<PAGE>
<PAGE>
SCHEDULE 14A INFORMATION
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Subsection 240.14a-11(c)
or Subsection 240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
FRANKFORT FIRST BANCORP, INC.
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than
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)(1) 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>
<PAGE>
October 9, 1998
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Frankfort First Bancorp, Inc. to be held at the
main office of First Federal Savings Bank of Frankfort, 216 West
Main Street, Frankfort, Kentucky on Tuesday, November 10, 1998
at 4:30 p.m., local time. Your Board of Directors and
management look forward to personally greeting those
stockholders able to attend.
The attached Notice of Annual Meeting and Proxy Statement
describe the formal business to be transacted at the meeting.
During the meeting, we will also report on the operations of the
Company. Directors and officers of the Company as well as
representatives of Grant Thornton LLP, the Company's independent
auditors, will be present to respond to any questions the
stockholders may have.
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 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. On behalf of your Board of
Directors, thank you for your interest and support.
Sincerely,
/s/ William C. Jennings
William C. Jennings
President and
Chief Executive Officer<PAGE>
<PAGE>
_________________________________________________________________
FRANKFORT FIRST BANCORP, INC.
216 W. MAIN STREET
FRANKFORT, KENTUCKY 40602
(502) 223-1638
_________________________________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 10, 1998
_________________________________________________________________
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders (the "Meeting") of Frankfort First Bancorp, Inc.
(the "Company"), will be held at the main office of First
Federal Savings Bank of Frankfort, 216 West Main Street,
Frankfort, Kentucky at 4:30 p.m. on Tuesday, November 10, 1998.
A Proxy Card and a Proxy Statement for the Meeting are
enclosed.
The Meeting is for the purpose of considering and acting
upon:
1. Election of two directors of the Company; and
2. Transaction of such other matters as may
properly come before the Meeting or any
adjournments thereof.
The Board of Directors is not aware of any other business
to come before the Meeting.
Any action may be taken on any one of the foregoing pro-
posals at the Meeting on the date specified above or on any date
or dates to which, by original or later adjournment, the Meeting
may be adjourned. Stockholders of record at the close of
business on September 30, 1998, are the stockholders entitled to
notice of and to vote at the Meeting and any adjournments
thereof.
You are requested to fill in and sign the enclosed form of
proxy which is solicited by 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/ Danny A. Garland
DANNY A. GARLAND
SECRETARY
Frankfort, Kentucky
October 9, 1998
________________________________________________________________
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE YOUR COMPANY
THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A
QUORUM. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES. PLEASE ACT PROMPTLY.
________________________________________________________________
<PAGE>
<PAGE>
________________________________________________________________
PROXY STATEMENT
OF
FRANKFORT FIRST BANCORP, INC.
216 W. MAIN STREET
FRANKFORT, KENTUCKY 40602
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 10, 1998
________________________________________________________________
________________________________________________________________
GENERAL
________________________________________________________________
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Frankfort
First Bancorp, Inc. (the "Company") to be used at the Annual
Meeting of Stockholders of the Company (the "Meeting") which
will be held at the main office of First Federal Savings Bank of
Frankfort, 216 West Main Street, Frankfort, Kentucky on Tuesday,
November 10, 1998, at 4:30 p.m., local time. The accompanying
notice of meeting and this Proxy Statement are being first
mailed to stockholders on or about October 9, 1998.
________________________________________________________________
VOTING AND REVOCABILITY OF PROXIES
________________________________________________________________
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 thereof. Proxies may be revoked by written notice
to the Secretary of the Company, at the address shown above, by
filing of a later dated proxy prior to a vote being taken on a
particular proposal at the Meeting or by attending the Meeting
and voting in person. Proxies solicited by the Board of
Directors of the Company will be voted in accordance with the
directions given therein. WHERE NO INSTRUCTIONS ARE INDICATED,
PROXIES WILL BE VOTED FOR THE NOMINEES FOR DIRECTOR SET FORTH
BELOW. The proxy confers discretionary authority on the persons
named therein to vote with respect to the election of any person
as a director where the nominee is unable to serve or for good
cause will not serve, and matters incident to the conduct of the
Meeting.
________________________________________________________________
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
________________________________________________________________
The securities entitled to notice of and to vote at the
Meeting consist of the Company's common stock, par value $.01
per share (the "Common Stock"). Stockholders of record as of
the close of business on September 30, 1998 (the "Record Date"),
are entitled to one vote for each share of Common Stock then
held. As of the Record Date, there were 1,583,948 shares of
Common Stock issued and outstanding.
Persons and groups owning in excess of 5% of the Common
Stock are required to file certain reports regarding such
ownership pursuant to the Securities Exchange Act of 1934, as
amended with the Company and the Securities and Exchange
Commission ("SEC"). Based on such reports (and certain other
written information received by the Company), management knows
of no persons other than those set forth below who owned more
than 5% of the outstanding shares of Common Stock as of the
Record Date. The following table sets forth, as of the Record
Date, certain information as to those persons who were the
beneficial owners of more than 5% of the Common Stock, the
shares beneficially owned by the Company's Chief Executive
Officer and the shares of beneficially owned by all executive
officers and directors of the Company as a group.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Percent of Shares
Name and Address Amount and Nature of of Common Stock
of Beneficial Owner Beneficial Ownership Outstanding
___________________ ____________________ __________________
<S> <C> <C>
C.M. Gatton 100,000 6.31%
State & 11th Streets
Bristol, Tennessee 37620
William C. Jennings 79,243 (1) 5.00%
President and Chief
Executive Officer
All Executive Officers and 212,420 (2) 12.87%
Directors as a Group (9 persons)
<FN>
_____________
(1) Includes 32,154 shares which Mr. Jennings and his spouse have the right
to purchase pursuant to the exercise of stock options which are
exercisable within 60 days of September 30, 1998.
(2) Includes stock held in joint tenancy; stock owned as tenants in common;
stock owned or held by a spouse or other member of the individual's
household; stock allocated through certain employee benefit plans of the
Company; and stock in which the individual otherwise has either sole or
shared voting and/or investment power. Includes 66,861 shares which all
executive officers and directors as a group have the right to purchase
pursuant to the exercise of stock options which are exercisable within
60 days of September 30, 1998.
</FN>
</TABLE>
________________________________________________________________
PROPOSAL I -- ELECTION OF DIRECTORS
________________________________________________________________
The Company's Board of Directors is composed of eight
members. The Company's Certificate of Incorporation requires
that directors be divided into three classes, as nearly equal in
number as possible, each class to serve for a three year period,
with approximately one-third of the directors elected each year.
The Board of Directors has nominated Charles A. Cotton, III and
Danny A. Garland, each of whom are currently members of the
Board, to serve as directors for a three-year period.
If any nominee is unable to serve, the shares represented
by all valid proxies will be voted for the election of such
substitute as the Board of Directors may recommend or the size
of the Board may be reduced to eliminate the vacancy. At this
time, the Board knows of no reason why any nominee might be
unavailable to serve.
Under the Company's Bylaws, directors shall be elected by
a plurality of the votes of the shares present in person or by
proxy at the Meeting. Votes which are not cast at the Meeting,
either because of abstentions or broker non-votes, are not
considered in determining the number of votes which have been
cast for or against the election of a nominee.
Unless otherwise specified on the proxy, it is intended
that the persons named in the proxies solicited by the Board
will vote for the election of the named nominees.
The following table sets forth the names of the Board's
nominees for election as directors of the Company and of those
directors who will continue to serve as such after the Meeting.
Also set forth is certain other information with respect to each
person's age as of the Record Date, the year he first became a
director of First Federal Savings Bank of Frankfort (the
"Bank"), the expiration of his term as a director, and the
number and percentage of shares of the Common Stock beneficially
owned as of the Record Date. With the exception of Mr.
Davenport, who was initially appointed as director in September
1996, all of the individuals were initially appointed as
director of the Company in 1995 in connection with the Company's
incorporation.
2<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Shares of
Age as Year First Common Stock
of the Elected as Current Beneficially
Record Director of Term Owned at the Percent
Name Date the Bank to Expire Record Date (1) of Class
- ---------------------------------------------------------------------------------------
BOARD NOMINEE FOR TERM TO EXPIRE IN 2001
<S> <C> <C> <C> <C> <C>
Charles A. Cotton, III 61 1974 1998 5,674 *
Danny A. Garland 53 1981 1998 39,565 2.47%
DIRECTORS CONTINUING IN OFFICE
David G. Eddins 41 1993 1999 14,260 *
William C. Jennings (2) 62 1973 1999 79,243 5.00%
C. Michael Davenport 39 1996 1999 21,380 1.35%
William M. Johnson 62 1984 2000 9,140 *
Frank McGrath 72 1973 2000 9,140 *
Herman D. Regan, Jr. 69 1988 2000 24,140 1.52%
<FN>
__________
* Less than 1%.
(1) Includes stock held in joint tenancy; stock owned as tenants in common; stock owned
or held by a spouse or other member of the individual's household; stock allocated
through certain employee benefit plans of the Company; and stock in which the
individual otherwise has either sole or shared voting and/or investment power.
Includes 3,450, 16,077, 3,450, 32,154, 1,380, 3,450, 3,450 and 3,450 shares which
may be purchased pursuant to options which are exercisable within 60 days
of September 30, 1998 by Directors Cotton, Garland, Eddins, Jennings (and his
spouse), Davenport, Johnson, McGrath and Regan, respectively.
(2) Mr. Jennings is the husband of Joyce H. Jennings who serves as Vice President of
the Company, and the Bank and the father of Don Jennings who serves as Vice
President of the Company and the Bank.
</FN>
</TABLE>
The principal occupation of each director of the Company
for the last five years is set forth below.
CHARLES A. COTTON, III has served as the Commissioner of
the Department of Housing, Building & Construction of the
Commonwealth of Kentucky since 1981. He is the past president
and a director of the National Conference of States on Building
Codes and Standards. He is also a past member of the YMCA of
Frankfort Board of Directors, a past Board member of Galileons
Home, President of the St. Vincent de Paul Society of Frankfort,
President of the Coalition of Committed Christians Homeless
Shelter and Soup Kitchen and involved with the Simon House as a
Fundraiser.
DANNY A. GARLAND has been an employee of the Bank since
1975. In January of 1998, Mr. Garland was appointed by the
Board of Directors to serve as President and Chief Executive
Officer of the Bank. In addition, Mr. Garland serves as Vice
President and Secretary of the Company. Mr. Garland also serves
as Chairman of the Frankfort Chamber of Commerce Success Awards
Committee and the Board of the Kentucky Book Fair. He is a
member of the Frankfort Optimist Club, the Bluegrass Striders
running club, the Frankfort Board of Realtors, and the Capital
Community Economic and Industrial Development Authority. He is
a former Frankfort City Commissioner. He has served as Chairman
of the Multiple Sclerosis Community Leaders Lunch, the
Administrative Board of First United Methodist Church and the
Board of Directors of the YMCA of Frankfort. He has also
coached several youth basketball and baseball teams in
Frankfort.
DAVID G. EDDINS is a self-employed certified public
accountant. He is currently a member of the Frankfort Area
Chamber of Commerce, the Kentucky Chamber of Commerce, and the
National Conference of Practicing CPAs.
3<PAGE>
<PAGE>
WILLIAM C. JENNINGS has been an employee of the Bank
since 1963. In January of 1998, Mr. Jennings resigned as
President and Chief Executive Officer of the Bank, which were
positions he had held with the Bank since 1980. Mr. Jennings
continues to serve as Chairman of the Board of the Bank, and as
President and Chief Executive Officer of the Company. He is
also currently Moderator and Deacon for the Pigeon Fork Baptist
Church. His wife, Joyce H. Jennings, serves as Vice President
of the Company and the Bank.
C. MICHAEL DAVENPORT is an auctioneer, builder, developer,
real estate broker, and serves as President and CEO of Davenport
Broadcasting, Inc. which operates radio station WKYL 102.1 FM
and Mikey Mart. He is currently a member of the Frankfort Home
Builders Association and the Kentucky Youth Association. He has
served previously on the boards of P.U.S.H., the Franklin County
Humane Society, and the Blue Ridge Assembly. He has served as
national director of the Home Builders and is a past president
of the Frankfort Area Chamber of Commerce.
WILLIAM M. JOHNSON is a self-employed attorney in
Frankfort, Kentucky and currently serves as the attorney for the
Bank. He serves on the Board of Directors of the YMCA of
Frankfort, the Franklin County Development Corporation, and the
Frankfort Cemetery. Mr. Johnson is a member of the Kentucky
Chamber of Commerce, serves on the Board of Trustees of the
Kentucky Bar Center Headquarters, and is Secretary of the
Capital City Performing Arts Foundation.
FRANK MCGRATH has served as President of Frankfort Lumber
Company since 1989. Prior to this date, Mr. McGrath was
manager. He is a member of the Kentucky Lumber and Building
Material Association, the Frankfort/Franklin County Chamber of
Commerce, the Kentucky Chamber of Commerce, and the Lawrenceburg
First Christian Church.
HERMAN D. REGAN, JR. served as Chairman of the Board and
President of Kenvirons, Inc., a civil and environmental
engineering consulting firm from 1975 until his retirement in
August, 1994. He is a registered professional engineer, a
member of the Kentucky Society of Professional Engineers, and
the National Society of Professional Engineers. Mr. Regan is a
past Director of the Baptist Health Care Systems and is a member
of the Kentucky-Tennessee Water Environment Federation, the
National Water Environment Federation, the American Public Works
Association, the First Baptist Church of Frankfort, Kentucky,
and the University of Kentucky Alumni Association.
________________________________________________________________
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
________________________________________________________________
The Boards of Directors of the Company and the Bank hold
regular semi-monthly meetings and hold special meetings as
needed. During the fiscal year ended June 30, 1998, the Board
of the Company met 20 times and the Board of the Bank met 24
times. No director attended fewer than 75% in the aggregate of
the total number of Board meetings held while he was a member
during the fiscal year ended June 30, 1998 and the total number
of meetings held by committees on which he served during such
fiscal year.
The Board of Directors of the Company has standing Audit
and Compensation Committees. (The Bank has standing Executive,
Loan and Investment Committees.) The Audit Committee for fiscal
1998 consisted of Directors David Eddins (Chairman), Herman D.
Regan, Jr. and William M. Johnson. The Audit Committee met one
time during fiscal year 1998.
For fiscal 1998, the Compensation Committee consisted of
non-employee Directors Charles A. Cotton, III, William M.
Johnson and Frank McGrath. The Compensation Committee met once
during fiscal year 1998.
The Company does not have a standing Nominating Committee.
Under the Company's Bylaws, the Board of Directors or a
committee appointed by the Board acts as a nominating committee
for selecting management's nominees
4<PAGE>
<PAGE>
for election as directors. The full Board of Directors served
as a nominating committee for the nominees chosen for election
as directors at the Meeting. While the Board of Directors will
consider nominees recommended by stockholders, it has not
actively solicited recommendations from the Company's
stockholders for nominees nor, subject to the procedural
requirements set forth in the Company's Certificate of
Incorporation and Bylaws, established any procedures for this
purpose.
________________________________________________________________
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
________________________________________________________________
OVERVIEW AND OBJECTIVES. Composed of non-employee directors
Charles A. Cotton, III, William M. Johnson and Frank McGrath,
the Compensation Committee (the "Committee") of the Board of
Directors establishes the Company's and the Bank's executive
compensation policies. The Committee is responsible for
developing the Company's and the Bank's executive compensation
policies generally, and for implementing those policies for the
Company's and Bank's executive officers, including the Chief
Executive Officer. The Committee's overall objectives in
designing and administering the specific elements of the
Company's and the Bank's executive compensation program
include providing incentives for executive officers to promote
the success of the Bank and the Company; attracting, retaining
and motivating executive officers for the long-term success of
the Bank and the Company; and aligning executive compensation
with increases in stockholder value.
BENEFIT PLAN RESTRUCTURING. In June 1997, the Board of
Directors approved a benefit plan restructuring on the basis of
its belief that a reduction of the expenses associated with the
Company's Employee Stock Ownership Plan ("ESOP") and Management
Recognition Plan (" MRP") would improve the Company's
profitability and, therefore, the Company's long-term prospects
for independence. The restructuring involved a series of
actions including the termination of the ESOP, which occurred as
of December 31, 1997 and the termination of the MRP and the
cancellation of all unvested shares under the MRP, which
occurred on June 24, 1997. Participants in these plans were
compensated for the loss of benefits under the MRP and ESOP with
cash bonuses.
COMPONENTS OF EXECUTIVE COMPENSATION. In furtherance of
the objectives it has established, the Company's and Bank's
executive compensation program consists of the following
components.
. Base Salary. The Board of Directors of the Bank
approved the terms of employment agreements with William C.
Jennings, Chairman of the Company and the Bank and President of
the Company, Danny A. Garland, Vice President and Secretary of
the Company and President of the Bank and Joyce H. Jennings,
Vice President of the Company and the Bank. The agreements set
forth the base salaries of such executive officers. In
establishing base salaries, the Committee considered a number of
factors, including the officer's experience, tenure, abilities
and performance and reviews regional and national surveys of
salaries paid to executive officers of other savings and loan
holding companies and other financial institutions similar in
size and other characteristics. The Committee's objective is to
provide for base salaries that are competitive with the average
salary paid by the Company's peers. In January 1998 the
employment agreements with Mr. Jennings and Ms. Jennings were
terminated upon their retirement from the day-to-day operations
of the Bank. At the request of Mr. Jennings and subsequent
approval by the Committee, Mr. Jennings' base salary was reduced
to $3,000 annually.
. Bonuses. Historically, the Bank has paid bonuses on
a regular basis at the discretion of the Board. Bonus payments
in the past have been less than fifteen (15%) percent of the
annual compensation of the employee. Bonuses were paid in
fiscal year 1997, but none were paid in fiscal 1998. The
Committee's current intention, however, is to cease payment of
such bonuses in future periods.
<PAGE>
. Stock Option and Incentive Plan. The Company
maintains the 1995 Stock Option and Incentive Plan (the "Option
Plan") as a means of providing directors and key employees the
opportunity to acquire a proprietary interest in the Company and
to align their interests with those of the Company's
stockholders. By encouraging stock ownership,
5<PAGE>
<PAGE>
the Company seeks to attract, retain and motivate the best
available personnel for positions of substantial responsibility
and to provide additional incentive to directors and employees
of the Company and the Bank to promote the success of the
business of the Company.
Under this plan, participants are eligible to receive
stock options and stock appreciation rights ("SARs"). Awards
under this plan are subject to vesting and forfeiture as
determined by the Committee. Options and SARs are granted at
the market value of the Common Stock on the date of the grant.
Thus, such awards have value only if the Company's stock price
increases. The Committee believes that this plan aligns
stockholder and officer's interests and helps to retain and
motivate executive officers to improve long-term stockholder
value. No options were granted to executive officers during
fiscal year 1998.
Deferred Compensation Plan. The Bank maintains a deferred
compensation plan for the benefit of the directors and the
President and Vice Presidents of the Bank. Pursuant to the
terms of this plan, eligible officers may elect to defer receipt
of up to 100% of their future compensation. Deferred amounts
are credited to a bookkeeping account in the individual's name.
Such accounts are credited quarterly with the investment return
which would have resulted if such amounts had been invested,
based on the individual's choice, in either the Common Stock or
the Bank's highest annual rate of interest on certificates of
deposit, regardless of term. Among the purposes of this plan is
to attract and retain directors and executive officers by
permitting them to elect to have Common Stock measure the
appreciation or depreciation of their deferred compensation and
to provide them with a direct equity interest in the Company and
thereby strengthen the connection between the interest of
officers and directors and the interest of the Company's
stockholders. See "Executive Compensation -- Selected Benefit
Plans and Arrangements -- Deferred Compensation Plan."
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. William Jennings was employed by the Bank for over 34
years, and served as President and Chief Executive Officer for
over 16 years. Mr. Jennings salary was established in
accordance with the terms of the employment agreement between
the Bank and Mr. Jennings, but in January 1998, Mr. Jennings
resigned as President and Chief Executive Officer of the Bank
which terminated his employment contract with the Bank. Mr.
Jennings has remained President and Chief Executive Officer of
the Company and as consideration for his serving in that
capacity Mr. Jennings requested, and the Committee agreed to, a
reduction in his base salary to $3,000 annually. Mr. Jennings
salary for fiscal 1998 was $50,458.
In January of 1998, Mr. Danny Garland was appointed as
President and Chief Executive Officer of the Bank. Mr. Garland
is also Vice President and Secretary of the Company. In
establishing Mr. Garland's compensation the Committee takes
into account his experience, tenure, abilities, job performance
and other considerations.
Mr. Garland's base salary is established in accordance
with the terms of the employment agreement entered into between
the Bank and Mr. Garland (see "Executive Compensation -
Employment Agreements") and is currently $70,000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consists entirely of
non-employee directors.
THE COMPENSATION COMMITTEE
Charles A. Cotton, III
William M. Johnson
Frank McGrath
6<PAGE>
<PAGE>
________________________________________________________________
Executive Compensation
________________________________________________________________
SUMMARY COMPENSATION TABLE
The following table sets forth cash and noncash compensation
for each of the last three fiscal years awarded to or earned by
the Chief Executive Officer and the named executive officers of
the Company and the Bank. No other executive officer received
salary and bonus in excess of $100,000 during the fiscal year
ended June 30, 1998.
<TABLE>
<CAPTION>
Annual Compensation
Principal Position Principal Position -------------------------------
with the Company/ with the Company/Bank Fiscal Other Annual
Name Bank through 12/97 from 1/98 to Present Year Salary Bonus Compensation(1)
- ---- ------------------- --------------------- ------ ------ ----- ---------------
<S> <C> <C> <C> <C> <C> <C>
William C. Jennings President and Chief President and Chief 1998 $50,458 $ -- $6,600
Executive Officer/ Executive Officer/-- 1997 80,000 178,666 (2) 7,200
President and Chief Chairman of the 1996 80,000 6,666 7,200
Executive Officer Board of Directors
Danny A. Garland Vice President and Vice President and 1998 67,500 -- 7,200
Secretary/Vice Secretary/President and 1997 65,000 168,417 (2) 7,200
President and Chief Executive Officer 1996 65,000 5,417 7,200
Secretary
<CAPTION>
Long-Term
Compensation Awards
-------------------------------
Restricted Securities
Stock Underlying All Other
Name Award(s) Options Compensation
- -------- ---------- ---------- ------------
<S> <C> <C> <C>
William C. Jennings $ -- $ -- $ --
-- -- 31,886
322,920 80,385 26,004
Danny A. Garland -- -- --
-- -- 25,907
304,980 80,385 21,120
<FN>
____________
(1) "Other Annual Compensation" represents directors' fees.
(2) Represents contributions to these individuals for the loss of benefits as a result of the termination
of the ESOP during fiscal 1997. See "Compensation Committee Report on Executive Compensation --
Benefit Plan Restructuring."
</FN>
</TABLE>
7<PAGE>
<PAGE>
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth information concerning the
value of options held by the Company's Chief Executive Officer
and Executive Officers at June 30, 1998.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End at Fiscal Year-End (1)
--------------------------- -------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---- --------------------------- -------------------------
<S> <C> <C>
William C. Jennings 16,077 / 24,116 N/A(2)
Danny A. Garland 16,077 / 24,116 N/A(2)
<FN>
________
(1) Represents the difference between the fair market value of the
underlying shares of Common Stock at June 30, 1998 and the
exercise price ($18.96 per share, as adjusted).
(2) The exercise price of Mr. Jennings' and Mr. Garland's options ($18.96 per
share) exceeded the fair market value of the Common Stock at June 30,
1998.
</FN>
</TABLE>
PENSION PLAN
Effective July 1, 1994, the Bank adopted the FIRF Pension
Trust (the "Pension Plan") for the benefit of all employees who
are at least 21 years of age and have completed one year of
service. A participant becomes fully vested after six years of
service.
The following table illustrates annual pension benefits at
age 65 under the Pension Plan at various levels of compensation
and years of service, assuming 100% vesting of benefits. All
retirement benefits illustrated in the table below are without
regard to any Social Security benefits to which a participant
might be entitled.
<TABLE>
<CAPTION>
Years of Service
Average ------------------------------------------
Compensation 15 20 25 30 35
- ----------------- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
$ 20,000 $ 3,750 $ 5,000 $ 6,250 $ 7,500 $ 8,750
40,000 7,500 10,000 12,500 15,000 17,500
60,000 11,250 15,000 18,750 22,500 26,250
80,000 15,000 20,000 25,000 30,000 35,000
100,000 18,750 25,000 31,250 37,500 43,750
</TABLE>
Participants in the Pension Plan will receive an annual
benefit based on average salary and years of service at the time
of retirement, which is not subject to offset for social
security payments. Average salary for purposes of determining a
participant's benefit consists of salary only, exclusive of
overtime, bonuses and other special payments. At June 30, 1998,
Mr. Jennings had 35 years of credited service under the Pension
Plan. As of June 30, 1998, Mr. Jennings began to receive
benefits under the Pension Plan.
SELECTED BENEFIT PLANS AND ARRANGEMENTS
Deferred Compensation Plan. In 1994, the Bank established
the First Federal Savings Bank of Frankfort Deferred
Compensation Plan (the "Deferred Compensation Plan") for the
exclusive benefit of members of the Bank's Board of Directors
and the President and Vice Presidents of the Bank. Pursuant to
the terms of the Deferred Compensation Plan, directors may elect
to defer the receipt of all or part of their future fees, and
eligible officers may elect to defer receipt of their future
compensation. Deferred amounts are credited to a bookkeeping
account in the participant's name, which will also be credited
quarterly with the investment return which would have resulted
if such
8<PAGE>
<PAGE>
deferred amounts had been invested, based upon the participant's
choice in either the Common Stock or the Bank's highest annual
rate of interest on certificates of deposit, regardless of their
term. Participants may cease future deferrals any time. The
Bank contributes to the Deferred Compensation Plan on a
quarterly basis.
Employment Agreements. The Company and the Bank have
entered into an employment agreement (the "Employment
Agreements") with Danny A. Garland, Vice President and Secretary
of the Company and President of the Bank. In such capacity, Mr.
Garland is responsible for overseeing all operations of the Bank
and for implementing the policies adopted by the Boards of
Directors of the Company and the Bank. The Boards believe that
the Employment Agreement assures fair treatment of Mr. Garland
in relation to his career with the Company and the Bank by
assuring him of some financial security.
The Employment Agreement became effective on the date of
completion of the conversion of the Bank to stock form and
provides for a term of three years, with an annual base salary
for Mr. Garland of $70,000. On each anniversary date from the
date of commencement of Mr. Garland's Employment Agreement, the
term of his employment will be extended for an additional one-
year period beyond the then-effective expiration date, upon a
determination by the Boards of Directors that the performance of
Mr. Garland has met the required performance standards and that
such Employment Agreement should be extended. The Employment
Agreement provides Mr. Garland with a salary review by the Board
of Directors not less often than annually, as well as with
inclusion in any discretionary bonus plans, retirement and
medical plans, customary fringe benefits and vacation and sick
leave and reimbursement for reasonable out-of-pocket expenses.
Mr. Garland's Employment Agreement will terminate upon death or
disability, and is terminable by the Bank for "just cause" as
defined in Mr. Garland's Employment Agreement. In the event of
termination for just cause, no severance benefits are available.
If the Company or the Bank terminates Mr. Garland's employment
without just cause, then he will be entitled to a continuation
of his salary and benefits from the date of termination through
the remaining term of his Employment Agreement plus an
additional 12-month period. If the Employment Agreement is
terminated due to the Mr. Garland's "disability" (as defined in
the Employment Agreement), he will be entitled to a continuation
of his salary and benefits for the period preceding such
termination of employment. In the event of Mr. Garland's death
during the term of his Employment Agreement, his estate will be
entitled to receive his salary through the end of the month of
his death. Severance benefits payable to Mr. Garland (or to his
estate) will be paid in a lump sum or in installments, as he (or
his estate) elects. Mr. Garland is able to voluntarily
terminate his Employment Agreement by providing 60 days' written
notice to the Boards of Directors of the Bank and the Company,
in which case he is entitled to receive only his compensation,
vested rights and benefits up to the date of termination.
Mr. Garland's Employment Agreement contains a provision
stating that in the event of Mr. Garland's involuntary
termination of employment in connection with, or within one year
after, any change in control of the Bank or the Company, other
than for "just cause," Mr. Garland will be paid within 10 days
of such termination an amount equal to the difference between
(i) 2.99 times his "base amount," as defined in Section
280G(b)(3) of the Internal Revenue Code, and (ii) the sum of any
other parachute payments, as defined under Section 280G(b)(2) of
the Internal Revenue Code, that he receives on account of the
change in control. "Control" generally refers to the
acquisition, by any person or entity, of the ownership or power
to vote more than 25% of the Bank's or Company's voting stock,
the control of the election of a majority of the Bank's or the
Company's directors, or the exercise of a controlling influence
over the management or policies of the Bank or the Company. In
addition, under Mr. Garland's Employment Agreement, a change in
control occurs when, during any consecutive two-year period,
directors of the Company or the Bank at the beginning of such
period cease to constitute two-thirds of the Board of Directors
of the Company or the Bank, unless the election of replacement
directors was approved by a two-thirds vote of the initial
directors then in office. Mr. Garland's Employment Agreement
with the Bank provides that within five business days of a
change in control, the Bank shall fund, or cause to be funded, a
trust in the amount of 2.99 times his base amount, that will be
used to pay amounts owed to him upon termination other than for
just cause within one year of the change in control. The amount
to be paid to Mr. Garland from this trust upon his termination
is determined according to the procedures outlined in Mr.
Garland's Employment Agreement with the Bank, and any money not
paid to Mr. Garland is returned to the
9<PAGE>
<PAGE>
Bank. Mr. Garland's Employment Agreement also provides for a
similar lump sum payment to be made in the event of Mr.
Garland's voluntary termination of employment within one year
following a change in control, upon the occurrence, or within 90
days thereafter, of certain specified events following the
change in control, which have not been consented to in writing
by Mr. Garland, including (i) the requirement that he perform
his principal executive functions more than 35 miles from the
Bank's current primary office, (ii) a reduction in his base
compensation as then in effect, (iii) the failure of the Company
or the Bank to maintain existing or substantially similar
employee benefit plans, including material vacation, fringe
benefits, stock option and retirement plans, (iv) the assignment
to Mr. Garland of duties and responsibilities which are other
than those normally associated with his position with the Bank,
(v) a material reduction in his authority and responsibility,
and (vi) the failure to re-elect him to the Company's or the
Bank's Board of Directors. The aggregate payments that would be
made to Mr. Garland assuming his termination of employment under
the foregoing circumstances at June 30, 1998 would have been
approximately $209,300. This provision may have an anti-
takeover effect by making it more expensive for a potential
acquiror to obtain control of the Company. Under the terms of
Mr. Garland's Employment Agreement, in the event that Mr.
Garland prevails over the Company and the Bank in a legal
dispute as to his Employment Agreement, he will be reimbursed
for his legal and other expenses.
________________________________________________________________
DIRECTORS' COMPENSATION
________________________________________________________________
Fees. The Bank's directors receive fees of $600 per month
and $100 per meeting for certain committee meetings. Directors
do not receive separate compensation for service on the Board of
Directors of the Bank.
________________________________________________________________
Transactions with Management
________________________________________________________________
Director William M. Johnson received fees for services
rendered as the Bank's attorney in the amount of $27,184 for
fiscal year 1998.
The Bank offers loans to its directors, officers, and
employees. These loans currently are made in the ordinary
course of business with the same collateral, interest rates and
underwriting criteria as those of comparable transactions
prevailing at the time and to not involve more than the normal
risk of collectibility or present other unfavorable features.
10<PAGE>
<PAGE>
STOCK PERFORMANCE GRAPH
The graph and table which follow show the cumulative total
return on the Common Stock since the commencement of trading or
the Common Stock on July 10, 1995 compared with the cumulative
total return of (i) the Nasdaq Stock Market Index -- U.S.; and
(ii) the Nasdaq Stock Market Bank Index. Cumulative total
return on the stock or the index equals the total increase in
value since July 10, 1995, assuming reinvestment of all
dividends paid on the stock or the index, respectively. The
graph and table were prepared assuming that $100 was invested at
the closing price on July 10, 1995 in the Common Stock and in
each of the indices. The shareholder returns shown on the
performance graph are not necessarily indicative of the future
performance of the Common Stock or of any particular index.
CUMULATIVE TOTAL SHAREHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDICES
July 10, 1995 through June 30, 1998
[Line graph appears here depicting the cumulative total
shareholder return of $100 invested in the Common Stock as
compared to $100 invested in the Nasdaq Stock Market Index -
U.S. and the Nasdaq Stock Market Bank Index. Line graph begins
at July 10, 1995 and plots the cumulative total return at June
30, 1996, 1997 and 1998. Plot points are provided below.]
<TABLE>
<CAPTION>
7/10/95 6/30/96 6/30/97 6/30/98
------- ------- ------- -------
<S> <C> <C> <C> <C>
Frankfort First Bancorp, Inc. 100 164.47 180.44 170.02
Nasdaq Stock Market Index - U.S. 100 122.73 149.23 196.97
Nasdaq Stock Market Bank Index 100 126.95 198.46 275.45
</TABLE>
11<PAGE>
<PAGE>
________________________________________________________________
RELATIONSHIP WITH INDEPENDENT AUDITORS
________________________________________________________________
Grant Thornton LLP were the Company's independent
certified public auditors for the fiscal year ended June 30,
1998. The Board of Directors presently intends to renew the
Company's arrangement with Grant Thornton LLP to be its
independent certified public auditors for the 1999 fiscal year.
A representative of Grant Thornton LLP is expected to be present
at the Meeting to respond to appropriate questions and to make a
statement, if so desired.
________________________________________________________________
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
________________________________________________________________
Pursuant to regulations promulgated under the Exchange
Act, the Company's officers, directors and persons who own more
than ten percent of the outstanding Common Stock are required to
file reports detailing their ownership and changes of ownership
in such Common Stock, and to furnish the Company with copies of
all such reports. Based solely on its review of the copies of
such reports received during the past fiscal year or with
respect to the past fiscal year, the Company believes that,
during the fiscal year ended June 30, 1998, all of its officers,
directors and stockholders owning in excess of 10% of the
Company's outstanding Common Stock complied with these
requirements, except that Mr. Don Jennings inadvertently failed
to timely file an initial statement of beneficial ownership on
Form 3.
________________________________________________________________
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 matters should
properly come before the Meeting, it is intended that proxies in
the accompanying form will be voted in respect thereof in
accordance with the determination of the Board of Directors.
________________________________________________________________
MISCELLANEOUS
________________________________________________________________
The cost of soliciting 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.
The Company's Annual Report to Stockholders, including
financial statements, is being mailed to all stockholders of
record as of the Record Date. Any stockholder who has not
received a copy of such Annual Report may obtain a copy by
writing to the Secretary of the Company. Such Annual Report is
not to be treated as a part of the proxy solicitation material
or as having been incorporated herein by reference.
________________________________________________________________
STOCKHOLDER PROPOSALS
________________________________________________________________
In order to be eligible to be considered for inclusion in
the Company'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 Company's executive office at
216 W. Main Street, Frankfort, Kentucky 40602, no later than
June 10, 1999. Any such proposal shall be subject to the
requirements of the proxy rules adopted under the Exchange Act.
12<PAGE>
<PAGE>
Stockholder proposals, other than those submitted pursuant
to the Exchange Act, must be submitted in writing to the
Secretary of the Company at the address given in the preceding
paragraph not less than thirty days nor more than sixty days
prior to the date of any such meeting; provided, however, that
if less than forty days' notice of the meeting is given to
stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Company not later than
the close of business on the tenth day following the day on
which notice of the meeting was mailed to stockholders.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Danny A. Garland
DANNY A. GARLAND
SECRETARY
Frankfort, Kentucky
October 9, 1998
________________________________________________________________
FORM 10-K
________________________________________________________________
A COPY OF THE COMPANY'S FORM 10-K FOR THE FISCAL YEAR
ENDED JUNE 30, 1998 AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS
OF THE RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY,
FRANKFORT FIRST BANCORP, INC., 216 W. MAIN STREET, FRANKFORT,
KENTUCKY 40602.
________________________________________________________________
13
<PAGE>
<PAGE>
REVOCABLE PROXY
FRANKFORT FIRST BANCORP, INC.
FRANKFORT, KENTUCKY
________________________________________________________________
ANNUAL MEETING OF STOCKHOLDERS
November 10, 1998
________________________________________________________________
The undersigned hereby appoints William M. Johnson, Frank
McGrath and Herman D. Regan, Jr., with full powers of
substitution, to act as proxies for the undersigned, to vote all
shares of common stock of Frankfort First Bancorp, Inc. (the
"Company") which the undersigned is entitled to vote at the
Annual Meeting of Stockholders (the "Meeting"), to be held at
the main office of First Federal Savings Bank of Frankfort, 216
West Main Street, Frankfort, Kentucky, on Tuesday, November 10,
1998 at 4:30 p.m., local time, and at any and all adjournments
thereof, as follows:
VOTE VOTE
FOR WITHHELD
--- --------
I. The election as directors of all
nominees listed below (except as
marked to the contrary below). [ ] [ ]
Charles A. Cotton, III and
Danny A. Garland
INSTRUCTION: TO WITHHOLD YOUR VOTE
FOR ANY INDIVIDUAL NOMINEE, INSERT THAT
NOMINEE'S NAME ON THE LINE PROVIDED BELOW.
_________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES.
________________________________________________________________
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES FOR
DIRECTOR AND FOR THE PROPOSAL LISTED ABOVE. IF ANY OTHER
BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL
BE VOTED BY THOSE NAMED IN THIS PROXY IN ACCORDANCE WITH THE
DETERMINATION OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME,
THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE
PRESENTED AT THE MEETING. THIS PROXY CONFERS DISCRETIONARY
AUTHORITY ON THE HOLDERS THEREOF TO VOTE WITH RESPECT TO THE
ELECTION OF ANY PERSON AS DIRECTOR WHERE THE NOMINEE IS UNABLE
TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE AND MATTERS INCIDENT
TO THE CONDUCT OF THE MEETING.
________________________________________________________________
<PAGE>
<PAGE>
FRANKFORT FIRST BANCORP, INC.
IMPORTANT
Please complete both sides of the Proxy Card.
Sign, date and return the attached proxy card in
the postage paid envelope as soon as possible. Your
vote is important, regardless of the number of
shares that you own.
DETACH PROXY CARD HERE
- ----------------------------------------------------------------
FRANKFORT FIRST BANCORP, INC.
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
stockholder's decision to terminate this proxy, then power of
said 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 Annual
Meeting of Stockholders, a proxy statement dated October 9, 1998
and an annual report.
Signature ___________________________
Signature ___________________________
Date _______________________, 1998
Please sign exactly as your name appears above. 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 BOTH SIDES, DATE, SIGN AND MAIL THIS PROXY
PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
