[LETTERHEAD OF FIRST FINANCIAL BANCORP, INC.]
March 17, 1997
Dear Shareholder:
We cordially invite you to attend the Annual Meeting of
Shareholders of First Financial Bancorp, Inc. (the "Company").
The Annual Meeting will be held in the Meeting Room of the Ida
Public Library, 320 North State Street, Belvidere, Illinois at
2:00 p.m., (local time) on Wednesday, April 16, 1997.
The enclosed Notice of Annual Meeting and Proxy Statement
describe the formal business to be transacted. During the Annual
Meeting we will also report on the operations of the Company and
First Federal Savings Bank, the wholly-owned subsidiary of the
Company. Directors and officers of the Company, as well as a
representative of our independent auditors, will be present to
respond to any questions that shareholders may have.
At the Annual Meeting, shareholders will be given an opportunity
to consider the election of Richard E. Winkelman and James V.
Twyning as directors of the Company, each to serve for a term of
three years, and Charles G. Popp as director of the Company to
serve for a term of one year. In addition, shareholders will be
requested to ratify the appointment of Crowe, Chizek and Company
LLP as auditors for the Company's 1997 fiscal year.
The Board of Directors of the Company has determined that the
matters to be considered at the Annual Meeting are in the best
interest of the Company and its shareholders. For the reasons
set forth in the Proxy Statement, the Board of Directors
unanimously recommends a vote "FOR" each matter to be considered.
On behalf of the Board of Directors, we urge you to sign, date
and return the enclosed proxy card as soon as possible even if
you currently plan to attend the Annual Meeting. Your vote is
important, regardless of the number of shares that you own. This
will not prevent you from voting in person, but will assure that
your vote is counted if you are unable to attend the meeting.
Sincerely,
Steven C. Derr
President and Chief Executive Officer
<PAGE>
FIRST FINANCIAL BANCORP, INC.
121 East Locust Street
Belvidere, Illinois 61008
(815) 544-3167
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
To Be Held On April 16, 1997
Notice is hereby given that the Annual Meeting of First
Financial Bancorp, Inc. (the "Company") will be held in the
Meeting Room of the Ida Public Library, 320 North State Street,
Belvidere, Illinois, on Wednesday, April 16, 1997 at 2:00 p.m.,
local time.
A Proxy Card and a Proxy Statement for the Annual Meeting
are enclosed.
The Annual Meeting is for the purpose of considering and
acting upon:
1. The election of three directors of the Company;
2. The ratification of the appointment of Crowe, Chizek
and Company LLP as auditors for the Company for the fiscal year
ending December 31, 1997; and
such other matters as may properly come before the Annual
Meeting, or any adjournments thereof. The Board of Directors is
not aware of any other business to come before the Annual
Meeting.
Any action may be taken on the foregoing proposals at the
Annual Meeting on the date specified above, or on any date or
dates to which by original or later adjournment the Annual
Meeting may be adjourned. In the event there are not sufficient
votes for a quorum or to approve any proposal at the time of the
Annual Meeting, the Annual Meeting may be adjourned in order to
permit further solicitation of proxies. Shareholders of record
at the close of business on March 7, 1997, are the shareholders
entitled to vote at the Annual Meeting, and any adjournments
thereof.
EACH SHAREHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE
ANNUAL MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. ANY PROXY GIVEN BY THE SHAREHOLDER MAY BE REVOKED AT
ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY
FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR
A DULY EXECUTED PROXY BEARING A LATER DATE. ANY SHAREHOLDER
PRESENT AT THE ANNUAL MEETING MAY REVOKE HIS OR HER PROXY AND
VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE ANNUAL MEETING.
HOWEVER, IF YOU ARE A SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED
IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER IN ORDER TO VOTE PERSONALLY AT THE ANNUAL
MEETING.
By Order of the Board of Directors
Patricia J. McCoy
Secretary
Belvidere, Illinois
March 17, 1997
- -----------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY
THE EXPENSE OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT
THE ANNUAL MEETING. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR
YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE
UNITED STATES.
- -----------------------------------------------------------------
<PAGE>
PROXY STATEMENT
of
FIRST FINANCIAL BANCORP, INC.
121 East Locust Street
Belvidere, Illinois 61008
(815) 544-3167
- -----------------------------------------------------------------
ANNUAL MEETING OF SHAREHOLDERS
April 16, 1997
- -----------------------------------------------------------------
This Proxy Statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of
First Financial Bancorp, Inc. (the "Company") to be used at the
Annual Meeting of Shareholders of the Company (the "Meeting"),
which will be held in the Meeting Room of the Ida Public Library,
320 North State Street, Belvidere, Illinois, on Wednesday,
April 16, 1997 at 2:00 p.m., local time, and all adjournments
thereof. The accompanying Notice of Annual Meeting of
Shareholders and this Proxy Statement are first being mailed to
shareholders on or about March 17, 1997.
- -----------------------------------------------------------------
Revocation of Proxies
- -----------------------------------------------------------------
Shareholders who execute proxies in the form solicited
hereby retain the right to revoke them in the manner described
below. Unless so revoked, the shares represented by such proxies
will be voted at the Meeting and all adjournments thereof.
Proxies solicited on behalf of the Board of Directors of the
Company will be voted in accordance with the directions given
thereon. Where no instructions are indicated, proxies will be
voted "FOR" the proposals set forth in this Proxy Statement for
consideration at the Meeting.
Proxies may be revoked by sending written notice of
revocation to the Secretary of the Company, Patricia J. McCoy, at
the address of the Company shown above. The presence at the
Meeting of any shareholder who had given a proxy shall not revoke
such proxy unless the shareholder delivers his or her ballot in
person at the Meeting or delivers a written revocation to the
Secretary of the Company prior to the voting of such proxy.
- -----------------------------------------------------------------
Voting Securities and Principal Holders Thereof
- -----------------------------------------------------------------
Holders of record of the Company's common stock, par value
$.10 per share (the "Common Stock") as of the close of business
on March 7, 1997 (the "Record Date") are entitled to one vote for
each share then held. As of the Record Date, the Company had
418,488 shares of Common Stock issued and outstanding. The
presence in person or by proxy of a majority of the outstanding
shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Meeting. In the event there are not
sufficient votes for a quorum or to approve any proposal at the
time of the Annual Meeting, the Annual Meeting may be adjourned
in order to permit further solicitation of proxies.
Persons and groups who beneficially own in excess of five
percent of the Common Stock are required to file certain reports
with the Securities and Exchange Commission ("SEC") regarding
such ownership pursuant to the Securities Exchange Act of 1934
(the "Exchange Act"). The following table sets forth, as of the
Record Date, the shares of Common Stock beneficially owned by
directors and nominees individually, by named executive officers
individually, by executive officers and directors as a group and
by each person who was the beneficial owner of more than five
percent of the Company's outstanding shares of Common Stock on
the Record Date.
<PAGE>
<TABLE>
<CAPTION>
Name Owned and Nature Percent of Shares
and Address of of Beneficial of Common Stock
Beneficial Owner Ownership Outstanding
- ---------------- ---------------- -----------------
<S> <C> <C>
Directors and Officers (1)
Steven C. Derr 12,920 3.04%
Jack R. Manley 2,459 *
Nancy K. Sylvester 850 *
James V. Twyning 200 *
Morton I. Silver 16,012 3.77
Richard E. Winkelman 6,387 1.50
Charles G. Popp 100 *
All executive officers and
directors as a group
(11 persons) 43,110 10.15
First Federal Savings Bank
of Belvidere
Employee Stock Ownership
Plan(2) 32,373 7.62
121 East Locust Street
Belvidere, Illinois 61008
Franklin Resources, Inc.(3) 26,500 6.24
Franklin Advisory Services, Inc.
Charles B. Johnson and
Rupert A. Johnson, Jr.
777 Mariners Island Blvd.
P.O. Box 7777
San Mateo, California 94403-7777
S.C. Investments, L.P.(4) 22,362 5.26
Webb and O'Neill, Inc.
50 N. Brockway, Suite 3-8
P.O. Box 1186
Palatine, Illinois 60078
National City Bank(5) 40,000 9.41
National City Center
1900 East 9th Street
Cleveland, Ohio 44114-3484
(footnotes on following page)
</TABLE>
<PAGE>
- ---------------------
*Less than 1%.
(1) Unless otherwise indicated, includes shares held directly by
the individuals as well as by spouses, in trust and other
indirect forms of ownership over which shares the
individuals effectively exercise sole or shared voting and
investment power. Includes 2,431 shares of Common Stock
which outside directors of the Company have the right to
acquire within 60 days of the Record Date pursuant to the
exercise of stock options granted under the Company's 1993
Stock Option Plan for Outside Directors (the "Directors'
Option Plan"). Includes 1,260 shares awarded, subject to
restrictions pursuant to the Company's 1993 Recognition and
Retention Plan for Outside Directors (the "Directors'
Recognition Plan"). Includes 6,034 shares of Common Stock
underlying options awarded to officers under the Company's
1993 Incentive Stock Option Plan (the "Incentive Stock
Option Plan") since such options are exercisable within
sixty days of the Record Date. Includes 2,377 shares
awarded, subject to restrictions, pursuant to the Company's
1993 Recognition and Retention Plan for Employees (the
"Employees' Recognition Plan").
(2) Under the First Federal Savings Bank of Belvidere Employee
Stock Ownership Plan (the "ESOP"), shares allocated to
participants' accounts are voted in accordance with the
participants' directions. Unallocated shares held by the
ESOP are voted by the ESOP Trustee in the manner calculated
to most accurately reflect the instructions it has received
from the participants regarding the allocated shares. As of
the Record Date, 18,810 shares of Common Stock were
allocated under the ESOP.
(3) The information is based upon Schedule 13G beneficial
ownership report, dated February 12, 1997, filed by Franklin
Resources, Inc., Franklin Advisory Services, Inc., Charles
B. Johnson and Rupert A. Johnson, Jr. According to such
report, Messrs. Johnson and Johnson are the principal
shareholders in Franklin Resources, Inc. and Franklin
Advisory Services, Inc.
(4) The information is based upon Schedule 13G beneficial
ownership report, dated February 12, 1997, filed by S.C.
Investments, L.P.
(5) The information is based upon Schedule 13G beneficial
ownership report, dated February 14, 1997, filed by National
City Bank.
<PAGE>
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PROPOSAL I--ELECTION OF DIRECTORS
- -----------------------------------------------------------------
The bylaws of the Company provide for a Board of Directors
of 6 members and provide that approximately one-third of the
directors are to be elected annually. Directors of the Company
are generally elected to serve for a three year period or until
their respective successors shall have been elected and shall
qualify. The Board of Directors has nominated Richard E.
Winkelman and James V. Twyning to serve as directors for three
year terms and until their respective successors have been
elected and qualified. The Board of Directors has nominated
Charles G. Popp to serve as a director for a one year term and
until his successor has been elected and qualified. Mr.
Winkelman has served as a Director since 1977. Messrs. Twyning
and Popp have not previously served on the Board of Directors.
The table below sets forth certain information regarding the
composition of the Company's Board of Directors, including the
terms of office of Board members. 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 one or more nominees)
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 such proxies will be voted for the election of
such substitute as the Board of Directors may recommend. At this
time, the Board of Directors knows of no reason why the nominees
might be unable to serve, if elected. Except as indicated
herein, there are no arrangements or understandings between the
nominees and any other person pursuant to which the nominees were
selected.<PAGE>
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
Positions Held Director Current Term Owned on the Percent
Name Age with the Company Since(1) To Expire Record Date Of Class
- ------------------------------------------------------------------------------------------------
NOMINEES
<S> <C> <C> <C> <C> <C> <C>
Charles G. Popp 39 Director -- -- 100 *
James V. Twyning 47 Director -- -- 200 *
DIRECTORS CONTINUING IN OFFICE
Jack R. Manley 68 Director 1977 1998 2,459(2) *
Steven C. Derr 53 President and Chief 1995 1999 12,920(3) 3.04%
Executive Officer
Nancy K. Sylvester 49 Director and Chairman 1996 1999 850(4) *
- -----------------------------
</TABLE>
PAGE
<PAGE>
* Less than 1%.
(1) Reflects the initial appointment of Messrs. Winkelman and
Manley to the Board of Directors of the Company's mutual
predecessor.
(2) Includes 789 shares subject to options granted pursuant to
the Directors' Option Plan and 420 shares awarded, subject
to restrictions, pursuant to the Directors' Recognition
Plan.
(3) Includes 2,127 shares awarded, subject to restrictions,
pursuant to the Employees' Recognition Plan. Includes 5,474
shares subject to options granted pursuant to the Incentive
Stock Option Plan which are exercisable within 60 days of
the Record Date. Includes 2,194 shares allocated to Mr.
Derr's account under the ESOP.
(4) Includes 700 shares subject to options granted pursuant to
the Directors' Plan.
(5) Includes 942 shares subject to options granted pursuant to
the Directors' Plan and 420 shares awarded, subject to
restrictions, pursuant to the Directors' Recognition Plan.
The principal occupation during the past five years of each
director, nominee for director and named executive officer of the
Company is set forth below. References to the "Company" include
the Company's mutual predecessor. All directors and executive
officers have held their present positions for five years unless
otherwise stated.
Steven C. Derr is President and Chief Executive Officer of
the Company. Mr. Derr previously served as Treasurer of the
Company, and as Secretary-Treasurer and Chief Financial Officer
of the Bank. Mr. Derr began his employment with the Bank in
1984.
Nancy K. Sylvester is a Rock Valley College associate
professor, Professional Registered Parliamentarian, and part
owner of Jimmy's Frozen Custard.
Charles G. Popp is an Attorney specializing in real estate
law and a General Partner of Strom, Sewell, Larson and Popp. Mr.
Popp has not previously served as a director for the Company.
Mr. Popp was elected to the Bank's Board of Directors on January
16, 1997.
James V. Twyning is a Certified Public Accountant who is
part owner and Vice President of Northern Nationalease &
Freightliner, a truck leasing firm. Mr. Twyning has not
previously served as a director for the Company. Mr. Twyning was
elected to the Bank's Board of Directors on January 16, 1997.
Jack R. Manley is part owner of Manley Motor Sales, a Ford,
Lincoln and Mercury new car dealership, in Belvidere, Illinois.
Richard E. Winkelman is the former owner of Winkelman
Flowers in Belvidere, Illinois. Mr. Winkelman is semi-retired
and works for a local florist.
Ownership Reports by Officers and Directors
The Common Stock of the Company is registered pursuant to
Section 12(g) of the Exchange Act. The officers and directors of
the Company and beneficial owners of greater than 10% of the
Company's Common Stock ("10% beneficial owners") are required to
file reports on Forms 3, 4, and 5 with the SEC disclosing changes
in beneficial ownership of the Common Stock. SEC rules require
disclosure in the Company's Proxy Statement and Annual Report on
Form 10-KSB of the failure of an officer, director or 10%
beneficial owner of the Company's Common Stock to file a Form 3,
4 or 5 on a timely basis. The Company believes that, during the
fiscal year ended December 31, 1996, all filing requirements
under SEC rules applicable to the Company's officers, directors
and 10% beneficial owners were complied with on a timely basis.
- -----------------------------------------------------------------
Meetings and Committees of the Board of Directors
- -----------------------------------------------------------------
The business of the Company's Board of Directors is
conducted through meetings and activities of the Board and its
committees. First Federal Savings Bank is the wholly-owned
subsidiary of the Company, and the Company does not currently
conduct any business separate from its ownership of all of the
outstanding common stock of the Bank. The Board of Directors of
the Company held thirteen regular and special meetings during
1996. During that period, no director attended fewer than 75
percent of the total meetings of the Board of Directors of the
Company and committees on which such director served.
The Company operates through the work of committees of the
Board of Directors of the Bank, and members of the Board of
Directors of the Company serve as members of committees of the
Bank.
The Company's Nominating Committee consists of Directors
Manley (Chairman), Sylvester and Derr. The Nominating Committee
met one time during 1996.
<PAGE>
The Bank's Audit Committee is composed of Directors Manley
(Chairman), Sylvester, Silver and Winkelman. The Audit Committee
meets as needed in order to examine and approve the audit report
prepared by the Bank's independent auditors. During 1996, the
Audit Committee met ten times.
The Bank's Compensation Committee consists of Directors
Silver (Chairman), Sylvester, Manley and Winkelman. The
Compensation Committee reviews the salary and benefits provided
to the Bank's officers and employees. During 1996, the
Compensation Committee met four times.
- -----------------------------------------------------------------
Executive Compensation
- -----------------------------------------------------------------
The following table sets forth the cash compensation for the
years ended December 31, 1996, 1995, and 1994, and certain
information as to the total remuneration paid by the Bank to the
named executive officers of the Company.<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation Awards
---------------------- --------------------------------
Restricted
Fiscal Annual Stock Options/ All Other
Name and Years Ended Salary Bonus Compensation Award(2) SARs Compensation
Principal Position(1) December 31, ($)(2) ($) ($)(3) ($)(4) (#)(5) Payouts ($)(6)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Steven C. Derr 1996 $63,080 $ -- $7,664 $18,821 5,474 --- $24,887
President and Chief 1995 62,061 $ -- 3,618 18,523 4,106 --- 18,061
Executive Officer 1994 59,961 $8,500 -- 14,179 2,737 --- 10,806
</TABLE>
PAGE
<PAGE>
(1) No other executive officer received salary and bonuses that
in the aggregate exceeded $100,000 for the years ended
December 31, 1996, 1995 and 1994.
(2) Amount shown is gross earnings. Includes $4,712, $4,158 and
$4,018 for the years ended December 31, 1996, 1995 and 1994,
respectively, deferred by Mr. Derr pursuant to the Bank's
401(k) Plan. Includes $2,102, $2,199 and $2,616 for the
years ended December 31, 1996, 1995 and 1994, respectively,
contributed by Mr. Derr to the Bank's Section 125 Plan.
(3) Includes directors' fees paid for attendance at Board
meetings of the Bank and the Company. The Bank and the
Company provided Mr. Derr with membership dues to certain
organizations that are not included in the summary
compensation table because the aggregate amount of such
benefits does not exceed the lesser of $50,000 or 10% of
such officer's compensation.
(4) Includes 1,195 shares, 1,195 shares and 1,194 shares for Mr.
Derr of Common Stock awarded on October 1, 1993 pursuant to
the Company's Recognition and Retention Plan, which shares
vested on October 1, 1996, 1995 and 1994, respectively. The
value of such shares was determined by multiplying the
number of shares which became fully vested by the price of
the shares of Common Stock on October 1, 1996, 1995 and
1994. At December 31, 1996, Mr. Derr had no remaining
shares subject to restrictions under the Company's
Recognition and Retention Plan. The fair market value of
such restricted stock on December 31, 1996 (based on the
closing price of the Common Stock as reported on the Nasdaq
Small-Cap Market) was approximately $18,971.
(5) On October 1, 1993, Mr. Derr was awarded 6,843 options to
purchase shares of the Company's common stock. The options
vest in five equal annual increments commencing on October
1, 1993 and the exercise price of such options is $8.00, the
fair market value of the underlying shares of Common Stock
on the date of grant. The options shown above represent the
options that were exercisable as of December 31, 1996.
(6) Includes $16,026, $10,058 and $6,607 allocated to Mr. Derr's
account for the years ended December 31, 1996, 1995 and
1994, respectively, under the Bank's ESOP. Includes $1,892,
$3,723 and $2,698 allocated to Mr. Derr's account for the
years ended December 31, 1996, 1995 and 1994, respectively,
under the Bank's 401(k) Plan. Includes $4,149, $4,280 and
$1,501 for Mr. Derr for the years ended December 31, 1996,
1995 and 1994, respectively, for reimbursement of income
taxes on the excess of the fair market value of the vested
Restricted Stock Award over the price of such shares in the
initial public offering of the Company.
Employment and Severance Arrangements
Employment Agreement. The Bank has entered into an
employment agreement with Steven C. Derr, President and Chief
Executive Officer of the Bank. The employment agreement is
intended to ensure that the Bank will be able to maintain a
stable and competent management base. The continued success of
the Bank depends to a significant degree on the skill and
competence of its President and Chief Executive Officer.
<PAGE>
The employment agreement provides for a three-year term.
Commencing on the first anniversary date and continuing each
anniversary date thereafter, the Board of Directors of the Bank
may extend the agreement for an additional year such that the
remaining term shall be three years unless written notice of
non-renewal is given by the Board of Directors after conducting a
performance evaluation of the executive. In addition to the base
salary, the agreement provides that the executive is to receive
all benefits provided to permanent full time employees of the
Bank, including among other things, disability pay, participation
in stock benefit plans and other fringe benefits applicable to
executive personnel. The agreement provides for termination by
the Bank for cause at any time. In the event the Bank chooses to
terminate the executive's employment for reasons other than for
cause, or upon the termination of the executive's employment for
reasons other than a change in control, as defined, or in the
event of the executive's resignation from the Bank upon (i)
failure to re-elect the executive to his current office, (ii) a
material change in the executive's functions, duties or
responsibilities, (iii) relocation of his principal place of
employment, (iv) the liquidation or dissolution of the Bank, or
(v) a breach of the agreement by the Bank, the executive or, in
the event of death, his beneficiary would be entitled to receive
an amount equal to the greater of the remaining payments,
including base salary, bonuses and other payments due under the
remaining term of the agreement or three times the average of the
executive's base salary, including bonuses and other cash
compensation paid, and the amount of any benefits received
pursuant to any employee benefit plans maintained by the Bank.
If termination, voluntary or involuntary, follows a "change
in control" of the Bank or the Company, as defined in the
agreement, the executive or, in the event of death, his
beneficiary, would be entitled to a payment equal to the greater
of (i) the payments due under the remaining term of the agreement
or (ii) 2.99 times his average annual compensation over the five
years preceding termination. The Bank would also continue the
executive's life, health, and disability coverage for the
remaining unexpired term of the agreement to the extent allowed
by policies maintained by the Bank from time to time. Payments
to the executive under the agreement will be guaranteed by the
Company in the event that payments or benefits are not paid by
the Bank.
The employment agreement provides that for a period of one
year following termination the executive agrees not to compete
with the Bank or the Company in any city, town or county in which
the Bank or the Company maintains an office or has filed an
application to establish an office.
Executive Salary Continuation Agreement. The Bank has
entered into an Executive Salary Continuation Agreement with Mr.
Derr (the "Executive"). The agreement provides that if the
Executive is employed by the Bank until his "Normal Retirement
Date" (as defined in the agreement), he will receive the normal
retirement benefit set forth under the agreement for a period of
fifteen years, payable in 180 equal monthly installments. If the
Executive retires before attaining his Normal Retirement Date but
on or after both attaining the age of 55 and having 15 years of
service with the Bank (the "Early Retirement Date"), the
Executive will receive a reduced benefit that will be payable for
fifteen years until the Executive has received 180 monthly
payments. The agreement also pays a benefit to the Executive in
the event that the Executive terminates employment with the Bank
after a Change in Control (as defined in the agreement) or as a
result of the Executive's death or disability. Benefits paid
under the agreements are funded by the Bank through the purchase
of life insurance policies on the lives of the designated
Executives.
Supplemental Executive Agreement. The Company has entered
into a Supplemental Executive Agreement with Mr. Derr. This
agreement supplements Mr. Derr's employment agreement, which
provides for a reduced severance payment in the event benefits
paid upon a Change in Control constitute "excess parachute
payments" under the Internal Revenue Code of 1986, as amended.
The agreement is designed to compensate Mr. Derr for any
reduction in benefits due him under his employment agreement and
also requires the Company to pay any excise tax to which Mr. Derr
becomes subject due to the "excess parachute payments"
provisions.
- -----------------------------------------------------------------
Directors' Compensation
- -----------------------------------------------------------------
In 1996, each non-employee director received $630 per month
in directors' fees, plus $150 for each special meeting attended
and $630 for attendance at the Bank's annual organizational
meeting. Each non-employee director serving on the audit and
compensation committees received $50 per meeting attended and
each non-employee director
<PAGE>
serving on the Loan Committee received $200 per month. In 1996,
each director who also served as an executive officer received
$578 per month in directors' fees, plus $150 for each special
meeting attended and $578 for attendance at the Bank's annual
organizational meeting.
- -----------------------------------------------------------------
Benefits
- -----------------------------------------------------------------
401(k) Plan. The Bank maintains the First of Belvidere
401(k) Profit Sharing Plan and Trust (the "401(k) Plan"), a tax
deferred compensation plan. Under the 401(k) Plan, employees 21
years of age or older with twelve months of service and 1,000
hours of service during that period may make pre-tax
contributions up to applicable limits under the Internal Revenue
Code. Employees are 100% vested in their contributions. The
Bank may elect to make contributions to the 401(k) Plan out of
Bank profits. Discretionary employer contributions vest at a
rate of 20% per year beginning in the third year of service by an
employee.
Benefits are payable when an employee reaches age 65 or the
fifth anniversary after entering the 401(k) Plan, whichever is
later. Benefits are payable whether or not the employee
continues to be employed by the Bank upon reaching age 65.
Distributions are made in a lump-sum payment or in an annuity for
the life of the participant, the participant and his or her
spouse, or the participant and a designated beneficiary.
Benefits are payable in the event of death, disability or
termination of a participating employee. The Bank allocated
$1,892 to the account of Mr. Derr, as a discretionary employer
contribution for the plan year ended December 31, 1996.
Employee Stock Ownership Plan and Trust. The Bank has
established an ESOP for eligible employees. Employees with a
twelve-month period of employment with the Bank during which they
worked at least 1,000 hours and who have attained age 21 are
eligible to participate.
Benefits generally become 100% vested after seven years of
credited service. Prior to the completion of three years of
credited service, a participant who terminates employment for
reasons other than death, retirement (or early retirement), or
disability will not receive any benefit under the ESOP. ESOP
contributions vest at a rate of 20% per year beginning in the
third year of service by an employee. Forfeitures will be
reallocated among remaining participating employees, in the same
proportion as contributions. Benefits may be payable upon death,
retirement, early retirement, disability or separation from
service. The Bank's contributions to the ESOP are not fixed, so
benefits payable under the ESOP cannot be estimated. The account
of Mr. Derr received allocations of $16,026 for the plan year
ended December 31, 1996.
Stock Option Plan. The Board of Directors of the Company
maintains the 1993 Incentive Stock Option Plan for officers and
employees of the Bank because it believes that stock options
serve as an important means for attracting and retaining
personnel as well as rewarding employees who help the Bank
achieve its business objectives. Moreover, the exercise of stock
options is beneficial to the Bank because it provides additional
capital at minimal expense.
The Board of Directors granted options (with Limited Rights)
under the Incentive Stock Option Plan at an exercise price of
$8.00 per share, as follows: options to purchase 6,843 shares of
Common Stock were granted to Mr. Derr; options to purchase an
additional 14,686 shares in the aggregate were granted to other
executive officers of the Bank; and options to purchase 3,158
shares in the aggregate were granted to other employees of the
Bank. The Bank reserved 2,142 shares covered by the Stock Plan
for future grant, of which 1,000 and 1,700 were granted at an
exercise price of $15.625 and $15.50, respectively, on August 15,
1995 and November 21, 1996 to employees of the Bank. Options are
exercisable in equal increments over a five year period beginning
one year from the date of grant. Options will be 100%
exercisable in the event the optionee terminates his employment
due to death, disability or retirement or in the event of a
change in control of the Bank or the Company.
PAGE
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUE
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options at The-Money Options at
Fiscal Year-End Fiscal Year-End(2)
Shares Acquired Value
Name Upon Exercise Realized(1) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
Steven C. Derr -- -- 4,106/2,737 $32,335/$21,554
</TABLE>
PAGE
<PAGE>
(1) Equals the difference between the aggregate exercise price
of the options exercised and the aggregate fair market value
of the shares of common stock received upon exercise
computed using the price of the Common Stock as quoted on
the Nasdaq Small-Cap Market at the time of exercise.
(2) Equals the difference between the aggregate exercise price
of such options and the aggregate fair market value of the
shares of common stock that would be received upon exercise,
assuming such exercise occurred on December 31, 1996, at
which date the closing price of the Common Stock as quoted
on the Nasdaq Small-Cap Market was at $15.88.
Stock Option Plan For Outside Directors. The Board of
Directors of the Company has adopted the Directors' Option Plan
for directors who are not employees of the Bank because it
believes that stock options serve as an important means for
attracting and retaining qualified directors and rewarding
outside directors who help the Bank achieve its business
objectives. Moreover, the exercise of stock options is
beneficial to the Bank because it provides additional capital at
minimal expense.
The Directors' Option Plan is a self-administering plan and
provides for the granting of nonstatutory options for 9,687
shares to directors who are not officers or employees of the Bank
or the Company. The exercise price of each option granted under
the Directors' Option Plan is $8.00 per share. Options for 789
and 1,842 shares of Common Stock were awarded to Directors Manley
and Winkelman, respectively. Mr. Winkelman has exercised 900 of
the 1,842 options awarded under the Directors' Option Plan. Ms.
Sylvester was awarded 700 shares under the Directors' Option Plan
at an exercise price of $15.50 per share. 3,126 shares covered by
the Directors' Plan have been reserved for future grant.
Recognition And Retention Plan for Employees. The Board of
Directors of the Company has adopted the Employees' Recognition
Plan as a method of providing officers and key employees of the
Bank with a proprietary interest that is designed as a means of
rewarding the service of persons who have helped the Bank to
achieve its business objectives as well as encouraging such
persons to remain with the Bank. 18,114 shares of Common Stock
were purchased by the Employees' Recognition Plan for the benefit
of eligible officers and employees. Awards are nontransferable
and nonassignable and officers of the Bank will earn (i.e.,
become vested in) shares of Common Stock covered by the award at
a rate of 33-1/3% per year commencing one year from the year from
the date of the award or as stipulated by the plan trustee.
Awards will be 100% vested upon termination of employment due to
death, disability or retirement of the officer or following a
change in control of the Bank or the Company.
Recognition And Retention Plan for Outside Directors. The
Board of Directors of the Company has adopted the Directors'
Recognition Plan as a method of providing directors who are not
employees of the Bank with a proprietary interest that is
designed as a means of rewarding persons who have helped the Bank
to achieve its business objectives as well as encouraging such
persons to remain with the Bank. 1,260 shares of Common Stock
were purchased by the Directors' Recognition Plan for the benefit
of outside directors. Awards are nontransferable and
nonassignable and outside directors of the Bank will earn (i.e.,
become vested in) shares of Common Stock
<PAGE>
covered by the award at a rate of 33-1/3% per year commencing one
year from the year from the date of the award. Awards will be
100% vested upon termination of employment due to death,
disability or retirement of the outside director or following a
change in control of the Bank or the Company. All current awards
are 100% vested.
- -----------------------------------------------------------------
Transactions With Certain Related Persons
- -----------------------------------------------------------------
The Financial Institutions Reform, Recovery and Enforcement
Act of 1989 requires that all loans or extensions of credit to
executive officers and directors must be made on substantially
the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with the
general public and must not involve more than the normal risk of
repayment or present other unfavorable features. In addition,
loans made to a director or executive officer in excess of the
greater of (a) $25,000 or 5% of the Bank's capital and surplus,
or (b) $500,000 must be approved in advance by a majority of the
disinterested members of the Board of Directors. All loans made
by the Bank to officers, directors, and executive officers are
made in the ordinary course of business on the same terms and
conditions as the Bank would make to any other customer in the
ordinary course of business and do not involve more than a normal
risk of collectibility or present other unfavorable features. At
December 31, 1996, loans to officers, directors and their
affiliates aggregated $104,750.
- -----------------------------------------------------------------
PROPOSAL II-RATIFICATION OF APPOINTMENT OF AUDITORS
- -----------------------------------------------------------------
The Board of Directors of the Company has approved the
engagement of Crowe, Chizek and Company LLP to be the Company's
auditors for the 1997 fiscal year, subject to the ratification of
the engagement by the Company's shareholders. At the Meeting,
shareholders will consider and vote on the ratification of the
engagement of Crowe, Chizek and Company LLP for the Company's
fiscal year ending December 31, 1997. A representative of Crowe,
Chizek and Company LLP is expected to attend the Meeting to
respond to appropriate questions and to make a statement if he so
desires.
In order to ratify the selection of Crowe, Chizek and
Company LLP as the auditors for the 1997 fiscal year, the
proposal must receive at least a majority of the votes cast,
either in person or by proxy, in favor of such ratification. The
Board of Directors recommends a vote "FOR" the ratification of
Crowe, Chizek and Company LLP as auditors for the 1997 fiscal
year.
- -----------------------------------------------------------------
SHAREHOLDER PROPOSALS
- -----------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy
materials for next year's Annual Meeting of Shareholders, any
shareholder proposal to take action at such meeting must be
received at the Company's executive office, 121 East Locust
Street, Belvidere, Illinois 61008-3688, no later than November
15, 1997. Any such proposals shall be subject to the
requirements of the proxy rules adopted under the Exchange Act as
administered by the SEC.
- -----------------------------------------------------------------
MISCELLANEOUS
- -----------------------------------------------------------------
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 matters should properly come
before the Meeting, it is intended that holders of the proxies
will act as directed by a majority of the Board of Directors,
except for matters related to the conduct of the Meeting, as to
which they shall act in accordance with their best judgment.
<PAGE>
The cost of solicitation of proxies will be borne by the
Company. The Company 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 Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may
solicit proxies personally or by telegraph or telephone without
additional compensation.
BY ORDER OF THE BOARD OF DIRECTORS
Patricia J. McCoy
Secretary
Belvidere, Illinois
March 17, 1997
<PAGE>
REVOCABLE PROXY
FIRST FINANCIAL BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
April 16, 1997
The undersigned hereby appoints the official proxy committee
consisting of those members of the Board of Directors not
nominated to the Board of Directors, with full powers of
substitution, to act as attorneys and proxies for the undersigned
to vote all shares of Common Stock of the First Financial
Bancorp, Inc. (the "Company") which the undersigned is entitled
to vote at the Annual Meeting of Shareholders ("Meeting") to be
held in the Meeting Room of the Ida Public Library, 320 North
State Street, Belvidere, Illinois at 2:00 p.m. (local time) on
Wednesday, April 16, 1997. The official proxy committee is
authorized to cast all votes to which the undersigned is entitled
as follows:
VOTE
FOR WITHHELD
1. The election as directors of all / / / /
nominees listed below (except as
marked to the contrary below)
Richard E. Winkelman
James V. Twyning
Charles G. Popp
FOR WITHHELD ABSTAIN
2. The ratification of the appointment / / / / / /
of Crowe, Chizek and Company LLP
as auditors for the year ending
December 31, 1997.
3. The grant to the Board of Directors / / / / / /
of the authority to adjourn the
Annual Meeting, at their
discretion to permit further
solicitation of proxies by the
Company if there are insufficient
votes to act on any one of the
foregoing proposals at the time
of the Annual Meeting.
The Board of Directors recommends a vote "FOR" each of the listed
proposals.
- -----------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS
STATED ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH
MEETING, THIS PROXY WILL BE VOTED BY THE ABOVE-NAMED PROXIES AT
THE DIRECTION OF A MAJORITY OF THE BOARD OF DIRECTORS. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS
TO BE PRESENTED AT THE MEETING.
- -----------------------------------------------------------------
<PAGE>
THIS PROXY IS SOLICITED BY 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 shareholder's
decision to terminate this proxy, then the power of said
attorneys and proxies shall be deemed terminated and of no
further force and effect. This proxy may also be revoked by
sending written notice to the Secretary of the Company at the
address set forth on the Notice of Annual Meeting of
Shareholders, or by the filing of a later proxy prior to a vote
being taken on a particular proposal at the Meeting.
The undersigned acknowledges receipt from the Company prior
to the execution of this proxy of notice of the Meeting, a proxy
statement dated March 17, 1997, and audited financial statements.
Dated: _________________, 1997 / /
Check Box if You Plan
to Attend Annual Meeting
- ------------------------------- -----------------------------
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER
- ------------------------------- -----------------------------
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER
Please sign exactly as your name appears 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 complete and date this proxy and return it promptly
in the enclosed postage-prepaid envelope.
- -----------------------------------------------------------------
