<PAGE>
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] 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 (S) 240.14a-11(c) or (S) 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 17, 2000
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 24, 2000, at 3:00 p.m., Eastern Daylight Savings
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 shareholder 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 24, 2000
-------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of First
Bell Bancorp, Inc. (the "Company") will be held on April 24, 2000, at 3:00
p.m., Eastern Daylight Savings 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, 2000; and
3. Such other matters, including the shareholder 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, 2000, 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 17, 2000
<PAGE>
FIRST BELL BANCORP, INC.
----------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
April 24, 2000
----------------
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 24,
2000, at 3:00 p.m., Eastern Daylight Savings Time, at 629 Lincoln Avenue,
Bellevue, Pennsylvania and at any adjournments thereof. The 1999 Annual Report
to Stockholders, including the consolidated financial statements for the
fiscal year ended December 31, 1999, accompanies this proxy statement, which
is first being mailed to stockholders on or about March 17, 2000.
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 and "FOR" the ratification of the appointment of Deloitte & Touche
LLP as independent auditors of the Company for the fiscal year ending December
31, 2000 and "AGAINST" the shareholder 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 stockowner 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
1
<PAGE>
nominees, which are beneficially owned by others, to send proxy material to
and obtain proxies from such beneficial owners, and will reimburse such
holders for their reasonable expenses in doing so. In addition, the Company
has retained MATCO Incorporated ("MATCO") 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 stockholders. The
Company expects to pay approximately $25,000 for 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, 2000, 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 and entitled to vote on the Record Date was 5,104,763 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 the appointment of Deloitte & Touche LLP as
independent auditors of the Company, the shareholder 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 shareholder 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.
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<PAGE>
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 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 five percent of
the outstanding shares of Common Stock of the Company on the Record Date. This
information is based on 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>
Amount and
Nature of
Beneficial Percent
Title of Class Name and Address of Beneficial Owner Ownership of Class
-------------- -------------------------------------- ---------- --------
<C> <S> <C> <C>
Common Stock Bell Federal Savings and Loan 665,723(1) 13.04%
Association of Bellevue Employee Stock
Ownership Plan ("ESOP")
532 Lincoln Avenue
Bellevue, Pennsylvania 15202
Common Stock Reams Asset Management Company 267,800(2) 5.25%
227 Washington Street
Columbus, Indiana 47201
</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, 136,317 shares have been
allocated to participants' accounts and remain in the ESOP. 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").
(2) Based on information contained in a Schedule 13F as of December 31, 1999
filed with the SEC on February 7, 2000.
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 10% 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 10% 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.
3
<PAGE>
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 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. Each director is
selected to a three year term or until a successor is elected and qualified.
The three nominees proposed for election at the Meeting are Albert H.
Eckert, II, William S. McMinn and Jack W. Schweiger. All nominees named are
presently directors of the Company and the 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
Expiration Stock Percent
Name and Principal Occupation at Director of Term as Beneficially of
Present and for Past Five Years Age(1) Since(2) Director Owned(3) Class(4)
- --------------------------------------------- ------ -------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
NOMINEES
Albert H. Eckert, II(5) 67 1956 2003 239,446(6) 4.43%
President and Chief Executive Officer of the
Company and the Association; Member of the
Advisory Board of the Pittsburgh Symphony
Society; Director of the University of
Pittsburgh Business Alumni Association and
Trustee of the Western Pennsylvania Chapter
of the Leukemia Society of America
</TABLE>
(Continued on following page)
4
<PAGE>
<TABLE>
<CAPTION>
Shares of
Common
Expiration Stock Percent
Name and Principal Occupation at Director of Term as Beneficially of
Present and for Past Five Years Age(1) Since(2) Director Owned(3) Class(4)
- --------------------------------------------- ------ -------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
NOMINEES
William S. McMinn 43 1989 2003 19,162(7) .35%
Treasurer of the Company and the Association;
Senior Executive Vice President, Aon Risk
Services, Inc. of Pennsylvania, an
international employee benefit consulting
firm
Jack W. Schweiger 60 1995 2003 34,415(7) .64%
Independent builder and developer
specializing in custom homes; formerly Vice
President and Regional Production Manager of
Ryan Homes, Inc.
CONTINUING DIRECTORS
Robert C. Baierl 50 1987 2001 21,484(7) .40%
Secretary of the Company; President and Owner
of Wright Contract Interiors, a full service
contract interior firm
Jeffrey M. Hinds 42 1994 2001 139,315(8) 2.58%
Executive Vice President and Chief Financial
Officer of the Company; Executive Vice
President and Chief Financial Officer of the
Association
Thomas J. Jackson, Jr. 65 1974 2001 18,510(7) .34%
Retired Attorney; Chairman of the Board of
Directors of Suburban General Hospital;
member of the Board of Directors of Western
Pennsylvania Health Care System
Theodore R. Dixon 65 1995 2002 21,782(7) .40%
President and owner of the Dixon Agency, a
real estate appraisal firm
David F. Figgins 70 1971 2002 26,674(7) .49%
Vice President of the Company; retired Vice
President of Marshall Contractors, Inc.;
Director of Liberty Mutual Insurance Company
and Liberty Financial Services
Peter E. Reinert(5) 41 1995 2002 17,593(7) .33%
Partner with the law firm of Akerman,
Senterfitt & Eidson, P.A., Orlando, Florida;
Previously, Senior Counsel for General
Electric Appliances
Stock ownership of all directors and
executive officers as a group (9 persons) -- -- -- 538,381(9) 9.95%
</TABLE>
- --------------------
(1) At December 31, 1999.
(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) Percentages with respect to each person or group of persons have been
calculated on the basis of 5,104,763 shares of the Company's stock
outstanding and entitled to vote as of the record date, plus the number
of shares of stock which such person or group of persons has the right to
acquire within 60 days of the record date by the exercise of stock
options.
(Continued on following page)
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<PAGE>
(5) Mr. Reinert is the nephew of Mr. Eckert.
(6) Includes 34,384 shares awarded to Mr. Eckert under the Bell Federal
Savings and Loan Association of Bellevue 1996 Master Stock Compensation
Plan, as amended and restated on May 19, 1997 ("Stock Compensation Plan")
as to which voting may be directed by Mr. Eckert and 128,616 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
First Bell Bancorp, Inc. 1996 Master Stock Option Plan, as amended and
restated on May 19, 1997 ("Stock Option Plan").
(7) Includes 1,260 shares awarded to each outside director under the Stock
Compensation Plan as to which voting may be directed by such director,
and 12,860 shares which may be acquired through the exercise of stock
options which are exercisable, currently or within 60 days, under the
Stock Option Plan.
(8) Includes 13,760 shares awarded to Mr. Hinds under the Stock Compensation
Plan as to which voting may be directed by Mr. Hinds and 85,740 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.
(9) Includes 56,964 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 304,376 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 1999, the Board of
Directors of the Company held four regular meetings and four 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 1999.
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 did not meet in fiscal 1999.
Audit Committee. The Audit Committee of the Company consists of Messrs.
Dixon, Schweiger and Jackson. 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 1999.
Nominating Committee. The Company's Nominating Committee consists of
Messrs. Baierl, Dixon 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 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 1999.
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
1999.
6
<PAGE>
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 receive the annual
retainers from the Company and the Association. Directors are not reimbursed
for expenses incurred related to their attendance at board or committee
meetings.
Directors' Deferred Compensation Plan. The Association maintains the Bell
Federal Savings and Loan Association of Bellevue Deferred Compensation Plan
for Directors (the "Directors' Deferred Plan"). The Directors' Deferred Plan
is an unfunded plan that permits members of the Board of Directors to defer
all or a percentage of fees earned by written election 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 outside director participating in the Directors' Deferred 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 principal and
interest to date in annual installments based on an election by the
participant. Mr. Eckert also participates in the Directors' Deferred
Compensation Plan. Amounts deferred by Mr. Eckert were credited to a Rabbi
Trust established by the Association for the benefit of Mr. Eckert. See "Rabbi
Trust."
Stock Option Plan. Under the Stock Option Plan maintained by the Company,
grants of options to purchase the Company's common stock may be made to
directors. There were no grants made to directors in fiscal 1999.
Stock Compensation Plan. Under the Stock Compensation Plan maintained by
the Association, grants of common stock of the Company may be made to
directors. There were no grants made to directors in fiscal 1999.
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 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
7
<PAGE>
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 1999 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. If compensation would
exceed $1 million, the Company would comply with the requirements of Section
162(M) of the Internal Revenue Code, if applicable.
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 "1998
Watson Wyatt Financial Institutions Compensation Survey," and the "1997 New
York Bankers Association Northeast Banking Industry Compensation Survey." The
value of Long-term Incentive Compensation is based on the value of the
restricted stock awards at grant value and the value of the stock options is
determined by using the Black Scholes formula. 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.
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
goals of growth and profitability. Salary levels are intended to be
competitive with comparable financial institutions in the Company's peer
group.
8
<PAGE>
Long-Term Incentive Compensation. In 1996, the Company adopted the 1996
Master Stock Option Plan, as amended and restated on May 19, 1997 and the 1996
Master Stock Compensation Plan, as amended and restated on May 19, 1997 under
which executive officers may receive 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 comparable financial institutions, as verified by external
surveys and based upon the executive officers' level of responsibility, and
contributions to the Company and the Association. In the event that an award
recipient ceases service due to death, disability, or a change in control of
the Company or the Association, all stock awards granted under the Stock
Compensation Plan immediately vest. Additionally, in the event of a change in
control, or, if the recipient of stock options ceases service due to death or
disability, all stock options granted under the Stock Option Plan will
immediately vest. No awards were made in fiscal year 1999 under the Stock
Option Plan or the Stock Compensation Plan.
Compensation of the Chief Executive Officer. The Company and the
Association have entered into employment contracts with Mr. Eckert. The
details of the employment contract 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 contract. See also, "Employment Agreements" for a detailed
description of the employment contract. The Salary Review Committee, after
taking into consideration the factors discussed above, increased Mr. Eckert's
annual base salary by 5% to $209,385 for 1999, which is comparable to other
institutions in the Association's peer group. In addition, effective January
1, 1999, Mr. Eckert no longer receives separate Board of Director retainer
fees.
Compensation/Benefits Committee Salary Review Committee
William S. McMinn (Chairman) William S. McMinn (Chairman)
Robert C. Baierl Robert C. Baierl
David F. Figgins David F. Figgins
9
<PAGE>
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 1999,
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 an 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, 1999. The
graph was derived from historical information 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, LP
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>
Period Ending
-----------------------------------------------------
Index 06/29/95 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- ----- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
First Bell Bancorp, Inc. 100.00 110.31 136.24 200.01 166.92 168.27
NASDAQ--Total US* 100.00 114.26 140.58 172.25 242.67 441.13
SNL Thrift Index 100.00 122.44 159.54 271.47 238.76 195.04
SNL $500M-$1B Thrift Index 100.00 118.06 146.40 247.29 226.87 185.47
</TABLE>
10
<PAGE>
Summary Compensation Table. The following table shows, for the fiscal years
ended December 31, 1999, 1998 and 1997, 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 $100,000 (the
"Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
-------------------------------- ---------------------
Awards
---------------------
Securities
Other Restricted Underlying All
Annual Stock Options/ Other
Name and Salary Bonus Compensation Awards SARs Compen-
Principal Position Year ($)(1) ($) ($)(2) ($)(3) (#)(4) sation ($)
------------------ ---- -------- ----- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Albert H. Eckert, II 1999 $206,056 $-- $-- $-- $-- $68,007(5)
President and 1998 197,619 -- -- -- -- 69,893
Chief Executive Officer 1997 190,041 -- -- -- -- 88,982
Jeffrey M. Hinds 1999 $109,628 $-- $-- $-- $-- $67,497(5)
Executive Vice President 1998 106,162 -- -- -- -- 69,042
and Chief Financial
Officer 1997 102,717 -- -- -- -- 87,791
</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 by 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 1999, 1998 or 1997, the
above executives held the following shares of restricted stock valued at
December 31, 1999 at a market value of First Bell Bancorp, Inc. common
stock of $15.25 per share.
<TABLE>
<CAPTION>
Number of Shares Market Value on 12/31/99
---------------- ------------------------
<S> <C> <C>
Albert H. Eckert, II 34,384 $524,356
Jeffrey M. Hinds 13,760 $209,840
</TABLE>
The remaining restricted stock vests in two equal annual amounts commencing
on April 29, 2000. 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) $2,493 and $2,182 contributed by the Association under the
Association's 401(k) Plan to the account of Messrs. Eckert and Hinds,
respectively, during 1999 and (b) $65,514 and $65,315 representing the
value of shares allocated under the ESOP for the benefit of Messrs.
Eckert and Hinds, respectively, during 1999 based on the closing price of
the shares on the Nasdaq market at December 31, 1999.
Employment Agreements. The Company and the Association have entered into
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 employment agreements (collectively,
the "Employment Agreements") 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 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
11
<PAGE>
Board of Directors after conducting a performance evaluation of the Executive.
The 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 $209,385 and $110,774, 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 their
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, the Executive
or, in the event of death, his beneficiary would be entitled to an amount
equal to the remaining salary payments 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, 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 36
month period following the change of 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.
In the event of a change in control, Messrs. Eckert and Hinds would receive
three times the executive's annual compensation plus a severance payment equal
to other non-cash benefits provided for under the Employment Agreements,
including continued reimbursement of automobile expense, and life,
12
<PAGE>
health and disability coverage for a 36 month period consistent with the
amounts paid for the executive prior to the change of control.
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.
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.
Payments pursuant to the Employment Agreements will be allocated in
proportion to the services rendered and duties performed by the Executive with
respect to the Company and to the Association. To the extent that payments and
benefits are paid to or received by Executive under the Company Employment
Agreement, such compensation payments and benefits will be subtracted from any
amounts due simultaneously to the Executive under similar provisions of the
Association Employment Agreement.
Rabbi Trust. 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 Compensation Plan, the Supplemental
Executive Retirement Plan and the severance benefits payable pursuant to the
Employment Agreements in the event of a change of control. All severance
payments due to Mr. Hinds pursuant to the Employment Agreements in the event
of a change in control will also be held in a Rabbi Trust. The Company adopted
the Rabbi Trusts during the fourth 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, 1999. 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 year end price of
the Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options/SARs at
Options/SARs at Fiscal Year End
Fiscal Year End (#)(1)(2) ($)(1)(2)(3)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Albert H. Eckert, II 96,462 64,310 $438,601 $292,410
Jeffrey M. Hinds 64,305 42,872 $292,387 $194,934
</TABLE>
- --------------------
(1) No options were exercised by Messrs. Eckert or Hinds in fiscal 1999.
(2) The market price on December 31, 1999 was $15.25.
(3) Based on the market value of the underlying Common Stock at the 1999
fiscal year end, minus the exercise price.
13
<PAGE>
Retirement Plan. The Association maintained the Bell Federal Savings and
Loan Association of Bellevue Employee's Pension Plan (the "Retirement Plan"),
which was a noncontributory defined benefit pension plan, for the benefit of
substantially all of the employees of the Association. On December 21, 1998,
the Retirement Plan was terminated pending Internal Revenue Service approval.
Internal Revenue Service approval was subsequently received and the plan
assets were distributed out of the Retirement Plan in May, 1999.
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, 1999, a total of $420,982 was accrued for future payment under the SERP
and held in a Rabbi Trust for the benefit of the participant. See "Rabbi
Trust." 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 collection
or present other unfavorable features.
During 1999, the Association utilized the services of or purchased goods
from companies with whom directors of the Company are associated. The
Association paid: $169,055 for appraisal services to the Dixon Agency of which
Mr. Dixon is the sole proprietor; $135,982 for Pension Plan actuarial services
and insurance renewals to Aon Risk Services, Inc. of which Mr. McMinn is a
Senior Executive Vice President; $16,452 for office furnishings to Wright
Contract Interiors of which Mr. Baierl is President; and $1,160 for legal
services to the law firm of Akerman, Senterfitt & Eidson, P.A. of which Mr.
Reinert is a Partner.
14
<PAGE>
PROPOSAL 2. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended December 31,
1999 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, 2000 and
is requesting 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. SHAREHOLDER PROPOSAL
A shareholder ("Shareholder") has given the Company notice of its intention
to introduce the following proposal for consideration and action by
stockholders at the Annual Meeting. An identical proposal was voted on by
stockholders at last year's annual meeting and was defeated. The proposed
resolution and accompanying statement have been provided by the Shareholder
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 Annual
Meeting is required for approval of the proposal. If you would like additional
information about the Shareholder and the number of shares owned by the
Shareholder please contact the Corporate Secretary, c/o 532 Lincoln Avenue,
Pittsburgh, Pennsylvania 15202.
PROPOSAL
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 stockholder value.
15
<PAGE>
SUPPORTING STATEMENT
Shareholder believes that the Company could potentially achieve an
acquisition price well in excess of its current stock price. As set forth
below, if the Company achieved the average acquisition multiples obtained in
1999 by thrifts in two of the Company's peer groups, the Company could
potentially obtain an acquisition price between $20.30 and $39.66 per share.
Shareholder compared the Company's book value and earnings per share
("EPS") with the acquisition ratios for two of the Company's peer groups:
"Regional Peer Group" and "Asset-Size Peer Group". Based upon summary
statistics for mergers announced in 1999, Shareholder derived the Median
Average Announced Price/Book Ratio ("Price/Book") and the Median Average
Announced Price/Last Twelve Months EPS Ratio ("Price/EPS") for both of these
peer groups. Shareholder then derived an average of both peer groups'
respective Price/Book ("Average Price/Book") and Price/EPS ("Average
Price/EPS") and multiplied the applicable peer groups average ratios times the
Company's (a) book value ("Company Book Value") and (b) last twelve months
diluted EPS ("Company EPS").
<TABLE>
<S> <C>
Company Stock Price (11/16/99) $16.06
Company Book Value (9/30/99) $10.72
Company Price/Book 149.81%
Average Price/Book 189.38%
POTENTIAL ACQUISITION PRICE $20.30
Company EPS (9/30/99) $1.52
Company's Price/EPS 10.57X
Average Price/EPS 26.09X
POTENTIAL ACQUISITION PRICE $39.66
</TABLE>
The "Regional Peer Group" consists of 10 thrifts with total assets ranging
from $68 million to $2.5 billion located in Pennsylvania, New Jersey and New
York for which acquisitions were announced from January through August of 1999
and for which multiples were publicly available.
The "Asset-Size Peer Group" consists of 14 thrifts with total assets
between $250 million and $1 billion for which acquisitions were announced from
January through November of 1999 and for which multiples were publicly
available. These thrifts were located nationwide and included three thrifts in
the Regional Peer Group.
Based upon information provided by SNL Securities L.C., the following table
shows the Price/Book and Price/EPS multiples for both of the peer groups:
<TABLE>
<CAPTION>
Price/Book Multiples
-------------------------------------------------------------------------------
Low High Median
------ ------ ------
<S> <C> <C> <C>
Regional 114.65% 225.01% 168.12%
Asset-Size 133.24 371.84 210.64
<CAPTION>
Price/EPS Multiples
-------------------------------------------------------------------------------
Low High Median
------ ------ ------
<S> <C> <C> <C>
Regional 13.72x 47.77x 27.29x
Asset-Size 18.29 42.86 24.89
</TABLE>
16
<PAGE>
Although the Company may or may not achieve any of the individual
acquisition multiples achieved within or between the peer groups, Shareholder
believes that the most reliable way to apply these acquisition multiples to
the Company is to use an average of such multiples. In Shareholder's opinion,
the use of average multiples between the peer groups lessens any potential
skewing effect that may result from individual multiples. None of the thrifts
that comprise the peer groups are identical to the Company and no independent
evaluation of the Company's assets and liabilities has been made. The
"Potential Acquisition Price" is based entirely on the mathematical
application of the average multiples discussed above and may not represent
realizable value. Shareholder's analysis is not the only method to predict the
Company's potential acquisition price and does not necessarily represent the
price an acquirer would be willing to pay in a transaction. Assumptions need
to be made with regard to industry performance, business and economic
conditions.
Board of Directors' Statement in Opposition to the Proposal
Your Board of Directors believes that this proposal would not serve the
best interests of the Company's stockholders and, in fact, believes that
adoption of the proposal would be detrimental to their interests. Since 1998,
there has been a dramatic decline in thrift merger and acquisition volume,
which your Board of Directors believes is due in large part to the dramatic
decline in thrift equity prices. The interests of the stockholders of the
Company would not be served by initiating a sale or merger process at a time
when pricing multiples have been adversely affected by the very poor market
for bank and thrift stocks.
Your Board of Directors shares in any frustration that you may have that
our strong financial performance and proactive capital management program have
not been able to overcome the strong negative pressure that market conditions
have exerted on the Company's stock. We remain optimistic that our efforts
will be rewarded when the general bank and thrift stock market improves. It is
worth noting that in 1994, the Federal Reserve tightened the Federal Funds
Rate from 3.0% to 6.0%, which caused a decline in financial stocks while rates
were rising. Financial stocks enjoyed a 65% to 70% recovery after the rate
hikes were completed. While there is no guarantee of such a recovery this
time, your Board of Directors and management believe that history supports our
view that financial stocks are well positioned for a recovery when inflation
and interest rate fears subside.
17
<PAGE>
However, as evidenced by the accompanying chart, the Company's stock fared
considerably better in 1999 than it's Peer Group.*
[GRAPH APPEARS HERE}
* Peer Group figures are Medians and include Ambanc Holding, GA Financial,
Northeast Pennsylvania Financial Corp, Parkvale Financial Corp., PennFed
Financial Services, TF Financial Corp., Thistle Group Holdings, Warwick
Community Bancorp, Fidelity Bancorp, Laurel Capital Group, Pittsburgh Home
Financial and WVS Financial
The initiation of a public sale or merger process as recommended by the
Shareholder would be an ill timed effort to sell the Company when potential
buyers are not likely to be willing to pay an adequate premium for your
Company's franchise. Your Board of Directors recommends a vote "AGAINST" the
proposal for these reasons and the reasons stated below.
1. The acquisition values for the Common Stock presented in the Shareholder's
supporting statement may not represent realizable values.
18
<PAGE>
Thrift merger and acquisition activity slowed considerably in 1999 as
thrift equity prices declined. The chart below sets forth the dramatic
reduction in the dollar volume of thrift merger transactions in 1998 and 1999.
[GRAPH APPEARS HERE}
Source: SNL Securities, L.P.
The valuation methodologies used in the shareholder's supporting statement
rely on the average multiples of a number of thrift acquisition transactions,
only one of which was in the Company's market area. The use of implied ranges
of acquisition values for the Company is, at best, an incomplete method of
deriving a realistic estimate of a thrift's acquisition value. No merger
transactions have occurred in 1999 or 2000 among the Company's peer group of
Pennsylvania thrifts. 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 Shareholder 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 deposits and lending franchises and
various discounted cash flow analyses.
2. The Company's Operating Performance and Program for Building Stockholder
Value
Your Board of Directors have followed a program of building stockholder
value while maintaining the financial soundness of the Company. Despite the
poor condition of the thrift equity market, the Company delivered strong
financial performance in 1999.
19
<PAGE>
. Increased earnings per share by an impressive 19.3% from 1998 to 1999.
The chart below sets forth the Company's earnings per share since
1996, which shows cumulative average growth rate in earnings per share
of 16.5%.
[GRAPH APPEARS HERE]
. Increased profitability with a 12.50% return on average equity
("ROAE") and a .99% return on average assets ("ROAA") in 1999 as
compared to an average ROAE of 9.79% and an average ROAA of .77%
produced by the Company's Peer Group.
. In July, 1999 your Company was recognized by the influential,
respected and widely quoted, SNL Securities LLP ThriftINVESTOR
publication as the seventh highest performing public thrift in the
United States. This ranking was based on a measurement of
profitability, efficiency, credit quality and earnings per share
growth.
. Completed three 5% and one 10% share repurchase programs since 1998,
which together with the Company's prior share repurchases equals a
total of 3,490,687 shares or 40.6% of the Company's stock issued when
the Company went public in 1995. Your Board of Directors in February,
2000 approved an additional 10% share repurchase program. The
Company's share repurchase programs enhance stockholder value by
decreasing the number of outstanding shares of the Company's stock and
providing liquidity to shareholders.
. Your Board of Directors approved in February, 2000, a quarterly
dividend for the first quarter of 2000 of $.12 per share, which is a
20% increase over prior quarterly dividends.
3. 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.
20
<PAGE>
As you know, all directors of the Company are also stockholders and share a
commonality of interest with other stockholders. Members of your Board of
Directors illustrated their confidence in the value of First Bell stock by
increasing their stock equity ownership in the Company during 1999 and in
early 2000. The directors, in aggregate, beneficially owned or controlled
538,381 shares of stock as of March 1, 2000, representing approximately 9.95%
of the equity interest of the Company.
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 point in time, particularly at a time when the equity
prices for the thrift industry, as well as the entire financial industry, are
depressed. The Board of Directors and management of the Company believe that
the stock price of the Company will improve once the Federal Reserve completes
its interest rate adjustments.
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
stockholder'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 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 Lehman Brothers and
other third party advisors. 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
SHAREHOLDER 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 2001, 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 17, 2000. Any such proposal will be subject to 17
C.F.R. (S)240.14a-8 of the Rules and Regulations under the Exchange Act.
21
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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 90 days before
the time originally fixed for such meeting; provided, however, that in the
event that less than 100 days' notice or prior public disclosure of the date
of the meeting is given or made 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 2001. 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 2001.
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 the record holder of your shares or
have a legal proxy from the record holder of your shares and 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,
1999, 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 17, 2000
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.
22
<PAGE>
[ X ] PLEASE MARK VOTES
AS IN THIS EXAMPLE
REVOCABLE PROXY
FIRST BELL BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
April 24, 2000 * 3:00 p.m.
The undersigned hereby appoints Peter E. Reinert and Theodore R. Dixon, 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 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, to be held on April 24, 2000, at 3:00
p.m., Eastern Daylight Savings Time, at 629 Lincoln Avenue, Bellevue,
Pennsylvania, and at any and all adjournments or postponements thereof, on the
matters set forth herein, 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
hereon, but you need not mark any boxes if you wish to vote in accordance with
the Board of Directors recommendations.
- --------------------------------------------------------------------------------
Your Board of Directors recommends a vote FOR Items 1 and 2 below
- --------------------------------------------------------------------------------
FOR ALL
FOR WITHHOLD EXCEPT
1. The election as directors of all [ ] [ ] [ ]
nominees listed (except as marked
to the contrary below):
Albert H. Eckert, II, William S. McMinn and Jack W. Schweiger
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Ratification of Auditors [ ] [ ] [ ]
- --------------------------------------------------------------------------------
Your Board of Directors recommends a vote AGAINST Item 3 below.
- --------------------------------------------------------------------------------
AGAINST FOR ABSTAIN
3. Shareholder Proposal [ ] [ ] [ ]
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.
Please be sure to sign and date this Proxy in the box below.
- --------------------------------------------------------------------------------
Date:____________________________________________________
_________________________________________________________
Stockholder sign above
_________________________________________________________
Co-holder (if any) sign above
- --------------------------------------------------------------------------------
Detach above card, sign, date and mail in postage paid envelope provided.
FIRST BELL BANCORP, INC.
Please sign your name 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 for First
Bell Bancorp, Inc. is hereby acknowledged.
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD TODAY
IN THE POSTAGE-PAID ENVELOPE PROVIDED.
