----
FFYF
----
FFY FINANCIAL CORP.
September 16, 1996
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of FFY Financial
Corp., I cordially invite you to attend the Annual Meeting of Stockholders of
the Corporation. The Meeting will be held at 10:00 a.m., Youngstown, Ohio time,
on October 16, 1996, at Paonessa's, 871 McKay Court, Youngstown, Ohio.
The Meeting is for the purpose of considering and acting upon the
election of three directors of the Corporation and the ratification of KPMG Peat
Marwick LLP as independent auditor. In addition, the Meeting will include
management's report to you on the Corporation's fiscal year 1996 financial and
operating performance.
I encourage you to attend the Meeting in person. Whether or not you
plan to attend, however, please read the enclosed Proxy Statement and then
complete, sign and date the enclosed proxy and return it in the accompanying
postpaid return envelope as promptly as possible. This will save the Corporation
additional expense in soliciting proxies and will ensure that your shares are
represented at the Meeting.
Thank you for your attention to this important matter.
Very truly yours,
/s/ JEFFREY L. FRANCIS
Jeffrey L. Francis
President and Chief Executive Officer
724 Boardman-Poland Road/P.O. Box 3300/Youngstown, Ohio 44513-3300/330-726-3396
<PAGE>
FFY FINANCIAL CORP.
724 Boardman-Poland Road
Youngstown, Ohio 44512
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on October 16, 1996
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of FFY Financial Corp. (the "Corporation") will be held at 10:00
a.m., Youngstown, Ohio time, on October 16, 1996, at Paonessa's, 871 McKay
Court, Youngstown, Ohio.
A proxy card and a Proxy Statement for the Meeting are enclosed. The
Meeting is for the purpose of considering and acting upon the election of three
directors of the Corporation, ratification of KPMG Peat Marwick LLP as
independent auditor and such other matters as may properly come before the
Meeting or any adjournments or postponements thereof. The Board of Directors is
not aware of any other business to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on
the date specified above, or on any date or dates to which the Meeting may be
adjourned or postponed. Stockholders of record at the close of business on
August 30, 1996 are the stockholders entitled to vote at the Meeting and any
adjournments or postponements thereof.
You are requested to complete, sign and date the enclosed proxy, which
is solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed postpaid return envelope. The proxy will not be used if you attend and
vote at the Meeting in person.
By Order of the Board of Directors
/s/ SHIRLEY A. REIGHARD
SHIRLEY A. REIGHARD
Secretary
Youngstown, Ohio
September 16, 1996
- - --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE CORPORATION THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A PRE-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
WITHIN THE UNITED STATES.
- - --------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
FFY Financial Corp.
724 Boardman-Poland Road
Youngstown, Ohio 44512
ANNUAL MEETING OF STOCKHOLDERS
October 16, 1996
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of FFY Financial Corp. (the
"Corporation") to be used at the Annual Meeting of Stockholders of the
Corporation (the "Meeting"), to be held at Paonessa's, 871 McKay Court,
Youngstown, Ohio, on October 16, 1996, at 10:00 a.m., Youngstown, Ohio time and
at all adjournments or postponements of the Meeting. The accompanying Notice of
Meeting and this Proxy Statement are first being mailed to stockholders on or
about September 16, 1996. Certain of the information provided herein relates to
First Federal Savings Bank of Youngstown ("First Federal" or the "Bank"), a
wholly owned subsidiary and the predecessor of the Corporation.
At the Meeting, the stockholders of the Corporation are being asked to
consider and vote upon the election of three directors of the Corporation and
ratification of KPMG Peat Marwick LLP as independent auditor.
Voting Rights and Proxy Information
All shares of common stock, par value $.01 per share, of the
Corporation (the "Common Stock") represented at the Meeting by properly executed
proxies received prior to or at the Meeting, and not revoked, will be voted at
the Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for election of the nominees
for director named herein. The Corporation does not know of any matters, other
than as described in the Notice of Meeting, that are to come before the Meeting.
If any other matters are properly presented at the Meeting for action, the
persons named in the enclosed form of proxy will have the discretion to vote on
such matters in accordance with their best judgment.
A proxy given pursuant to this solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Corporation at or before the Meeting a written notice of revocation bearing
a later date than the proxy; (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Corporation at or
before the Meeting; or (iii) attending the Meeting and voting in person
(although attendance at the Meeting will not in and of itself constitute
revocation of a proxy). Any written notice revoking a proxy should be delivered
to Shirley A. Reighard, Secretary, FFY Financial Corp., 724 Boardman-Poland
Road, Youngstown, Ohio 44512.
Vote Required for Approval of Proposals
Directors shall be elected by a plurality of the votes present in
person or represented by proxy at the Meeting and entitled to vote on the
election of directors. Approval of the proposal to ratify KPMG Peat Marwick LLP
as independent auditor requires the affirmative vote of the holders of a
majority of the shares actually voted at the Meeting on the matter. Proxies
marked to abstain with respect to a proposal will have the same effect as a vote
against the proposal. Broker non-votes have no effect on the vote. One-third of
the shares of the Corporation's common stock present in person or represented by
proxy shall constitute a quorum for purposes of the Meeting.
Vote Securities and Principal Holders Thereof
Stockholders of record as of the close of business on August 30, 1996
will be entitled to one vote for each share then held. As of that date, the
Corporation had 5,112,698 shares of Common Stock issued and outstanding.
The following table sets forth information as of June 30, 1996
regarding the share ownership of (i) those persons or entities known by
management to beneficially own more than five percent of the Corporation's
Common Stock, (ii) the executive officers named below, and (iii) all directors
and officers of the Corporation and the Bank as a group.
<PAGE> 1
<TABLE>
<CAPTION>
Shares
Beneficially Percent
Name and Address of Beneficial Owner Owned of Class
- - ------------------------------------ ------------ --------
<S> <C> <C>
FFY Financial Corp. Employee Stock Ownership Plan(1) 527,361 10.4 %
724 Boardman-Poland Road
Youngstown, Ohio 44512
Named Officers
- - --------------
Jeffrey L. Francis 89,600 1.7
President and Chief Executive Officer of the Corporation
and First Federal
Randy Shaffer 110,163 2.1
Vice President of the Corporation and First Federal
Charles Shellogg, Jr. 97,899 1.9
Retired President, Chief Executive Officer and Chairman
of the Board of the Corporation and First Federal
Victor Samilenko 71,942 1.4
Retired Vice President of the Corporation and First Federal
All directors and officers of the Corporation and the Bank 616,195 11.6
as a group (15 persons)(2)
<FN>
<F1> Includes 4,877, 4,471, 6,922, 4,590 and 27,144 shares beneficially owned by
Messrs. Francis, Shaffer, Shellogg, Samilenko and all directors and
officers as a group, respectively, which are held in the Employee Stock
Ownership Plan. These shares are also included in each individual's/group's
respective shares.
<F2> This amount includes shares held by certain members of the named
individuals' families, or held by trusts of which the named individual is a
trustee or substantial beneficiary. This amount also includes 21,183,
26,802, 26,802 and 116,355 restricted shares, as well as 50,540, 48,540,
26,500 and 246,061 shares subject to options granted under the
Corporation's Stock Option and Incentive Plan (the "Stock Option Plan"),
which are exercisable within 60 days of June 30, 1996, to Messrs. Francis,
Shaffer, Samilenko and all directors and officers as a group, respectively.
</FN>
</TABLE>
I. ELECTION OF DIRECTORS
General
The Board of Directors of the Corporation (the "Board" or the "Board of
Directors") is comprised of ten directors and is divided into three classes,
each of which contains approximately one-third of the Board. Approximately
one-third of the directors are elected annually. Directors of the Corporation
are generally elected to serve for a three-year period or until their respective
successors are elected and qualified. Charles Shellogg, Jr. retired as
President, Chief Executive Officer and Chairman of the Board of the Corporation
and the Bank during fiscal year 1996. Victor Samilenko retired as Vice President
and a director of the Corporation and the Bank effective June 30, 1996. Kenneth
C. Schafer will retire as a director of the Corporation and the Bank effective
the date of the Meeting. The Boards of Directors of the Corporation and the Bank
appreciate the dedicated service of each of them over the years.
The table below sets forth certain information, as of June 30, 1996,
regarding the composition of the Board, including their terms of office. The
Board of Directors acting as the nominating committee has recommended and
approved the nominees identified in the following table. It is intended that the
proxies solicited on behalf of the Board of Directors (other than proxies in
which the vote is withheld as to a nominee) will be voted at the meeting FOR the
election of the nominees identified below. If a nominee is unable to serve, the
shares represented by all valid proxies will be voted for the election of such
substitute nominee as the Board of Directors may recommend. At this time, the
Board of Directors knows of no reason why any nominee may be unable to serve, if
elected. Except as disclosed herein, there are no arrangements or understandings
between the nominee and any other person pursuant to which the nominee was
selected.
<PAGE> 2
<TABLE>
<CAPTION>
Shares of
Common Stock
Position(s) Held Director Term to Beneficially Percent of
Name Age(1) in the Corporation Since(2) Expire Owned(3) Class(3)
- - --------------------- ------ ------------------ -------- ------- ------------ ----------
NOMINEES
<S> <C> <S> <C> <C> <C> <C>
Jeffrey L. Francis 45 President, Chief Executive 1992 1999 84,723 1.7%
Officer and Director
Myron S. Roh 69 Chairman of the Board 1978 1999 41,641 0.8
Ronald P. Volpe(4) 53 Nominee -- 1999 1,000 --
DIRECTORS CONTINUING IN OFFICE
Marie Izzo Cartwright 43 Director 1991 1997 25,641 0.5
Henry P. Nemenz 57 Director 1991 1997 40,291 0.8
W. Terry Patrick 46 Director 1992 1997 21,641 0.4
Randy Shaffer 45 Vice President and Director 1996 1998 105,692 2.1
Daniel J. Mirto 69 Director 1980 1998 39,891 0.8
A. Gary Bitonte, M.D. 48 Director 1990 1998 37,141 0.8
Jack R. Brownlee 68 Director 1980 1998 41,041 0.8
<FN>
<F1> At June 30, 1996.
<F2> Includes service as a director of the Bank.
<F3> Includes shares held directly and shares which are held in retirement
accounts, or held by certain members of the named individuals' families, or
held by trusts of which the named individual is a trustee or substantial
beneficiary, with respect to which shares the respective directors may be
deemed to have sole or shared voting and/or investment power. The amount
also includes shares of restricted stock granted pursuant to the RRPs, as
well as shares subject to options granted under the Stock Option Plan which
are exercisable within 60 days of June 30, 1996 .
<F4> Shares of common stock beneficially owned and percent of class as of August
30, 1996.
</FN>
</TABLE>
The business experience of each director of the Corporation is set
forth below. All directors have held their present position for at least five
years, unless otherwise indicated.
Jeffrey L. Francis - Mr. Francis is President and Chief Executive
Officer of the Corporation and the Bank. He began his career with the Bank in
1973 and has served in his current capacity since March 1996. Mr. Francis was
named Executive Vice President and Treasurer of the Corporation and Executive
Vice President and Chief Operating Officer of the Bank in October 1995. Prior to
his most recent positions, he was Vice President and Treasurer of the
Corporation and the Bank in which capacities he was responsible for managing the
securities portfolio and supervising the data processing, accounting and savings
departments. Mr. Francis received a B.B.A. degree from Kent State University and
an M.B.A. from Youngstown State University.
Myron S. Roh - Mr. Roh has been President and Treasurer of The
Scholl-Choffin Co., a management, private investment consulting firm, since
1985. Formerly, Mr. Roh was Secretary-Treasurer for 22 years of Scholl-Choffin
Co., a mechanical contracting firm and The Scholl-Choffin Sprinkler Corp.
Ronald P. Volpe - Dr. Volpe has been a member of the graduate faculty
and professor of finance at Youngstown State University ("YSU") since 1975. Dr.
Volpe, who received his B.S. degree from Youngstown State University, M.B.A.
from Central Michigan University and Ph.D. from the University of Pittsburgh,
teaches graduate and undergraduate courses in finance and investments at the YSU
Williamson College of Business Administration. Prior to his career in higher
education, he was a member of the accounting and finance staff of The Ford Motor
Co. in Dearborn, Michigan.
Marie Izzo Cartwright - Ms. Cartwright serves as vice president of
corporate communications for DeBartolo Properties Management, Inc.
("DeBartolo"). Ms. Cartwright, who joined DeBartolo in 1985 as director of
public relations, was promoted to assistant vice president in 1989 and elevated
to her current position in June 1994. An honors graduate of Kent State
University with a B.A. degree in journalism, Ms. Cartwright has nearly 20 years
experience in both corporate and agency public relations, marketing and
advertising.
<PAGE> 3
Henry P. Nemenz - Mr. Nemenz has been President of H.P. Nemenz Food
Stores since 1976, which owns and operates ten retail grocery stores in the
Youngstown, Ohio area.
W. Terry Patrick - Mr. Patrick has been a partner in the law firm of
Friedman & Rummell, L.P.A. of Youngstown, Ohio since 1980.
Randy Shaffer - Mr. Shaffer is Vice President of the Corporation and
the Bank, responsible for coordinating the activities of the lending departments
and development of lending policies and procedures. Mr. Shaffer has served in
various capacities since joining the Bank in 1973 and has served in his current
position since 1986. He earned a B.A. degree in economics from Hiram College,
served as a Director of the Youngstown Board of Realtors, and is a member of the
Home Builders Association of Mahoning Valley and the Mortgage Bankers of
Northeastern Ohio.
Daniel J. Mirto - Mr. Mirto currently serves as Chairman of the Board
and C.E.O. of The Rhiel Supply Company, a distributor of janitor supplies, paper
products, swimming pools and swimming pool supplies. He has been associated with
The Rhiel Supply Company for the past 40 years. For the past 12 years, Mr. Mirto
has also been President of the American Cleaning Equipment Company, Cleveland,
Ohio, a distributor of janitor supplies and paper products. He is also a
Director of the Serex Corporation, Youngstown, Ohio, which provides retail food
vending services.
A. Gary Bitonte, M.D. - Dr. Bitonte is a urologic surgeon who has been
in private practice for the past 17 years. Dr. Bitonte received B.S. and M.D.
degrees from Ohio State University. He is an assistant professor of urology at
the Northeastern Ohio Universities College of Medicine and associate professor
of urology at the Ohio University College of Osteopathic Medicine.
Jack R. Brownlee - Mr. Brownlee is the former owner of Brownlee
Pontiac, Inc., a Youngstown-based automobile dealership. Mr. Brownlee owned and
operated Brownlee Pontiac for 28 years, and has served in various capacities for
national, state and local trade associations as well as various community
service organizations.
Meetings and Committees of the Board of Directors
Meetings and Committees of the Corporation. The Board of Directors
meets quarterly and may have additional special meetings upon the written
request of the President or at least three directors. The Board of Directors met
11 times during the year ended June 30, 1996. During fiscal year 1996, no
incumbent director of the Corporation attended fewer than 75% of the aggregate
total number of meetings of the Board and committees on which he or she served.
Directors are paid a fee of $50 per Board meeting attended. The Board of
Directors of the Corporation has standing Stock Option, Audit and Executive
Committees.
During fiscal year 1996, the Corporation's Stock Option Committee was
composed of Directors Mirto, Brownlee and Nemenz. The Stock Option Committee is
responsible for administering the Corporation's Stock Option Plan. The Stock
Option Committee met one time during fiscal year 1996.
The Audit Committee is responsible for selecting the Corporation's
independent auditors and meeting with the independent auditors to outline the
scope and review the results of the annual audit. The Audit Committee also meets
with the Corporation's internal audit staff on a periodic basis. During fiscal
year 1996, the members of this committee were Directors Roh (Chairman),
Cartwright, Nemenz and Patrick. The Audit Committee met six times during fiscal
year 1996.
During fiscal year 1996, the Executive Committee was composed of
Directors Francis (Chairman), Brownlee, Mirto, Roh, Samilenko and Schafer. To
the extent authorized by the Board of Directors and by the Bylaws, this
committee exercises all of the authority of the Board of Directors between Board
meetings. The Executive Committee did not meet during fiscal 1996.
Meetings and Committees of the Bank. The Bank's Board of Directors
meets monthly and may hold additional special meetings upon the written request
of the President or at least three directors. The Board of Directors met 14
times during the year ended June 30, 1996. During fiscal year 1996, no incumbent
director of the Bank attended fewer than 75% of the aggregate total number of
meetings of the Board and committees on which he or she served. Non-employee
directors are paid a fee of $350 per month plus $250 per Board meeting attended.
Employee directors are paid a fee of $225 per month plus $250 per Board meeting
attended. Each director also receives $100 for each committee meeting and the
Chairman of each committee receives $150 for each meeting. Committee members who
are employees of the Bank receive no fee for their service on Board committees.
The Bank has standing Executive, Audit and Compensation Committees. The Bank
also has other committees which meet as needed to review various other functions
of the Bank.
<PAGE> 4
The Bank's Executive Committee exercises the powers of the full Board
of Directors between Board meetings, except that this committee does not have
the authority of the Board to amend the charter or bylaws, adopt a plan of
merger, consolidation, dissolution, or provide for the disposition of all or
substantially all of the property and assets of the Bank. During fiscal year
1996, the Executive Committee was composed of Directors Francis (Chairman),
Brownlee, Mirto, Roh, Samilenko and Schafer. The Executive Committee met 11
times during the year ended June 30, 1996.
The Audit Committee is responsible for selecting the Bank's independent
auditors and meeting with the independent auditors to outline the scope and
review the results of the annual audit. The Audit Committee also meets with the
Bank's internal audit staff on a periodic basis. During fiscal year 1996, the
members of this committee were Directors Roh (Chairman), Cartwright, Nemenz and
Patrick. This Committee held eight meetings during fiscal year 1996.
The Bank's Compensation Committee recommends employee compensation,
benefits and personnel policies to the Board of Directors, as well as salaries
and bonuses concerning executive officers. The members of this committee during
fiscal year 1996 were Directors Schafer (Chairman), Bitonte, Brownlee, Mirto and
Roh. The Compensation Committee held seven meetings during the year ended June
30, 1996.
Executive Compensation
The following table sets forth information concerning the compensation
for services in all capacities to the Corporation for the years ended June 30,
1996, 1995 and 1994 of those persons who were (i) the Corporation's Chief
Executive Officer at or any time during the year ended June 30, 1996 and (ii)
the other executive officers of the Corporation and the Bank at June 30, 1996
who earned in excess of $100,000 (the "named executives").
<TABLE>
<CAPTION>
Summary Compensation Table
- - ----------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation Awards
----------------------------------------- ----------------------------------------------
Other Annual Restricted Stock Options/ All Other
Name and Principal Position Year Salary($) Bonus($) Compensation($)(1) Awards($) SARs(#) Compensation($)
- - --------------------------- ---- --------- -------- ------------------ ---------------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jeffrey L. Francis 1996 $ 93,100 $46,743 $--- $--- $--- $ ---
President and Chief Executive 1995 89,000 32,817 --- --- --- ---
Officer 1994 84,650 35,861 --- --- --- ---
Charles Shellogg, Jr. 1996 $114,448 $14,325 $--- $--- $--- $410,907(2)
Retired Chairman, President 1995 162,800 49,469 --- --- --- ---
and Chief Executive Officer 1994 158,750 54,203 --- --- --- ---
Randy Shaffer 1996 $ 79,925 $29,682 $--- $--- $--- $ ---
Vice President 1995 75,800 31,729 --- --- --- ---
1994 71,400 34,194 --- --- --- ---
Victor Samilenko 1996 $ 85,300 $20,182 $--- $--- $--- $206,030(3)
Retired Vice President 1995 81,500 31,729 --- --- --- ---
1994 77,350 34,194 --- --- --- ---
<FN>
<F1> Does not include perquisites which did not exceed the lesser of $50,000 or
10% of the named individuals' salary and bonus.
<F2> Amount includes payments representing the remaining term of Mr. Shellogg's
employment agreement totaling $376,925, insurance benefits totaling $14,002
and Supplemental Executive Retirement Plan benefits totaling $19,980.
<F3> Amount includes payments representing the remaining term of Mr. Samilenko's
employment agreement totaling $160,359, insurance benefits totaling $5,171
and Supplemental Executive Retirement Plan benefits totaling $40,500.
</FN>
</TABLE>
<PAGE> 5
The following table provides information as to options exercised by
each of the following named executives for the fiscal year ended June 30, 1996
and the value of the options held by such executives at year-end measured in
terms of the $23.75 closing price of FFY Financial Corp.'s Common Stock on June
30, 1996.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
- - ---------------------------------------------------------------------------------------------------------------------------
Value of Unexercised
Number of Unexercised In-the-Money Options/SARs
Options/SARs at June 30, 1996 at June 30, 1996(1)
Shares --------------------------------- ---------------------------------
Acquired on Value
Name Exercise(#) Realized($) Exercisable(#) Unexercisable(#) Exercisable($) Unexercisable($)
- - --------------------- ----------- ----------- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <S> <C> <S>
Jeffrey L. Francis 2,500 $ 27,500 50,540 --- $694,925 ---
Charles Shellogg, Jr. 112,710 1,442,365 --- --- --- ---
Randy Shaffer 4,500 49,500 48,540 --- 667,425 ---
Victor Samilenko 26,540 332,260 26,500 --- 364,375 ---
<FN>
<F1> The difference between the aggregate option exercise price and the fair
market value of the underlying shares at June 30, 1996.
</FN>
</TABLE>
All options were granted as of the date of the Bank's conversion to
stock form (June 28, 1993) and expire 10 years from the date of grant. The
exercise price for options was set at the market price on the date of grant
($10.00).
Employment Agreements. The Bank has existing employment agreements with
Messrs. Francis and Shaffer. The employment agreements are designed to assist
the Bank in maintaining a stable and competent management team. The continued
success of the Bank depends to a significant degree on the skills and competence
of its officers. These agreements were filed with, and approved by, the Office
of Thrift Supervision (the "OTS") as part of the application of the Holding
Company for approval to become a savings and loan holding company. The
employment agreements provide for annual base salary and an initial term of
three years. The agreements provide for extensions of one year, in addition to
the then-remaining term under the agreement, on each anniversary of the
effective date of the agreements (June 28, 1993) subject to a formal performance
evaluation performed by disinterested members of the Board of Directors of the
Bank. The agreements were extended for one year effective June 28, 1996. The
agreements provide for termination upon the employee's death, for cause or in
certain events specified by OTS regulations. The employment agreements are also
terminable by the employee upon 90 days notice to the Bank.
The employment agreements provide for payment to the employee of his
salary for the remainder of the term of the agreement, plus up to 299% of the
employee's base compensation, in the event there is a "change in control" of the
Bank where employment terminates involuntarily in connection with such change in
control or within twelve months thereafter. This termination payment is subject
to reduction by the amount of all other compensation to the employee deemed for
purposes of the Internal Revenue Code of 1986, as amended (the "Code"), to be
contingent on a "change in control," and may not exceed three times the
employee's average annual compensation over the most recent five year period or
be non-deductible by the Bank for federal income tax purposes. For the purposes
of the employment agreements, a "change in control" is defined as any event
which would require the filing of an application for acquisition of control or
notice of change in control pursuant to 12 C.F.R. Sections 574.3 or 574.4. Such
events are generally triggered prior to the acquisition or control of 10% of the
Company's common stock. The agreements also provide for participation in an
equitable manner in employee benefits applicable to executive personnel.
Based on their current salaries, if Messrs. Francis and Shaffer's
employment had been terminated as of June 30, 1996, under circumstances
entitling them to severance pay as described above, they would have been
entitled to receive lump sum cash payments of approximately $376,000 and
$318,000, respectively.
Report on Executive Compensation
The Committee. The responsibility for compensation and pension matters
for the Corporation rests with the Compensation Committee (the "committee") of
the Board of Directors. The members of the Compensation Committee are
independent directors of the Corporation and the Bank. Mr. Francis attends
committee meetings to present recommendations and to provide information.
However, he is excused from any deliberations regarding his compensation. The
Compensation Committee met seven times during the year ended June 30, 1996. The
most significant issues addressed each year by the committee are: 1) approval of
salary adjustments for officers of the Corporation and Bank and recommendation
to the full Board of a total wage and salary budget prior to each calendar year;
2) approval of payments under the Bank's bonus plans; and 3) completion of
evaluations of the performance of executive officers in accordance with the
provisions of employment contracts.
<PAGE> 6
Salary Adjustments. Discussions of annual salary adjustments were held
in December 1995 for calendar year 1996. In December 1995, Mr. Shellogg was the
Chief Executive Officer of the Corporation and the Bank. With respect to Mr.
Shellogg, in determining base salary for 1996 the committee considered the
following: 1) salary information for the chief executive officers at comparable
institutions gathered from local, regional and national salary surveys as well
as information from proxy statements of publicly traded banks and thrifts; and
2) the financial performance of the Corporation and the Bank during the
preceding year as measured by return on assets, loan losses, total general and
administrative expenses and net income, with regard to both the absolute level
of such measures and as compared to peer institutions, including similar
publicly traded thrift holding companies. Regional and national statistics are
utilized for this review as well as any regulatory examination comments during
the preceding year. Further, during the past year the Corporation and the Bank
have been pursuing a number of initiatives to improve long term performance.
Success in completing these initiatives on a timely basis was also considered.
Mr. Francis, Mr. Samilenko and Mr. Shaffer were also reviewed based on the same
criteria. Mr. Francis, who was named Executive Vice President and Chief
Operating Officer in October 1995 and President and Chief Executive Officer in
March 1996, was granted a salary increase of $400 per month, or 5.71%, effective
January 1, 1996.
Bonus. The Bank has a long history of paying bonuses based on annual
net income. The committee believes these payments more closely tie employee
compensation to the Corporation's annual performance and act as an incentive to
management to work toward consistent and growing net income. Each of the
Corporation's executives, as employees of the Bank, is eligible to participate
in the Bank's quarterly bonus plan. The majority of allocated bonus funds are
distributed to all full-time employees on the basis of salary. A portion of the
bonus, distributed annually following the completion of each fiscal year, is
allocated on a discretionary basis to those individuals who, in the opinion of
the committee and the Board of Directors, most contributed to the success of the
Bank during the year. For the year ended June 30, 1996, each of the
Corporation's executives received payments under the Bank's bonus plan. Mr.
Francis' payment under the bonus plan was $46,743, representing an increase of
$13,926 compared to fiscal year 1995. This increase was largely attributable to
Mr. Francis having assumed the position of Executive Vice president and Chief
Operating Officer in October 1995 and President and Chief Executive Officer in
March 1996 without having received any material increase in base salary. Mr.
Shellogg did not receive any portion of the discretionary bonus, and his total
bonus was reduced 71.0% compared to fiscal year 1995, due to his retirement. Mr.
Shaffer and Mr. Samilenko's bonuses were reduced 6.45% and 36.4%, respectively
compared to fiscal year 1995. During fiscal year 1997, the committee will be
evaluating the Bank's bonus plan to provide consideration of return on equity,
earnings per share growth and to provide for an objective evaluation of
individual performance in the attainment of established goals.
Performance Evaluations. During March 1996, a committee of
disinterested directors, including the committee and outside director W. Terry
Patrick, completed performance evaluations of the executive officers of the
Corporation. Each executive officer was evaluated on the basis of experience,
knowledge and his vision of the Corporation's future. The evaluation process
included individual interviews with each executive officer and consultation with
other outside directors. Among other items, the committee considered the
Corporation's performance statistics as objective measures of performance, as
well as discussion of progress toward subjective corporate goals established the
previous year. The committee prepared and presented a written report of each
evaluation, which was reviewed by the entire Board of Directors in March 1996.
Stock Options/Restricted Stock. In October 1993, the stockholders of
the Corporation ratified the Corporation's Stock Option and Recognition and
Retention Plans. It is the view of the committee that such equity-based
compensation arrangements provide a great incentive on the part of the
Corporation's executives to focus on the long term appreciation of the
Corporation's stock price, in order to better match the interests of the
Corporation's executives with those of stockholders. Awards granted in fiscal
1993 to executive officers were based on an analysis of awards granted in other
similar mutual to stock conversions. During the years ended June 30, 1995 and
June 30, 1996, no grants were made to executive officers under its Stock Option
Plan or its Recognition and Retention Plan.
The foregoing report on executive compensation is furnished by the
Compensation Committee of the Board of Directors:
Kenneth C. Schafer, Chairman A. Gary Bitonte
Jack R. Brownlee Daniel J. Mirto
Myron S. Roh
<PAGE> 7
Pension Plan. The Corporation, through the Bank, maintains a qualified
defined benefit pension plan (the "Pension Plan") for all employees who are 20.5
years of age or older and have completed at least six months of eligible
service. The Pension Plan provides for a normal monthly retirement benefit at
age 65 equal to (i) 40% of a participant's average monthly compensation earned
during the 60 consecutive months of service within the last 10 years of
participation in which his or her compensation was highest, plus (ii) 20% of a
participant's average monthly compensation in excess of a formula based on a
participant's year of birth. The monthly retirement benefit is reduced by 1/30th
for each year of service less than 30 at such participant's normal retirement
date. The term "compensation" means total salary and wages paid or otherwise
accrued to an employee, excluding bonuses, overtime, extra remuneration,
employer contributions to the Pension Plan and other non-taxable fringe
benefits. At June 30, 1996, Messrs. Francis and Shaffer had 23 years and 22
years, respectively, of credited service under the Pension Plan. At the time of
their retirement, Messrs. Shellogg and Samilenko had 40 and 31 years,
respectively, of credited service under the Pension Plan.
The following table shows annual benefits payable at normal retirement
age (age 65) in the form of a life annuity with guaranteed payments for 10 years
at specified levels of compensation (average total compensation for highest paid
60 months of employment). These estimates are based on Social Security covered
compensation for an individual reaching age 65 in 1996. As required by the Code,
the Pension Plan may not provide annual benefits which exceed certain maximum
limits or which are based on annual compensation in excess of $150,000 for the
plan year which commenced in 1995. The following table includes benefits payable
under the Pension Plan.
<TABLE>
<CAPTION>
Pension Plan Table
--------------------------------------------------------------------
Years of Credited Service
---------------------------------------------------
Remuneration 10 15 20 25 30
------------ ------- ------- ------- ------- -------
<C> <C> <C> <C> <C> <C>
$ 50,000 $ 8,162 $12,242 $16,323 $20,404 $24,485
75,000 13,162 19,742 26,323 32,904 39,485
100,000 18,162 27,242 36,323 45,404 54,485
125,000 23,162 34,742 46,323 57,904 69,485
150,000 28,162 42,242 56,323 70,404 84,485
175,000 28,162 42,242 56,323 70,404 84,485
200,000 28,162 42,242 56,323 70,404 84,485
225,000 28,162 42,242 56,323 70,404 84,485
</TABLE>
Supplemental Executive Retirement Plan. Effective July 1992, the Bank
adopted a supplemental executive retirement plan ("SERP") for the benefit of key
employees, including Messrs. Francis and Shaffer, upon the death, disability or
retirement upon attaining age 65 of such participant. This unfunded
non-qualifying SERP provides for retirement income supplemental to that to be
provided under the Bank's Pension Plan, payable on a monthly basis for 180
months in an amount equal to the lesser of (a) the excess, if any, which would
have been available to the participant under the Bank's prior pension plan over
the amount available to such participant under the Bank's current Pension Plan;
and (b) one thousand dollars per month. As of June 30, 1996, the monthly benefit
available to Messrs. Francis and Shaffer would have been $337 and $323,
respectively.
<PAGE> 8
Stockholder Return Performance Presentation
The line graph below compares the cumulative total stockholder return
on the Corporation's common stock to the cumulative total return of the NASDAQ
Stock Market Index and the NASDAQ Banking Index for the period June 30, 1993
through June 30, 1996. The graph assumes that $100 was invested on June 30, 1993
and that all dividends were reinvested. The Corporation became a publicly traded
company on June 28, 1993.
[INSERT GRAPH HERE]
<TABLE>
<CAPTION>
JUN-93 JUL-93 AUG-93 SEP-93 OCT-93 NOV-93 DEC-93
<S> <C> <C> <C> <C> <C> <C> <C>
FFYF 100.0 105.0 111.0 118.0 118.0 111.8 109.7
NASDAQ (US) 100.0 100.1 105.3 108.4 110.9 107.6 110.6
NASDAQ BANK 100.0 103.6 106.3 109.3 107.7 103.4 106.6
<CAPTION>
JAN-94 FEB-94 MAR-94 APR-94 MAY-94 JUN-94 JUL-94 AUG-94 SEP-94 OCT-94 NOV-94 DEC-94
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FFYF 115.8 118.6 118.6 118.4 120.4 124.5 134.5 143.8 145.8 156.1 161.2 157.1
NASDAQ (US) 113.9 112.8 105.9 104.5 104.8 101.0 103.0 109.6 109.3 111.5 107.8 108.1
NASDAQ BANK 108.4 107.0 105.4 108.8 113.7 113.7 115.3 118.3 115.0 111.5 106.9 106.3
<CAPTION>
JAN-95 FEB-95 MAR-95 APR-95 MAY-95 JUN-95 JUL-95 AUG-95 SEP-95 OCT-95 NOV-95 DEC-95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FFYF 156.1 150.9 148.8 149.8 153.0 161.4 188.6 189.7 178.1 184.6 180.4 178.2
NASDAQ (US) 108.7 114.4 117.8 121.5 124.7 134.8 144.7 147.6 151.0 150.1 153.6 152.8
NASDAQ BANK 109.8 115.2 116.3 119.6 123.2 128.4 134.5 141.7 145.0 147.4 154.9 158.3
<CAPTION>
JAN-96 FEB-96 MAR-96 APR-96 MAY-96 JUN-96
<S> <C> <C> <C> <C> <C> <C>
FFYF 182.7 188.0 193.4 196.8 192.5 204.3
NASDAQ (US) 153.6 159.4 159.9 173.2 181.2 173.0
NASDAQ BANK 158.7 160.9 164.5 163.7 166.5 167.3
</TABLE>
Certain Transactions. The Bank, like many financial institutions, has
followed a policy of granting various types of loans to officers, directors and
employees. All loans by the Bank to its directors and executive officers are
subject to OTS regulations restricting loans and other transactions with
affiliated persons of the Bank. Since August 9, 1989, federal law has required
that all such loans be made on terms and conditions comparable to those for
similar transactions with non-affiliates (including interest rates and loan
fees).
All transactions between the Corporation or the Bank and its officers,
directors, holders of 10% or more of the shares of any class of its common stock
and affiliates thereof, other than those originated prior to August 9, 1989 or
at a time when the borrower was not an executive officer or director, were made
in the ordinary course of business with substantially the same terms, including
interest rates and collateral as those prevailing at the time for comparable
transactions with other persons, do not involve more than the normal risk of
collectibility or present other unfavorable features and are approved by a
majority of disinterested directors of the Corporation, if any.
The following table sets forth certain information as to loans made by
the Bank to any of its directors or executive officers on terms more favorable
than for similar loans to public borrowers and whose aggregate indebtedness to
First Federal exceeded $60,000 at any time since June 30, 1995. Each of these
loans is a residential first mortgage loan secured by the borrower's principal
place of residence.
<PAGE> 9
<TABLE>
<CAPTION>
Largest Amount Interest Rate
Outstanding Since Balance as of as of
Name and Position Date of Loan Type of Loan June 30, 1995 June 30, 1996 June 30, 1996
- - ----------------- ------------ -------------- ----------------- ------------- -------------
<C> <C> <S> <C> <C> <C>
Mark S. Makoski 11/27/92 Residential(1) $ 67,438 $ 62,535 6.25%
Vice President
David S. Hinkle 11/25/94 Residential(2) 133,299 131,714 6.25%
Vice President
<FN>
<F1> This loan was made to Mr. Makoski when he was a non-executive officer of
the Bank entitled to receive a 1.0% reduction on the interest rate as well
as reduced closing costs consistent with the Bank's policy and Federal law.
<F2> This loan was made to an immediate family member of Mr. Hinkle who was also
a non-executive officer employee of the Bank entitled to receive a 1.0%
reduction on the interest rate as well as reduced closing costs consistent
with the Bank's policy and Federal law.
</FN>
</TABLE>
II. RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors has renewed the Corporation's arrangement for
KPMG Peat Marwick LLP to be its auditors for the 1997 fiscal year, subject to
the ratification of the appointment by the Corporation's stockholders.
Representatives of KPMG Peat Marwick LLP are expected to attend the Meeting to
respond to appropriate questions and to make a statement if they so desire.
On February 13, 1996, Hill, Barth & King, Inc. was dismissed and KPMG
Peat Marwick LLP was engaged as FFY Financial Corp.'s independent accountants.
Hill, Barth & King, Inc.'s accountant's report on the financial statements for
each of the years ended June 30, 1994 and June 30, 1995 was unqualified and did
not contain an adverse opinion or a disclaimer opinion, or qualification or
modification as to uncertainty, audit scope or accounting principles. The
decision to dismiss Hill, Barth & King, Inc. was approved by the Board of
Directors upon recommendation by the Audit Committee of the Board of Directors.
During the fiscal years ended June 30, 1994 and June 30, 1995 and the subsequent
interim period from July 1, 1995 through February 13, 1996, there were no
disagreements with Hill, Barth & King, Inc. on any matter of accounting
principles or practices, financial statement disclosure or auditing scope of
procedure which, if not resolved to the satisfaction of Hill, Barth & King,
Inc., would have caused it to make reference to the subject matter of the
disagreements in connection with its report. Additionally, there were no
disagreements with Hill, Barth & King, Inc. regarding any of these matters,
either those resolved to their satisfaction or those not resolved to their
satisfaction. None of the events listed in Item 304(a)(1)(v)(A) through (D) of
Regulation S-K of the Securities and Exchange Commission ("Regulation S-K")
occurred during the fiscal years ended June 30, 1994 or June 30, 1995 or the
subsequent interim period from July 1, 1995 through February 13, 1996. During
the fiscal years ended June 30, 1994 and June 30, 1995 and the subsequent
interim period from July 1, 1995 through February 13, 1996, there was no
consultation with KPMG Peat Marwick LLP regarding: (1) application of accounting
principles to a specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on FFY Financial Corp.'s financial
statements; or (2) any matter that was the subject of a disagreement (as defined
in paragraph 304(a)(1)(iv) of Regulation S-K) or a reportable event (as defined
in paragraph 304(a)(1)(v) of Regulation S-K).
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE RATIFICATION
OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE CORPORATION'S AUDITORS FOR
THE FISCAL YEAR ENDING JUNE 30, 1997.
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in the Corporation's proxy
materials for next year's Annual Meeting of Stockholders, any stockholder
proposal to take action at such meeting must be received at the Corporation's
executive offices, 724 Boardman-Poland Road, Youngstown, Ohio, no later than May
20, 1997. Any such proposals shall be subject to the requirements of the proxy
rules adopted under the Securities Exchange Act of 1934.
<PAGE> 10
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and persons who own more than
10% of a registered class of the Corporation's equity securities, to file with
the Securities and Exchange Commission (the "SEC") initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Corporation. Officers, directors and greater than 10% stockholders are
required by SEC regulation to furnish the Corporation with copies of all Section
16(a) forms they file.
To the Corporation's knowledge, based solely on a review of the copies
of such reports furnished to the Corporation and written representations that no
other reports were required, during the fiscal year ended June 30, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with, with the exception of the
inadvertent omission of certain shares from two Statements of Changes in
Beneficial Ownership of Securities on Form 4 filed by Director Nemenz, which
omissions were subsequently corrected.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than the matters described above in this Proxy Statement. However,
if any other matters should properly come before the Meeting, it is intended
that holders of the proxies will act in accordance with their best judgment.
The cost of solicitation of proxies will be borne by the Corporation.
The Corporation will reimburse brokerage firms and other custodians, nominees
and fiduciaries for reasonable expenses incurred by them in sending proxy
materials to the beneficial owners of Corporation Common Stock. In addition to
solicitation by mail, directors and officers of the Corporation and regular
employees of the Bank may solicit proxies personally or by telegraph or
telephone, without additional compensation.
By Order of the Board of Directors
/s/ SHIRLEY A. REIGHARD
Shirley A. Reighard
Secretary
Youngstown, Ohio
September 16, 1996
<PAGE> 11
PROXY CARD
REVOCABLE PROXY
FFY FINANCIAL CORP.
----------------------------------
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 16, 1996
----------------------------------
The undersigned hereby appoints the Board of Directors of FFY
Financial Corp. (the "Company"), and its survivor, with full power of
substitution, to act as attorneys and proxies for the undersigned to vote
all shares of common stock of the Company which the undersigned is
entitled to vote at the Annual Meeting of Stockholders (the "Meeting"), to
be held on Wednesday, October 16, 1996 at Paonessa's, located at 871 McKay
Court, Youngstown, Ohio, at 10:00 a.m., Youngstown, Ohio time, and at any
and all adjournments thereof, as follows:
I. The election as directors of all nominees listed below:
FOR WITHHELD
[ ] [ ]
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
Jeffrey L. Francis Myron S. Roh Ronald P. Volpe
II. The ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors for the Company for the fiscal year ending
June 30, 1997.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting or any adjournment
thereof.
The Board of Directors recommends a vote "FOR" the listed proposals.
- - ----------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSALS STATED. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE
NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD
OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
- - ----------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting
or at any adjournment thereof, and after notification to the Secretary of
the Company at the Meeting of the stockholder's decision to terminate this
Proxy, then the power of such attorneys and proxies shall be deemed
terminated and of no further force and effect.
The undersigned acknowledges receipt from the Company, prior to the
execution of this Proxy, of a Notice of the Meeting, a Proxy Statement and
the Company's Annual Report to Stockholders for the fiscal year ended
June 30, 1996.
-----------------------------, 1996
NUMBER OF SHARES
------------------------- -------------------------
Print Name of Stockholder Print Name of Stockholder
------------------------- -------------------------
Signature of Stockholder Signature of Stockholder
Please sign exactly as your name appears above on this
card. When signing as attorney, executor, administrator,
trustee or guardian, please give your full title. If
shares are held jointly, each holder should sign.
PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
