<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
FIRST BELL BANCORP, 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
FIRST BELL BANCORP, INC.
300 Delaware Avenue, Suite 1704
Wilmington, Delaware 19801
(302) 427-7883
March 19, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Meeting") of First Bell Bancorp, Inc. (the "Company"), the holding company
for Bell Federal Savings and Loan Association of Bellevue (the "Association"),
which will be held on April 26, 1999, at 3:00 p.m., Eastern Standard Time, at
629 Lincoln Avenue, Bellevue, Pennsylvania.
The attached notice of the meeting and proxy statement describe the formal
business to be transacted at the meeting. Directors and officers of the
Company, as well as a representative of Deloitte & Touche LLP, the Company's
independent auditors, will be present at the meeting to respond to any
questions that stockholders may have regarding the business to be transacted.
For the reasons set forth in the proxy statement, the Board unanimously
recommends a vote "FOR" each of the nominees as directors specified under
Proposal 1 and "FOR" Proposal 2, the ratification of auditors, and "AGAINST"
Proposal 3, the stockholder proposal described in the proxy statement.
Please sign and return the enclosed proxy promptly. Your cooperation is
appreciated since a majority of the Company's common stock must be
represented, either in person or by proxy, to constitute a quorum for the
conduct of business. Whether or not you expect to attend the Meeting, please
sign, date and return the enclosed proxy card promptly in the postage-paid
envelope provided so that your shares will be represented.
On behalf of the Board of Directors and all of the employees of the Company
and the Association, I wish to thank you for your continued support.
Sincerely yours,
/s/ Albert H. Eckert, II
Albert H. Eckert, II
President and Chief Executive Officer
<PAGE>
FIRST BELL BANCORP, INC.
300 Delaware Avenue, Suite 1704
Wilmington, Delaware 19801
(302) 427-7883
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On April 26, 1999
-------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of First
Bell Bancorp, Inc. (the "Company") will be held on April 26, 1999, at 3:00
p.m., Eastern Standard Time, at 629 Lincoln Avenue, Bellevue, Pennsylvania.
The annual meeting is for the purpose of considering and voting upon the
following matters:
1. The election of three directors for terms of three years each;
2. The ratification of Deloitte & Touche LLP as independent auditors
of the Company for the fiscal year ending December 31, 1999;
3. Such other matters, including the stockholder proposal described
in the enclosed proxy statement, as may properly come before the
meeting or any adjournments thereof, including whether or not to
adjourn the meeting.
The Board of Directors has established March 1, 1999, as the record date
for the determination of stockholders entitled to notice of and to vote at the
annual meeting and at any adjournments thereof. Only record holders of the
common stock of the Company as of the close of business on that date will be
entitled to vote at the annual meeting or any adjournments thereof. In the
event there are not sufficient votes for a quorum or to approve or ratify any
of the foregoing proposals at the time of the annual meeting, the annual
meeting may be adjourned in order to permit further solicitation of proxies by
the Company. A list of stockholders entitled to vote at the annual meeting
will be available at Bell Federal Savings and Loan Association of Bellevue,
532 Lincoln Avenue, Bellevue, Pennsylvania 15202, for a period of ten days
prior to the annual meeting and will also be available for inspection at the
annual meeting.
By Order of the Board of Directors
/s/ Robert C. Baierl
Robert C. Baierl
Secretary
Wilmington, Delaware
March 19, 1999
<PAGE>
FIRST BELL BANCORP, INC.
----------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
April 26, 1999
----------------
Solicitation and Voting of Proxies
This proxy statement is being furnished to stockholders of First Bell
Bancorp, Inc. (the "Company") in connection with the solicitation by the Board
of Directors of the Company (the "Board of Directors") of proxies to be used
at the Annual Meeting of Stockholders (the "Meeting") to be held on April 26,
1999, at 3:00 p.m., Eastern Standard Time, at 629 Lincoln Avenue, Bellevue,
Pennsylvania and at any adjournments thereof. The 1998 Annual Report to
Stockholders, including the consolidated financial statements for the fiscal
year ended December 31, 1998, accompanies this proxy statement, which is first
being mailed to stockholders on or about March 19, 1999.
Regardless of the number of shares of common stock owned, it is important
that record holders of a majority of the shares be represented by proxy or
present in person at the Meeting. Stockholders are requested to vote by
completing the enclosed proxy and returning it signed and dated in the
enclosed postage-paid envelope. Stockholders are urged to indicate their vote
in the spaces provided on the proxy. 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, signed proxies will be voted
"FOR" the election of each of the nominees for directors named in this proxy
statement, "FOR" the ratification of Deloitte & Touche LLP as independent
auditors of the Company for the fiscal year ending December 31, 1999 and
"AGAINST" the stockholder proposal described in this proxy statement.
Other than the matters set forth on the attached Notice of Annual Meeting
of Stockholders, the Board of Directors knows of no additional matters that
will be presented for consideration at the Meeting. Execution of a proxy,
however, confers on the designated proxy holders discretionary authority to
vote the shares in accordance with their best judgment on such other business,
if any, that may properly come before the Meeting or any adjournments thereof,
including whether or not to adjourn the Meeting.
A proxy may be revoked at any time prior to its exercise by the filing of a
written notice of revocation with the Secretary of the Company, by delivering
to the Company a duly executed proxy bearing a later date, or by attending the
Meeting and voting in person. However, if you are a stockholder whose shares
are not registered in your own name, you will need appropriate documentation
from your record holder to vote personally at the Meeting.
The cost of solicitation of proxies on behalf of management will be borne
by the Company. Proxies may also be solicited personally or by telephone or
telegraph by directors, officers and regular employees of the Company and the
Association, without additional compensation therefor. The Company will also
request persons, firms and corporations holding shares in their names, or in
the name of their nominees, which are beneficially owned by others, to send
proxy material to and obtain proxies from
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such beneficial owners, and will reimburse such holders for their reasonable
expenses in doing so. In addition, the Company has retained Innisfree M&A
Incorporated ("Innisfree") to assist in the solicitation of proxies from
beneficial owners of shares held of record by brokerage houses, banks and
other custodians, nominees, fiduciaries or other shareholders. In accordance
with the agreement with Innisfree, the Company will pay a retainer of $12,500
plus expenses incurred in the solicitation of proxies.
Voting Securities
The securities which may be voted at the Meeting consist of shares of
common stock, par value $0.01 per share, of the Company ("Common Stock"), with
each share entitling its owner to one vote on all matters to be voted on at
the Meeting except as described below. There is no cumulative voting for the
election of directors.
The close of business on March 1, 1999, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Meeting and
any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 6,100,476 shares.
As provided in the Company's certificate of incorporation, record holders
of Common Stock who beneficially own in excess of 10% of the outstanding
shares of Common Stock (the "Limit") are not entitled to any vote in respect
of the shares held in excess of the Limit. A person or entity is deemed to
beneficially own shares owned by an affiliate of, as well as persons acting in
concert with, such person or entity. The Company's certificate of
incorporation authorizes the Board of Directors (i) to make all determinations
necessary to implement and apply the Limit and (ii) to demand that any person
who is reasonably believed to beneficially own stock in excess of the Limit to
supply information to the Company to enable the Board of Directors to
implement and apply the Limit.
The presence, in person or by proxy, of the holders of at least a majority
of the total number of shares of Common Stock entitled to vote (after
subtracting any shares in excess of the Limit pursuant to the Company's
certificate of incorporation) is necessary to constitute a quorum at the
Meeting. In the event there are not sufficient votes for a quorum or to
approve or ratify any proposal at the time of the Meeting, the Meeting may be
adjourned in order to permit the further solicitation of proxies.
As to the election of directors, the proxy card being provided by the Board
of Directors enables a stockholder to vote "FOR" the election of the nominees
proposed by the Board of Directors, or to "WITHHOLD AUTHORITY" to vote for one
or more of the nominees being proposed. Under Delaware law and the Company's
certificate of incorporation and bylaws, directors are elected by a plurality
of shares voted, without regard to either (i) broker non-votes or (ii) proxies
as to which authority to vote for one or more of the nominees being proposed
is withheld.
As to the ratification of Deloitte & Touche LLP as independent auditors of
the Company, the stockholder proposal described in this proxy statement and
all other matters that may properly come before the Meeting, by checking the
appropriate box, a stockholder may: (i) vote "FOR" the item; (ii) vote
"AGAINST" the item; or (iii) "ABSTAIN" from voting on such item. Under the
Company's certificate of incorporation and bylaws, unless otherwise required
by law, the ratification of Deloitte & Touche LLP as independent auditors and
the adoption of the stockholder proposal shall be determined by a majority of
the votes cast, without regard to either (a) broker non-votes or (b) proxies
marked "ABSTAIN" as to that matter.
Proxies solicited hereby will be returned to the transfer agent, and will
be tabulated by inspectors of election designated by the Board of Directors,
who will not be employed by, or be a director of, the
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Company or any of its affiliates. After the final adjournment of the Meeting,
the proxies will be returned to the Company for safekeeping.
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information as to those persons
believed by management to be beneficial owners of more than 5% of the
outstanding shares of Common Stock on the Record Date, as disclosed in certain
reports regarding such ownership filed with the Company and with the
Securities and Exchange Commission (the "SEC"), in accordance with Sections
13(d) and 13(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), by such persons and groups. Other than those persons listed
below, the Company is not aware of any person or group, as such term is
defined in the Exchange Act, that owns more than 5% of the Common Stock as of
the Record Date.
<TABLE>
<CAPTION>
Number Percent
Title of Class Name and Address of Beneficial Owner of Shares of Class
-------------- -------------------------------------- --------- --------
<C> <S> <C> <C>
Common Stock Bell Federal Savings and Loan 673,002(1) 11.03%
Association of Bellevue Employee Stock
Ownership Plan ("ESOP")
532 Lincoln Avenue
Bellevue, Pennsylvania 15202
</TABLE>
- --------------------
(1) The ESOP Trustee, subject to its fiduciary duty, must vote all allocated
shares held in the ESOP in accordance with the instructions of the
participating employees. As of the Record Date, 111,440 shares have been
allocated to participants' accounts. Under the ESOP, unallocated shares
held in the suspense account will be voted by the ESOP Trustee in a
manner calculated to most accurately reflect the instructions it has
received from participants regarding the allocated stock so long as such
vote is in accordance with the provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's officers (as
defined in regulations promulgated by the SEC thereunder) and directors, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in ownership with
the SEC. Officers, directors and greater than ten percent shareholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on a review of copies of such reports of ownership furnished
to the Company, or written representations that no forms were necessary, the
Company believes that during the past fiscal year all filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with.
PROPOSALS TO BE VOTED ON AT THE MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
Pursuant to its bylaws, the number of directors of the Company is set at
nine (9) members unless otherwise designated by the Board of Directors. The
Company's certificate of incorporation requires that the directors be divided
into three classes as nearly equal in number as possible.
The three (3) nominees proposed for election at the Meeting are Theodore R.
Dixon, David F. Figgins and Peter E. Reinert. All nominees named are presently
directors of the Company and the
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Association. No person being nominated as a director is being proposed for
election pursuant to any agreement or understanding between any person and the
Company.
In the event that any such nominee is unable to serve or declines to serve
for any reason, it is intended that proxies will be voted for the election of
the balance of those nominees named and for such other persons as may be
designated by the present Board of Directors. The Board of Directors has no
reason to believe that any of the persons named will be unable or unwilling to
serve. Unless authority to vote for the nominee is withheld, it is intended
that the shares represented by the enclosed proxy, if executed and returned,
will be voted "FOR" the election of all nominees proposed by the Board of
Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL NOMINEES
NAMED IN THIS PROXY STATEMENT.
Information with Respect to Nominees, Continuing Directors and Certain
Executive Officers
The following table sets forth, as of the Record Date, the names of the
nominees, continuing directors and the Named Executive Officers, as defined
below, as well as their ages, a brief description of their recent business
experience, including present occupations and employment, certain
directorships held by each, the year in which each became a director of the
Association and the year in which their terms (or, in the case of nominees,
their proposed terms) as director of the Company expire. This table also sets
forth the amount of Common Stock and the percent thereof beneficially owned by
each director and the Named Executive Officers and all directors and executive
officers as a group as of the Record Date.
<TABLE>
<CAPTION>
Shares of
Common
Name and Principal Expiration Stock
Occupation at Present and Director of Term as Beneficially Percent
for Past Five Years Age(1) Since(2) Director Owned(3) of Class
- ---------------------------- ------ -------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
NOMINEES
Theodore R. Dixon 64 1995 2002 18,388(5) .29%
Sole proprietor of the Dixon
Agency, a real estate
appraisal firm
David F. Figgins 69 1971 2002 23,277(5) .37%
Vice President of the
Company; retired President
of Trafalgar House
Construction, Ltd.;
Director of Liberty Mutual
Insurance Co. and three of
its affiliates
Peter E. Reinert(4) 40 1995 2002 14,193(5) .22%
Of Counsel with the law firm
of Akerman, Senterfitt &
Eidson, P.A., Orlando,
Florida; previously, Senior
Counsel for General
Electric Appliances
</TABLE>
(Continued on following page)
4
<PAGE>
<TABLE>
<CAPTION>
Shares of
Common
Name and Principal Expiration Stock
Occupation at Present and Director of Term as Beneficially Percent
for Past Five Years Age(1) Since(2) Director Owned(3) of Class
- ---------------------------- ------ -------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
CONTINUING DIRECTORS
Albert H. Eckert, II(4) 66 1956 2000 206,825(6) 3.27%
President and Chief
Executive Officer of the
Company; President and
Chief Executive Officer of
the Association since 1970
William S. McMinn 42 1989 2000 15,906(5) .25%
Treasurer of the Company and
the Association; Senior
Vice President, Aon Risk
Services, Inc. of
Pennsylvania, an
international employee
benefit consulting firm
Jack W. Schweiger 59 1995 2000 30,461(5) .48%
Independent builder and
developer specializing in
custom homes; formerly Vice
President and Regional
Production Manager of Ryan
Homes, Inc.
Robert C. Baierl 49 1987 2001 18,140(5) .29%
Secretary of the Company;
President and owner of
Wright Contract Interiors,
a full service contract
interior firm
Jeffrey M. Hinds 41 1994 2001 114,899(7) 1.82%
Executive Vice President and
Chief Financial Officer of
the Company; Executive Vice
President and Chief
Financial Officer of the
Association since 1993;
Controller from 1986-1993
Thomas J. Jackson, Jr. 64 1974 2001 15,296(5) .24%
Retired Attorney; Chairman
of the Board of Directors
of Suburban General
Hospital; member of the
Board of Directors of
Western Pennsylvania Health
Care System
</TABLE>
(Continued on following page)
5
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<TABLE>
<CAPTION>
Shares of
Common
Name and Principal Expiration Stock
Occupation at Present and Director of Term as Beneficially Percent
for Past Five Years Age(1) Since(2) Director Owned(3) of Class
- ---------------------------- ------ -------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
Stock Ownership of all -- -- -- 457,385(8) 7.23%
directors and executive
officers as a group (9
persons)
</TABLE>
- --------------------
(1) At December 31, 1998.
(2) Includes years of service as a director of the Company's wholly owned
subsidiary, the Association, if applicable.
(3) Each person or relative of such person whose shares are included herein
exercises sole (or shared with spouse, relative or affiliate) voting or
dispositive power as to the shares reported.
(4) Mr. Reinert is the nephew of Mr. Eckert.
(5) Includes 1,890 shares awarded to each outside director under the Bell
Federal Savings and Loan Association 1996 Master Stock Compensation Plan
("Stock Compensation Plan") as to which voting may be directed by such
director, and 9,646 shares which may be acquired through the exercise of
stock options which are exercisable, currently or within 60 days, under
the First Bell Bancorp, Inc. 1996 Master Stock Option Plan ("Stock Option
Plan").
(6) Includes 51,576 shares awarded to Mr. Eckert under the Stock Compensation
Plan as to which voting may be directed by Mr. Eckert and 96,463 shares
which may be acquired through the exercise of stock options, which are
exercisable, currently or within 60 days, granted to Mr. Eckert under the
Stock Option Plan.
(7) Includes 20,640 shares awarded to Mr. Hinds under the Stock Compensation
Plan as to which voting may be directed by Mr. Hinds and 64,306 shares
which may be acquired through the exercise of stock options, which are
exercisable, currently or within 60 days, granted to Mr. Hinds under the
Stock Option Plan.
(8) Includes 85,446 shares held in trust for the directors and executive
officers under the Stock Compensation Plan as to which voting may be
directed by them and 228,289 shares which may be acquired through the
exercise of stock options, which are exercisable, currently or within 60
days, granted to directors and executive officers under the Stock
Option Plan.
Meetings of the Board of Directors and Committees of the Board
The Board of Directors conducts its business through meetings of the Boards
of the Company and the Association and through activities of its committees.
The Board of Directors of the Company meets quarterly and the Board of
Directors of the Association meets monthly. Regular meetings may be
supplemented with special meetings as needed. During 1998, the Board of
Directors of the Company held four (4) regular meetings and two (2) special
meetings. All directors of the Company attended at least 75% in the aggregate
of the total number of the Company's board meetings held and committee
meetings on which such directors served during fiscal 1998.
The Board of Directors of the Company maintains committees, the nature and
composition of which are described below:
Executive Committee. The Executive Committee of the Company consists of
Messrs. Eckert, Hinds, Figgins, Jackson and Baierl. The Executive Committee
has the authority to exercise all the powers of the Board of Directors between
Board meetings. The Executive Committee met one time in 1998.
Audit Committee. The Audit Committee of the Company consists of Messrs.
Baierl, McMinn, Schweiger and Dixon. The Audit Committee is responsible for
reviewing and reporting to the Board of Directors on the Company's and its
subsidiaries' financial condition, reviewing reports from internal and
independent auditors and analyzing loan review reports. The committee meets as
needed, and at least on an annual basis. The Audit Committee met one time in
fiscal 1998.
Nominating Committee. The Company's Nominating Committee consists of
Messrs. Eckert, Baierl, McMinn and Hinds. The Nominating Committee considers
and recommends the nominees for director to stand for election at the
Company's Annual Meeting of Stockholders. The Company's bylaws
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also provide for stockholder nominations of directors. These provisions
require such nominations to be made pursuant to timely written notice to the
Secretary of the Company. The stockholders' notice of nominations must contain
all information relating to the nominee which is required to be disclosed by
the Company's bylaws and by the Exchange Act. See "Additional Information--
Notice of Business to Be Conducted at an Annual Meeting." The Nominating
Committee met one time in fiscal 1998.
Compensation/Benefits Committee. The Company's Compensation/Benefits
Committee consists of Messrs. McMinn, Baierl and Figgins. This committee meets
to establish compensation for the Chief Executive Officer, approves the
compensation of senior officers and various compensation and benefits to be
paid to employees and to review the incentive compensation programs when
necessary. See "Executive Compensation--Compensation Committee Report on
Executive Compensation." The Compensation/Benefits Committee met four times in
1998.
Directors' Compensation
Directors' Fees. The directors of the Company received an annual retainer
of $10,000 and each outside director received $50 for each committee meeting
attended. The directors of the Association received an annual retainer of
$5,000 and each outside director received $50 for each committee meeting
attended. Effective January 1, 1999, only outside directors will receive the
annual retainers from the Company and the Association. Directors are not
reimbursed for expenses incurred with respect to their attendance at Board or
committee meetings.
Directors' Deferred Fee Plan. The Association maintains the Bell Federal
Savings and Loan Association of Bellevue Deferred Compensation Plan for
Directors (the "Directors' Deferred Fee Plan"). The Directors' Deferred Fee
Plan is an unfunded plan that permits members of the Board of Directors to
defer all or a percentage of fees earned until termination of service as a
director. Pursuant to this plan, the Association maintains passbook savings
accounts which represent the aggregate of all sums deferred by each of the
participants in the Directors' Deferred Fee Plan, which is credited quarterly
with a payment equal to the participant's directors' fees earned and interest
equal to that paid by the Association on a standard passbook savings account.
Once a participant has terminated service with the Board of Directors or
attained age 65, such participant is paid his deferred fees and interest to
date in annual installments based on an election by the participant.
Stock Option Plan. Under the Stock Option Plan maintained by the Company,
discretionary grants may be made to directors. There were no grants made to
directors in fiscal 1998.
Stock Compensation Plan. Under the Stock Compensation Plan maintained by
the Association, discretionary equity grants may be made to directors. There
were no grants made to directors in fiscal 1998.
Executive Compensation
The report of the compensation committee and the stock performance graph
shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange
Act, and except as to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
Compensation Committee Report on Executive Compensation. Under rules
established by the SEC, the Company is required to provide certain data and
information in regard to the compensation and benefits provided to the
Company's Chief Executive Officer and other executive officers of the Company.
The disclosure requirements for the Chief Executive Officer and such executive
officers include the use of tables and a report explaining the rationale and
consideration that led to fundamental
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<PAGE>
compensation decisions affecting those individuals. In fulfillment of this
requirement, the Compensation/Benefits Committee, at the direction of the
Board of Directors, has prepared the following report for inclusion in this
proxy statement.
General. The Company is the parent of the Association and does not pay any
cash compensation to its executive officers. The Board of Directors of the
Company has established the Compensation/Benefits Committee (the "Committee")
consisting of Messrs. McMinn, Baierl and Figgins, who are Treasurer, Secretary
and Vice President of the Company, respectively, for which positions such
Directors receive no additional compensation.
A separate committee, the Salary Review Committee of the Association, was
responsible for establishing the 1998 compensation and benefits for the
executive officers of the Association and for reviewing recommendations of
management for the compensation and benefits of other officers and employees
of the Association. The Salary Review Committee consists of Messrs. McMinn,
Baierl, Figgins and Eckert, who is a non-voting member. Messrs. Baierl and
Figgins are not officers of the Association. Mr. McMinn is the Treasurer of
the Association but receives no additional compensation. The actions of the
Salary Review Committee are ratified by the Association's Board of Directors.
Mr. Eckert did not participate in establishing his compensation and benefits.
Compensation Policies. The Committee has established the following goals
for compensation programs impacting the executive officers of the Company and
the Association:
. to provide compensation opportunities which are consistent with
competitive norms of the industry and the Company's level of
performance, thus allowing the Company to retain high quality
executive officers who are critical to the Company's long-term
success;
. to motivate key executive officers to achieve strategic business
initiatives and reward them for their achievement; and
. to provide motivation for the executive officers to enhance
stockholder value by linking their compensation to the value of the
Company's Common Stock.
The Salary Review Committee established the factors and criteria upon which
the executive officers' compensation was based and how such compensation
relates to the Association's performance, general compensation policies,
competitive factors and regulatory requirements. The Committee's compensation
policies are designed to reward and provide incentive for executives based
upon achievement of individual and Association goals. Although the Committee's
policy is to maximize the tax deductibility of compensation payments to the
executive officers under section 162(m) of the Internal Revenue Code and the
regulation thereunder, the Committee may authorize payments to executive
officers that may not be fully deductible if it believes it is in the best
interests of shareholders to do so.
For purposes of determining the competitive market for the Association's
executives, the Committee reviewed the compensation paid to top executives of
financial institutions with total assets in a range of the Association's total
asset size and performance results comparable to those of the Association.
This information was derived from peer group data as summarized in the "1997
Watson Wyatt Financial Institutions Benchmark Compensation Report," and the
"1997 New York Bankers Association Northeast Banking Industry Compensation
Survey." The peer group used in benchmarking compensation is composed of many
of the same institutions used in the peer group for the stock performance
graph.
The compensation package available to executive officers is composed of:
(i) base salary and (ii) long-term incentive compensation.
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<PAGE>
Base Salary. In determining salary levels for the named executive officers,
the Committee considers the entire compensation package, including the
potential equity compensation provided under the Company's stock plans. The
Committee meets as needed to review the appropriateness of the executive's
base salary annually. The level of any salary increase is based on the
executive's job performance over the year in conjunction with the Company's
goals of growth and profitability. Salary levels are intended to be
competitive with comparable financial institutions in the Company's peer
group.
Salaries are aimed at reflecting the overall performance of the Company and
the performance of the individual executive officer.
Long-Term Incentive Compensation. The Company has adopted the 1996 Master
Stock Option Plan and the 1996 Master Stock Compensation Plan, under which
executive officers may receive equity grants and awards. Awards to officers of
the Company or the Association under the Stock Compensation Plan are subject
to the Company achieving certain performance goals. The performance goals are
subject to change annually and are currently based on earnings per share,
asset quality and regulatory classification. The Committee believes that stock
ownership is a significant incentive in building stockholder value and
aligning the interests of employees with those of stockholders. Stock options
and stock awards under such plans are allocated by the Committee based upon
the Company's fiscal responsibility, regulatory practices and policies, the
practices of other recently converted financial institutions, as verified by
external surveys and based upon the executive officers' level of
responsibility, and contributions to the Company and the Association. The
Committee will consider the amount of outstanding awards in determining the
total annual compensation package. No awards were made in fiscal year 1998
under the 1996 Master Stock Option Plan or the 1996 Master Stock Compensation
Plan.
Compensation of the Chief Executive Officer. The Company and the
Association have each entered into employment contracts with Mr. Eckert. The
details of the employment contracts were determined based on a review of
industry practice and discussions with consultants specializing in employment
and compensation matters. Mr. Eckert's base salary is payable pursuant to his
employment contracts. See also, "Employment Agreements" for a detailed
description of the employment contracts. The Salary Review Committee, after
taking into consideration the factors discussed above, increased Mr. Eckert's
annual base salary by 3% to $185,129 for 1998, which is comparable to other
institutions in the Association's peer group. In addition, Mr. Eckert also
received board fees totaling $15,000.
Compensation/Benefits Committee Salary Review Committee
William S. McMinn (Chairman) William S. McMinn
Robert C. Baierl Robert C. Baierl
David F. Figgins David F. Figgins
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee consists of Messrs. McMinn, Baierl and Figgins. Mr.
McMinn is Treasurer of the Company and the Association. Mr. Baierl is
Secretary of the Company and Mr. Figgins is a Vice President of the Company.
Messrs. McMinn, Baierl and Figgins were also members of the Board of Directors
and the Salary Review Committee of the Association. During fiscal year 1998,
certain members of the Compensation Committee engaged in certain transactions
with the Company which are described in "Indebtedness of Management and
Transactions with Certain Related Persons" below.
Stock Performance Graph. The following graph shows a bi-annual comparison
of stockholder return on the Company's Common Stock based on the market price
of Common Stock assuming the reinvestment of dividends, with the cumulative
total returns for the companies on the Nasdaq Total Return Index, SNL Thrift
Index and SNL $500M--$1B Thrift Index for the period beginning on June 29,
1995, the day the Company's Common Stock began trading, through December 31,
1998. The graph was derived from a limited period of time, and as a result,
may not be indicative of possible future performance of the Company's Common
Stock. The data was supplied by SNL Securities, L.P.
9
<PAGE>
Comparison of Cumulative Total Return
Among the Company, Nasdaq Total Return
Index, SNL Thrift Index and SNL $500M to $1B Thrift Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Index 6/29/95 12/31/95 12/31/96 12/31/97 12/31/98
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
First Bell Bancorp, Inc. 100.00 110.31 136.24 200.01 166.92
NASDAQ - Total US 100.00 114.26 140.50 172.37 242.31
SNL Thrift Index 100.00 122.44 159.54 271.47 238.76
SNL $500M-$1B Thrift Index 100.00 118.06 146.40 247.29 226.87
</TABLE>
10
<PAGE>
Summary Compensation Table. The following table shows, for the fiscal years
ended December 31, 1998, 1997 and 1996, the cash compensation paid by the
Association, as well as certain other compensation paid or accrued for those
years, to the Chief Executive Officer and those executive officers of the
Company who received an amount in salary and bonus in excess of $100,000 (the
"Named Executive Officers").
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------- ------------------------
Awards
------------------------
Other Securities
Annual Restricted Underlying All
Compen- Stock Options/ Other
Salary Bonus sation Awards SARs Compen-
Name and Principal Position Year ($)(1) ($) ($)(2) ($)(3) (#)(4) sation ($)
- --------------------------- ---- -------- ----- ------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Albert H. Eckert 1998 $197,619 $-- $-- $ -- $ -- $69,893(5)
President and 1997 190,041 -- -- -- -- 88,982
Chief Executive Officer 1996 183,313 -- -- 1,149,715 160,772 59,283
Jeffrey M. Hinds 1998 $106,162 $-- $-- $ -- $ -- $69,042(5)
Executive Vice President 1997 102,717 -- -- -- -- 87,791
and Chief Financial
Officer 1996 95,444 -- -- 460,100 107,177 49,158
</TABLE>
- --------------------
(1) Includes compensation deferred at the election of Messrs. Eckert and
Hinds through the Association's 401(k) Plan. Also includes directors'
fees of $15,000 and $15,000 received in 1998 and 1997, and $13,750 and
$13,750 received in 1996 for Messrs. Eckert and Hinds, respectively.
(2) There were no (a) perquisites over the lesser of $50,000 or 10% of the
individual's total salary and bonus, respectively, (b) payments of above-
market preferential earnings on deferred compensation, (c) payments of
earnings with respect to long-term incentive plans prior to settlement or
maturation, (d) tax payment reimbursements or (e) preferential discounts
on stock.
(3) Restricted stock awards are valued at the market value as of the date of
grant. Dividends are paid on restricted shares at the same rate paid to
all stockholders. While no grants were made in 1998 or 1997, the above
executives held the following shares of restricted stock valued at
December 31, 1998 at a market value of First Bell Bancorp, Inc. common
stock of $15.50 per share.
<TABLE>
<CAPTION>
Number of Shares Market Value on 12/31/98
---------------- ------------------------
<S> <C> <C>
Albert H. Eckert 85,960 $1,332,380
Jeffrey M. Hinds 34,400 533,200
</TABLE>
The restricted stock vests in five equal annual amounts commencing on
April 29, 1997. When shares become vested and are distributed, the
recipient will also receive an amount equal to accumulated dividends and
earnings thereon (if any). All awards vest immediately upon termination
due to death, disability or a change of control. The plan share awards to
Messrs. Eckert and Hinds are subject to the achievement of certain
performance goals established by the Committee, in addition to the
vesting requirement. See "Compensation Committee Report on Executive
Compensation."
(4) See "Fiscal Year-End Options/SAR Values" table for a discussion of
options granted under the Stock Option Plan.
(5) Includes (a) $2,499 and $1,648 contributed by the Association under the
Association's 401(k) Plan to the account of Messrs. Eckert and Hinds,
respectively, during 1998 and (b) $67,394 and $67,394 representing the
value of shares allocated under the ESOP for the benefit of Messrs.
Eckert and Hinds, respectively, during 1998 based on the closing price of
the shares on the Nasdaq market at December 31, 1998.
Employment Agreements. Effective November 16, 1998, the Company and the
Association entered into separate amended and restated employment agreements
with Messrs. Eckert and Hinds (the "Executives"). These employment agreements
are intended to ensure that the Company and the Association will be able to
maintain a stable and competent management base. The continued success of the
Company and the Association depends to a significant degree on the skills and
competence of the Executives.
The Company's and the Association's respective employment agreements
(collectively, the "Employment Agreements") each provide for three-year terms
for Mr. Eckert and for Mr. Hinds. The Employment Agreements provide that,
commencing on the first anniversary date and continuing on each anniversary
date thereafter, the Board of Directors may extend the agreements for an
additional year so that the remaining terms shall be the amount of the
original terms, unless written notice of non-renewal is given by the Board of
Directors after conducting a performance evaluation of the Executive. The
11
<PAGE>
Employment Agreements provide that the Executive's base salary will be
reviewed annually. In this regard, the current base salaries of Messrs. Eckert
and Hinds are $200,129 and $107,090, respectively. In addition to base salary,
the Employment Agreements provide for, among other things, participation in
stock benefit plans and other fringe benefits applicable to executive
personnel. The Employment Agreements provide that the Executive may have his
employment terminated by the Company or the Association for "Cause" as defined
in the Employment Agreements at any time. In the event the Company or the
Association chooses to terminate the Executive's employment for reasons other
than for cause or for disability, or in the event of the Executive's
resignation from the Company and the Association upon (i) failure to re-elect
the Executive to his current offices, (ii) a material change in the
Executive's functions, duties or responsibilities, (iii) a relocation of the
Executive's principal place of employment by more than 30 miles, (iv) a
material reduction in the benefits and perquisites to the Executive, (v)
liquidation or dissolution of the Company or the Association or (vi) a breach
of the Employment Agreement by the Company or the Association (each an "Event
of Termination"), the Executive or, in the event of death, his beneficiary
would be entitled to an amount equal to the remaining salary payments and
fringe benefits due under the Employment Agreement and the contributions that
would have been made on the Executive's behalf to any employee benefit plans
of the Company or the Association during the remaining term of the Employment
Agreement. The Company and the Association would also continue the Executive's
life, health and disability coverage for the remaining term of the Employment
Agreement.
Under the Employment Agreements, if the Executive's employment is
terminated, whether voluntary or involuntary, following a "change in control"
of the Company or the Association, as defined in the Employment Agreements,
the Executive or, in the event of death, his beneficiary would be entitled to
a severance payment equal to the greater of (i) the payments due for the
remaining terms of the Employment Agreements or (ii) three times his average
annual compensation over the five (5) years preceding his termination of
employment, as determined by the respective terms of the Employment
Agreements. Annual compensation includes base salary, commissions, bonuses,
contributions on behalf of the Executive to any pension and profit sharing
plan, severance payments, directors or committee fees and fringe benefits paid
or to be paid to the Executive. In addition, the Company and the Association
would continue the Executive's life, health and disability coverage for a
thirty-six (36) month period following the change in control.
Payments to the Executive under the Association's Employment Agreement are
guaranteed by the Company in the event that payments or benefits are not paid
by the Association. All reasonable costs and legal fees paid or incurred by
the Executive pursuant to any dispute or question of interpretation relating
to the Employment Agreements would be paid by the Association or the Company,
respectively, if such Executive is successful on the merits pursuant to a
legal judgment, arbitration or settlement. It is expected that the Company and
the Association would indemnify the Executive to the fullest extent allowable
under federal and Delaware law, respectively.
Payments and benefits under the Company Employment Agreement together with
payments under other benefit plans may constitute an excess parachute payment
under Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), resulting in the imposition of an excise tax on the Executive and
denial of the deduction for such excess amounts to the Company and the
Association. If it is determined that an excise tax is imposed by Section 4999
of the Code, the Company Employment Agreement provides that the Executive will
be reimbursed for the excise tax along with any interest or penalties charged
as a result of the excise tax.
The Company and the Association will require any successor or assignee to
all or substantially all of the assets or business of the Company or the
Association, respectively, to assume and agree to perform the Employment
Agreements.
12
<PAGE>
If the Executive's employment is terminated under the Employment Agreements
pursuant to an Event of Termination (as defined in the Employment Agreements),
the Executive may not work, advise or consult with any business that competes
directly or indirectly with the Company or the Association for one year
following his termination of employment. In addition, the Executive may not
engage any person employed by the Company or the Association in an employment
or other contractual relationship for one year following the termination of
the Employment Agreement without the approval of the Chief Executive Officer
of the Company. Notwithstanding the foregoing, the foregoing restrictions will
no longer apply to the Executive upon the occurrence of a change of control.
Rabbi Trusts. On November 16, 1998, the Board of Directors approved the
establishment of Rabbi Trusts to provide for the payment of benefits to Mr.
Eckert under the Directors Deferred Fee Plan, and the Supplemental Executive
Retirement Plan and the severance benefits payable pursuant to the Employment
Agreements in the event of a change in control. All severance payments due to
Mr. Hinds pursuant to the Employment Agreements in the event of a change in
control will also be payable pursuant to a Rabbi Trust. The Company
anticipates adopting the Rabbi Trusts during the first quarter of 1999.
The following table provides certain information with respect to the number
of shares of Common Stock represented by outstanding options held by the Named
Executive Officers as of December 31, 1998. Also reported are the values for
"in-the-money" options which represent the positive spread between the
exercise price of any such existing stock options and the closing price of the
Common Stock on the NASDAQ as of December 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
Fiscal Year End (#)(1)(2) Fiscal Year End ($)(1)(2)(3)
------------------------- -----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ------------ --------------
<S> <C> <C> <C> <C>
Albert H. Eckert 64,308 96,464 $308,477 $409,466
Jeffrey M. Hinds 42,870 64,307 $205,642 $ 308,473
</TABLE>
- --------------------
(1) No options were exercised by Messrs. Eckert or Hinds in fiscal 1998.
(2) The closing market price on December 31, 1998 was $15.50.
(3) Based on the market value of the underlying Common Stock at the 1998
fiscal year end, minus the exercise price.
Retirement Plan. The Association maintains the Bell Federal Savings and
Loan Association of Bellevue Employee's Pension Plan (the "Retirement Plan"),
which is a noncontributory defined benefit pension plan, for the benefit of
substantially all of the employees of the Association. The Retirement Plan is
administered by CIGNA Retirement and Investment Services. The Retirement Plan
has been amended to state that no further benefits shall accrue after March
31, 1998 and that no employees shall be eligible to enter the Retirement Plan
after March 31, 1998. In addition, on January 1, 1999, the Retirement Plan was
terminated pending Internal Revenue Service approval.
13
<PAGE>
The following table illustrates annual pension benefits at age 65 under the
Retirement Plan and the Supplemental Executive Retirement Plan (described
below) at various levels of compensation and years of service, assuming 100%
vested benefits.
<TABLE>
<CAPTION>
Years of Benefit Service at Retirement (1)(2)
-----------------------------------------------------------------
Average Salary 15 20 25 30 35
-------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 25,000 $ 6,000 $ 8,000 $10,000 $12,000 $14,000
50,000 12,000 16,000 20,000 24,000 28,000
75,000 18,000 24,000 30,000 36,000 42,000
100,000 24,000 32,000 40,000 48,000 56,000
125,000 30,000 40,000 50,000 60,000 70,000
150,000 36,000 48,000 60,000 72,000 84,000
175,000(3) 38,400 51,200 64,000 76,800 89,600
200,000(3) 38,400 51,200 64,000 76,800 89,600
225,000(3) 38,400 51,200 64,000 76,800 89,600
250,000(3) 38,400 51,200 64,000 76,800 89,600
</TABLE>
- --------------------
(1) The compensation utilized for formula purposes includes the salary
reported in the "Summary Compensation Table."
(2) The benefit amounts shown in the preceding table are not subject to any
deductions for social security benefits or other offset amounts.
(3) The maximum annual compensation permitted under 401(a) 17 of the Code for
1998 is $160,000. The maximum annual benefit permitted under Section 415
of the Code is $125,000.
The approximate years of credited service as of December 31, 1998, for Mr.
Eckert and Mr. Hinds, the individuals named in the Summary Compensation Table,
is thirty-nine (39) years and thirteen (13) years, respectively.
Supplemental Executive Retirement Plan. The Association maintains a non-
qualified Supplemental Executive Retirement Plan ("SERP") for certain
employees and their beneficiaries whose benefits under the Retirement Plan
were reduced by reason of certain amendments to the benefit formula under the
Retirement Plan. Benefits under the SERP, which can range from $0-$60,000
annually, are determined by calculating the projected benefit under the
formula set forth in the Retirement Plan as of January 1, 1983 and then
subtracting the projected benefit under the benefit formula in effect in
fiscal 1992. The amount actually accrued for the year is tied to the
Association's return on assets. One hundred percent of the accrued benefit
will be paid if the Association realizes a return on assets greater than 1.0%.
A pro rata percent of the accrued benefit will be paid for a return on assets
of between 75 to 100 basis points. No benefit is payable under the SERP for a
return on assets of less than 75 basis points.
Effective December 1, 1998, the SERP was amended to provide that a
participant could elect an in-service distribution of his SERP benefit in
annual payments over a 10 year period. Benefits will continue to accrue as
long as a participant remains employed by the Association whether or not
payments have commenced. Upon a change of control, payments of accrued
benefits will be made to the participant in a lump sum payment. As of December
31, 1998, a total of $420,982 was accrued for future payment under the SERP.
Currently, Mr. Eckert is the only participant in the SERP.
Indebtedness of Management and Transactions with Certain Related
Persons. The Association extends credit to certain directors, officers and
employees of the Company, as well as to members of their immediate families,
in connection with mortgage loans, revolving lines of credit and other
extensions of credit. The Association's policy provides that all loans made by
the Association to its directors and officers are made in the ordinary course
of business, are made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons and do not involve more than the normal risk
of collectibility or present other unfavorable features.
14
<PAGE>
During 1998, the Association utilized the services of or purchased goods
from companies with whom directors of the Company are associated. The
Association paid: $156,890 for appraisal services to the Dixon Agency of which
Mr. Dixon is the sole proprietor; $145,058 for Pension Plan actuarial services
and insurance renewals to Aon Risk Services, Inc. of which Mr. McMinn is a
Senior Vice President; and $97,073 for office furnishings to Wright Contract
Interiors of which Mr. Baierl is President. The Company believes that, in each
case, the fees charged are at or below market for the services provided and
the goods received. In addition, in 1999 the Association expects to pay a
retainer of less than $5,000 to the law firm of Akerman, Senterfitt & Eidson,
P.A. of which Mr. Reinert is Of Counsel.
PROPOSAL 2. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended December 31,
1998 were Deloitte & Touche LLP. The Company's Board of Directors has
reappointed Deloitte & Touche LLP to continue as independent auditors for the
Company and the Association for the fiscal year ending December 31, 1999
subject to ratification of such appointment by the stockholders.
Representatives of Deloitte & Touche LLP will be present at the Meeting.
They will be given an opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions from stockholders
present at the Meeting.
Unless marked to the contrary, the shares represented by the enclosed proxy
will be voted "FOR" ratification of the appointment of Deloitte & Touche LLP
as the independent auditors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT AUDITORS OF THE
COMPANY.
PROPOSAL 3. STOCKHOLDER PROPOSAL
A stockholder has given the Company notice of its intention to introduce
the following proposal for consideration and action by stockholders at the
Meeting. The proposed resolution and accompanying statement have been provided
by the stockholder and the Board of Directors disclaims any responsibility for
the contents thereof. The affirmative vote of at least a majority of the
Company's outstanding Common Stock represented in person or by proxy at the
Meeting is required for approval of the proposal.
The following stockholder proposal and supporting statement are submitted
by Jewelcor Management, Inc. ("JMI"). JMI is the record holder of 200 shares
and purportedly the beneficial owner of 15,000 shares and is located at 100
North Wilkes-Barre Boulevard, Wilkes-Barre, Pennsylvania 18702.
RESOLVED, it is recommended that the Board of Directors
of First Bell Bancorp, Inc. ("Company") take the
necessary steps to achieve a sale or merger of the
Company on terms that will maximize shareholder value.
15
<PAGE>
SUPPORTING STATEMENT
Based on the analyses below, JMI believes that the Company could
potentially achieve an acquisition price of $24.86 to $34.85 per share if the
Board of Directors took the necessary steps to achieve a sale or merger. In
JMI's opinion, the following acquisition valuations provide a reasonable basis
for estimating a potential acquisition price of the Company well in excess of
the current stock price./1/
The following table does not account for the different financial
characteristics of each of the Mid-Atlantic Thrifts, the different forms of
consideration offered in each of the $100-$500M Acquisitions or the recent
volatility in the equity markets that can affect takeover values. Therefore,
the values derived in the table do not necessarily represent realizable values
for the Company.
Analysis
JMI compared the Company's book value and earnings per share ("EPS") with
acquisition ratios of two relevant peer groups: (1) Mid Atlantic Thrifts
acquired in 1998 as of 11/5/98 ("Mid-Atlantic Thrifts") and (2) Thrifts
acquired in 1998 with acquisition values between $100 and $500 million as of
11/5/98 ("$100-500M Acquisitions")./2/ In particular, JMI derived the Average
Announced Acquisition Price/Book Ratio ("Price/Book") and the Median Announced
Acquisition Prices/Last Twelve Months EPS Ratio ("Price/EPS") for both peer
groups./3/ JMI then multiplied the applicable peer group ratios times the
Company's respective (a) book value as of 9/30/98 and (b) last twelve months
(ended 9/30/98) diluted EPS after extraordinary items ("Company's EPS").
Book Value Approach
<TABLE>
<S> <C>
Company Stock Price (11/18/98) $15.00
Company Book Value (9/30/98) $11.90
Company Price/Book 126.05%
"Mid-Atlantic Thrifts" Price/Book 208.90%
COMPANY'S POTENTIAL ACQUISITION PRICE $24.86
"100-500M Acquisitions" Price/Book 223.70%
COMPANY'S POTENTIAL ACQUISITION PRICE $26.62
</TABLE>
- --------------------
(1) JMI's analyses are not the only ways to predict the Company's potential
acquisition price. Moreover, they do not reflect the unrecognized
expenses and cost savings associated with a potential transaction, since
expenses and cost savings depend, in part, on the overlap in markets and
subsidiaries present in a particular transaction.
(2) "Mid-Atlantic Thrifts": 1st Bergen Bancorp, Raritan Bancorp, First
Savings Bancorp, Peoples Bancorp, Monarch Bank FSB, SFS Bancorp,
Financial Bancorp, Bayonnne Bancshares, Pulse Bancorp, ALBANK Financial,
Columbian Bank, AFSB, Wayne Bancorp, TR Financial Corp., AFSALA Bancorp,
Long Island Bancorp, IBS Financial, Peoples Savings Financial, Fajardo
FSB, Tappan Zee Financial, Maryland Federal Bancorp, First Shenango
Bancorp, Direct Financial Corp.
"$100-500M Acquisition": First Coastal Bancshares, Enterprise Federal
Bancorp, Calumet Bancorp, Peoples Bancorp, SIS Bancorp, Bayonne
Bancshares, Pulse Bancorp, NSS Bancorp, Home Bancorp of Elgin, First Palm
Beach Bancorp, HFNC Financial, Trumbull Financial, USB Holdings, Security
First Corp., IBS Financial Corp., Dime Financial Corp., Life Financial
Corp., Maryland Federal Bancorp, AmerUs Bank, First Shenango Bancorp,
Sandwich Bancorp.
Source: SNL Securities LC, Mergers and Acquisitions Datasource and the
Financial Datasource, dated November 5, 1998.
(3) Although the Company could possibly achieve any of the individual
acquisition ratios achieved by the peer groups, JMI believes that the
most reliable method for determining potential acquisition values is to
compare the average or median ratios.
16
<PAGE>
Earnings Approach
<TABLE>
<S> <C>
Company's EPS $ 1.31
Company's Price/EPS 11.45X
"Mid-Atlantic Thrifts" Price/EPS 26.60X
COMPANY'S POTENTIAL ACQUISITION PRICE $34.85
"100-500M Acquisitions" Price/EPS 26.10X
COMPANY'S POTENTIAL ACQUISITION PRICE $34.19
</TABLE>
Vote Yes on this proposal.
Board of Directors' Statement in Opposition to the Proposal
Your Board of Directors believes that this proposal would not serve the
Company's best interests and, in fact, believes that adoption of the proposal
would be detrimental to the interests of the stockholders. Your Board of
Directors recommends a vote AGAINST the proposal.
1. The proposal offered is not, in your Board of Directors' judgment, in the
best interest of the Company and its stockholders.
Your Board of Directors takes seriously its duty to act in the best
interest of all stockholders in managing and supervising the affairs of the
corporation. Maximizing stockholder value is considered by the Board of
Directors to be the central component of that duty.
As you know, all directors of the Company are also stockholders and share a
commonality of interest with other stockholders. It is interesting to observe
that the proponent is purportedly the beneficial owner of only 15,000 shares
of Common Stock which, as of March 1, 1999, represents approximately 0.24% of
the equity interest of the Company. As a measure of comparative interest in
the Company's destiny and well-being, the Directors, in aggregate,
beneficially owned or controlled 457,385 shares as of March 1, 1999,
representing approximately 7.23% of the equity interest of the Company, with
the vast bulk of these shares having been held long term.
Your Board of Directors believes that adoption of the proposal could
prejudice the financial interests of stockholders. Although the proposal only
requests that certain action be taken by the Board of Directors and does not
obligate the Board of Directors to take action, the announcement that the
proposal has been adopted could adversely affect the Company's relationships
with its customers and employees by creating uncertainty about its future. In
that event, revenues and profits and, in turn, stockholder value could
decline.
Most importantly, your Board of Directors should retain full discretion to
consider all possible strategic alternatives for the Company's future in the
best interests of all stockholders and should not be urged to pursue only one
course of action at a particular point in time, particularly at a time when
the Company's stock price does not reflect its true value.
Finally, your Board of Directors believes it is important that strategic
planning is conducted confidentially. Should the Board of Directors in the
future determine that a merger or other strategic transaction is in the
Company's best interests, exploration of that possibility could proceed
without disturbing ongoing valuable relationships. In this way, plans can be
developed discreetly, without the fear of adverse publicity or disruptions of
the public market for the Company's stock. The Board of Directors and
management of the Company are firmly committed to increasing stockholder value
and are always willing to consider suggestions for accomplishing this goal.
The Board of Directors and management
17
<PAGE>
regularly evaluate steps that may be taken to maximize stockholder value and,
to assist them in this process, the Company retains nationally recognized
investment bankers Keefe, Bruyette & Woods, Inc. ("KBW") and other third party
advisors.
2. The Company's operating performance and program for building stockholder
value.
The Company's management and Board of Directors have followed a program of
building stockholder value while maintaining the financial soundness of the
Company. For instance, the Company has:
. Instituted regular cash dividends that included a special return of
capital to stockholders in 1996.
. Completed four 5% share repurchases that helped the Company to
manage its capital without incurring significant business risks and
offered increased liquidity to stockholders.
. Improved the Company's balance sheet by reducing interest rate risk
resulting from a rising interest rate scenario.
. Increased origination of home equity loans and lines of credit in
order to augment the overall yield of the loan portfolio.
. Maintained tight expense controls that, according to KBW, have made
the Company one of the most efficient depository financial
institutions in the nation. In the third quarter of 1998, the
Company had the best efficiency ratio of the ninety northeastern
banks and thrifts tracked by the research department of KBW. The
result of a superior efficiency ratio is that a higher percentage of
revenue falls to net income and can be available for distribution
to stockholders.
. Initiated a focused advertising program within the Company's markets
to gain new customers and grow the business franchise.
. Introduced 24-hour banking and debit card services to savings
customers.
. Developed new training and incentive programs to increase sales by
managers and tellers.
This program has shown positive results. The Company continues to be on
strong financial footing.
. Asset quality is superior with no charge-offs for the past three
years and only .08% of total assets classified as non-performing as
of December 31, 1998 as compared to an industry average of .58% of
total assets classified as non-performing.
. Profitability has improved as the Company reported a 10.75% return
on equity and 1.05% return on assets in 1998 as compared to an
average return on equity of 5.67% and an average return on assets of
.66% produced by a peer group of 17 thrifts with asset sizes between
$500 million and $1 billion that have converted from mutual form
since 1994.
. Earnings per share grew by 9.8% from 1997 to 1998.
18
<PAGE>
These results are all the more compelling when viewed in light of very
difficult operating conditions for the thrift industry that resulted from the
interest rate environment in 1998.
In view of the future prospects of the Company and the currently depressed
market for thrift stocks, your Board of Directors believes that this is not
the appropriate time to undertake a sale or merger of the Company. A sale or
merger at this time would foreclose the full opportunity currently available
to the Company for enhancement of stockholder value through its present
operations.
3. The acquisition values for the Common Stock presented in the supporting
statement may not represent realizable values.
The valuation methodologies used in the proponent's supporting statement
rely on the average multiples of a number of bank acquisition transactions to
produce implied ranges of acquisition values for the Company which, at best,
is an incomplete method of deriving a realistic estimate of a bank's
acquisition value. It is fundamentally inadequate to rely solely on valuation
methodologies such as these to estimate acquisition prices. A comparable
multiple type analysis such as that set forth by the proponent is useful only
in the context of a larger analytical exercise which involves research on
potential purchasers, their acquisition strategies and their financial ability
to pay for a target, as well as alternative measures of value such as the
value of the Company's deposit and lending franchises and various discounted
cash flow analyses.
* * *
The Board of Directors believes that it is in the best interests of the
stockholders to allow the Board of Directors to maintain the flexibility and
the discretion to consider all possible future strategies for the Company that
are in the best interests of stockholders and not be urged to pursue only one
course of action. Therefore, for all the reasons stated above, your Board of
Directors urges stockholders to reject the proposal.
The Board of Directors recommends a vote AGAINST the adoption of the
foregoing stockholder proposal. Proxies solicited by the Board of Directors
will be so voted unless stockholders otherwise specify in the proxies.
ADDITIONAL INFORMATION
Stockholder Proposals
To be considered for inclusion in the proxy statement and proxy relating to
the Annual Meeting of Stockholders to be held in 2000, a stockholder proposal
must be received by the Secretary of the Company at the address set forth on
the Notice of Annual Meeting of Stockholders attached to this Proxy Statement,
not later than November 19, 1999. Any such proposal will be subject to 17
C.F.R. (S) 240.14a-8 of the Rules and Regulations under the Exchange Act.
Notice of Business to Be Conducted at an Annual Meeting
The bylaws of the Company provide an advance notice procedure for certain
business to be brought before an annual meeting. In order for a stockholder to
properly bring business before an annual meeting, the stockholder must give
written notice to the Secretary of the Company not less than ninety (90) days
before the time originally fixed for such meeting; provided, however, that in
the event that less than one hundred (100) days' notice or prior public
disclosure of the date of the meeting is given or made
19
<PAGE>
to stockholders, notice by the stockholder to be timely must be received not
later than the close of business on the tenth day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made. The notice must include the stockholder's name and
address, as it appears on the Company's record of stockholders, a brief
description of the proposed business, the reason for conducting such business
at the annual meeting, the class and number of shares of the Company's capital
stock that are beneficially owned by such stockholder and any material
interest of such stockholder in the proposed business. In the case of
nominations to the Board of Directors, certain information regarding the
nominee must be provided. Nothing in this paragraph shall be deemed to require
the Company to include in its proxy statement and proxy relating to the annual
meeting any stockholder proposal which does not meet all of the requirements
for inclusion established by the SEC in effect at the time such proposal is
received. The Company has not yet set a date for the Annual Meeting of
Stockholders for 1999. Any proxy received by the Company may
confer discretionary authority to vote on any stockholder proposal if not
received by the Company 90 days prior to the date of the Annual Meeting of
Stockholders for 1999.
Other Matters Which May Properly Come Before the Meeting
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought
before the Meeting, it is the intention of the persons named in the
accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
Whether or not you intend to be present at the Meeting, you are urged to
return your proxy promptly. If you are present at the Meeting and wish to vote
your shares in person, your proxy may be revoked by voting at the Meeting.
A COPY OF THE FORM 10-K (WITHOUT EXHIBITS) FOR THE YEAR ENDED DECEMBER 31,
1998, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE FURNISHED
WITHOUT CHARGE TO STOCKHOLDERS OF RECORD UPON WRITTEN REQUEST TO FIRST BELL
BANCORP, INC., 300 DELAWARE AVENUE, SUITE 1704, WILMINGTON, DELAWARE 19801.
By Order of the Board of Directors
/s/ Robert C. Baierl
Robert C. Baierl
Secretary
Wilmington, Delaware
March 19, 1999
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN AND PROMPTLY RETURN
THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
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REVOCABLE PROXY
First Bell Bancorp. Inc.
The undersigned hereby appoints Jack W. Schweiger and William S. McMinn, and
each of them, as the true and lawful agents and proxies of the undersigned, with
the power to appoint their substitute, and authorizes them to represent and to
vote as designated on the reverse side, all shares of Common Stock of First Bell
Bancorp. Inc. (the "Company") which the undersigned would be entitled in any
capacity to vote at the Annual Meeting of Stockholders of the Company (the
"Meeting") to be held on April 26, 1999 at 3:00 p.m., Eastern Standard Time, at
629 Lincoln Avenue, Bellevue, Pennsylvania and at any and all adjournments or
postponements thereof, on the matters set forth on the reverse side, and in
their discretion, upon all matters incident to the conduct of the Meeting and
upon such other matters as may properly be brought before the Meeting.
You are encouraged to specify your choices by marking the appropriate boxes on
the REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations.
SIGN THIS CARD ON THE REVERSE SIDE
Please sign and mail promptly to ensure your representation at the Meeting.
<PAGE>
(cont. from reverse side)
Please indicate your vote by marking an (X) in the appropriate boxes. This
proxy, when properly executed, will be voted in the manner directed. If no
direction is made, this proxy will be voted FOR Items 1 and 2, and AGAINST ITEM
3.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
Your Board of Directors recommends a vote FOR Items 1 and 2 below.
---
1. The election as directors of all nominees
listed (except as marked to the contrary below)
FOR [ ] WITHHOLD [ ] FOR ALL [ ]
EXCEPT*
Theodore R. Dixon, David F. Figgins, Peter E. Reinert
*INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below:
_____________________________________________________________________________
2. Ratification of Auditors
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Your Board of Directors recommends a vote AGAINST Item 3 below.
-------
3. Stockholder Proposal
FOR [ ] AGAINST [ ] ABSTAIN [ ]
______________________________
Signature
______________________________
Signature
______________________________
Title(s)
DATED __________________, 1999
Please sign your name exactly as it appears hereon. If shares are held jointly,
each stockholder should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give your full title as such. If a corporation,
please sign in full corporate name by president or other authorized officer. If
a partnership, please sign in partnership name by authorized person. Receipt of
Notice of said Meeting and of the Proxy Statement and Annual Report of First
Bell Bancorp, Inc. is hereby acknowledged.
PLEASE SIGN, DATE AND RETURN YOUR PROXY TODAY IN THE POSTAGE-PAID ENVELOPE
PROVIDED.
