<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(mark one)
[X] Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 (fee required)
For the Fiscal Year ended December 31, 1999
-----------------
OR
[ ] Transition Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
(no fee required)
For the Transition period from ________ to ________
Commission File Number 0 - 24024
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FIRST COMMUNITY FINANCIAL GROUP, INC.
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(Exact name of registrant as specified in its charter)
WASHINGTON 91-1277503
---------- ----------
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation or organization)
721 COLLEGE ST. S.E., P.O. BOX 3800, LACEY, WA 98503
----------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number: (360) 459-1100
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $2.50 PAR VALUE
-----------------------------
(Title of class)
Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes X No
--- ---
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this form 10-K [X]
State the issuer's revenues for its most recent fiscal year: $27,189,000
--------------
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: at January 31, 2000 - $52,252,008
---------------------------------
Number of shares of common stock outstanding as of January 31, 2000: 2,177,167
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement (the "Proxy Statement") for use in
connection with the annual meeting of shareholders to be held on May 9, 2000,
are incorporated by reference into Parts II and III of this Annual Report.
<PAGE>
PART I
ITEM 1 - BUSINESS
First Community Financial Group, Inc. ("FCFG" or "the Company") was incorporated
under the laws of the State of Washington in November 1983 as First Community
Bancorp, Inc. and is a bank holding company. The company's name was changed to
First Community Financial Group in July, 1992. In 1984, pursuant to a plan of
reorganization, FCFG acquired all of the stock of First Community Bank of
Washington ("FCB" or "Bank"), a state banking corporation chartered under the
laws of the State of Washington in 1979.
On March 1, 1993, the Company acquired Citizens First Bank ("CFB"), a state
banking corporation chartered under the laws of the State of Washington in 1978.
On December 8, 1995 CFB's banking charter was merged into First Community Bank.
On November 29, 1995, the Company acquired Northwest Community Bank ("NCB"), a
state banking corporation chartered under the laws of the State of Washington in
1991 and merged it into FCB. The transaction was accomplished through an
exchange of FCFG's stock for shares of NCB stock. The accompanying financial
information has been prepared following the pooling-of-interests method of
accounting and reflects the combined financial position and operating results of
FCFG and NCB for all periods presented.
During 1996, Premises, Inc., a non-bank corporation formed for the purpose of
acquiring and holding properties used by FCFG's banking subsidiaries, was merged
into FCB.
On February 6, 1997 the Company acquired Prairie Security Bank, a three branch
bank headquartered in Yelm, Washington with total assets of approximately $45
million. The purchase price of approximately $7,469,000 was a combination of
cash and FCFG common stock. This in- market merger, accounted for as a purchase,
allowed the Company to consolidate two branches in Yelm, as well as two in
Olympia, Washington in addition to achieving certain other economies typical of
such transactions.
On July 18, 1997, the Bank completed the purchase of four Wells Fargo Bank
branches. This acquisition included $43,200,000 in deposits as well as branch
facilities in Hoquiam, Montesano, Toledo and Winlock, Washington. The branches
in Winlock, Toledo and Montesano represent further expansion of the Company's
market area. The Hoquiam branch represents further penetration into an existing
market.
On January 20, 1999, Information Management Systems ("IMS"), a non-banking
corporation formed for the purpose of providing data processing services to the
Bank, was merged with and into FCFG.
In February 1999, a lending office was opened in Puyallup, then in October 4,
1999, the Puyallup lending office expanded to a full service branch. The
Puyallup branch represents further penetration into an existing Pierce County
market.
The principal offices of FCFG and FCB are located in Lacey, Washington. The Bank
engages in general banking business through fifteen branches and a mortgage
production office in Thurston, Grays Harbor, Lewis and Pierce Counties. The Bank
provides a full range of consumer banking services including: savings accounts,
checking accounts, installment, mortgage and commercial lending, safety deposit
facilities, time deposits, Visa and MasterCard and other consumer and
business-related financial services including the sale of non-deposit investment
products.
2
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COMPETITION
The financial services industry is highly competitive. The Bank competes
actively with national and state banks, mutual savings banks, savings and loan
associations, finance companies, credit unions, brokerage houses and other
financial institutions operating in the service area. Many of these financial
institutions have merged or are in process of merging and many have greater
resources than the bank.
EMPLOYEES
FCFG and its subsidiaries employed a total of 189 employees, consisting of 153
full time and 36 part time employees at December 31, 1999. Such employees are
not represented by a union organization or other collective bargaining group,
and management considers their relations with their employees to be very good.
BANK SUPERVISION AND REGULATION
The following generally refers to certain significant statutes and regulations
affecting the banking industry. These references are only intended to provide
brief summaries and, therefore, are not complete and are qualified by the
statutes and regulations referenced. Changes in applicable laws or regulations
may have a material effect on the business and prospects of the Company. The
operations of the Company may also be affected by changes in the policies of
banking and other government regulators. The Company cannot accurately predict
the nature or extent of the effects on its business and earnings that fiscal or
monetary policies, or new federal or state laws, may have in the future.
CHANGES IN BANKING LAWS AND REGULATIONS
The laws and regulations that affect banks and bank holding companies have
recently undergone significant changes. On November 12, 1999, the president
signed into law the Financial Services Modernization Act of 1999. Generally, the
act (i) repeals the historical restrictions on preventing banks from affiliating
with securities firms, (ii) provides a uniform framework for the activities of
banks, savings institutions and their holding companies, (iii) broadens the
activities that may be conducted by national banks and banking subsidiaries of
bank holding companies, (iv) provides an enhanced framework for protecting the
privacy of consumers' information and (v) addresses a variety of other legal and
regulatory issues affecting both day-to-day operations and long-term activities
of financial institutions.
THE COMPANY
GENERAL
As a bank holding company, the Company is subject to the Bank Holding Company
Act of 1956 ("BHCA"), as amended, which places the Company under the supervision
of the Board of Governors of the Federal Reserve. The Company must file annual
reports with the Federal Reserve and must provide it with such additional
information as it may require. In addition, the Federal Reserve periodically
examines the Company and its subsidiaries, including the Bank.
BANK HOLDING COMPANY REGULATION
In general, the BHCA limits bank holding company business to owning or
controlling banks and engaging in other banking-related activities. Bank holding
companies must obtain the FRB's approval before they: (1) acquire direct or
indirect ownership or control of any voting shares of any bank that results in
total ownership or control, directly or indirectly, of more than 5% of the
voting shares of such bank; (2) merge or consolidate with another bank holding
company; or (3) acquire substantially all of the assets of any additional banks.
Subject to certain state laws, such as age and contingency laws, a bank holding
company that is adequately capitalized and adequately managed may acquire the
assets of both in-state and out-of-state banks.
3
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CONTROL OF NONBANKS. With certain exceptions, the BHCA prohibits bank holding
companies from acquiring direct or indirect ownership or control of voting
shares in any company that is not a bank or a bank holding company unless the
FRB determines that the activities of such company are incidental or closely
related to the business of banking. If a bank holding company is
well-capitalized and meets certain criteria specified by the FRB, it may engage
de novo in certain permissible nonbanking activities without prior FRB approval.
CONTROL TRANSACTIONS. The Change in Bank Control Act of 1978, as amended,
requires a person (or group of persons acting in concert) acquiring "control" of
a bank holding company to provide the FRB with 60 days' prior written notice of
the proposed acquisition. Following receipt of this notice, the FRB has 60 days
within which to issue a notice disapproving the proposed acquisition, but the
FRB may extend this time period for up to another 30 days. An acquisition may be
completed before expiration of the disapproval period if the FRB issues written
notice of its intent not to disapprove the transaction. In addition, any
"company" must obtain the FRB's approval before acquiring 25% (5% if the
"company" is a bank holding company) or more of the outstanding shares or
otherwise obtaining control over the Company.
TRANSACTIONS WITH AFFILIATES
The Company and the Bank are deemed affiliates within the meaning of the Federal
Reserve Act, and transactions between affiliates are subject to certain
restrictions. Accordingly, the Company and the Bank must comply with Sections
23A and 23B of the Federal Reserve Act. Generally, Sections 23A and 23B (1)
limit the extent to which a financial institution or its subsidiaries may engage
in "covered transactions" with an affiliate, as defined, to an amount equal to
10% of such institution's capital and surplus and an aggregate limit on all such
transactions with all affiliates to an amount equal to 20% of such capital and
surplus, and (2) require all transactions with an affiliate, whether or not
"covered transactions," to be on terms substantially the same, or at least as
favorable to the institution or subsidiary, as those provided to a
non-affiliate. The term "covered transaction" includes the making of loans,
purchase of assets, issuance of a guarantee and other similar types of
transactions.
REGULATION OF MANAGEMENT
Federal law (1) sets forth the circumstances under which officers or directors
of a financial institution may be removed by the institution's federal
supervisory agency; (2) places restraints on lending by an institution to its
executive officers, directors, principal stockholders, and their related
interests; and (3) prohibits management personnel from serving as a director or
in other management positions with another financial institution which has
assets exceeding a specified amount or which has an office within a specified
geographic area.
TIE-IN ARRANGEMENTS
The Company and the Bank cannot engage in certain tie-in arrangements in
connection with any extension of credit, sale or lease of property or furnishing
of services. For example, with certain exceptions, neither the Company nor the
Bank may condition an extension of credit on either (1) a requirement that the
customer obtain additional services provided by it or (2) an agreement by the
customer to refrain from obtaining other services from a competitor.
The FRB has adopted significant amendments to its anti-tying rules that: (1)
removed FRB-imposed anti-tying restrictions on bank holding companies and their
non-bank subsidiaries; (2) allow banks greater flexibility to package products
with their affiliates; and (3) establish a safe harbor from the tying
restrictions for certain foreign transactions. These amendments were designed to
enhance competition in banking and nonbanking products and to allow banks and
their affiliates to provide more efficient, lower cost service to their
customers. However, the impact of the amendments on the Company and the Bank is
unclear at this time.
STATE LAW RESTRICTIONS
As a Washington business corporation, the Company may be subject to certain
limitations and restrictions as provided under applicable Washington corporate
law. In addition, Washington banking law restricts and governs certain
activities of the Bank.
4
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THE BANK
GENERAL
The Bank, as a non-Fed member FDIC insured institution, is subject to regulation
and examination by the FDIC and the State of Washington. The federal laws that
apply to the Bank regulate, among other things, the scope of its business, its
investments, its reserves against deposits, the timing of the availability of
deposited funds and the nature and amount of and collateral for loans. The laws
and regulations governing the Bank generally have been promulgated to protect
depositors and not to protect stockholders of the bank or its holding company.
CRA. The Community Reinvestment Act (the "CRA") requires that, in connection
with examinations of financial institutions within their jurisdiction, the FDIC
evaluates the record of the financial institutions in meeting the credit needs
of their local communities, including low and moderate income neighborhoods,
consistent with the safe and sound operation of those banks. These factors are
also considered in evaluating mergers, acquisitions, and applications to open a
branch or facility.
INSIDER CREDIT TRANSACTIONS. Banks are also subject to certain restrictions
imposed by the Federal Reserve Act on extensions of credit to executive
officers, directors, principal shareholders, or any related interests of such
persons. Extensions of credit (i) must be made on substantially the same terms,
including interest rates and collateral, and follow credit underwriting
procedures that are not less stringent than those prevailing at the time for
comparable transactions with persons not covered above and who are not
employees; and (ii) must not involve more than the normal risk of repayment or
present other unfavorable features. Banks are also subject to certain lending
limits and restrictions on overdrafts to such persons. A violation of these
restrictions may result in the assessment of substantial civil monetary
penalties on the affected bank or any officer, director, employee, agent, or
other person participating in the conduct of the affairs of that bank, the
imposition of a cease and desist order, and other regulatory sanctions.
FDICIA. Under the Federal Deposit Insurance Corporation Improvement Act of 1991
(the "FDICIA"), each federal banking agency has prescribed, by regulation,
noncapital safety and soundness standards for institutions under its authority.
These standards cover internal controls, information systems, and internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth, compensation, fees and benefits, such other operational and managerial
standards as the agency determines to be appropriate, and standards for asset
quality, earnings and stock valuation. An institution which fails to meet these
standards must develop a plan acceptable to the agency, specifying the steps
that the institution will take to meet the standards. Failure to submit or
implement such a plan may subject the institution to regulatory sanctions.
Management of the Company believes that the Bank meets all such standards, and
therefore, does not believe that these regulatory standards materially affect
the Company's business operations.
INTERSTATE BANKING AND BRANCHING
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Act") permits nationwide interstate banking and branching under
certain circumstances. This legislation generally authorizes interstate
branching and relaxes federal law restrictions on interstate banking. Currently,
bank holding companies may purchase banks in any state, and states may not
prohibit such purchases. Additionally, banks are permitted to merge with banks
in other states as long as the home state of neither merging bank has "opted
out." The Interstate Act requires regulators to consult with community
organizations before permitting an interstate institution to close a branch in a
low-income area.
5
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With regard to interstate bank mergers, Washington has "opted in" to the
Interstate Act and allows in-state banks to merge with out-of-state banks
subject to certain aging requirements. Washington law generally authorizes the
acquisition of an in-state bank by an out-of-state bank through merger with a
Washington financial institution that has been in existence for at least 5 years
prior to the acquisition. With regard to interstate bank branching, out-of-state
banks that do not already operate a branch in Washington may not establish de
novo branches in Washington or establish and operate a branch by acquiring a
branch in Washington. Under FDIC regulations, banks are prohibited from using
their interstate branches primarily for deposit production. The FDIC has
accordingly implemented a loan-to-deposit ratio screen to ensure compliance with
this prohibition.
DEPOSIT INSURANCE
The deposits of the Bank are currently insured to a maximum of $100,000 per
depositor through the Bank Insurance Fund ("BIF") administered by the FDIC. All
insured banks are required to pay semi-annual deposit insurance premium
assessments to the FDIC.
The FDICIA included provisions to reform the Federal Deposit Insurance System,
including the implementation of risk-based deposit insurance premiums. The
FDICIA also permits the FDIC to make special assessments on insured depository
institutions in amounts determined by the FDIC to be necessary to give it
adequate assessment income to repay amounts borrowed from the U.S. Treasury and
other sources, or for any other purpose the FDIC deems necessary. The FDIC has
implemented a risk-based insurance premium system under which banks are assessed
insurance premiums based on how much risk they present to the BIF. Banks with
higher levels of capital and a low degree of supervisory concern are assessed
lower premiums than banks with lower levels of capital or a higher degree of
supervisory concern.
DIVIDENDS
The principal source of the Company's cash revenues is dividends received from
the Bank. The payment of dividends is subject to government regulation, in that
regulatory authorities may prohibit banks and bank holding companies from paying
dividends which would constitute an unsafe or unsound banking practice. In
addition, a bank may not pay cash dividends if that payment could reduce the
amount of its capital below that necessary to meet minimum applicable regulatory
capital requirements. Other than the laws and regulations noted above, which
apply to all banks and bank holding companies, neither the Company nor the Bank
is currently subject to any regulatory restrictions on its dividends.
CAPITAL ADEQUACY
Federal bank regulatory agencies use capital adequacy guidelines in the
examination and regulation of bank holding companies and banks. If capital falls
below minimum guideline levels, the holding company or bank may be denied
approval to acquire or establish additional banks or nonbank businesses or to
open new facilities.
The FDIC and Federal Reserve use risk-based capital guidelines for banks and
bank holding companies. These are designed to make such capital requirements
more sensitive to differences in risk profiles among banks and bank holding
companies, to account for off-balance sheet exposure and to minimize
disincentives for holding liquid assets. Assets and off-balance sheet items are
assigned to broad risk categories, each with appropriate weights. The resulting
capital ratios represent capital as a percentage of total risk-weighted assets
and off-balance sheet items. The guidelines are minimums, and the Federal
Reserve has noted that bank holding companies contemplating significant
expansion programs should not allow expansion to diminish their capital ratios
and should maintain ratios well in excess of the minimum. The current guidelines
require all bank holding companies and federally- regulated banks to maintain a
minimum risk-based total capital ratio equal to 8%, of which at least 4% must be
Tier I capital. Tier I capital for bank holding companies includes common
shareholders' equity, certain qualifying perpetual preferred stock and minority
interests in equity accounts of consolidated subsidiaries, less intangibles
except as described above.
6
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The Federal Reserve also employs a leverage ratio, which is Tier I capital as a
percentage of total assets less intangibles, to be used as a supplement to
risk-based guidelines. The principal objective of the leverage ratio is to
constrain the maximum degree to which a bank holding company may leverage its
equity capital base. The Federal Reserve requires a minimum leverage ratio of
3%. However, for all but the most highly rated bank holding companies and for
bank holding companies seeking to expand, the Federal Reserve expects an
additional cushion of at least 1% to 2%.
FDICIA created a statutory framework of supervisory actions indexed to the
capital level of the individual institution. Under regulations adopted by the
FDIC, an institution is assigned to one of five capital categories depending on
its total risk-based capital ratio, Tier I risk-based capital ratio, and
leverage ratio, together with certain subjective factors. Institutions which are
deemed to be "undercapitalized" depending on the category to which they are
assigned are subject to certain mandatory supervisory corrective actions. the
Company does not believe that these regulations have any material effect on
their operations.
EFFECTS OF GOVERNMENT MONETARY POLICY
The earnings and growth of the Company are affected not only by general economic
conditions, but also by the fiscal and monetary policies of the federal
government, particularly the Federal Reserve. The Federal Reserve can and does
implement national monetary policy for such purposes as curbing inflation and
combating recession, but its open market operations in U.S. government
securities, control of the discount rate applicable to borrowings from the
Federal Reserve, and establishment of reserve requirements against certain
deposits, influence the growth of bank loans, investments and deposits, and also
affect interest rates charged on loans or paid on deposits. The nature and
impact of future changes in monetary policies and their impact on the Company
and the Bank cannot be predicted with certainty.
ITEM 2 - PROPERTIES
The Bank owns the property and building on which the Aberdeen, Elma, Hoquiam -
Timbermens, Lacey, Yelm, Fircrest, Eatonville, Winlock, Toledo, Montesano,
Centralia and downtown Olympia branches are situated. The Tumwater branch is
operated in a building owned by FCB which is situated on leased property. The
Hawks Prairie, Panorama City and Puyallup branches are operated in leased space.
The Lacey branch is a two story building with a basement and a drive-up, which
has approximately 17,500 square feet and is fully utilized as a branch bank,
administrative offices, operations center and data processing facility. The
Tumwater, Yelm, Eatonville, Winlock, Centralia, Aberdeen and Hoquiam branches
are single story structures with drive-up facilities. The Elma, downtown Olympia
and Montesano branches are two story structures with drive-up facilities. The
Toledo branch is a single story structure with a walk up ATM. The Fircrest
facility is an office condominium, of which the Bank occupies approximately
one-half.
ITEM 3 - LEGAL PROCEEDINGS
From time to time in the ordinary course of business, FCFG or its subsidiaries
may be involved in litigation. At the present time neither FCFG nor any of its
subsidiaries are involved in any material litigation proceeding.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the year ended December 31, 1999, no matters were
submitted to the security holders through the solicitation of proxies or
otherwise.
7
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PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
No broker makes a market in FCFG's common stock, and trading has not been
extensive. Trades that have occurred cannot be characterized as amounting to an
active market. The stock is traded by individuals on a personal basis and is not
listed on any exchange or traded on the over-the-counter market. Due to the
limited information available, the following price information may not
accurately reflect the actual market value of FCFG's shares. The following data
includes trades between individual investors and new issues of stock. It does
not include the exercise of stock options or shares issued in the acquisition of
Prairie Security Bank, nor does it include shares purchased by the Company as
discussed in Note 12 of the consolidated financial statements.
<TABLE>
<CAPTION>
# of Shares
Period Traded Price Range
<S> <C> <C>
1996 61,036 $20.00 - $22.00
1997 44,969 $21.00 - $24.50
1998 75,713 $20.96 - $35.00
1999 37,937 $23.00 - $29.75
</TABLE>
At December 31, 1999, options for 357,602 shares of FCFG common stock were
outstanding. See Note 17 of the audited financial statements for additional
information.
NUMBER OF EQUITY HOLDERS
As of December 31, 1999, there were 1,337 holders of record of FCFG's common
stock.
DIVIDENDS
Cash dividends of $ .40, $ .09 and $.09 per share were issued on April 15, 1999,
July 30, 1999 and October 30, 1999, respectively. There were no cash dividends
declared in 1998, or 1997. Stock dividends of 5% were issued on May 6, 1998 and
April 15, 1997, respectively.
Washington law limits the ability of the Bank to pay dividends to the Company.
Under these restrictions, a bank may not declare or pay any dividend in an
amount greater than its retained earnings without approval of the Division of
Banks. All of the retained earnings of FCB are available for the payment of
dividends to the Company under these restrictions, subject to the federal
capital regulations discussed above.
8
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ITEM 6 - SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
($ in thousands, except per share data) 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the Year
Net interest income after provision
for credit losses $ 11,348 $ 14,302 $ 12,106 $ 9,361 $ 9,410
Non-interest income 4,619 4,883 4,163 1,824 1,723
Non-interest expense and taxes 14,607 15,580 15,550 9,324 10,213
- -----------------------------------------------------------------------------------------------------
Net income $ 1,360 $ 3,605 $ 719 $ 1,861 $ 920
- -----------------------------------------------------------------------------------------------------
Per Common Share
Basic Earnings Per Share1 $ .64 $ 1.74 $ 0.36 $ 1.01 $ 0.47
- -----------------------------------------------------------------------------------------------------
Stock Dividends declared -- 5% 5% 5% 5%
Cash Dividends Paid $ .58
- -----------------------------------------------------------------------------------------------------
Balance Sheet Data:
Total Assets $292,773 $271,566 $294,474 $176,501 $177,832
Long-term debt 2,030 2,808 3,818 1,294 1,237
Stockholders' equity 30,618 30,341 26,165 20,919 19,240
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) Earnings per Share for all periods prior to 1997 have been restated in
connection with the adoption of SFAS 128.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Incorporated by reference to the section entitled MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS as set forth in the
2000 Annual Proxy Statement ("Proxy Statement").
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Incorporated by reference to the section entitled MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - LIQUIDITY, RATE
SENSITIVITY AND MARKET RISK as set forth in the Proxy Statement.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Audited Consolidated Financial Statements, notes, and supplementary data
called for by this item is incorporated by reference to the Proxy Statement.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Within the 24 months prior to December 31, 1999, FCFG has not changed
independent accountants, at either FCFG's election or by reason of the
accountant's resignation.
9
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PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS; COMPLIANCE WITH SECTION 16(A) OF THE
EXCHANGE ACT
Incorporated by reference to the sections entitled ELECTION OF DIRECTORS -
INFORMATION WITH RESPECT TO NOMINEES AND DIRECTORS WHOSE TERMS CONTINUE,
MANAGEMENT, AND SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE, as set
forth in the Proxy Statement.
ITEM 11 - EXECUTIVE COMPENSATION
Incorporated by reference to the sections entitled INFORMATION REGARDING THE
BOARD OF DIRECTORS AND ITS COMMITTEES - DIRECTOR COMPENSATION AND EXECUTIVE
COMPENSATION, as set forth in the Proxy Statement.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference to the sections entitled ELECTION OF DIRECTORS -
INFORMATION WITH RESPECT TO NOMINEES AND DIRECTORS WHOSE TERMS CONTINUE, AND
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, as set forth in
the Proxy Statement.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference to the section entitled CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS, as set forth in the Proxy Statement.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
The following exhibits are filed as part of this report:
(a)(1) Financial Statements:
The Audited Consolidated Financial Statements, notes, and
supplementary data called for by this item is incorporated by
reference to the Proxy Statement.
(a)(2) Financial Statement Schedules. None
(a)(3) Exhibits. See separate Exhibit Index
(b) Reports on Form 8-K. None
(c) Exhibits. See separate Exhibit Index
(d) Financial Statement Schedules: None
10
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 23rd day of March,
2000.
FIRST COMMUNITY FINANCIAL GROUP, INC.
(Registrant)
By: /S/ Ken F. Parsons
------------------------------
Ken F. Parsons
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on the 20th day of March, 2000.
SIGNATURES TITLE
Principal Executive Officer
/s/ Ken F. Parsons President, Chief Executive Officer, and
- ----------------------------- Chairman of the Board
Ken F. Parsons
Chief Financial and Accounting Officer
/s/ James F. Arneson Executive Vice President and Chief
- ----------------------------- Financial Officer
James F. Arneson
/s/ E. Paul Detray Director
- -----------------------------
E. Paul DeTray
/s/ A. Richard Panowicz Director
- -----------------------------
A. Richard Panowicz
/s/ Patrick L. Martin Director
- -----------------------------
Patrick L. Martin
/s/ Michael N. Murphy Director
- -----------------------------
Michael N. Murphy
11
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EXHIBIT INDEX
Exhibit No. Exhibit Description
- ----------- -------------------
(3) a. Amended and Restated Articles of Incorporation.(1)
(3) c. Registrant's Bylaws.(2)
(10) a. Employment contract for Ken F. Parsons.(3)
(10) b. 1992 Stock Option Plan for Non-employee Directors.(4)
(10) c. Second Amended Non-employee Directors Stock Option Plan.(4)
(10) d. Employee Stock Option and Restricted Stock Award Plan.(4)
(10) e. Executive Supplemental Income Plan.(4)
(10) f. 1994 Stock Option Plan for Non-employee Directors.(5)
(10) g. Employment contract for James F. Arneson.(7)
(10) h. 1999 Employee Stock Option and Restricted Award Plan and form
of agreements.
(10) i. Employee Stock Option and Restricted Stock Award Plan dated
April 19, 1989.(4)
(21) Subsidiaries of Registrant.
(27) Financial Data Schedule.
- ---------------
1 Incorporated by reference to Exhibit 3 of the Registrant's Registration
Statement on Form 10Q-SB for the quarter ended October 31, 1996.
2 Incorporated by reference to Exhibits 3 and 10 of the Registrant's
Registration Statement on Form S-4 declared effective on November 20, 1992,
Commission File No. 33-52556.
3 Incorporated by reference to Exhibit 10 of the Registrant's Quarterly
Report on Form 10Q-SB for the quarter ended September 30, 1996.
4 Incorporated by reference from Exhibit 10 of Registrant's Annual Report on
Form 10-KSB for the fiscal year ending December 31, 1992.
5 Incorporated by reference to Exhibit 10 of Registrant's Annual Report on
Form 10-KSB for the fiscal year ending December 31, 1994.
6 Incorporated by reference to Exhibit 10 to Registrant's Annual Report on
Form 10K-SB for the fiscal year ending December 31, 1997.
7 Incorporated by reference to Exhibit 10 to Registrant's Annual Report on
Form 10K for the fiscal year ending December 31, 1998.
12
<PAGE>
EXHIBIT 10(H)
FIRST COMMUNITY FINANCIAL GROUP, INC.
EMPLOYEE STOCK OPTION PLAN
Purpose of the Plan. The purpose of this Employee Stock Option Plan ("Plan") is
to provide additional incentives to key employees of FIRST COMMUNITY FINANCIAL
GROUP, INC., a Washington corporation ("First Community") and any of its
existing or future Subsidiaries, thereby helping to attract and retain the best
available personnel for positions of responsibility with said corporations and
otherwise promoting the success of the business activities of First Community.
First Community intends that Options issued pursuant to this Plan shall
constitute either Incentive Stock Options within the meaning of Section 422 of
the Code or Nonqualified Stock Options
DEFINITIONS. AS USED IN THIS PLAN, THE FOLLOWING DEFINITIONS APPLY:
"First Community" has the meaning set forth in paragraph 1 of this Plan.
"Board" means the Board of Directors of First Community.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means First Community's common stock, currently with a par
value of $2.50 per share.
"Committee" has the meaning set forth in subparagraph 4(a) of this Plan.
"Continuous Status as Employee" means the absence of any interruption or
termination of service as an Employee. Continuous Status as an Employee
shall not be considered interrupted in the case of sick leave, military
leave or any other approved leave of absence.
"Date of Grant" of an Option means the date on which the Committee makes
the determination granting such Option, or such later date as the Committee
may designate. The Date of Grant shall be specified in the Option
agreement.
"Employee" means any person employed by First Community, or a Subsidiary of
First Community which is currently in existence or is hereafter organized
or is acquired by First Community.
"Exercise Price" has the meaning set forth in subparagraph 4(b)(2) of this
Plan.
1
<PAGE>
"Option" means a stock option granted under this Plan. Options shall
include both Incentive Stock Options as defined under Section 422 of the
Code and Nonqualified Stock Options, which refer to all stock options other
than Incentive Stock Options.
"Optionee" means an Employee who receives an Option.
"Plan" has the meaning set forth in paragraph 1 of this Plan.
"Parent" means any corporation owning at least eighty percent (80%) of the
total voting power of the issued and outstanding stock of First Community,
and eighty percent (80%) of the total value of the issued and outstanding
stock of First Community.
"Shareholder-Employee" means an Employee who owns stock representing more
than ten percent (10%) of the total combined voting power of all classes of
stock of First Community or of any Subsidiary or parent company. For this
purpose, the attribution of stock ownership rules provided in Section
424(d) of the Code shall apply.
"Subsidiary" means any corporation of which not less than fifty percent
(50%) of the voting shares are held by First Community or a Subsidiary,
whether or not such corporation now exists or is hereafter organized or
acquired by First Community or a Subsidiary.
STOCK SUBJECT TO OPTIONS
NUMBER OF SHARES RESERVED. The maximum number of shares which may be optioned
and sold under this Plan is 40,000 shares of the Common Stock of First Community
(subject to adjustment as provided in subparagraph 6(j) of this Plan). During
the term of this Plan, First Community will at all times reserve and keep
available a sufficient number of shares of its Common Stock to satisfy the
requirements of this Plan.
EXPIRED OPTIONS. If any outstanding Option expires or becomes unexercisable for
any reason without having been exercised in full, the shares of Common Stock
allocable to the unexercised portion of such Option will again become available
for other Options.
ADMINISTRATION OF THE PLAN
THE COMMITTEE. The Board will administer this Plan directly, acting as a
Committee of the whole, or if the Board elects, by a separate Committee
appointed by the Board for that purpose and consisting of at least three Board
members. All references in the Plan to the "Committee" refers to this separate
Committee, if any is established, or if none is then in existence, refers to the
Board as a whole. Once appointed, any Committee will continue to serve until
otherwise directed by the Board. From time to time, the Board may increase the
size of the Committee and appoint additional members, remove members (with or
without cause), appoint new members in
2
<PAGE>
substitution, and fill vacancies however caused. The Committee will select one
of its members as chairman, and will hold meetings at such times and places as
the chairman or a majority of the Committee may determine. At all times, the
Board will have the power to remove all members of the Committee and thereafter
to directly administer this Plan as a Committee of the whole.
Members of the Committee who are eligible for Options or who have been granted
Options will be counted for all purposes in determining the existence of a
quorum at any meeting of the Committee and will be eligible to vote on all
matters before the Committee respecting the granting of Options or
administration of this Plan.
At least annually, the Committee must present a written report to the Board
indicating the persons to whom Options have been granted since the date of the
last such report, and in each case the Date of Grant, the number of shares
optioned, and the per-share Exercise Price.
POWERS OF THE COMMITTEE. All actions of the Committee must be either (i) by a
majority vote of the members of the full Committee at a meeting of the
Committee, or (ii) by unanimous written consent of all members of the full
Committee without a meeting. All decisions, determinations and interpretations
of the Committee will be final and binding on all persons, including all
Optionees and any other holders or persons interested in any Options, unless
otherwise expressly determined by a vote of the majority of the entire Board. No
member of the Committee or of the Board will be liable for any action or
determination made in good faith with respect to the Plan or any Option. Subject
to all provisions and limitations of the Plan, the Committee will have the
authority and discretion:
to determine the persons to whom Options are to be granted, the Dates of
Grant, and the number of shares to be represented by each Option;
to determine the price at which shares of Common Stock are to be issued
under an Option, subject to subparagraph 6(b) of this Plan ("Exercise
Price");
to determine all other terms and conditions of each Option granted under
this Plan (including specification of the dates upon which Options become
exercisable, and whether conditioned on performance standards, periods of
service or otherwise), which terms and conditions can vary between Options;
to modify or amend the terms of any Option previously granted, or to grant
substitute Options, subject to subparagraphs 6(l) and 6(m) of this Plan;
to authorize any person or persons to execute and deliver Option agreements
or to take any other actions deemed by the Committee to be necessary or
appropriate to effect the grant of Options by the Committee;
to interpret this Plan and to make all other determinations and take all
other actions which the Committee deems necessary or appropriate to
administer this Plan in accordance with its terms and conditions.
3
<PAGE>
Eligibility. Options may be granted only to Employees. Granting of Options under
this Plan will be entirely discretionary with the Committee. Adoption of this
Plan will not confer on any Employee any right to receive any Option or Options
under this Plan unless and until said Options are granted by the Committee in
its sole discretion. Neither the adoption of this Plan nor the granting of any
Options under this Plan will confer upon any Employee or Optionee any right with
respect to continuation of employment, nor will the same interfere in any way
with his or her right or with the right of the shareholders of First Community
or any Subsidiary to terminate his or her employment at any time.
Terms and Conditions of Options. All Options granted under this Plan must be
authorized by the Committee, and must be documented in written Option agreements
in such form as the Committee will approve from time to time, which agreements
must comply with and be subject to all of the following terms and conditions:
NUMBER OF SHARES; ANNUAL LIMITATION. Each Option agreement must state whether
the Option is intended to be an Incentive Stock Option or a Nonqualified Stock
Option and the number of shares subject to Option. Any number of Options may be
granted to an Employee at any time; except that, in the case of Incentive Stock
Options, the aggregate fair market value (determined as of each Date of Grant)
of all shares of Common Stock with respect to which Incentive Stock Options
become exercisable for the first time by such Employee during any one calendar
year (under all incentive stock option plans of the Company and all of its
Subsidiaries taken together) shall not exceed $100,000. Any portion of an Option
in excess of the $100,000 limitation shall be treated as a Nonqualified Stock
Option
EXERCISE PRICE AND CONSIDERATION. The Exercise Price shall be the price
determined by the Committee, subject to subparagraphs (1) and (2) below.
In the case of Incentive Stock Options, the Exercise Price shall in no
event be less than the fair market value of the Common Stock on the Date of
Grant. In the case of an Incentive Stock Option granted to a Employee who,
immediately before the grant of such Incentive Stock Option, is a
Shareholder-Employee, the Exercise Price shall be at least 110% of the fair
market value of the Common Stock on the Date of Grant.
In all cases, the Exercise Price shall be no less than the greater of (i)
the fair market value of the Common Stock or (ii) the net book value of the
Common Stock at the time of grant, as is determined by the Committee.
In all cases, the Exercise Price shall be payable either in (i) United
States dollars upon exercise of the Option, (ii) Common Stock of First
Community, or (iii) if approved by the Board, other consideration including
without limitation services, debt instruments or other property.
4
<PAGE>
TERM OF OPTION. No Option shall in any event be exercisable after the expiration
of ten (10) years from the Date of Grant. Further, no Incentive Stock Option
granted to a Employee who, immediately before such Incentive Stock Option is
granted, is a Shareholder-Employee shall be exercisable after the expiration of
five (5) years from the Date of Grant. Subject to the foregoing and other
applicable provisions of the Plan including but not limited to subparagraphs
6(g), 6(h) and 6(i), the term of each Option will be determined by the Committee
in its discretion.
NON-TRANSFERABILITY OF OPTIONS. No Option may be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee.
MANNER OF EXERCISE. An Option will be deemed to be exercised when written notice
of exercise has been given to First Community in accordance with the terms of
the Option by the person entitled to exercise the Option, together with full
payment for the shares of Common Stock subject to said notice.
RIGHTS AS SHAREHOLDER. An Optionee shall have none of the rights of a
shareholder with respect to any shares covered by his or her Option unless and
until the Optionee has exercised such Option and submitted full payment for the
shares.
DEATH OF OPTIONEE. An Option shall be exercisable at any time prior to
termination under subparagraphs (1) or (2), below, by the Optionee's estate or
by such person or persons who have acquired the right to exercise the Option by
bequest or by inheritance or by reason of the death of the Optionee. In the
event of the death of an Holder,
an Incentive Stock Option shall terminate no later than the earliest of (i)
one year after the date of death of the Optionee if the Optionee had been
in Continuous Status as an Employee since the Date of Grant of the Option,
or (ii) the date specified under subparagraph 6(i) of this Plan if the
Optionee's status as an Employee was terminated prior to his or her death,
or (iii) the expiration date otherwise provided in the applicable Option
agreement; and
a Nonqualified Stock Option shall terminate no later than the earlier of
(i) one year after the date of death of the Optionee, or (ii) the
expiration date otherwise provided in the Option agreement, except that if
the expiration date of a Nonqualified Stock Option should occur during the
180-day period immediately following the Optionee's death, such Option
shall terminate at the end of such 180-day period.
DISABILITY OF OPTIONEE. If an Optionee's status as an Employee is terminated at
any time during the Option period by reason of a disability (within the meaning
of Section 22(e)(3) of the Code) and if said Optionee had been in Continuous
Status as an Employee at all times between the date of grant of the Option and
the termination of his or her status as an Employee, his or her Option shall
terminate no later than the earlier of (i) one year after the date of
termination of his or her status as an Employee, or (ii) the expiration date
otherwise provided in his or her Option agreement.
5
<PAGE>
TERMINATION OF STATUS AS AN EMPLOYEE.
If an Optionee's status as an Employee is terminated at any time after the grant
of an Option to such Employee for any reason other than death or disability (as
described in subparagraphs 6(g) and 6(h) above) and not for cause, as provided
in subparagraph (2) below, then such Option shall terminate no later than the
earlier of (i) the same day of the third month after the date of termination of
his or her status as an Employee, or (ii) the expiration date otherwise provided
in his or her Option agreement.
If an Optionee's status as an Employee is terminated for cause at any time after
the grant of an Option to such Employee, then such Option shall terminate at the
end of the day on the date of termination of his or her status as an Employee.
For this purpose, "cause" includes fraud or willful misconduct or any other
conduct which the Board reasonably believes will cause or has caused First
Community substantial injury as a result of gross negligence or dishonesty.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any required action by
the shareholders of First Community, the number of shares of Common Stock
covered by each outstanding Option, the number of shares of Common Stock
available for grant of additional Options, and the per-share Exercise Price in
each outstanding Option, will be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from any stock
split or other subdivision or consolidation of shares, the payment of any stock
dividend (but only on the Common Stock) or any other increase or decrease in the
number of such shares of Common Stock effected without receipt of consideration
by First Community; PROVIDED, however, that conversion of any convertible
securities of First Community will not be deemed to have been "effected without
receipt of consideration." Such adjustment will be made by the Committee, whose
determination in that respect will be final, binding and conclusive.
Except as otherwise expressly provided in this subparagraph 6(j), no
Optionee will have any rights by reason of any stock split or the payment
of any stock dividend or any other increase or decrease in the number of
shares of Common Stock, and no issuance by First Community of shares of
stock of any class, or securities convertible into shares of stock of any
class, will affect the number of shares or Exercise Price subject to any
Options, and no adjustments in Options will be made by reason thereof. The
grant of an Option under this Plan will not affect in any way the right or
power of First Community to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure.
CONDITIONS UPON ISSUANCE OF SHARES. Shares of Common Stock will not be issued
with respect to an Option granted under this Plan unless the exercise of such
Option and the issuance and delivery of such shares pursuant thereto will comply
with all applicable provisions of law, including applicable federal and state
securities laws. As a condition to the exercise of an Option, First Community
may require the person exercising such Option to represent and warrant at the
time of exercise that the shares of Common Stock are being purchased only for
investment and without any present intention to sell or distribute such Common
Stock if, in the opinion of counsel for First Community, such a representation
is required by any of the aforementioned relevant provisions of law.
6
<PAGE>
CORPORATE SALE TRANSACTIONS. In the event of the merger or reorganization of
First Community with or into any other corporation, the sale of substantially
all of the assets of First Community, or a dissolution or liquidation of First
Community (collectively, "Sale Transaction"), (1) all outstanding Options that
are not then fully exercisable will become exercisable upon the date of closing
of any sale transaction or such earlier date as the Committee may fix; and (2)
the Committee may, in the exercise of its sole discretion, terminate all
outstanding Options as of a date fixed by the Committee. In such event, however,
the Committee must notify each Optionee of such action in writing not less than
sixty (60) days prior to the termination date fixed by the Committee, and each
Optionee must have the right to exercise his or her Option prior to said
termination date.
SUBSTITUTE STOCK OPTIONS. In connection with an internal reorganization of First
Community, the Committee is authorized, in its discretion, to substitute for any
unexercised Option, a new option for shares of the resulting entity's stock.
TAX COMPLIANCE. First Community, in its sole discretion, may take actions
reasonably believed by it to be required to comply with any local, state, or
federal tax laws relating to the reporting or withholding of taxes attributable
to the grant or exercise of any Option or the disposition of any shares of
Common Stock issued upon exercise of an Option, including, but not limited to
(i) withholding from any Optionee exercising an Option a number of shares of
Common Stock having a fair market value equal to the amount required to be
withheld by First Community under applicable tax laws, and (ii) withholding from
any form of compensation or other amount due an Optionee, or holder, of shares
of Common Stock issued upon exercise of an Option any amount required to be
withheld by First Community under applicable tax laws. Withholding or reporting
will be considered required for purposes of this subparagraph if the Committee,
in its sole discretion, so determines.
HOLDING PERIOD FOR INCENTIVE STOCK OPTIONS. With regard to shares of Common
Stock issued pursuant to an Incentive Stock Option granted under the Plan, if
the Optionee (or such other person who may exercise the Option pursuant to
subparagraph 6(g) of this Plan) makes a disposition of such shares within two
years from the Date of Grant of such Option, or within one year from the date of
issuance of such shares to the Optionee upon the exercise of such Option, then
the Optionee must request and obtain approval from the Company in writing of
such disposition and must cooperate with the Company in any tax compliance
relating to such disposition.
OTHER PROVISIONS. Option agreements executed under this Plan may contain such
other provisions as the Committee will deem advisable.
Term of the Plan. This Plan will become effective and Options may be
granted upon the Plan's approval by the Board, subject to shareholder
approval. Unless sooner terminated as provided in subparagraph 7(a) of this
Plan, this Plan will terminate on the tenth (10th) anniversary of its
effective date. Options may be granted at any time after the effective date
and prior to the date of termination of this Plan.
7
<PAGE>
AMENDMENT OR EARLY TERMINATION OF THE PLAN. The Board may terminate this Plan at
any time. The Board may amend this Plan at any time and from time to time in
such respects as the Board may deem advisable, except that, without approval of
the shareholders, no revision or amendment will increase the number of shares of
Common Stock subject to this Plan other than in connection with an adjustment
under subparagraph 6(j) of this Plan.
EFFECT OF AMENDMENT OR TERMINATION. No amendment or termination of this Plan
will affect Options granted prior to such amendment or termination, and all such
Options will remain in full force and effect notwithstanding such amendment or
termination.
Shareholder Approval. Adoption of this Plan will be subject to ratification
by affirmative vote of shareholders owning at least a majority of the
outstanding Common Stock of First Community at a duly convened meeting. If
such shareholder approval is not obtained within twelve (12) months after
the date of the Board's adoption of this Plan, then this Plan shall
terminate subject to subparagraph 7(b) of the Plan except that any
Incentive Stock Options previously granted under the Plan shall become
Nonqualified Stock Options, and no further Options shall be granted under
the Plan.
8
<PAGE>
FIRST COMMUNITY FINANCIAL GROUP, INC.
EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT
This Employee Incentive Stock Option Agreement (Agreement) is entered into by
and between FIRST COMMUNITY FINANCIAL GROUP, INC., a Washington corporation
(First Community) and the Employee, named below.
1. Pursuant to First Communitys Employee Stock Option Plan (the Plan) and
subject to the terms of this Agreement, First Community hereby grants the
following irrevocable incentive stock option (Option):
Employee: ______________________________________________________________
Option Shares: _____________________ Exercise Price: ___________________
Date of Grant: _____________________ Date of Termination: ______________
Vesting Schedule: This Option will become exercisable as to ____________
Shares on each of the first ____ anniversary dates from the Date of Grant.
2. Pursuant to this Option, the Employee has the option to purchase the
stated number of Option Shares of the common stock of First Community at
the Exercise Price, payable on the date of exercise. This Option is
granted as of the Date of Grant, and shall terminate on the Date of
Termination unless sooner terminated by reason of death, disability or
other termination of status as an employee as provided in the Plan.
3. This Option shall become exercisable according to the Vesting Schedule.
Option Shares as to which this Option becomes exercisable are called
Vested Shares. This Option shall be exercisable as to Vested Shares in
whole or in part at any time between the Date of Grant and the Date of
Termination of this Option. Notwithstanding the foregoing, if the
Optionees status as an employee with First Community terminates, then
this Option will cease to vest and will not become exercisable as to any
additional shares, as of the date on which the Optionees employment
terminates. In such case, this Option will be limited to the Vested
Shares as of such date of the termination of employment.
4. This Option must be exercised by actual delivery to First Community of a
written notice of exercise signed by Employee specifying the number of
shares with respect to which this Option is being exercised and the
per-share Exercise Price, accompanied by payment of the full amount of
the Exercise Price for the number of shares being purchased, together
with the applicable Federal income tax withholding amount, if any.
5. All terms and conditions of the Plan are hereby incorporated by this
reference as a part of this Agreement, including but not limited to the
Terms and Conditions of Options provided in the Plan. The First
Community reserves the right, without the consent of Employee, to amend
the Plan and/or
<PAGE>
this Agreement at any time prior to the exercise of the Option granted
hereunder to cause this Option to qualify as an incentive stock option
within the scope and meaning of Section422 of the Internal Revenue Code
(Code), or any successor provision of the Code.
EMPLOYEE: FIRST COMMUNITY FINANCIAL GROUP, INC.,
a Washington corporation
By:
- --------------------------------- -------------------------------
Print Name: Title:
---------------------- ----------------------------
I hereby acknowledge that I have received a copy of the Plan, incorporated by
reference above.
- ---------------------------------
Employee
<PAGE>
FIRST COMMUNITY FINANCIAL GROUP, INC.
EMPLOYEE NONQUALIFIED STOCK OPTION AGREEMENT
This Employee Nonqualified Stock Option Agreement (Agreement) is entered into
by and between FIRST COMMUNITY FINANCIAL GROUP, INC., a Washington corporation
(First Community) and the Employee, named below.
1. Pursuant to First Communitys Employee Stock Option Plan (the Plan) and
subject to the terms of this Agreement, First Community hereby grants the
following irrevocable nonqualified stock option (Option):
Employee: ______________________________________________________________
Option Shares: _____________________ Exercise Price: ___________________
Date of Grant: _____________________ Date of Termination: ______________
Vesting Schedule: This Option will become exercisable as to ____________
Shares on each of the first ____ anniversary dates from the Date of Grant.
2. Pursuant to this Option, the Employee has the option to purchase the
stated number of Option Shares of the common stock of First Community at
the Exercise Price, payable on the date of exercise. This Option is
granted as of the Date of Grant, and shall terminate on the Date of
Termination unless sooner terminated by reason of death, disability or
other termination of status as an employee as provided in the Plan.
3. This Option shall become exercisable according to the Vesting Schedule.
Option Shares as to which this Option becomes exercisable are called
Vested Shares. This Option shall be exercisable as to Vested Shares in
whole or in part at any time between the Date of Grant and the Date of
Termination of this Option. Notwithstanding the foregoing, if the
Optionees status as an employee with First Community terminates, then
this Option will cease to vest and will not become exercisable as to any
additional shares, as of the date on which the Optionees employment
terminates. In such case, this Option will be limited to the Vested
Shares as of such date of the termination of employment.
4. This Option must be exercised by actual delivery to First Community of a
written notice of exercise signed by Employee specifying the number of
shares with respect to which this Option is being exercised and the
per-share Exercise Price, accompanied by payment of the full amount of
the Exercise Price for the number of shares being purchased, together
with the applicable Federal income tax withholding amount, if any.
5. All terms and conditions of the Plan are hereby incorporated by this
reference as a part of this Agreement, including but not limited to the
Terms and Conditions of Options provided in the Plan.
EMPLOYEE: FIRST COMMUNITY FINANCIAL GROUP, INC.,
a Washington corporation
By:
- --------------------------------- -------------------------------
Print Name: Title:
---------------------- ----------------------------
I hereby acknowledge that I have received a copy of the Plan, incorporated by
reference above.
- ---------------------------------
Employee
<PAGE>
EXHIBIT 21
FIRST COMMUNITY FINANCIAL GROUP, INC.
Subsidiaries Owned at December 31, 1999
Name of Subsidiary Trade Name State of Incorporation
- ------------------ ---------- ----------------------
First Community Bank of Washington Same Washington
FCB Financial Services, Inc. Same Washington
13
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<PAGE>
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<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 10,349
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<DEPOSITS> 245,527
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0
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<INCOME-PRETAX> 1,858
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