE GRAPH
The graph below shows the cumulative total return on the Common Stock
of the Corporation between June 30, 1995 through June 30, 2000 compared with the
cumulative total return of the NASDAQ Stock Market Index for U.S. Companies and
the S&P Savings and Loans Index over the same period. Cumulative total return on
the stock or the index equals the total increase in value since June 30, 1995,
assuming reinvestment of all dividends paid into the stock or the index,
respectively. The graph was prepared assuming that $100 was invested on June 30,
1995 in the Common Stock of the Corporation or in the indexes.
[GRAPHIC OMITTED]
------------------------------------------------------------------------------
6/95 6/96 6/97 6/98 6/99 6/00
------------------------------------------------------------------------------
First Federal Financial
Corporation of Kentucky 100 153 138 218 178 154
NASDAQ Stock Market - US 100 128 156 206 296 437
S & P Savings & Loan Companies 100 122 213 273 232 222
11
<PAGE>
INDEPENDENT AUDITORS
On April 20, 1999, Whelan, Doerr & Company was dismissed after the
Board of Directors approved a recommendation made by the Risk Management
Committee to change accountants.
During the two most recent fiscal years and subsequent interim periods
preceding the dismissal there had been no prior disagreements with Whelan, Doerr
& Company concerning accounting principles or practices, financial statement
disclosure, or auditing scope or procedures. Also, during the past two fiscal
years, Whelan, Doerr & Company's report on the Corporation's financial
statements contained an unqualified opinion.
The reason for the change was due to the fact that Whelan, Doerr &
Company could no longer provide the services needed due to a decrease in
personnel. Therefore, based on the Corporation's current size and projected
growth plans, a decision was made to go with a larger regional firm. Crowe,
Chizek & Company LLP has served as the Corporation's independent auditors since
April 20, 1999.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to regulations promulgated under the Securities Exchange Act
of 1934, the Corporation's officers, directors and persons who own more than ten
percent of the outstanding Common Stock are required to file reports detailing
their ownership and changes of ownership in Common Stock, and to furnish the
Corporation with copies of all such reports. Based solely on its review of the
copies of such reports received during the past fiscal year or with respect to
the last fiscal year, the Corporation believes that during the fiscal year ended
June 30, 2000, all of its officers and directors and all stockholders who own
more than ten percent of the Corporation's outstanding Common Stock have
complied with the reporting requirements.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that shares represented by completed proxy cards in the accompanying
form will be voted in respect thereof in accordance with the judgment of the
person or persons voting such shares.
MISCELLANEOUS
The cost of solicitation of proxy cards will be borne by the
Corporation. In addition to solicitations by mail, directors, officers, and
regular employees of the Corporation may solicit proxy cards personally or by
telegraph or telephone without additional compensation.
The Corporation's Annual Report to Shareholders, including financial
statements, is being mailed to all shareholders of record as of the close of
business on September 15, 2000. Any shareholder who has not received a copy of
the Annual Report may obtain a copy by writing to the Corporate Secretary of the
Corporation. The Annual Report is not to be treated as a part of the proxy
solicitation material or as having been incorporated herein by reference.
12
<PAGE>
SHAREHOLDER PROPOSALS
Shareholders proposals to be presented at the 2001 Annual Meeting must
be received by the Corporate Secretary of the Corporation no later than June 4,
2001 to be included in the proxy statement for the 2001 Annual Meeting. Any such
proposals and any nominations of candidates for election of directors must
comply with the Corporation's Articles of Incorporation and the requirements of
the proxy rules adopted under the Securities Exchange Act of 1934. The
Corporation expects to exercise discretionary voting authority granted under any
proxy form which is properly executed and returned to the Corporation on any
matter that may properly come before the 2001 Annual Meeting unless written
notice of the matter is delivered to the Corporation at its corporate offices,
addressed to the Corporate Secretary of the Corporation, not later than October
15, 2001.
BY ORDER OF THE BOARD OF DIRECTORS
Rebecca S. Bowling
Corporate Secretary
Elizabethtown, Kentucky
September 25, 2000
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