SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ X ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
First Mutual Bancorp, Inc.
----------------------------------------
(Name of Registrant as Specified in its Charter)
Robert B. Pomerenk, Esq.
Luse Lehman Gorman Pomerenk & Schick
5335 Wisconsin Avenue, N.W., Suite 400
Washington, D.C. 20015
----------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or
14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction
applies:
______________________________
2) Aggregate number of securities to which transaction
applies:
______________________________
3) Per unit price or other identifying value of
transaction computed pursuant
to Exchange Act Rule 0-11:
______________________________
4) Proposed maximum aggregate value of transaction:
______________________________
[ ] 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 offset fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
1) Amount Previously Paid:
____________________
2) Form, Schedule or Registration Number:
_____________________
3) Filing Party:
____________________
4) Date Filed:
03/10/98
<PAGE>
March 13, 1998
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of
Stockholders of First Mutual Bancorp, Inc. (the "Company"). The
Annual Meeting will be held at The Decatur Club, 158 West Prairie
Avenue, Decatur, Illinois at 3:00 p.m. (local time) on Thursday,
April 23, 1998.
The enclosed Notice of Annual Meeting and Proxy Statement
describe the formal business to be transacted. During the Annual
Meeting we will also report on the operations of the Company and
First Mutual Bank, S.B., the wholly owned subsidiary of the
Company. Directors and officers of the Company, as well as a
representative of our independent auditors, will be present to
respond to any questions that stockholders may have.
The business to be conducted at the Annual Meeting includes the
election of three directors and ratification of the appointment
of Crowe, Chizek and Company LLP as auditors for the year ending
December 31, 1998.
The Board of Directors of the Company has determined that the
matters to be considered at the Annual Meeting are in the best
interest of the Company and its stockholders. For the reasons
set forth in the Proxy Statement, the Board of Directors
unanimously recommends a vote "FOR" each matter to be considered.
On behalf of the Board of Directors, we urge you to sign, date
and return the enclosed proxy card as soon as possible even if
you currently plan to attend the Annual Meeting. Your vote is
important, regardless of the number of shares that you own. This
will not prevent you from voting in person, but will assure that
your vote is counted if you are unable to attend the meeting.
Sincerely,
Paul K. Reynolds
President and Chief Executive Officer
<PAGE>
FIRST MUTUAL BANCORP, INC.
135 East Main Street
Decatur, Illinois 62523
(217) 429-2306
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On April 23, 1998
Notice is hereby given that the Annual Meeting of First
Mutual Bancorp, Inc. (the "Company") will be held at The Decatur
Club, 158 West Prairie Avenue, Decatur, Illinois, on Thursday,
April 23, 1998 at 3:00 p.m., local time.
A Proxy Card and a Proxy Statement for the Annual Meeting
are enclosed.
The Annual Meeting is for the purpose of considering and
acting upon:
1. The election of three directors of the Company;
2. The ratification of the appointment of Crowe, Chizek
and Company LLP as auditors for the Company for the year ending
December 31, 1998; and
such other matters as may properly come before the Annual
Meeting, or any adjournments thereof. The Board of Directors is
not aware of any other business to come before the Annual
Meeting.
Any action may be taken on the foregoing proposals at the
Annual Meeting on the date specified above, or on any date or
dates to which by original or later adjournment the Annual
Meeting may be adjourned. Stockholders of record at the close of
business on March 6, 1998, are the stockholders entitled to vote
at the Annual Meeting, and any adjournments thereof. A list of
stockholders entitled to vote at the Annual Meeting will be
available at the main office of the Company for a period of ten
days prior to the Annual Meeting, and will also be available for
inspection at the Meeting itself.
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE
ANNUAL MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE REVOKED AT
ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY
FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR
A DULY EXECUTED PROXY BEARING A LATER DATE. ANY STOCKHOLDER
PRESENT AT THE ANNUAL MEETING MAY REVOKE HIS OR HER PROXY AND
VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE ANNUAL MEETING.
HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED
IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER IN ORDER TO VOTE PERSONALLY AT THE ANNUAL
MEETING.
By Order of the Board of Directors
G. Lynn Brinkman
Secretary
Decatur, Illinois
March 13, 1998
- -----------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY
THE EXPENSE OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT
THE ANNUAL MEETING. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR
YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE
UNITED STATES.
- -----------------------------------------------------------------
<PAGE>
PROXY STATEMENT
of
FIRST MUTUAL BANCORP, INC.
135 East Main Street
Decatur, Illinois 62523
(217) 429-2306
- -----------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
April 23, 1998
- -----------------------------------------------------------------
This Proxy Statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of
First Mutual Bancorp, Inc. (the "Company") to be used at the
Annual Meeting of Stockholders of the Company (the "Meeting"),
which will be held at The Decatur Club, 158 West Prairie Avenue,
Decatur, Illinois, on Thursday, April 23, 1998 at 3:00 p.m.,
local time, and all adjournments thereof. The accompanying
Notice of Annual Meeting of Stockholders and this Proxy Statement
are first being mailed to stockholders on or about March 13,
1998.
- -----------------------------------------------------------------
Revocation of Proxies
- -----------------------------------------------------------------
Stockholders who execute proxies in the form solicited
hereby retain the right to revoke them in the manner described
below. Unless so revoked, the shares represented by such proxies
will be voted at the Meeting and all adjournments thereof.
Proxies solicited on behalf of the Board of Directors of the
Company will be voted in accordance with the directions given
thereon. Where no instructions are indicated, proxies will be
voted "FOR" the election of the nominees for director named in
this Proxy Statement and "FOR" the ratification of Crowe, Chizek
and Company LLP as auditors for the year ending December 31,
1998.
The Board of Directors knows of no additional matters that
will be presented for consideration at the Annual Meeting.
Execution of a proxy, however, confers on the designated
proxyholders discretionary authority to vote the shares in
accordance with their best judgment on such other business, if
any, that may properly come before the Annual Meeting or any
adjournments thereof.
Proxies may be revoked by sending written notice of
revocation to the Secretary of the Company, G. Lynn Brinkman, at
the address of the Company shown above. The presence at the
Meeting of any stockholder who had given a proxy shall not revoke
such proxy unless the stockholder delivers his or her ballot in
person at the Meeting or delivers a written revocation to the
Secretary of the Company prior to the voting of such proxy.
- -----------------------------------------------------------------
Voting Securities and Principal Holders Thereof
- -----------------------------------------------------------------
Holders of record of the Company's common stock, par value
$.10 per share (the "Common Stock") as of the close of business
on March 6, 1998 (the "Record Date") are entitled to one vote for
each share then held, except as described below. As of the
Record Date, the Company had 3,507,070 shares of Common Stock
issued and outstanding. The presence in person or by proxy of a
majority of the outstanding shares of Common Stock entitled to
vote is necessary to constitute a quorum at the Meeting. In the
event there are not sufficient votes for a quorum, or to approve
or ratify any matter being presented at the time of the Annual
Meeting, the Annual Meeting may be adjourned in order to permit
the further solicitation of proxies.
In accordance with the provisions of 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 with
respect to the shares held in excess of the Limit. The Company's
Certificate of Incorporation authorizes the Board of Directors
(i) to make all determinations necessary to implement and apply
the Limit, including determining whether persons or entities are
acting in concert, and (ii) to demand that any person who is
reasonably believed to
<PAGE>
beneficially own stock in excess of the Limit supply information
to the Company to enable the Board to implement and apply the
Limit.
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 three nominees proposed by the Board, or
to WITHHOLD AUTHORITY to vote for the nominees being proposed.
Under Delaware law and the Company's Certificate of Incorporation
and Bylaws, Directors are elected by a plurality of votes cast,
without regard to either broker non-votes, or proxies as to which
authority to vote for the nominees being proposed is withheld.
As to the ratification of the appointment of independent
auditors, the proxy card being provided by the Board of Directors
enables a stockholder to check the appropriate box on the proxy
card to (i) vote "FOR", (ii) vote "AGAINST", or (iii) vote to
"ABSTAIN" from voting on, such matter. An affirmative vote of
the holders of a majority of the Common Stock present at the
Annual Meeting, in person or by proxy, and entitled to vote is
required to constitute ratification by the stockholders. Shares
as to which the "ABSTAIN" box has been selected on the proxy card
will be counted as shares present and entitled to vote and will
have the effect of a vote against the matter for which the
"ABSTAIN" box has been selected. In contrast, broker non-votes
will not be counted as shares present and entitled to vote and
will have no effect on the vote on the matter presented.
Proxies solicited hereby will be returned to the Company,
and will be tabulated by inspectors of election designated by the
Board.
Persons and groups who beneficially own in excess of five
percent of the Common Stock are required to file certain reports
with the Securities and Exchange Commission ("SEC") regarding
such ownership pursuant to the Securities Exchange Act of 1934
(the "Exchange Act"). The following table sets forth, as of the
Record Date, the shares of Common Stock beneficially owned by
directors and nominees individually, by named executive officers
individually, by executive officers and directors as a group and
by each person who was the beneficial owner of more than five
percent of the Company's outstanding shares of Common Stock on
the Record Date. This information is based solely on information
supplied to the Company and the filings required pursuant to the
Exchange Act.
<TABLE>
<CAPTION>
Amount of Shares
Owed and Nature Percent of Shares
Name and Address of of Beneficial of Common Stock
Beneficial Owner Ownership Outstanding
- ------------------------------------------------------------------------
Directors and Officers(1)
<S> <C> <C>
C. Robert Chastain 39,100 1.11%
Paul K. Reynolds 122,451 3.49
Richard L. Jacobs 38,800 1.11
Glen J. Whitney 38,800 1.11
Roy M. Ousley 29,300 .84
Robert D. Nichols 40,000 1.14
Jon D. Robinson 500 .01
David G. Weber 46,533 1.33
G. Lynn Brinkman 35,352 1.01
Gary M. Walters 31,648 .90
Jimmy W. Goatley 39,641 1.13
Philip J. Duffy 29,773 .85
All executive officers and directors
as a group (12 persons)(4) 491,898 14.03%
-----------------------------------
(footnotes begin on following page>
<PAGE>
First Mutual Bank, S.B.
Employee Stock Ownership Plan(2)
135 East Main Street
Decatur, Illinois 62523 282,000 8.04%
John Hancock Advisers, Inc.(3)
101 Huntington Avenue
Boston, Massachusetts 238,000 6.79%
- -------------------------
</TABLE>
(1) Unless otherwise indicated, includes shares held directly by the
individuals as well as by spouses, in trust and other indirect forms of
ownership over which shares the individuals effectively exercise sole or
shared voting and investment power. Also includes shares that may be
acquired pursuant to presently exercisable options.
(2) Under the First Mutual Bank, S.B. Employee Stock Ownership Plan (the
"ESOP"), shares allocated to participants' accounts are voted in accordance
with the participants' directions. Unallocated shares held by the ESOP are
voted by the ESOP Trustee in the manner calculated to most accurately reflect
the instructions it has received from the participants regarding the allocated
shares. As of the Record Date, 92,002 shares of Common Stock were allocated
under the ESOP.
(3) Pursuant to Schedule 13G filed with the Securities and Exchange
Commission in January 1998, on behalf of the John Hancock Mutual Life
Insurance Company ("JHMLICO"), JHMLICO's wholly-owned subsidiary, John Hancock
Subsidiaries, Inc. ("JHSI"), JHSI's wholly-owned subsidiary, The Berkeley
Financial Group ("TBFG") and TBFG's wholly-owned subsidiary, John Hancock
Advisers, Inc. ("JHA"). JHA has direct beneficial ownership of the 238,000
shares. Through their parent-subsidiary relationship to JHA, JHMLICO, JHSI
and TBFG have indirect beneficial ownership of these same shares, according to
the Schedule 13G.
(4) Excludes 282,000 shares of Common Stock or 8.04% of the shares of Common
Stock outstanding, owned by the Company's ESOP for the benefit of the
employees of the Bank. Under the terms of the ESOP, shares of Common Stock
allocated to the account of employees are voted in accordance with the
instructions of the respective employees. Unallocated shares are voted by the
ESOP trustee in the manner calculated to most accurately reflect the
instructions it has received from the participants regarding the allocated
shares, unless its fiduciary duty requires otherwise. As of the Record Date,
92,002 shares of Common Stock have been allocated under the ESOP.
(5) Total Common Stock outstanding does not include shares that may be
acquired pursuant to presently exercisable options.
- -----------------------------------------------------------------
PROPOSAL I--ELECTION OF DIRECTORS
- -----------------------------------------------------------------
The Company's Board of Directors is composed of seven
members. The Company's bylaws provide that approximately
one-third of the directors are to be elected annually. Directors
of the Company are generally elected to serve for a three year
period or until their respective successors shall have been
elected and shall qualify. Three directors will be elected at
the Meeting to serve for three-year terms and until their
respective successors have been elected and qualified. The Board
of Directors has nominated to serve as directors C. Robert
Chastain, Richard L. Jacobs and Glen J. Whitney, each of whom is
currently a member of the Board of Directors.
The following table sets forth certain information regarding
the composition of the Company's Board of Directors, including
the terms of office of Board members. It is intended that the
proxies solicited on behalf of the Board of Directors (other than
proxies in which the vote is withheld as to one or more nominees)
will be voted at the Meeting for the election of the nominees
identified below. If a nominee is unable to serve, the shares
represented by all such proxies will be voted for the election of
such substitute as the proxy holders may recommend. At this
time, the Board of Directors knows of no reason why the nominees
might be unable to serve, if elected. Except as indicated
herein, there are no arrangements or understandings between the
nominees and any other person pursuant to which the nominees were
selected.
PAGE
<PAGE>
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
Positions Held Director Current Term Owned on the Percent
Name Age(1) with the Bank Since(1) To Expire Record Date Of Class
- ---------------------------------------------------------------------------------------------------
NOMINEES
<S> <C> <C> <C> <C> <C> <C>
Richard L. Jacobs 65 Director 1987 1998 38,800(7) 1.11
Glen J. Whitney 69 Director 1985 1998 38,800(8) 1.11
C. Robert Chastain 66 Chairman of the Board 1984 1998 39,100(4) 1.11
DIRECTORS CONTINUING IN OFFICE
Paul K. Reynolds 49 President and Chief 1991 2000 122,451(3) 3.49%
Executive Officer
and Director
Jon D. Robinson 51 Director 1997 2000 500 .01
Robert D. Nichols 74 Director 1974 1999 40,000(5) 1.14
Roy M. Ousley 75 Director 1978 1999 29,300(6) .84
- -----------------------------
(1) As of December 31, 1997.
(2) The year of initial appointment refers to appointment to the Board of Directors of
First Mutual Bank, S.B., the Company's mutual predecessor.
(3) Includes 47,000 shares that may be acquired pursuant to presently exercisable
options.
(4) Includes 9,400 shares that may be acquired pursuant to presently exercisable options.
(5) Includes 9,400 shares that may be acquired pursuant to presently exercisable options.
(6) Includes 9,400 shares that may be acquired pursuant to presently exercisable options.
(7) Includes 9,400 shares that may be acquired pursuant to presently exercisable options.
(8) Includes 9,400 shares that may be acquired pursuant to presently exercisable options.
/TABLE
<PAGE>
The principal occupation during the past five years of each
director, nominee for director and named executive officer of the
Company is set forth below. References to the "Company" include
the Company's mutual predecessor. All directors and executive
officers have held their present positions for five years unless
otherwise stated.
Robert D. Nichols has been a Director since 1974. Mr.
Nichols operated Nichols Advertising until 1992. Currently, Mr.
Nichols is the Owner of Nova Gallery of Art and Framing.
Richard L. Jacobs has been a Director since 1987. Mr.
Jacobs is owner and operator of Jacobs Farms. Mr. Jacobs was a
member of the Board of Directors for the Farm Credit Services of
East Central Illinois during the period 1983-1989.
C. Robert Chastain has been a Director since 1984. Mr.
Chastain is a pharmacist and recently retired as President of
Family Drug Stores.
Roy M. Ousley has been a Director since 1978. Prior to his
retirement in 1992, Mr. Ousley was owner and operator of R.M.
Martin and Company, a retail jewelry and art business.
Jon D. Robinson was appointed by the Board of Directors in
March 1997, to serve the unexpired term of Richard J. Welsh. He
was elected by the stockholders in April 1997, to serve a three
year term. Mr. Robinson is a partner in the law firm Campbell &
Robinson, Decatur, Illinois, where he has practiced law since
1971.
Glen J. Whitney has been a Director since 1985. Mr. Whitney
is President of Clayton Sales Company, distributors of energy
savings equipment.
<PAGE>
Paul K. Reynolds is President, Chief Executive Officer, and
a Director. Mr. Reynolds joined the Bank as Vice President in
May 1988 and became Senior Vice President in July 1988. He was
appointed Senior Executive Vice President and Managing Officer in
November 1988 before being named to his present position in
January 1990. He has been a Director since 1991.
Philip J. Duffy is Senior Vice President and Senior Lending
Officer. Prior to joining the Bank in January 1995, Mr. Duffy
was a Senior Vice President at Bank of Illinois, Champaign,
Illinois, where he was head of corporate banking and commercial
lending since 1985.
David G. Weber is Senior Vice President -- Retail
Banking/Operations Officer. Prior to being appointed to his
current position in June 1995, Mr. Weber was Senior Vice
President of Retail Banking/Operations for First of America Bank,
Decatur, Illinois, since 1989.
G. Lynn Brinkman is Vice President, Secretary, Treasurer and
Chief Financial Officer. Prior to being appointed to his current
position in July 1992, Mr. Brinkman was Treasurer of the Bank
since 1981.
Gary M. Walters is Vice President in charge of residential
mortgage lending. Mr. Walters has been a Vice President since
1977.
Jimmy W. Goatley is Vice President of retail banking. Mr.
Goatley was appointed Vice President of retail banking in
September 1989. Prior to being appointed Vice President of
retail banking, he was Vice President in charge of training and
branch management since January 1988.
Ownership Reports by Officers and Directors
The Common Stock of the Company is registered pursuant to
Section 12(g) of the Exchange Act. The officers and directors of
the Company and beneficial owners of greater than 10% of the
Company's Common Stock ("10% beneficial owners") are required to
file reports on Forms 3, 4, and 5 with the SEC disclosing changes
in beneficial ownership of the Common Stock. SEC rules require
disclosure in the Company's Proxy Statement and Annual Report on
Form 10-K of the failure of an officer, director or 10%
beneficial owner of the Company's Common Stock to file a Form 3,
4 or 5 on a timely basis. The Company believes that, during the
year ended December 31, 1997, all filing requirements under SEC
rules applicable to the Company's officers, directors and 10%
beneficial owners were complied with on a timely basis with the
exception of Director Robinson, who failed to timely file an
initial report on Form 3; Director Jacobs, who failed to timely
file a report on Form 4; and officers Reynolds, Goatley, Walters,
Brinkman, Weber and Duffy who failed to timely file on Form 5
upon the allocation of ESOP shares on December 31, 1996.
- -----------------------------------------------------------------
Meetings and Committees of the Board of Directors
- -----------------------------------------------------------------
The business of the Company's Board of Directors is
conducted through meetings and activities of the Board and its
committees. First Mutual Bank, S.B. (the "Bank") is the wholly
owned subsidiary of the Company, and the Company presently does
not currently conduct any business separate from its ownership of
all of the outstanding common stock of the Bank. The Board of
Directors of the Company held 12 regular and one special meetings
during 1997. During that period, no director attended fewer than
75 percent of the total meetings of the Board of Directors of the
Company and of the Bank, and committees on which such director
served.
The Company and the Bank maintain a Finance Committee. In
addition to this committee, the Bank maintains an
Audit/Compliance Committee, a Personnel/Compensation Committee, a
Loan Committee and a Planning/Marketing Committee. C. Robert
Chastain, Chairman of the Board of the Company and the Bank, is a
non-voting ex officio member of each committee of the Company and
the Bank.
<PAGE>
The Company's Finance Committee consists of Messrs. Whitney,
Ousley and Robinson. The Finance Committee communicates,
coordinates, and controls the Bank's asset-liability management
policies and procedures, and establishes and monitors the volume
and mix of assets and funding sources. The Finance Committee met
12 times during the year ended December 31, 1997.
The Bank's Audit/Compliance Committee consists of Messrs.
Ousley, Jacobs and Robinson. The Audit/Compliance Committee
meets with the Bank's independent and internal auditors and
communicates its findings to the Board of Directors, establishes
policies to assure full disclosure of financial results and
condition, reviews audit procedures and works to improve internal
auditing functions and internal controls and monitors CRA,
consumer protection laws and regulatory reporting requirements.
The Audit/Compliance Committee reports to the full Board of
Directors on a regular basis. The Audit/Compliance Committee met
four times during the year ended December 31, 1997.
The Bank's Personnel/Compensation Committee consists of
Messrs. Jacobs, Nichols and Whitney. The Personnel/Compensation
Committee reviews overall salary recommendations, reviews and
approves all bonuses and/or incentive programs, and approves
salaries for key officers. The Personnel/Compensation Committee
meets as needed, and met three times during the year ended
December 31, 1997.
The Loan Committee consists of two members of the full Board
of Directors (on a monthly rotating basis) and the Chief
Executive Officer and the Chief Lending Officer. As of December
31, 1997, the director members of the Loan Committee were Messrs.
Chastain and Jacobs. The Loan Committee reviews general loan and
appraisal guidelines and approves all loan requests in excess of
$500,000 and up to $2 million (or $3 million if the Loan
Committee is supplemented by an additional outside member of the
Board of Directors). The Loan Committee meets as needed, and
generally at least once a month. The Committee met 24 times
during 1997.
The Bank's Planning/Marketing Committee consists of Messrs.
Nichols, Jacobs and Whitney. The Planning/Marketing Committee
considers business planning, branching, mergers, acquisitions,
and plant and equipment and also handles all marketing functions
for the Bank, such as sales, advertising, promotions, and public
relations. The Planning/Marketing Committee met three times
during 1997.
The Company's Nominating Committee is not a standing
committee but is convened as needed and is composed of the full
Board of Directors. While the Committee will consider nominees
recommended by stockholders, it has not actively solicited
recommendations from stockholders. Nominations by stockholders
must comply with certain procedural and informational
requirements set forth in the Company's Bylaws.
- -----------------------------------------------------------------
Executive Compensation
- -----------------------------------------------------------------
The following table sets forth the cash compensation paid by
the Company for services during the years ended December 31,
1997, 1996 and 1995 to the Chief Executive Officer of the
Company. Other than Mr. Reynolds, no executive officer of the
Company received compensation during such years in excess of
$100,000.<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
----------------------
Annual Compensation Awards
------------------------- ----------------------
Restricted
Stock Options/ All Other
Name and Base Award(s) SARs Compensation Other Annual
Principal Position Year Salary($)(1) Bonus($) ($)(2) (#)(3) ($)(4) Compensation(5)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul K. Reynolds, 1997 $159,021 $ - $ - $ - $20,900 $56,404
President and Chief 1996 $142,771 $25,000 705,000 117,500 $21,050 $39,938
Executive Officer 1995 $133,472 $20,000 0 0 $20,050 $27,821
________________________________
(1) Includes the use of an automobile and life insurance premiums, the aggregate value of
which did not exceed the lesser of $50,000 or 10% of the executive's cash compensation.
(2) The restricted stock award for Mr. Reynolds consists of 47,000 shares of Common Stock
whose value was calculated based on the reported closing price per share of the Common
Stock at December 31, 1996 of $15.00 per share. The 47,000 shares awarded vest in equal
installments over five years, with the first such installment vesting on July 25, 1996,
the date of award. All such shares will be immediately vested upon termination of
employment due to death, disability or following a change in control of the Bank or the
Company. Any cash or stock dividends paid with respect to the restricted stock award will
be paid to Mr. Reynolds pursuant to the terms of the plan, regardless of whether such
shares have vested. See "Benefits--Recognition and Retention Plan".
(3) The options reflected in the table vest in five equal annual increments commencing on
July 25, 1996, the date of grant, and are fully exercisable upon termination of employment
due to death, disability, normal retirement or following a change in control of the Bank
or the Company. The exercise price of all such options is $11.75 per share, the fair
market value of the underlying shares of Common Stock on the date of grant. As of
December 31, 1997, options to acquire 47,000 shares of Common Stock were exercisable. See
"Benefits--Stock Option Plan".
(4) Consists of aggregate directors' fees, including deferred fees.
(5) Represents contributions on behalf of the executive under the Company's Profit
Sharing Plan for 1997, 1996 and 1995 (but does not include earnings on such contributions)
and includes the value of allocated ESOP shares for 1996 valued at $15.00 per share, the
reported closing price of the Common Stock on December 31, 1996 and at $25.00 per share,
the reported closing price of the Common Stock at December 31, 1997.
</TABLE>
PAGE
<PAGE>
Stock Performance Graph
<TABLE>
6/30/95 12/31/95 12/31/96 12/31/97
<S> <C> <C> <C> <C>
First Mutual Bancorp, Inc. 0 37 55.5 161.9
NASDAQ Composite Index 0 12.7 38.3 68.2
SNL Thrift Index 0 20.1 54.3 159.1
</TABLE>
Compensation Committee Interlocks and Insider Participation
The Bank retains the principal responsibility for the
compensation of the officers, directors and employees of the
Company and the Bank. The Company does not currently maintain a
Compensation Committee; instead, compensation for employees of
the Bank and the Company, including executive officers, is fixed
by the Personnel/Compensation Committee of the Bank. The
Personnel/Compensation Committee currently consists of Directors
Jacobs, Nichols and Whitney. The Personnel/Compensation
Committee meets as needed, and during the year ended December 31,
1997, the Personnel/Compensation Committee met three times.
Report of the Personnel/Compensation Committee 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 its Chief Executive Officer
and other executive officers. The disclosure requirements for
the Chief Executive Officer and other executive officers include
the use of tables and a report explaining the rationale and
considerations that led to fundamental executive compensation
decisions affecting those individuals. In fulfillment of this
requirement, the Personnel/Compensation Committee of the Bank's
Board of Directors has prepared the following report for
inclusion in this Proxy Statement.
The Personnel/Compensation Committee annually reviews the
performance of the Chief Executive Officer and other executive
officers and recommends changes to base compensation as well as
the level of bonus, if any, to be
<PAGE>
awarded. The Personnel/Compensation Committee also approves any
perquisites payable to the executive officers. In determining
whether to recommend an increase to the base salary of the Chief
Executive Officer and other executive officers, the
Personnel/Compensation Committee takes into account individual
performance, performance of the Bank and the Company, the size of
the Bank and the complexity of its operations, and information
regarding compensation paid to executives performing similar
duties for financial institutions in the Bank's market area. In
evaluating changes to compensation, the Personnel/Compensation
Committee uses an annual survey of executive compensation for
peer institutions developed by America's Community Bankers, the
Bank's trade association, the Sheshunoff Executive Compensation
Survey, as well as information on compensation paid by employers
in the Bank's market area developed from local publications.
While the Personnel/Compensation Committee does not use
strict numerical formulas to determine recommendations for
changes in compensation for the Chief Executive Officer, and
while it weighs a variety of different factors in its
deliberations, it has emphasized and will continue to emphasize
earnings, profitability, capital position and income level, and
return on average assets as factors in setting the compensation
of the Chief Executive Officer. Other non-quantitative factors
considered by the Personnel/Compensation Committee in 1997
included achievement of goals and objectives of the Business
Plan, general management oversight of the Bank, the quality of
communication with the Board of Directors, the productivity of
employees, and the Bank's record of compliance with regulatory
requirements. Finally, the Personnel/Compensation Committee
considered the standing of the Bank with customers and the
community, as evidenced by the level of customer/community
complaints and compliments. While each of the quantitative and
non-quantitative factors described above was considered by the
Personnel/Compensation Committee, such factors were not assigned
a specific weight in evaluating the performance of the Chief
Executive Officer. Rather, all factors were considered, and
based upon the effectiveness of such officers in addressing each
of the factors, and the range of compensation paid to officers of
peer institutions, the Personnel/Compensation Committee approved
an increase in the base salary of the Chief Executive Officer.
This report has been provided by the Personnel/
Compensation Committee:
Richard L. Jacobs, Robert D. Nichols and Glen J. Whitney
Severance Arrangements
Employment Agreement. The Bank has entered into an
employment agreement with Paul K. Reynolds, President and Chief
Executive Officer of the Bank and the Company. The employment
agreement is intended to ensure that the Bank will be able to
maintain a stable and competent management base. The continued
success of the Bank depends to a significant degree on the skill
and competence of the President and Chief Executive Officer.
The employment agreement for Mr. Reynolds provides for a
one-year term. On each anniversary of the commencement date of
the employment agreement, the Board of Directors may extend the
employment agreement for an additional year such that the
remaining term shall be one year, unless written notice of
nonrenewal is given by the Board of Directors after conducting a
performance evaluation of the executive. The agreement provides
that the base salary of Mr. Reynolds will be reviewed annually.
In addition to the base salary, the employment agreement provides
that the executive is to receive all benefits provided to
permanent full-time employees of the Bank, including among other
things, participation in stock benefit plans, incentive
compensation plans and other fringe benefits applicable to
executive personnel. The employment agreement provides for
termination by the Bank for cause, as defined, at any time. In
the event the Bank chooses to terminate Mr. Reynolds' employment
for any reason other than (i) for cause, (ii) the executive's
disability, as defined, or death, (iii) the executive's
retirement, as defined, or (iv) upon the termination of his
employment for reasons other than a change in control, as
defined; or in the event of an executive's resignation from the
Bank upon (i) failure to re-elect him to his current office, (ii)
a material change in his functions, duties or responsibilities
which change would cause his position to become one of lesser
responsibility, importance or scope, (iii) relocation of his
principal place of employment by more than 30 miles or material
reduction in benefits or perquisites, (iv) the liquidation or
dissolution of the Bank or the Company, or (v) a breach of the
agreement by the Bank, the executive, or in the event of his
death, his beneficiary, would be entitled to receive an amount
equal to the greater of the remaining payments, including base
salary, bonuses and other payments due under the remaining term
of the
<PAGE>
employment agreement or three times the average of the
executive's base salary for the three preceding years, including
bonuses and other cash compensation paid, and the amount of any
benefits received pursuant to any employee benefit plans
maintained by the Bank. At the discretion of the Bank's Board of
Directors, the executive may receive a severance payment in an
amount up to the average of the three preceding years' salary in
the event the executive voluntarily terminates employment prior
to a change in control of the Bank.
If termination, whether voluntary or involuntary, follows a
change in control of the Bank during the term of the agreement
other than for death, disability, or for cause, the executive or,
in the event of death, his beneficiary, would be entitled to a
payment equal to the greater of (i) the payments due under the
remaining term of the employment agreement or (ii) 2.99 times the
average of the executive's base salary for the five preceding
years, including bonuses and other taxable compensation paid.
Payments to the executive under the agreement will be guaranteed
by the Company. The Bank would also continue the executive's
life, health, and disability coverage for the remaining unexpired
term of the employment agreement to the extent allowed by the
plan or policies maintained by the Bank from time to time. For
these purposes, a "change in control" is defined generally to
mean: (i) a plan of reorganization, merger or sale of
substantially all of the assets of the Bank or the Company that
is not approved by a majority of the Board of Directors of the
Bank or the Company; (ii) certain changes to the Board of
Directors of the Bank or the Company or changes in beneficial
ownership of the Company representing 25% or more of the combined
voting power of the Company's securities; (iii) a change in
control as defined by the Bank Holding Company Act; or (iv) a
change that would be required to be reported in response to Item
1(a) of Form 8-K.
The employment agreement provides that for a period of one
year following termination the executive agrees not to compete
with the Bank or the Company in any city, town or county in which
the Bank or the Company maintains an office or has filed an
application to establish an office. Any termination payments
made pursuant to the employment agreement would have to comply
with applicable law.
Directors' Compensation
The directors of the Company are currently those individuals
serving as directors of the Bank. During the year ended December
31, 1997 the Company paid aggregate directors' fees of $26,650
and the Bank paid aggregate directors' fees (including fees
deferred at the election of individual directors) of $117,950 to
the seven persons who served as directors of the Company and the
Bank during the year. Each member of the Board is paid an annual
retainer of $3,600 and $16,800, payable monthly, for attendance
at regular meetings of the Board of Directors of the Company and
the Bank, respectively. Each Board member is also paid $250 for
each special meeting of the Company and the Bank attended. In
addition, the Bank pays $150 per meeting to Bank directors who
attend the Loan Committee meetings. The Bank paid a total of
$7,200 in fees for attendance at such Committee meetings during
the year ended December 31, 1997.
Benefits
Profit Sharing Plan. All full-time employees of the Bank
who have attained age 21 and have at least one year of service
with the Bank during which they have worked 1,000 hours or more
are eligible to participate in the Bank's Profit Sharing Plan, a
tax-qualified plan. The plan is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and
is a defined contribution plan to which the Bank, but not Bank
employees, may make annual contributions. The Bank's
contribution to the plan for each plan year is a sum that the
Bank, by action of the Board of Directors, authorizes (so long as
the contribution for any plan year does not exceed the maximum
amount deductible for federal income tax purposes). Bank
contributions and plan forfeitures are allocated among plan
participants in the proportion that the compensation of each
participant bears to the total compensation of all participants.
Earnings and appreciation on plan assets are allocated among the
participants based on the respective participant's account
balance.
If a participant's employment is terminated, voluntarily or
involuntarily, for any reason other than death, retirement or
disability, the participant's interest in his or her individual
account balances shall vest as follows:
<PAGE>
<TABLE>
Completed Vested
Years of Service Percentages
---------------- -----------
<S> <C>
1 10%
2 20
3 30
4 40
5 60
6 80
7 or more 100
</TABLE>
For the year ended December 31, 1997, the Bank contributed a
total of $311 to the Profit-Sharing Plan account of Mr. Reynolds,
the only Company executive officer whose total individual annual
compensation exceeded $100,000 in 1997. At December 31, 1997, the
Profit-Sharing Plan account of Mr. Reynolds totaled $209,021.
Director Deferred Compensation Agreement. The Bank
maintains a non-tax-qualified deferred compensation plan for
directors (the "Directors Plan"). Each director may voluntarily
defer all or a portion of his annual director fees into the
Directors Plan. The deferred amounts, plus earnings, will be paid
to the director, as a retirement benefit, upon the attainment of
the director's benefit eligibility date, or upon the disability
of the director. In the event the director incurs a financial
hardship, the director may request a financial hardship benefit,
which will be approved or rejected in the sole discretion of the
Bank. In the event of the director's death prior to the
commencement of benefits, a survivor benefit will be paid to the
director's beneficiary.
Messrs. Ousley, Robinson, Reynolds, Chastain, Jacobs,
Nichols, and Whitney have elected to defer directors' fees under
the Directors Plan. For the year ended December 31, 1997, $78,000
of directors' fees and $20,430 in interest was deferred under the
Directors Plan.
Directors Emeritus Plan. Upon reaching age 65 with 8 years
of service as a director, each director, who is not also an
officer of the Bank, shall upon retirement from the Board of
Directors become a "Director Emeritus" if such director agrees to
perform consulting services for the Board of Directors. Under the
current plan, in consideration of his services as a Director
Emeritus, each Director Emeritus will receive a sum equal to 10%
of the annual fees paid to the active directors of the Bank from
time to time, multiplied by his years of service as an active
director, not to exceed 90% of the current annual fees paid to
active directors of the Bank, provided that a Director Emeritus
will not be compensated as such for a number of years which
exceeds the number of years that he served as an active director
of the Bank. Upon the death, disability or unwillingness of a
Director Emeritus to provide further consulting services, no
further benefits will be paid to such Director Emeritus.
Supplemental Retirement Income Plans. On August 1, 1994,
the Bank established a non-tax-qualified executive supplemental
retirement plan (the "SERP") for the benefit of certain executive
officers. The SERP provides a supplemental retirement income
benefit in an annual amount equal to the projected annual salary
of the executive at retirement, multiplied by a wage replacement
percentage and reduced by any amounts received from other benefit
plans of the Bank. Mr. Reynolds' wage replacement percentage is
eighty percent of his final average salary. Benefits under the
SERP are payable to an executive upon the attainment of each
executive's normal retirement date. In the event of an
executive's voluntary or involuntary termination of employment,
other than for cause, the executive is entitled to the vested
portion of his or her accrued benefit under the SERP. Benefits
will be payable in a lump sum or in monthly installments
beginning on the executive's normal retirement date and
continuing for a period of 180 months. Payments to an executive,
or to his beneficiary, may be made from the SERP upon the
executive's death, or total or permanent disability. The SERP is
considered an unfunded plan for tax and ERISA purposes. In
connection with the adoption of the SERP, the Bank purchased life
insurance on the participants in the SERP and the Directors Plan.
The cash surrender
<PAGE>
value of that insurance was approximately $3.5 million at
December 31, 1997. For financial statement purposes, the Bank
recorded a negative expense of $121,499 for 1997 relating to its
obligations under the SERP. The cash surrender value of the life
insurance increased by $281,000 during 1997. All obligations
arising under the SERP are payable from the general assets of the
Company. The SERP was effective on August 1, 1994.
Employee Stock Ownership Plan and Trust. The Bank has
established an Employee Stock Ownership Plan. The ESOP is a tax-
qualified plan subject to the requirements of ERISA and the
Internal Revenue Code. Employees with a 12-month period of
employment with the Bank during which they worked at least 1,000
hours and who have attained age 21 are eligible to participate.
As part of the Company's initial public offering, the ESOP
borrowed funds from the Company and used the funds to purchase 8%
of the Common Stock issued in the offering, or 376,000 shares.
Collateral for the loan is the Common Stock purchased by the
ESOP. The loan will be repaid principally from the Bank's
contributions to the ESOP over a period of up to 10 years. The
payment of principal or interest on the loan is not guaranteed by
the Bank. Shares purchased by the ESOP are held in a suspense
account for allocation among participants as the loan is repaid.
Contributions to the ESOP and shares released from the
suspense account in an amount proportional to the repayment of
the ESOP loan are allocated among participants on the basis of
compensation in the year of allocation, up to an annual adjusted
maximum level of compensation. Benefits generally vest at the
rate of 10% per year for the first four years of credited service
and 20% per year of credited service from the fifth to seventh
year, until a participant is 100% vested in his account balance
after seven years of credited service. Service with the Bank's
mutual predecessor is counted towards a participant's credited
service. Forfeitures are reallocated among remaining
participating employees in the same proportion as contributions.
Benefits may be payable upon death, retirement, early retirement,
disability or separation from service. The Bank's contributions
to the ESOP are not fixed, so benefits payable under the ESOP
cannot be estimated.
In connection with the establishment of the ESOP, a
committee of three directors was selected by the Bank to
administer the ESOP (the "ESOP Committee"). An unrelated
corporate trustee for the ESOP was appointed prior to the
completion of the offering. The ESOP Committee may instruct the
trustee regarding investment of funds contributed to the ESOP.
The ESOP trustee generally will vote all shares of Common Stock
held under the ESOP in accordance with the written instructions
of the ESOP Committee. In certain circumstances, however, the
ESOP trustee must vote all allocated shares held in the ESOP in
accordance with the instructions of the participating employees,
and unallocated shares and shares held in the suspense account in
a manner calculated to most accurately reflect the instructions
the ESOP trustee has received from participants regarding the
allocated stock, subject to and in accordance with the fiduciary
duties under ERISA owed by the ESOP trustee to the ESOP
participants. Under ERISA, the Secretary of Labor is authorized
to bring an action against the ESOP trustee for the failure of
the ESOP trustee to comply with its fiduciary responsibilities.
Such a suit could seek to enjoin the ESOP trustee from violating
its fiduciary responsibilities and could result in the imposition
of civil penalties or criminal penalties if the breach is found
to be willful.
Stock Option Plan. In July 1996, the stockholders of the
Company approved the Company's 1996 Stock Option Plan (the "Stock
Option Plan"), pursuant to which certain key employees and
nonemployee directors of the Company and its affiliates,
including the Bank, are eligible to participate. A committee
consisting of the nonemployee directors of the Board of Directors
of the Company (the "Committee") determines the grant of options
to employees. Options granted to nonemployee directors under the
Stock Option Plan are awarded under a formula pursuant to which
each nonemployee director received options to purchase 23,500
shares of Common Stock of the Company. Options must be exercised
within ten years from the date of grant. The exercise price of
the options must be at least 100% of the fair market value on the
underlying Common Stock at the time of the grant. The exercise
price of each option granted to nonemployee directors is $ 11.75,
the last reported trading price of the Common Stock on the date
of grant. Set forth in the following table is certain additional
information concerning options outstanding to Mr. Reynolds at
December 31, 1997.
PAGE
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUE
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options at The-Money Options at
Fiscal Year-End Fiscal Year-End(2)
Shares Acquired Value
Name Upon Exercise Realized(1) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
Paul K. Reynolds -- $-- 47,000/70,500 $622,750/$934,125
____________________________________
(1) Equals the difference between the aggregate exercise price of such options and the
aggregate fair market value of the shares of Common Stock that would be received upon
exercise, assuming such exercise occurred on December 31, 1997, at which date the last
reported price of the Common Stock as quoted on the Nasdaq Market was $25.00.
/TABLE
<PAGE>
All nonstatutory stock options awarded to outside directors
vest at the rate of twenty percent (20%) of the initially awarded
amount per year commencing with the vesting of the first
installment on the date of grant, and succeeding installments on
each anniversary of the date of grant provided the participant
maintains continuous service as an outside director or director
emeritus. Nonstatutory stock options awarded to employees are
exercisable in installments, as determined by the Committee,
which also determines the date on which each installment shall
become exercisable. Incentive stock options granted under the
Plan will vest in an employee at the rate or rates determined by
the Committee. Awards to employees will become fully vested and
100% exercisable upon termination of service due to death,
disability or normal retirement. In the event of a change in
control of the Bank or the Company, nonstatutory stock options
awarded to employees will become fully vested and incentive stock
options will become fully vested in the event of the employee's
subsequent termination of employment. All options granted to
outside directors will be 100% exercisable in the event of a
change in control of the Bank or the Company, or in the event the
optionee terminates service due to death or disability. Unvested
options will be forfeited by an outside director upon termination
of service for cause, failure to seek reelection, failure to be
reelected, or resignation from the Board, provided, however, that
unvested options will not be forfeited if an outside director
terminates service on the Board but continues to serve the Bank
or the Company as a director emeritus.
Recognition and Retention Plan. In July 1996, the
stockholders of the Company approved the Company's 1996
Recognition and Retention Plan (the "Recognition Plan"), as a
method of providing certain key employees and nonemployee
directors of the Bank and/or the Company with a proprietary
interest in the Company in a manner designed to encourage such
persons to remain with the Bank and the Company.
A committee of the Board of Directors of the Company
composed of "disinterested" directors administers the Recognition
Plan and makes awards to executive officers and certain key
employees. Pursuant to the Plan, 9,400 shares of Common Stock
were awarded to each of the nonemployee directors of the Company
and 47,000 shares were awarded to Mr. Reynolds, President and
Chief Executive Officer of the Company
Participants in the Recognition Plan earn (become vested in)
shares of Restricted Stock covered by an award and all
restrictions are expected to lapse over a period of time
commencing from the date of the award; provided, however, that
the Committee may accelerate or extend the earnings rate on any
awards made to officers and employees after the effective date of
the Recognition Plan. Awards to outside directors vest at the
rate of twenty percent (20%) of the initially awarded amount per
year commencing with the first installment being earned as of the
date of grant, and succeeding installments being earned on each
anniversary of the date of grant, provided that the recipient
maintains continuous service as a director or a director
emeritus. Awards to employees become fully vested upon
termination of employment due to death, disability or normal
retirement or following a termination of employment upon or
following a change in the control of the Bank or the Company.
Upon termination of employment for any other reason, unvested
shares are forfeited. Awards to outside directors become fully
vested upon an outside director's disability, death, or following
termination of service upon or following a change in control of
the Bank or the Company. Unvested shares of Restricted Stock
would be forfeited by an outside director upon termination of
services for cause, failure to seek
<PAGE>
reelection, failure to be reelected, or resignation from the
Board; provided, however, that unvested shares of Restricted
Stock would not be forfeited if an outside director terminates
service on the Board but continues to serve the Bank or the
Company as a director emeritus.
- -----------------------------------------------------------------
Transactions with Certain Related Persons
- -----------------------------------------------------------------
Federal law requires that all loans or extensions of credit
to executive officers and directors of financial institutions
must be made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for
comparable transactions with the general public and must not
involve more than the normal risk of repayment or present other
unfavorable features.
The Bank makes loans to its directors and executive officers
in the ordinary course of business, on substantially the same
terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other
persons, and such loans do not involve more than the normal risk
of collectability or present other unfavorable features.
As of December 31, 1997, the aggregate principal balance of
loans outstanding for all directors and the one officer whose
annual compensation exceeded $100,000 during 1997, and all such
directors, officers, and family members was $101,978 and
$506,219, respectively.
- -----------------------------------------------------------------
PROPOSAL II--RATIFICATION OF APPOINTMENT OF AUDITORS
- -----------------------------------------------------------------
The Board of Directors of the Company has approved the
engagement of Crowe, Chizek and Company LLP to be the Company's
auditors for the year ending December 31, 1998, subject to the
ratification of the engagement by the Company's stockholders. At
the Annual Meeting, stockholders will consider and vote on the
ratification of the engagement of Crowe, Chizek and Company LLP
for the year ending December 31, 1998. A representative of
Crowe, Chizek and Company LLP is expected to attend the Annual
Meeting to respond to appropriate questions and to make a
statement if he so desires.
In order to ratify the selection of Crowe, Chizek and
Company LLP as the auditors for the year ending December 31,
1998, the proposal must receive at least a majority of the votes
cast, either in person or by proxy, in favor of such
ratification. The Board of Directors recommends a vote "FOR" the
ratification of Crowe, Chizek and Company LLP as auditors for
1998.
- -----------------------------------------------------------------
STOCKHOLDER PROPOSALS
- -----------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy
materials for next year's Annual Meeting of Stockholders, any
stockholder proposal to take action at such meeting must be
received at the Company's executive office, 135 East Main Street,
Decatur, Illinois 62523, no later than November 27, 1998. Any
such proposals shall be subject to the requirements of the proxy
rules adopted under the Exchange Act as administered by the SEC.
- -----------------------------------------------------------------
MISCELLANEOUS
- -----------------------------------------------------------------
The Board of Directors is not aware of any business to come
before the Annual Meeting other than the matters described above
in this Proxy Statement. However, if any matters should properly
come before the Annual Meeting, it is intended that holders of
the proxies will act as directed by a majority of the Board of
Directors, except for matters related to the conduct of the
Annual Meeting, as to which they shall act in accordance with
their best judgment.
<PAGE>
The cost of solicitation of proxies will be borne by the
Company. In addition to solicitations by mail, directors,
officers and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional
compensation. The Company will also request persons, firms and
corporations holding shares in their names, or in the names of
their nominees, which are beneficially owned by others, to send
proxy materials to and obtain proxies from such beneficial
owners, and will reimburse such holders for their reasonable
expenses in doing so.
BY ORDER OF THE BOARD OF DIRECTORS
G. Lynn Brinkman
Secretary
Decatur, Illinois
March 13, 1998
<PAGE>
REVOCABLE PROXY
FIRST MUTUAL BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
April 23, 1998
The undersigned hereby appoints the official proxy committee
consisting of those members of the Board of Directors not
nominated to the Board of Directors, with full powers of
substitution, to act as attorneys and proxies for the undersigned
to vote all shares of Common Stock of the First Mutual Bancorp,
Inc. (the "Company") which the undersigned is entitled to vote at
the Annual Meeting of Stockholders ("Meeting") to be held at The
Decatur Club, 158 West Prairie Avenue, Decatur, Illinois at 3:00
p.m. (local time) on Thursday, April 23, 1998. The official
proxy committee is authorized to cast all votes to which the
undersigned is entitled as follows:
VOTE
FOR WITHHELD
1. The election as directors of all / / / /
nominees listed below (except as
marked to the contrary below)
C. Robert Chastain
Richard L. Jacobs
Glen J. Whitney
FOR AGAINST ABSTAIN
2. The ratification of the / / / / / /
appointment of Crowe, Chizek
and Company LLP as auditors
for the year ending December 31,
1998.
/ / / / / /
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Meeting or at any adjournment thereof and after notification to
the Secretary of the Company at the Meeting of the stockholder's
decision to terminate this proxy, then the power of said
attorneys and proxies shall be deemed terminated and of no
further force and effect. This proxy may also be revoked by
sending written notice to the Secretary of the Company at the
address set forth on the Notice of Annual Meeting of
Stockholders, or by the filing of a later proxy prior to a vote
being taken on a particular proposal at the Meeting.
The undersigned acknowledges receipt from the Company prior
to the execution of this proxy of notice of the Meeting, a proxy
statement dated March 13, 1998, and audited financial statements.
Dated: ----------------, 1998 / /
Check Box if You Plan
to Attend Annual Meeting
- ------------------------------ ------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ------------------------------ ------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this card. When
signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held
jointly, each holder should sign.
- -----------------------------------------------------------------
Please complete and date this proxy and return it promptly
in the enclosed postage-prepaid envelope.
- -----------------------------------------------------------------
