[PROXY STATEMENT]
[FFY FINANCIAL CORP. LETTERHEAD]
September 21, 1998
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 21, 1998, at The Holiday Inn, 7410 South Avenue, Youngstown, Ohio.
The Meeting is for the purpose of considering and acting upon the
election of four directors of the Corporation and the ratification of the
appointment of KPMG Peat Marwick LLP as the Corporation's independent auditor.
In addition, the Meeting will include management's report on the Corporation's
financial and operating performance for the fiscal year ended June 30, 1998.
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,
Jeffrey L. Francis
President and Chief Executive Officer
FFY FINANCIAL CORP.
724 Boardman-Poland Road
Youngstown, Ohio 44512
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on October 21, 1998
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 21, 1998, at The Holiday Inn, 7410
South Avenue, 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 four
directors of the Corporation, the ratification of the appointment of KPMG Peat
Marwick LLP as the Corporation's independent auditor for the fiscal year ended
June 30, 1999 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 31, 1998 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,
SHIRLEY A. REIGHARD
Secretary
Youngstown, Ohio
September 21, 1998
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
PROXY STATEMENT
FFY Financial Corp.
724 Boardman-Poland Road
Youngstown, Ohio 44512
ANNUAL MEETING OF STOCKHOLDERS
October 21, 1998
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 The Holiday Inn, 7410 South Avenue,
Youngstown, Ohio, on October 21, 1998, at 10:00 a.m., Youngstown, Ohio time and
at all adjournments or postponements of the Meeting. The accompanying Notice of
Meeting and form of proxy and this Proxy Statement are first being mailed to
stockholders on or about September 21, 1998. 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 four directors of the Corporation and
the ratification of the appointment of KPMG Peat Marwick LLP as the
Corporation's independent auditor for the fiscal year ending June 30, 1999.
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 and for the ratification of the appointment of the
independent auditor. 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 cast at the
Meeting. Approval of the proposal to ratify the appointment of 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 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 31, 1998
will be entitled to one vote for each share then held. As of that date, the
Corporation had 3,953,935 shares of Common Stock issued and outstanding.
The following table sets forth information as of June 30, 1998 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.
<TABLE>
<CAPTION>
Shares
Beneficially Percent
Name and Address of Beneficial Owner Owned of Class
- -------------------------------------------- ------------ --------
<S> <C> <C>
FFY Financial Corp. Employee Stock Ownership
and 401(k) Plan(1) 504,852 12.6%
724 Boardman-Poland Road
Youngstown, Ohio 44512
Named Officers(2)
- -----------------
Jeffrey L. Francis 85,223 2.1
President and Chief Executive Officer of the
Corporation and First Federal
Randy L. Shaffer 108,682 2.7
Vice President of the Corporation and First
Federal
Therese Ann Liutkus 23,693 0.6
Treasurer and Chief Financial Officer of the
Corporation and First Federal
J. Craig Carr 31,756 0.8
Vice President and General Counsel of the
Corporation and First Federal
All directors and officers of the Corporation
and the Bank as a group (14 persons) 473,989 11.3
<FN>
- -------------------
<F1> The amount reported represents shares of Common Stock held by the FFY
Financial Corp. Employee Stock Ownership and 401(k) Plan (the "KSOP"). As
of June 30, 1998, 201,396 shares of Common Stock held by the KSOP had
been allocated to accounts of participants. First Bankers Trust Company,
as trustee of the KSOP, may be deemed to beneficially own the shares held
by the KSOP which have not been allocated to the accounts of participants
or which have been allocated but have not been voted by participants.
Pursuant to the terms of the KSOP, participants in the KSOP have the
right to direct the voting of shares allocated to participants accounts.
Unallocated shares held by the KSOP are voted by the plan trustee in the
same manner that the plan trustee is directed to vote by the majority of
the plan participants who directed the plan trustee as to the manner of
voting the shares allocated to their plan accounts. As of June 30, 1998,
8,564, 7,248, 5,874, 5,906 and 38,408 shares had been allocated to the
KSOP accounts of Mr. Francis, Mr. Shaffer, Ms. Liutkus, Mr. Carr and all
officers as a group, respectively. These shares are also included in each
individual's/group's respective shares.
<F2> Amounts include shares held directly and shares held in retirement
accounts, shares held by certain members of a named individual's or group
member's family, or held by trusts of which a named individual or group
member is a trustee or substantial beneficiary with respect to which the
named individual or group member may have sole or shared voting and/or
investment power. The amounts also include 46,715, 42,840, 11,260, 16,564
and 171,469 shares subject to options granted under the Corporation's
Stock Option and Incentive Plan (the "Stock Option Plan") to Mr. Francis,
Mr. Shaffer, Ms. Liutkus, Mr. Carr 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. Messrs. Daniel A. Mirto and
Jack R. Brownlee will retire as directors of the Corporation and the Bank
effective the date of the Meeting. The Boards of Directors of the Corporation
and the Bank appreciate the years of dedicated service provided by Messrs.
Mirto and Brownlee.
The following table sets forth certain information, as of June 30, 1998,
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.
<TABLE>
<CAPTION>
Shares of
Term Common Stock Percent
Position(s) Held Director to Beneficially of
Name Age(1) in the Corporation Since(2) Expire Owned(3) Class(3)
- ---------------------- ------ --------------------------- -------- ------ ------------ --------
<S> <C> <S> <C> <C> <C> <C>
NOMINEES
A. Gary Bitonte, MD 50 Director 1990 2001 59,957 1.5%
Randy L. Shaffer 47 Vice President and Director 1996 2001 108,682 2.7
William A. Russell 50 Nominee 2001 1,093(4) 0.0
Robert L. Wagmiller 54 Nominee 2001 1,000 0.0
DIRECTORS CONTINUING IN OFFICE
Jeffrey L. Francis 47 President, CEO and Director 1992 1999 85,223 2.1
Myron S. Roh 71 Chairman of the Board 1978 1999 41,618 1.0
Ronald P. Volpe, Ph.D. 55 Director 1996 1999 7,630 0.2
Marie Izzo Cartwright 45 Director 1991 2000 27,118 0.7
Henry P. Nemenz 59 Director 1991 2000 41,908 1.0
W. Terry Patrick 48 Director 1992 2000 20,967 0.5
<FN>
- -------------------
<F1> At June 30, 1998.
<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 6,645, 42,840, 46,715, 6,630, 6,630,
1,945, 9,945 and 9,945 shares subject to options currently exercisable
which were granted under the Stock Option Plan to Directors Bitonte,
Shaffer, Francis, Roh, Volpe, Cartwright, Nemenz and Patrick
respectively.
<F4> Mr. Russell owned 320 shares at June 30, 1998, the remainder was acquired
in August 1998.
</FN>
</TABLE>
The business experience of each director of the Corporation is set forth
below. All directors have held their present positions for at least five years,
unless otherwise indicated.
A. Gary Bitonte, MD - Dr. Bitonte is a urologic surgeon and has been in
private practice for the past 20 years. Dr. Bitonte received his BS and MD
degrees from Ohio State University. He is an associate professor of urology at
the Northeastern Ohio University College of Medicine and associate professor of
urology at the Ohio University College of Osteopathic Medicine. Dr. Bitonte is
the Director of the Urologic and Impotence Center located in Youngstown, Ohio.
Randy L. 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 BA 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. Mr. Shaffer is also Vice President of FFY
Holdings, Inc., a wholly-owned subsidiary of the Corporation.
William A. Russell - Mr. Russell is the President of Canteen Service of
Steel Valley, Inc., a food and vending service company that employees 20 people
and has served the surrounding five county area for over 62 years. He has been
associated with Canteen Service of Steel Valley, Inc. for the past 24 years.
Mr. Russell graduated from Bowling Green State University in 1969 and went on
to serve in the United States Navy from 1970 through 1974.
Robert L. Wagmiller - Mr. Wagmiller is a Partner/Principal at Hill, Barth
and King, Inc., a certified public accounting firm that employees 180
professionals. He has been associated with Hill, Barth and King, Inc. for the
past 33 years and has served in his current capacity for the past 20 years. Mr.
Wagmiller received his degree in Wholesale Management from Ohio State
University and his Bachelor of Science degree in Business Administration from
Youngstown State University.
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 Bank's
securities portfolio and supervising its data processing, accounting and
savings departments. Mr. Francis holds a BBA degree from Kent State University
and a MBA from Youngstown State University. Mr. Francis is also President of
FFY Holdings, Inc., a wholly-owned subsidiary of the Corporation.
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, Ph.D. - Dr. Volpe has been a professor of finance at the
Williamson College of Business Administration at Youngstown State University
since 1975. Dr. Volpe received his BSBA degree from Youngstown State
University, MBA from Central Michigan University and Ph.D. from the University
of Pittsburgh. Prior to his career in higher education, he was employed as a
member of the accounting and finance staff of The Ford Motor Company in
Dearborn, Michigan.
Marie Izzo Cartwright - Ms. Cartwright has served as vice president of
corporate communications and marketing for Glimcher Properties Limited
Partnership since October, 1996. Ms. Cartwright formerly served 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 vice president in June 1994. An honors graduate of Kent State University
with a BA degree in journalism, Ms. Cartwright has over 20 years experience in
both corporate and agency public relations, marketing and advertising.
Henry P. Nemenz - Mr. Nemenz has been President of H.P. Nemenz Food
Stores since 1976, which owns and operates retail grocery stores in the
Youngstown, Ohio area. Since 1995, Mr. Nemenz has also been the President of
Food Store Management which operates 16 Sav-A-Lot retail grocery stores in
Mahoning, Columbiana, Jefferson, Trumbull and Ashtabula counties in
northeastern Ohio, as well as stores in Virginia and Pennsylvania.
W. Terry Patrick - Mr. Patrick has been a partner in the law firm of
Friedman & Rummell, L.P.A. of Youngstown, Ohio since 1980.
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 9 times
during the year ended June 30, 1998. During fiscal year 1998, 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,
except for Director Brownlee who missed 5 meetings due to illness. The Board of
Directors of the Corporation has standing Stock Option, Audit and Executive
Committees.
During fiscal year 1998, the members of the Corporation's Stock Option
Committee were Directors Mirto (chairman), Nemenz and Patrick. The Stock Option
Committee is responsible for administering the Corporation's Stock Option Plan.
The Stock Option Committee did not meet during fiscal year 1998.
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 1998, the members of this committee were Directors Roh (Chairman),
Cartwright, Nemenz and Volpe. The Audit Committee met five times during fiscal
year 1998.
During fiscal year 1998, the members of the Executive Committee were
Directors Francis (Chairman), Brownlee, Mirto, Roh, Shaffer and Patrick. To the
extent authorized by the Board of Directors and by the Corporation's Bylaws,
this committee exercises all of the authority of the Board of Directors between
Board meetings. The Executive Committee did not meet during fiscal 1998.
The entire Board of Directors acts as a nominating committee for
selecting nominees for election as directors. While the Board of Directors of
the Corporation will consider nominees recommended by stockholders, the Board
has not actively solicited such nominations. Pursuant to the Corporation's
Bylaws, nominations by stockholders generally must be delivered in writing to
the Secretary of the Corporation at least 30 days prior to the date of the
Meeting. The Board of Directors met one time during fiscal 1998 in its capacity
as a nominating committee.
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 13 times
during the year ended June 30, 1998. During fiscal year 1998, 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, except for
Director Brownlee who missed 7 meetings due to illness. 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.
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
1998, the Executive Committee was composed of Directors Francis (Chairman),
Brownlee, Mirto, Roh, Patrick and Shaffer. The Executive Committee met 12 times
during the fiscal year ended June 30, 1998.
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 1998, the
members of this committee were Directors Roh (Chairman), Cartwright, Nemenz and
Volpe. This Committee held five meetings during fiscal year 1998.
The Bank's Compensation Committee recommends employee compensation,
benefits and personnel policies to the Board of Directors, as well as salaries
and bonuses for executive officers. The members of this committee during fiscal
year 1998 were Directors Patrick (Chairman), Bitonte, Brownlee, Mirto and Roh.
The Compensation Committee held seven meetings during the fiscal year ended
June 30, 1998.
Director Compensation. Each director of the Corporation is paid a fee of
$100 per Board meeting attended. Each director of the Bank is paid a fee of
$1,250 per quarter plus $400 per Board meeting attended. Each non-employee
member of a committee of the Bank's Board of Directors is paid $150 per
committee meeting attended, and the Chairman of each committee of the Bank's
Board of Directors receives $200 per committee meeting attended. Bank directors
who are employed by the Bank do not receive a fee for attending committee
meetings.
Assuming their election to the Board of Directors, Mr. Russell and Mr.
Wagmiller will each be granted an option to purchase 9,945 shares of Common
Stock at an exercise price equal to the fair market value of the Corporation's
common stock on the date of the grant. One-third, or 3,315 of these shares will
vest on April 21, 1999, another 3,315 shares will vest on April 21, 2000 and
the remaining 3,315 shares will vest on April 21, 2001.
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,
1998, 1997 and 1996 for (i) the Corporation's Chief Executive Officer and (ii)
the other executive officers of the Corporation and the Bank whose salary and
bonus for fiscal 1998 exceeded $100,000 (the "named executives").
<TABLE>
<CAPTION>
Summary Compensation Table
- ----------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
Annual Compensation Awards
--------------------------------------- ------------------------
Other Annual Restricted Options/ All Other
Salary(5) Bonus Compensation(1) Stock Awards SARs Compensation
Name and Principal Position Year ($) ($) ($) ($) (#) ($)
- ----------------------------- ---- --------- ------- --------------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jeffrey L. Francis 1998 $160,750 $40,000 $--- $--- $--- $59,955 (2)
President and Chief 1997 114,746 44,391 --- --- --- 55,621 (3)
Executive Officer 1996 93,100 46,743 --- --- --- 37,929 (4)
Randy L. Shaffer 1998 $102,010 $18,000 $--- $--- $--- $41,820 (2)
Vice President 1997 94,955 22,688 --- --- --- 46,101 (3)
1996 79,925 29,682 --- --- --- 34,913 (4)
Therese Ann Liutkus 1998 $ 85,822 $15,000 $--- $--- $--- $37,761 (2)
Treasurer and Chief Financial 1997 88,681 17,271 --- --- --- 33,225 (3)
Officer 1996 79,839 17,405 --- --- --- 26,315 (4)
J. Craig Carr 1998 $ 82,236 $18,000 $--- $--- $--- $37,741 (2)
Vice President and General 1997 74,718 21,838 --- --- --- 41,206 (3)
Counsel 1996 66,650 21,059 --- --- --- 26,109 (4)
<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> 1998 amounts represent allocations under the Corporation's KSOP and term
life insurance premiums. These amounts respectively include $59,498 and
$457 paid for Mr. Francis; $41,522 and $298 paid for Mr. Shaffer; $37,494
and $267 paid for Ms. Liutkus; and $37,476 and $265 paid for Mr. Carr.
<F3> 1997 amounts represent allocations under Corporation's KSOP, the present
value payout from the termination of the Supplemental Executive
Retirement Plan ("SERP") and term life insurance premiums paid on behalf
of the executives. These amounts respectively include $47,445, $7,313 and
$863 paid for Mr. Francis; $38,488, $7,009 and $604 paid for Mr. Shaffer;
$33,225, $-0- and $-0- paid for Ms. Liutkus; and $32,643, $8,563 and $-0-
paid for Mr. Carr.
<F4> 1996 amounts represent allocations under the Corporation's Employee Stock
Ownership Plan.
<F5> For Messrs. Francis and Shaffer, amounts includes fees for services as
directors of the Corporation and Bank. Mr. Francis earned $10,750 in
1998; $9,125 in 1997; and $6,700 in 1996. Mr. Shaffer earned $10,750 in
1998; $9,125 in 1997; and $1,325 in 1996. For Ms. Liutkus amounts include
compensation for attending meetings of the Corporation's Board of
Directors, $450 in 1998; $350 in 1997; and $-0- in 1996.
</FN>
</TABLE>
The table below provides information as to options exercised by each of
the named executives for the fiscal year ended June 30, 1998 and the value of
the options held by such executives at year-end measured in terms of the $32.50
closing price of the Corporation's Common Stock on June 30, 1998.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
- ------------------------------------------------------------------------------------------------------------------------
Value Realized Number of Value of Unexercised
from Exercise of Options in the Unexercised Options/SARs at In-the-Money Options/SARs at
current fiscal year June 30, 1998 June 30, 1998(1)
--------------------------------- ---------------------------- ----------------------------
Shares Acquired
on Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
- ------------------- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey L. Francis --- --- 46,715 --- $1,051,088 ---
Randy L. Shaffer 950 $20,647 42,840 --- 963,900 ---
Therese Ann Liutkus 1,000 21,755 11,260 --- 253,350 ---
J. Craig Carr 1,000 21,762 16,564 --- 372,690 ---
<FN>
- -------------------
<F1> The difference between the aggregate option exercise price and the fair
market value of the underlying shares at June 30, 1998.
</FN>
</TABLE>
All options for the four executives named above 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
Corporation 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 an additional year on
July 21, 1998. The agreements provide for termination upon the employee's
death, for cause or upon 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 would generally be triggered prior to the acquisition or
control of 10% of the 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's and Shaffer's
employment had been terminated as of June 30, 1998, under circumstances
entitling them to severance pay as described above, they would have been
entitled to receive lump sum cash payments of approximately $463,000 and
$350,000, respectively.
Report on Executive Compensation
The Committee. The responsibility of compensation matters for the
Corporation rests with the Compensation Committee of the Board of Directors
(the "Compensation Committee"). 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 does not participate in any deliberations regarding his own
compensation. The Compensation Committee met seven times during the year ended
June 30, 1998. The most significant issues addressed each year by the
Compensation 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.
Salary Adjustments. Effective July 1, 1997, the base salary of Mr.
Francis was increased from $9,950 per month to $12,500 per month, where it
remained until the end of the fiscal year. Discussions of annual salary
adjustments for other executives were held in December 1997 for calendar year
1998. With respect to determining Mr. Francis's compensation, the Compensation
Committee considered the following: (i) salary information for the chief
executive officers of comparable institutions gathered from local, regional and
national salary surveys; (ii) information from proxy statements of publicly
traded banks and thrifts; (iii) the financial performance of the Bank during
the preceding year as measured by return on assets, loan loss and delinquency
levels, total general and administrative expenses and earnings per share, with
regard to both the absolute level of such measures and as compared to peer
institutions, including similar publicly traded thrift holding companies; (iv)
regional and national statistics, as well as any regulatory examination
comments received during the preceding year; and (v) the Bank's progress toward
completing a number of long-term initiatives, as monitored by the Board of
Directors. The Bank's executive officers were also reviewed based upon the same
criteria. The percentage increases in base salary for the Bank's eight highest
paid executive officers (except for Mr. Francis who had been previously
considered) at January 1, 1998 ranged from 0% to 4.12%.
Bonus. The Bank has a long history of paying annual bonuses based on
annual net income. The Compensation Committee believes that 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 increasing net
income. A bonus totaling 2% of pre-tax net income of the Bank is distributed
annually following the completion of the fiscal year. Payments under this plan
are allocated on a discretionary basis to those individuals who, in the opinion
of the Compensation Committee and the Board of Directors, most contributed to
the success of the Bank during the year. For the year ended June 30, 1998,
select executives of the Corporation (among others) received payments under the
Bank's discretionary bonus plan. Mr. Francis' payment totaled $40,000, a
decrease of $4,391 compared to fiscal 1997. This decrease was attributable to
the mid-year termination of the Bank's quarterly bonus plan in fiscal 1997. The
Compensation Committee continues to evaluate the Corporation's compensation
arrangements to consider return on equity, earnings per share growth and
individual performance.
Performance Evaluations. As noted above, during each year the
Compensation Committee completes performance evaluations of the executive
officers of the Corporation. Each executive officer was evaluated based on
experience, knowledge and his or her vision of the Corporation's future. The
evaluation process included individual interviews with the Compensation
Committee and consultation with other outside directors. Among other items, the
Compensation Committee considered Corporation performance statistics as
objective measures of performance, as well as discussion of progress toward
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 July, 1998.
Stock Options/Restricted Stock. During 1993, the stockholders of the
Corporation ratified the Corporation's Stock Option and Recognition and
Retention Plans. The Compensation Committee believes that such equity-based
compensation arrangements provide a strong incentive to focus on the long term
appreciation of the Corporation's stock price, thereby matching the interests
of the company 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 fiscal year ended June 30, 1998
no grants were made to executive officers under the Company's Stock Option Plan
or Recognition and Retention Plan.
The foregoing report on executive compensation was furnished by the
Compensation Committee of the Board of Directors:
W. Terry Patrick, Chairman Jack R. Brownlee A. Gary Bitonte
Myron S. Roh Daniel J. Mirto
Pension Plan. The Corporation, through the Bank, maintained a qualified
defined benefit pension plan (the "Pension Plan") for all employees that were
20.5 years of age or older and had completed at least six months of eligible
service. On November 15, 1996, the Board of Directors approved the termination
of the Pension Plan due to significantly high retirement costs. Upon
termination, all participants in the Pension Plan became fully vested. On July
25, 1997, the Corporation received a favorable determination letter from the
Internal Revenue Service (IRS) approving the termination of the Pension Plan
and the Pension Plan assets were distributed during fiscal 1998. As of June 30,
1998, all Pension Plan assets have been allocated to the participants and none
have been retained by the Corporation.
There were three pension plan distribution options available to
participants: (i) monthly, based on normal retirement age or early retirement
age, dependent upon certain qualifications; (ii) a single lump sum, including
direct rollovers to an IRA or qualified pension plan; or (iii) certain types of
annuities. Each of the four named executives chose distribution option (ii) and
the lump sum amounts distributed to Messrs. Francis, Shaffer, Carr and Ms.
Liutkus were $84,337, $74,801, $75,436 and $12,623, respectively.
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, 1998. 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.
<TABLE>
<CAPTION>
FFYF NASDAQ (US) NASDAQ BANK
-------- ----------- -----------
<S> <C> <C> <C>
6/30/93 100.0000 100.0000 100.0000
7/31/93 105.0000 100.1070 106.7350
8/31/93 111.0000 105.5250 111.2950
9/30/93 118.0000 108.3570 114.9590
10/31/93 118.0000 110.6980 116.1480
11/30/93 111.7790 107.1650 112.4090
12/31/93 109.7650 110.3490 113.4150
1/31/94 116.6200 113.7110 116.2020
2/28/94 118.6480 112.5790 113.8630
3/31/94 118.6480 105.6130 110.9730
4/30/94 118.4590 104.2460 113.4900
5/31/94 120.5020 104.4380 120.5440
6/30/94 124.5860 100.2860 124.5920
7/31/94 134.6400 102.5870 126.2260
8/31/94 143.8900 108.7610 128.8610
9/30/94 145.9460 108.5720 126.9890
10/31/94 156.1910 110.4470 121.1950
11/30/94 161.3630 106.5870 114.7740
12/31/94 157.2250 106.8200 114.6720
1/31/95 156.1910 107.2800 119.9960
2/28/95 150.9850 112.7540 126.0270
3/31/95 148.9020 116.0890 126.6060
4/30/95 149.9430 119.8920 130.9350
5/31/95 153.0890 122.8180 133.7370
6/30/95 162.5260 132.6020 139.8450
7/31/95 188.8150 142.2270 146.0140
8/31/95 189.8700 144.9120 156.7350
9/30/95 178.2670 148.2410 159.3520
10/31/95 184.8220 147.1780 157.6970
11/30/95 180.5730 150.4650 163.4480
12/31/95 178.4480 149.4610 166.0540
1/31/96 182.9100 150.5490 169.7690
2/29/96 188.2580 156.2680 170.6830
3/31/96 193.6060 156.4600 173.1570
4/30/96 197.0080 169.1200 172.7730
5/31/96 201.3140 176.6360 175.2730
6/30/96 204.5440 168.3390 176.7210
7/31/96 206.9130 153.5040 175.8090
8/31/96 207.9960 162.1560 182.7860
9/30/96 207.9960 174.2910 189.0800
10/31/96 216.0440 173.5220 196.6650
11/30/96 223.1400 183.6220 208.0460
12/31/96 220.9580 183.3980 209.4920
1/31/97 221.9130 196.0150 220.9480
2/28/97 220.8150 185.9510 233.8880
3/31/97 224.1100 173.5490 226.6730
4/30/97 227.8460 179.0980 227.4740
5/31/97 232.2700 198.9230 244.0660
6/30/97 230.0580 204.8540 265.6990
7/31/97 228.9520 226.4780 286.0921
8/31/97 240.0124 226.1316 283.7645
9/30/97 246.6487 239.5103 313.3603
10/31/97 258.8153 227.1056 314.6273
11/30/97 264.3455 228.2434 326.8899
12/31/97 293.1027 224.5954 355.6310
1/31/98 285.3604 231.6414 340.0252
2/28/98 303.0572 253.3886 358.8043
3/31/98 295.3148 262.7333 375.9540
4/30/98 309.6935 267.1847 380.7867
5/31/98 287.5725 252.5744 368.0061
6/30/98 287.5725 270.3850 368.7708
</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, 1997. Each of these
loans is a residential first mortgage loan secured by the borrower's principal
place of residence.
<TABLE>
<CAPTION>
Largest
Amount Interest
Outstanding Balance as Rate as of
Since June 30, of June 30, June 30,
Name and Position Date of Loan Type of Loan 1997 1998 1998
- ----------------- ------------ -------------- -------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
David S. Hinkle 11/25/94 Residential(1) $130,015 $128,193 6.95%
Vice President
<FN>
- -------------------
<F1> 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 appointed KPMG Peat Marwick LLP as the
Corporation's auditors for the 1999 fiscal year, subject to the ratification of
such appointment by the Corporation's stockholders at the Meeting. KPMG Peat
Marwick LLP has been the Corporation's auditors since February, 1996.
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.
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, 1999.
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 24, 1999. Any such proposals shall be subject to the requirements of the
proxy rules adopted under the Securities Exchange Act of 1934 and, as with any
stockholder proposal (regardless of whether included in the Corporation's proxy
materials), the Corporation's Certificate of Incorporation and Bylaws and
Delaware law. Under the proxy rules, in the event that the Corporation receives
notice of a stockholder proposal to take action at the next Annual Meeting that
is not submitted for inclusion in the Corporation's proxy materials, or is
submitted for inclusion but is properly excluded from such proxy materials, the
persons named in the form of proxy sent by the Corporation to its stockholders
intend to exercise their discretion to vote on such proposal in accordance with
their best judgment if notice of the proposal is not received at the main
office of the Corporation by the Deadline (as defined below). In addition to
the provision of the proxy rules regarding discretionary voting authority
described in the preceding sentence, the Corporation's Bylaws provide that if
notice of a stockholder proposal to take action at the next Annual Meeting is
not received at the main office of the Corporation by the Deadline, such
proposal will not be recognized as a matter proper for submission to the
Corporation's stockholders and will not be eligible for presentation at such
meeting. The "Deadline" means the date that is 30 days prior to the date of the
next annual meeting; however, in the event that less than 40 days' notice of
the date of the next annual meeting is given or made to stockholders, the
"Deadline" means the close of business on the 10th day following the day on
which notice of the meeting was mailed.
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.
Based solely upon a review of the copies of such reports furnished to the
Corporation, or written representations that no other reports were required,
the Corporations believes that all Section 16(a) filing requirements applicable
to its officers, directors and greater than 10% beneficial owners were complied
with during the fiscal year ended June 30, 1998, except for the inadvertent
omission of an option exercise by Director Cartwright, which has been
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,
Shirley A. Reighard
Secretary
Youngstown, Ohio
September 21, 1998
[PROXY CARD]
REVOCABLE PROXY
FFY FINANCIAL CORP.
-------------------
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 21, 1998
-------------------
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 21, 1998 at The Holiday Inn, located at 7410 South
Avenue, Youngstown, Ohio, at 10:00 a.m., Youngstown, Ohio time, and at any
and all adjournments and postponements 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:
A. Gary Bitonte, MD William A. Russell
Randy L. Shaffer Robert L. Wagmiller
II. The ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors for the Company for the fiscal year ending
June 30, 1999.
[ ] 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.
- ----------------------------------------------------------------------------
FFY Financial Corp.
c/o Corporate Trust Services
Mail Drop 1090F5--4129
38 Fountain Square Plaza
Cincinnati, OH 45263
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 or postponement 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, 1998.
___________________________________________________ , 1998
___________________________ ___________________________
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.
