UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
EAST TEXAS FINANCIAL SERVICES, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total fee paid:
________________________________________________________________________________
[_] Fee paid previously with preliminary materials:
________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
________________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________________________________
3) Filing Party:
________________________________________________________________________________
4) Date Filed:
________________________________________________________________________________
<PAGE>
EAST TEXAS FINANCIAL SERVICES, INC.
1200 South Beckham Avenue
Tyler, Texas 75701
(903) 593-1767
--------------------------------------------------------------------------------
December 28, 2000
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of East Texas
Financial Services, Inc. (the "Company"), I cordially invite you to attend the
Annual Meeting of Stockholders of the Company. The meeting will be held at 2:00
p.m., local time, on January 24, 2001 at the offices of the Company, located at
1200 S. Beckham Avenue, Tyler, Texas.
An important aspect of the meeting process is the stockholder vote on
corporate business items. I urge you to exercise your rights as a stockholder to
vote and participate in this process. Stockholders are being asked to consider
and vote upon the proposals to elect three directors of the Company and to
ratify the appointment of auditors. In addition, the meeting will include
management's report to you on the Company's 2000 financial and operating
performance.
We 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 Company
additional expense in soliciting proxies and will ensure that your shares are
represented at the meeting.
Very truly yours,
/s/ Gerald W. Free
------------------
Gerald W. Free
Vice Chairman, President and Chief
Executive Officer
<PAGE>
EAST TEXAS FINANCIAL SERVICES, INC.
1200 South Beckham Avenue
Tyler, Texas 75701
(903) 593-1767
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on January 24, 2001
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of East Texas Financial Services, Inc. (the "Company") will be held
at the offices of the Company, located at 1200 S. Beckham Avenue, Tyler, Texas
on January 24, 2001 at 2:00 p.m., local time.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of three directors of the Company;
2. The ratification of the appointment of Bryant & Welborn,
L.L.P. as auditors for the Company for the fiscal year ending
September 30, 2001;
and such other matters as may properly come before the Meeting, or at 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
December 6, 2000 are the stockholders entitled to vote at the Meeting, and any
adjournments or postponements thereof. A complete list of stockholders entitled
to vote at the Meeting will be available at the main office of the Company
during the ten days prior to the Meeting, as well as at the Meeting.
You are requested to complete and sign the enclosed Proxy Card which is
solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. The Proxy will not be used if you attend and vote at the
Meeting in person.
By Order of the Board of Directors
/s/ Gerald W. Free
------------------
Gerald W. Free
Vice Chairman, President and Chief
Executive Officer
Tyler, Texas
December 28, 2000
<PAGE>
PROXY STATEMENT
EAST TEXAS FINANCIAL SERVICES, INC.
1200 South Beckham Avenue
Tyler, Texas 75701
(903) 593-1767
ANNUAL MEETING OF STOCKHOLDERS
January 24, 2001
This Proxy Statement is furnished in connection with the solicitation
on behalf of the Board of Directors of East Texas Financial Services, Inc. (the
"Company") of proxies to be used at the Annual Meeting of Stockholders (the
"Meeting") which will be held at the offices of the Company located at 1200 S.
Beckham Avenue, Tyler, Texas on January 24, 2001 at 2:00 p.m., local time, and
all adjournments or postponements of the Meeting. The accompanying Notice of
Annual Meeting of Stockholders and this Proxy Statement are first being mailed
to stockholders on or about December 20, 2000. Certain of the information
provided herein relates to First Federal Savings and Loan Association of Tyler
(the "Association"), a wholly owned subsidiary and predecessor of the Company.
At the Meeting, stockholders of the Company are being asked to consider
and vote upon (i) the election of three directors of the Company and (ii) a
proposal to ratify the appointment of Bryant & Welborn, L.L.P. as the Company's
independent auditors for the fiscal year ending September 30, 2001.
Vote Required and Proxy Information
All shares of common stock of the Company, par value $.01 per share
(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 the nominees and the
adoption of the proposal set forth in this Proxy Statement. The Company does not
know of any matters, other than as described in the Notice of Annual Meeting of
Stockholders, 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
Proxy Card and acting pursuant thereto will have the discretion to vote on such
matters in accordance with their best judgment.
Directors shall be elected by a plurality of the votes present in
person or represented by proxy at the Meeting and entitled to vote on the
election of directors. In all matters other than the election of directors, the
affirmative vote of the majority of shares present in person or represented by
proxy at the Meeting and entitled to vote on the matter shall be the act of the
stockholders. Proxies marked to abstain with respect to a proposal will have the
same effect as votes against the proposal. Broker non-votes will 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.
Abstentions and broker non-votes will be treated as shares present at the
Meeting for purposes of determining a quorum.
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments or postponements thereof. Proxies may be
revoked by: (i) filing with the Secretary of the Company 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 Company 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 Sandra J. Allen, Secretary, at the address shown above.
1
<PAGE>
Voting Securities and Principal Holders Thereof
Stockholders of record as of the close of business on December 6, 2000
will be entitled to one vote for each share then held. As of that date, the
Company had 1,162,320 shares of Common Stock outstanding. The following table
sets forth, as of December 6, 2000, information regarding share ownership of:
(i) those persons or entities known by management to beneficially own more than
five percent of the Common Stock (except for Mr. Free, Mr.Kidd and Dr. Vaughn
whose beneficial ownership is disclosed on page 4), (ii) each named officer as
defined on page 6 (except for Mr. Free whose beneficial ownership is disclosed
on page 4), and (iii) all directors and executive officers of the Company and
the Association as a group. For information regarding the beneficial ownership
of Common Stock by directors of the Company, see "Proposal I--Election of
Directors--General."
Shares Percent
Beneficially Of
Beneficial Owner Owned Class
---------------------------------------------- ---------------- ---------------
Societe Generale Asset Management Corp. 145,000(1) 12.52%
1221 Avenue of the Americas
New York, New York 10020
East Texas Financial Services, Inc. 141,396(2) 12.17%
Employee Stock Ownership Plan
1200 South Beckham
Tyler, Texas 75701
Arnhold and S. Bleichroeder, Inc. 127,500(3) 10.97%
1345 Avenue of the Americas
New York, New York 10105
Jeffrey L. Gendell 115,750(4) 9.96%
200 Park Avenue, Suite 3900
New York, New York 10166
Investors of America, Limited Partnership 69,000(5) 5.94%
1504 Hwy. #395 N #8-00508
Gardnerville, Nevada 89410
John Hancock Advisers, Inc. 66,000(6) 5.68%
101 Huntington Avenue
Boston, Massachusetts 02199
Derrell W. Chapman, 40,207(7) 3.46%
Vice President, Chief Financial Officer
And Chief Operating Officer
709 Sutherland
Tyler, Texas 75703
All directors and executive 431,754(8) 37.15%
Officers (10 persons) as a group
---------------
(1) As reported on a Schedule 13G/A dated January 5, 1999 filed on behalf of
Societe Generale Asset Management Corp., an investment adviser registered
under section 203 of the Investment Advisers Act of 1940. Societe Generale
Asset Management Corp. claims shared voting and dispositive power of the
145,000 shares with its investment advisory clients. Upon information and
belief, Arnold and S. Bleichroeder, Inc. has acquired Societe Generale
Asset Management, Corp.
(2) The amount reported represents shares held by the East Texas Financial
Services, Inc. Employee Stock Ownership Plan (the "ESOP"), 91,926 shares of
which have been allocated to accounts of participants. First Bankers Trust
Co., N.A., Quincy, Illinois, the trustee of the ESOP, may be deemed to
beneficially own the shares held by the ESOP which have not been allocated
to the accounts of participants.
(3) As reported on a Schedule 13G/A dated February 11, 2000 filed on behalf of
Arnhold and S. Bleichroeder, Inc. and Arnhold and S. Bleichroeder Advisers,
Inc., as a broker or dealer registered under section 15 of the Securities
and Exchange Act of 1934 and an investment adviser under section
2
<PAGE>
203 of the Investment Advisers Act of 1940, as amended. The Companies claim
shared voting and dispositive power as to the 127,500 shares. Upon
information and belief, Arnold and S. Bleichroeder, Inc. has acquired
Societe Generale Asset Management Corp.
(4) As reported on Schedule 13G dated February 17, 2000 filed on behalf of
Jeffrey L. Gendell, Tontine Financial Partners, L.P. and Tontine
Management, L.L.C. in which Mr. Gendell individually, as managing member of
Tontine Management, L.L.C., Tontine Management, L.L.C. as general partner
of Tontine Financial Partners, L.P. and Tontine Financial Partners, L.P.
claim shared voting and dispositive power as to 115,750 held by Tontine
Financial Partners, L.P.
(5) As reported on a Schedule 13D dated January 1, 2000 filed on behalf of
Investors of America, Limited Partnership ("IALP"). IALP claims sole voting
and dispositive power as to the 69,000 shares.
(6) As reported on a schedule 13G dated January 27, 2000 filed on behalf of
John Hancock Mutual Life Insurance Company ("JHMLICO"), JHMLICO's direct,
wholly-owned subsidiary, John Hancock Subsidiaries, Inc. ("JHSI"), JHSI's
direct wholly-owned subsidiary, The Berkeley Financial Group, Inc. ("TBFG")
and TBFG's wholly-owned subsidiary, John Hancock Advisers, Inc. ("JHA").
JHA claims sole voting power and sole dispositive power as to the 66,000
shares.
(7) Includes shares held directly, as well as shares held in retirement
accounts, in a fiduciary capacity or by certain entities or family members,
with respect to which shares Mr. Chapman may be deemed to have sole or
shared voting and/or dispositive power. Also includes 18,228 shares subject
to options under the Company's Stock Option and Incentive Plan ("The Stock
Option Plan") which are exercisable within 60 days of December 6, 2000, and
12,002 shares which have been allocated to Mr. Chapman under the ESOP.
(8) This amount includes shares held directly, as well as shares allocated to
the accounts of executive officers under the ESOP, held in retirement
accounts, in a fiduciary capacity or by certain entities or family members,
with respect to which shares the respective directors and officers may be
deemed to have sole voting and/or dispositive power. This amount also
includes an aggregate of 129,048 shares subject to options under the
Company's Stock Option Plan, which options are exercisable within 60 days
of December 6, 2000.
3
<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
General
The Company's Board of Directors currently consists of eight members,
each of whom is also a director of the Association. The Board is divided into
three classes, and approximately one-third of the directors are elected
annually. Directors of the Company are generally elected to serve for a
three-year term or until their respective successors are elected and qualified.
The following table sets forth certain information, as of December 6,
2000, regarding the composition of the Company's Board of Directors, including
each director's term 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 nominees and any other
person pursuant to which the nominees were selected.
<TABLE>
<CAPTION>
Shares of
Common Stock Percent
Position(s) Held Director Term to Beneficially of
Name Age in the Company Since(1) Expire Owned(2) Class
--------------------------- -------- ------------------------- ---------- -------- ----------------- ---------
NOMINEES
<S> <C> <C> <C> <C> <C> <C>
Gerald W. Free 61 Vice Chairman, President, 1984 2004 79,289 6.82
Chief Executive Officer
H. H. Richardson, Jr. 68 Director 1994 2004 14,685 1.26
Jim M. Vaughn, M.D. 88 Director 1949 2004 79,540 6.84
DIRECTORS CONTINUING IN OFFICE
M. Earl Davis 62 Director, Vice President 1988 2002 17,013 1.46
James W. Fair 75 Director 1951 2002 12,641 1.09
L. Lee Kidd 65 Director 1977 2002 70,727 6.09
Jack W. Flock 87 Chairman of the Board 1948 2003 56,685 4.88
Charles R. Halstead 73 Director 1994 2003 12,732 1.10
</TABLE>
(1) Includes service as a director of the Association.
(2) Includes shares held directly, as well as shares held in retirement
accounts, in a fiduciary capacity or by certain entities or family members,
with respect to which shares the respective directors may be deemed to have
sole or shared voting and/or dispositive power. Also includes shares
subject to options totaling 45,570 for President Free, 1,567 for Mr. Flock,
6,270 for Mr. Fair, and 7,837 for each remaining director under the
Company's Stock Option Plan which are exercisable within 60 days of
December 6, 2000. The amounts reflected for Mr. Free and Mr. Davis also
include 17,252 and 3,041 shares, respectively, which have been allocated to
them under the ESOP.
4
<PAGE>
The principal occupation of each director of the Company and each
nominee for director is set forth below. All directors and nominees have held
their present positions for at least five years unless otherwise indicated.
Gerald W. Free is the President and Chief Executive Officer of the
Company and the Association, a position he has held since May 1983. He was
elected Vice Chairman of both entities in January of 1997.
H. H. Richardson, Jr. is the President of H. H. Richardson, Jr.
Construction Company, which is involved in home building and development in the
Tyler area.
Jim M. Vaughn retired in 1993, after 50 years as an ophthalmologist in
Tyler. Dr. Vaughn recently retired from the board of trustees of Tyler Junior
College. He currently serves on the development board of The University of Texas
at Tyler and The University of Texas Health Center at Tyler.
M. Earl Davis is the Vice President Compliance/Marketing of the
Association, a position he has held since March 1996. Prior to taking this
position with the Association, he was the Executive Vice President of
Administration for Tyler Pipe Industries located in Tyler. He served in various
capacities with that company for 33 years. Mr. Davis also has served on numerous
boards of civic organizations in the Tyler area.
James W. Fair is involved in real estate development in the Tyler area.
Mr. Fair also is an investor in various oil and gas related ventures in East
Texas. Mr. Fair serves as a trustee for Tyler Junior College, Director of the
Tyler Economic Development Counsel, Inc., a board member of the East Texas
Hospital Foundation, and is a former mayor of Tyler.
L. Lee Kidd is an independent oil and gas operator in East Texas. In
addition, he is involved in real estate development in the Tyler area.
Jack W. Flock is Chairman of the Board of Directors, a position he has
held since 1983. Mr. Flock is an attorney, of counsel to Ramey & Flock, P.C.
located in Tyler. Prior to his of counsel relationship, he was President of
Ramey & Flock, P.C. Mr. Flock retired in 1995, after 20 years as Chairman of the
Board of Trustees of Tyler Junior College.
Charles R. Halstead is a geologist and is involved in oil and gas
related investments in East Texas. Mr. Halstead is a former mayor of Tyler.
Executive Officers Who are Not Directors
Officers are elected annually by the Board of Directors of the Company.
The business experience of the executive officers who are not directors is set
forth below.
Derrell W. Chapman, age 42, is Vice President, Chief Operating Officer
and Chief Financial Officer of the Company and the Association. He has held such
positions with the Company since its formation and the Association since 1989.
Mr. Chapman was appointed an Advisory Director in 1998. Prior to his employment
with the Association, Mr. Chapman was Vice President and Controller of Jasper
Federal Savings and Loan Association, located in Jasper, Texas. Mr. Chapman is a
certified public accountant.
Joe C. Hobson, age 47, is Senior Vice President--Lending of the
Association, a position he has held since 1992. Mr. Hobson has served the
Association in various capacities since 1975.
Meetings and Committees of the Board of Directors
Meetings of the Company's Board of Directors generally are held on a
monthly basis. The Board of Directors met 15 times during the fiscal year ended
September 30, 2000. During fiscal 2000, no incumbent director of the Company
attended fewer than 75% of the aggregate of the total number of Board meetings.
The Company has not established any standing committees independent of the
committees of the Association's Board of Directors.
The Association's Board of Directors generally meets monthly and may
have additional special meetings upon request of the Chairman of the Board, the
President or one-third of the directors. The Board of Directors of the
Association met 14 times during the year ended September 30, 2000. During fiscal
2000, no incumbent director of the
5
<PAGE>
Association attended fewer than 75% of the aggregate of the total number of
Board meetings and the total number of meetings held by the committees of the
Board of Directors on which he served. The Board of Directors has standing
Executive, Audit and Compensation Committees which also serve the same functions
for the Company's Board of Directors.
The Executive Committee, composed of Directors Flock (Chairman), Fair,
Vaughn and Free, generally meets on an annual basis to discuss salary
recommendations for all employees. This committee met once in fiscal 2000.
The Audit Committee, composed of Directors Kidd (Chairman), Richardson,
Fair and Halstead, provides for and reviews the Company's annual independent
audit. This committee met once during the fiscal year ended September 30, 2000.
Each member of the Audit Committee is "independent", as defined under the
National Association of Securities Dealers' listing standards for the Nasdaq
Stock Market. The Company's Board of Directors has not adopted a written charter
for the Audit Committee. The Audit Committee has issued the following report
with respect to the audited financial statements of the Company for the year
ended September 30, 2000:
The audit committee of the Board of Directors has met with
representatives of the independent auditors and discussed certain matters
required, under generally accepted auditing standards, to be communicated to
audit committees, in connection with the independent audit. In addition, the
committee has received from the auditors a letter disclosing the matters that,
in the opinion of the auditors, may reasonably be thought to bear on the
auditor's independence from the company and discussed with the committee their
independence.
The committee has reviewed and discussed the Company's audited
financial statements with management. Based on the review and discussions noted
above, the committee has recommended, to the Company's Board of Directors, that
the Company's audited financial statements, for the fiscal year ended September
30, 2000, be included in the Annual Report to stockholders and Form 10-KSB.
L. Lee Kidd James W. Fair
H. H. Richardson Charles R. Halstead
The Compensation Committee, composed of Directors Flock, Halstead, Fair
and Kidd, is responsible for recommending compensation plans for the Company's
officers and employees. The committee met twice during fiscal 2000.
The full Board of Directors of the Company acts as a Nominating
Committee for the annual selection of nominees for election as directors.
Pursuant to the Company's Bylaws, nominations for directors by stockholders must
be made in writing and delivered to the Secretary of the Company at least 70
days prior to the meeting and such written nomination must contain certain
information as provided in the Company's Bylaws. While the Board of Directors
will consider nominees recommended by stockholders, it has not actively
solicited nominations.
Executive Compensation
The Company has not paid any compensation to its executive officers
since its formation. The Company does not presently anticipate paying any
compensation to such persons until it becomes actively involved in the operation
or acquisition of business other than the Association.
The executive officers of the Company also hold the same positions with
the Association and receive compensation from the Association. The following
table sets forth information concerning the compensation paid or granted to the
Association's executive officers with compensation in excess of $100,000 ("Named
Officers") in fiscal 2000.
6
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================
SUMMARY COMPENSATION TABLE
--------------------------------------------------------------------------------------------------------------------
Long Term
Annual Compensation Compensation
-------------------------------------------
Awards
--------------------------------------------------------------------------------------------------------------------
Restricted
Stock Options/ All Other
Name and Principal Position Fiscal Salary Bonus Award(s) SARs Compensation
Year ($)(1)(2) ($) ($) (#) ($)
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gerald W. Free, President and Chief 2000 185,139 6,687 --- --- 4,565(3)
Executive Officer
1999 179,080 6,687 --- --- 5,328
1998 181,709 6,687 --- --- 6,057
--------------------------------------------------------------------------------------------------------------------
Derrell W. Chapman, Vice President, Chief 2000 111,577 4,167 --- --- 420(3)
Financial Officer and Chief Operating
Officer
1999 107,800 4,167 --- --- 714
1998 103,250 4,167 --- --- 443
====================================================================================================================
</TABLE>
(1) Includes $15,600 in director's fees for Mr. Free for each of the fiscal
years 2000, 1999 and 1998. Includes $7,800 in advisory director fees for
Mr. Chapman for fiscal 2000 and 1999 and $3,250 in fiscal 1998.
(2) Includes $3,000 earned in fiscal 2000, $2,980 in fiscal 1999 and $5,609 in
fiscal 1998 as a result of Mr. Free's salary being determined, to a partial
extent, by the profitability of the Company.
(3) Consists of term life insurance premiums associated with the Company's
medical insurance plan in the amounts of $4,565 and $420 that are included
as compensation for Mr. Free and Mr. Chapman, respectively. The amount
shown for Mr. Free also includes compensation for his personal use of a
Company car.
No stock options or stock appreciation rights ("SARs") were granted
during fiscal 2000.
The following table provides information as to stock options exercised
by its Named Officers during the fiscal year ended September 30, 2000 and the
value of the options held by the Named Officers on September 30, 2000.
<TABLE>
<CAPTION>
====================================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION VALUES
--------------------------------------------------------------------------------------------------------------------
Value of
Number of Unexercised
Securities In-the-Money
Underlying Options at
Unexercised FY-End ($)(1)
Options at
FY-End (#)
--------------------------------------------------------------
Shares Acquired Value
Name on Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable
($) (#) (#) ($) ($)
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gerald W. Free ---- ---- 45,570 -0- -0- -0-
--------------------------------------------------------------------------------------------------------------------
Derrell W. Chapman ---- ---- 18,228 -0- -0- -0-
====================================================================================================================
</TABLE>
(1) Represents the aggregate market value (market price of the Common Stock
less the exercise price) of the options granted based upon the exercise
price of the option ($9.42 per share) and the closing price of the Common
Stock ($8.75 per share) as reported on the OTC Bulletin Board on September
30, 2000.
7
<PAGE>
Compensation of Directors
The Board of Directors of the Company are not paid for their service in
such capacity. Directors and Advisory Directors of the Association receive fees
of $1,300 and $650, respectively, per regularly scheduled meeting of the board
and receive no fees for service on board committees.
Employment Agreement
The Association entered into employment agreements with Mr. Free and
Mr. Chapman, effective January 10, 1995, for three-year terms at an annual base
salary equal to their then current salary. While the contracts remain in force,
salary increases will be reviewed not less often than annually and are subject
to the sole discretion of the Board of Directors. The employment agreements
provide for annual extensions for one additional year, but only upon express
authorization by the Board of Directors at the end of each year. The employment
agreements also provide for termination upon the employees' death, for cause or
in certain events specified by Office of Thrift Supervision ("OTS") regulations.
The employment agreements are terminable by Mr. Free and Mr. Chapman upon 90
days notice to the Association.
In the event there is a "change in control" (as defined in the
employment agreement) of the Company or the Association and such employment is
terminated involuntarily the contracts provide for continuing payments of the
salary payable under the agreement over the portion of the term of the agreement
that would remain but for the termination, plus a payment equal to 299% of the
base amount of compensation as defined in the Internal Revenue Code of 1986, as
amended (the "Code"); provided that total payments under the agreements must be
limited to the maximum amount that would not cause certain adverse tax
consequences to the Association and employees under Section 280G of the Code.
Assuming a change in control had taken place as of September 30, 2000, the
aggregate amount payable to Mr. Free and Mr. Chapman pursuant to this change in
control provision would have been approximately $503,890 and $313,950,
respectively. The employment agreements also provide for participation in an
equitable manner in employee benefits applicable to executive personnel.
Certain Transactions
The Association has followed a policy of granting loans to officers,
directors and employees, if such loans are made in the ordinary course of
business and on the same terms and conditions, including interest rates and
collateral, as those of comparable transactions prevailing at the time, in
accordance with the Association's underwriting guidelines, and do not involve
more than the normal risk of collectibility or present other unfavorable
features. Loans to executive officers and directors must be approved by a
majority of the disinterested directors and loans to other officers and
employees must be approved by the Association's loan committee. All loans by the
Association to its directors and executive officers are subject to OTS
regulations restricting loan and other transactions with affiliated persons of
the Association. Federal law currently requires that all loans to directors and
executive officers be made on terms and conditions comparable to those for
similar transactions with non-affiliates. The Association was in compliance with
this requirement and loans to all directors and executive officers and their
associates totalled approximately $463,150 at September 30, 2000, which amount
was approximately 2.9% of stockholders' equity at that date.
PROPOSAL II
RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors has renewed the Company's arrangement for Bryant
& Welborn, L.L.P. to be its auditors for the 2001 fiscal year, subject to the
ratification of the appointment by the Company's stockholders. A representative
of Bryant & Welborn, L.L.P. is expected to attend the Meeting to respond to
appropriate questions and will have an opportunity to make a statement if he so
desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF BRYANT & WELBORN, L.L.P. AS THE COMPANY'S
AUDITORS FOR THE FISCAL YEAR ENDING SEPTEMBER 28, 2001.
8
<PAGE>
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials
for the next Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received no later than August 22, 2001, at the
Company's main office located at 1200 South Beckham Avenue, Tyler, Texas 75701.
Any such proposal shall be subject to the requirements of the proxy rules
adopted under the Exchange Act. Otherwise, any stockholder proposal to take
action at such meeting must be received at the Company's executive office, at
1200 South Beckham Avenue, Tyler, Texas 75701 on or before November 15, 2001 (70
days prior to the anniversary of the preceeding year's annual meeting date.) In
the event that the date of next year's annual meeting changes, a stockholder
proposal must be received not later than 70 days prior to the new date of such
annual meeting; provided, however, that in the event that the date of the annual
meeting is advanced by more then 20 days or delayed by more than 60 days from
such anniversary date, notice by a stockholder to be timely must be so delivered
by the close of business on the later of (i) the 70th day prior to such annual
meeting or (ii) the 10th day following the day on which public disclosure of the
date of the annul meeting is first made. All stockholder proposals must also
comply with the Company's bylaws and Delaware law.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matter 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 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 solicitation by mail,
directors, officers and regular employees of the Company and/or the Association
may solicit proxies personally or by telegraph or telephone without additional
compensation.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gerald W. Free
------------------
Gerald W. Free
Vice Chairman, President and Chief
Executive Officer
Tyler, Texas
December 28, 2000
9
<PAGE>
REVOCABLE PROXY
EAST TEXAS FINANCIAL SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS
January 24, 2001
The undersigned hereby appoints the Board of Directors of East Texas
Financial Services, Inc. (the "Company"), and the survivor of them, with full
powers 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 at the
Company's offices located at 1200 S. Beckham Avenue, Tyler, Texas, at 2:00 p.m.,
local time, on January 24, 2001, and at any and all adjournments or
postponements thereof, as follows:
I. The election of the following directors for three-year terms:
FOR WITHHELD
--- --------
GERALD W. FREE |_| |_|
H. H. RICHARDSON, JR. |_| |_|
JIM M. VAUGHN, M.D. |_| |_|
II. The ratification of the appointment of Bryant & Welborn,
L.L.P. as independent auditors for the Company for the fiscal
year ending September 30, 2001.
FOR AGAINST ABSTAIN
--- ------- -------
|_| |_| |_|
In their discretion, upon such other matters as may properly come
before the Meeting or any adjournment or postponement thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSITIONS.
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THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE PROPOSITIONS 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.
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<PAGE>
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 Notice of the Meeting, a Proxy Statement and an
Annual Report to Stockholders.
Dated: ____________________________
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PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
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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.
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PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE
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