FIRST SAVINGS FINANCIAL CORP
S-8, 1996-06-20
SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED
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<PAGE>
 
As filed with the Securities and Exchange Commission on June 20, 1996.
                                                       REGISTRATION NO. ________
================================================================================
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM S-8

                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933
                             ____________________

                         FIRST SAVINGS FINANCIAL CORP.
            (Exact name of Registrant as specified in its charter)

      NORTH CAROLINA                                             56-1928110
 (State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                           Identification No.)

                             501 SOUTH MAIN STREET
                             POST OFFICE BOX 1885
                     REIDSVILLE, NORTH CAROLINA 27323-1885
                   (Address of Principal Executive Offices)

FIRST SAVINGS BANK OF ROCKINGHAM COUNTY, INC., SSB MANAGEMENT RECOGNITION PLAN
                FIRST SAVINGS FINANCIAL CORP. STOCK OPTION PLAN
                           (Full title of the Plans)
                             ____________________

                           DAVID S. KEMP, PRESIDENT
                         FIRST SAVINGS FINANCIAL CORP.
                             501 SOUTH MAIN STREET
                             POST OFFICE BOX 1885
                     REIDSVILLE, NORTH CAROLINA 27323-1885
                                (910) 342-4251
  (Name and address, including zip code, and telephone number, including area
                          code, of agent for service)

                                  COPIES TO:
                             EDWARD C. WINSLOW III
                               ELLEN P. HAMRICK
                           BROOKS, PIERCE, MCLENDON,
                          HUMPHREY & LEONARD, L.L.P.
                            2000 RENAISSANCE PLAZA
                             POST OFFICE BOX 26000
                       GREENSBORO, NORTH CAROLINA 27420

<TABLE>
<CAPTION>
                        CALCULATION OF REGISTRATION FEE
===================================================================================================
TITLE OF SECURITIES           AMOUNT TO BE   PROPOSED MAXIMUM   PROPOSED MAXIMUM     AMOUNT OF
TO BE REGISTERED              REGISTERED/1/   OFFERING PRICE   AGGREGATE OFFERING   REGISTRATION
                                                 PER UNIT           PRICE/6/            FEE
- ---------------------------------------------------------------------------------------------------
<S>                           <C>            <C>               <C>                  <C>
Common Stock, no par value      37,935/2/       $11.125/3/        $  422,026.87    
Common Stock, no par value      94,838/4/       $11.125/5/        $1,055,072.75        $509.35
===================================================================================================
</TABLE>

                           (Footnotes on Next Page)

     THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE UPON FILING IN
ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND 17
C.F.R. (S)230.462.

     /1/Together with an indeterminate number of additional shares which may
be necessary to adjust the number of shares reserved for issuance pursuant to
the First Savings Financial Corp. Stock Option Plan ("Stock Option Plan"), and
the First Savings Bank of Rockingham County, Inc., SSB Management Recognition
Plan ("MRP") as a result of a reclassification, reorganization,
recapitalization, stock split, stock dividend or similar occurrence which makes
an adjustment of shares just and appropriate.

     /2/Represents the total number of shares issued under the MRP.

     /3/Assumes a value per share for shares which have been issued under the
MRP equal to $11.125, which was the price per share paid on April 11, 1996 (the
last trade known to management to have occurred prior to April 19, 1996).

     /4/Represents the total number of shares which may be issued pursuant to
options granted under the Stock Option Plan.

     /5/Assumes a value per share underlying options granted under the Stock
Option Plan equal to $11.125, which was the price per share paid on April 11,
1996 (the last trade known to management to have occurred prior to April 19,
1996).

     /6/Estimated total for the purposes of calculating the registration fee in
accordance with Rule 457(c) and (h). There is no established market for the
Common Stock, excluding limited sporadic quotations, although the Registrant's
Common Stock is quoted over-the-counter through the National Daily Quotation
System "pink sheets" published by the National Quotation Bureau, Inc. Subject to
the foregoing, and based upon the price paid and the last trade known to
management to have occurred prior to April 19, 1996, which trade occurred on
April 11, 1996, the per share market value of the Common Stock would be $11.125.

================================================================================
<PAGE>
 
                                    PART I
             INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS

ITEM I.  PLAN INFORMATION.

       This Registration Statement on Form S-8 relates to the registration of up
to 132,773 shares of common stock, no par value, of First Savings Financial
Corp. (the "Registrant") (i) which are reserved for issuance pursuant to options
which have been granted under the First Savings Financial Corp. Stock Option
Plan ("Stock Option Plan"), and (ii) which have been issued pursuant to the
First Savings Bank of Rockingham County, Inc., SSB Management Recognition Plan
("MRP"). This Registration Statement also relates to an indeterminent number of
additional shares which may be necessary to adjust the number of shares reserved
for issuance pursuant to the Stock Option Plan or pursuant to the MRP as a
result of a reclassification, reorganization, recapitalization, stock split,
stock dividend or similar occurrence which makes an adjustment of shares just
and appropriate. Documents containing the information specified in Part I of
Form S-8 will be sent or given to the participants in the Stock Option Plan and
MRP as specified by Rule 428(b)(1). Such documents are not filed with the
Securities and Exchange Commission (the "Commission") either as part of this
Registration Statement or as prospectuses or prospectus supplements pursuant to
Rule 424 in reliance on Rule 428.

ITEM 2.  REGISTRATION INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.

       The required statement is contained in the prospectus to be delivered
pursuant to Part I of this Registration Statement as specified by Rule
428(b)(1).

                                    PART II
              INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3.  INCORPORATION OF DOCUMENTS BY REFERENCE.

       The following documents filed with the Commission are incorporated herein
by reference:

       (a)  The Registrant's Annual Report on Form 10-KSB for the fiscal year
            ended December 31, 1995.

       (b)  The Registrant's Quarterly Report on Form 10-Q for the quarter ended
            March 31, 1996.

       (c)  The description of the Registrant's Common Stock contained in the
            Registrant's S-1 Registration Statement, Registration No. 33-93096,
            incorporated by reference in the Registration Statement on Form 8-A
            filed with the Commission under Section 12(b) of the Securities
            Exchange Act of 1934, as amended (the "Exchange Act"), on September
            8, 1995 (File No. 026730), including any amendment or report filed
            for the purpose of updating such description.

       All documents subsequently filed by the Registrant and the Stock Option
Plan or MRP pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment which indicates that all
securities registered hereby have been sold or which deregisters all securities
then remaining unsold, shall be deemed incorporated by reference herein and to
be a part
<PAGE>
 
hereof from the date of the filing of such documents. Any statement contained in
this Registration Statement, or in a document incorporated or deemed to be
incorporated by reference herein, shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein, or in any other subsequently filed document which is also
incorporated or deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.

ITEM 4.  DESCRIPTION OF SECURITIES.

       Not applicable.

ITEM 5.  INTERESTS OF NAMED EXPERTS AND COUNSEL.

       Not applicable.

ITEM 6.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

       The Registrant's Articles of Incorporation provide that to the fullest
extent permitted by the North Carolina Business Corporation Act (the "NCBCA"),
no person who serves as a director shall be personally liable to the Registrant
or any of its stockholders or otherwise for monetary damages for breach of any
duty as director. The Registrant's By-laws state that any person who at any time
serves or has served as a director or officer of the Registrant, or who, while
serving as a director or officer of the Registrant, serves or has served at the
request of the Registrant as a director, officer, partner, trustee, employer or
agent of another corporation, partnership, joint venture, trust or other
enterprise, or as a trustee or administrator under an employee benefit plan,
shall have a right to be indemnified by the Registrant to the fullest extent
permitted by law against (a) reasonable expenses, including attorneys' fees,
incurred by him in connection with any threatened, pending or completed civil,
criminal, administrative, investigative, or arbitrative action, suit, or
proceeding (and any appeal therein), whether or not brought by or on behalf of
the Registrant, seeking to hold him liable by reason of the fact that he is or
was acting in such capacity, and (b) reasonable payments made by him in
satisfaction of any judgment, money decree, fine (including an excise tax
assessed with respect to an employee benefit plan) or penalty for which he may
have become liable in any such action, suit or proceeding, or in connection with
a settlement approved by the Board of Directors of any such action, suit or
proceeding.

       Sections 55-8-50 through 55-8-58 of the NCBCA contain provisions
prescribing the extent to which directors and officers shall or may be
indemnified. Section 55-8-51 of the NCBCA permits a corporation, with certain
exceptions, to indemnify a present or former director against liability if (i)
the director conducted himself in good faith, (ii) the director reasonably
believed (x) that the director's conduct in the director's official capacity
with the corporation was in its best interests and (y) in all other cases the
director's conduct was at least not opposed to the corporation's best interests,
and (iii) in the case of any criminal proceeding, the director had no reasonable
cause to believe the director's conduct was unlawful. A corporation may not
indemnify a director in connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation or in
connection with a proceeding charging improper personal benefit to the director.
The above standard

                                       2
<PAGE>
 
of conduct is determined by the board of directors, or a committee or special
legal counsel or the shareholders as prescribed in Section 55-8-55.

       Sections 55-8-52 and 55-8-56 of the NCBCA require a corporation to
indemnify a director or officer in the defense of any proceeding to which the
director or officer was a party against reasonable expenses when the director or
officer is wholly successful in the director's or officer's defense, unless the
articles of incorporation provide otherwise. Upon application, the court may
order indemnification of the director or officer if the director or officer is
adjudged fairly and reasonably so entitled under Section 55-8-54.

       In addition, Section 55-8-57 permits a corporation to provide for
indemnification of directors, officers, employees or agents, in its articles of
incorporation or bylaws or by contract or resolution, against liability in
various proceedings and to purchase and maintain insurance policies on behalf of
these individuals.

       The foregoing is only a general summary of certain aspects of North
Carolina law dealing with indemnification of directors and officers and does not
purport to be complete. It is qualified in its entirely by reference to the
relevant statutes, which contain detailed specific provisions regarding the
circumstances under which and the person for whose benefit indemnifications
shall or may be made.

ITEM 7.  EXEMPTION FROM REGISTRATION CLAIMED.
 
       Not applicable.

ITEM 8.  EXHIBITS

       The following exhibits are filed with or incorporated by reference into
this Registration Statement on Form S-8 (numbering corresponds to Exhibit Table
in Item 601 of Regulation S-B):

<TABLE>
<CAPTION>
          Exhibit No.                   Description of Document
          -----------                   -----------------------             
          <S>               <C>
            (4)(i)          The Registrant's Articles of Incorporation
                            (incorporated by reference to Exhibit (3)(i) of the
                            Registrant's S-1 Registration Statement,
                            Registration No. 33-93096)
                      
            (4)(ii)         The Registrant's Bylaws (incorporated by
                            reference to Exhibit (3)(ii) of the Registrant's S-1
                            Registration Statement, Registration No. 33-93096)
                      
            (4)(iii)        Specimen Stock Certificate for the Registrant
                      
            (5)             Opinion of Brooks, Pierce, McLendon, Humphrey
                            & Leonard, L.L.P. as to legality of securities
                            being registered
                      
            (10)(i)         First Savings Financial Corp. Stock Option Plan
</TABLE>

                                       3
<PAGE>
 
<TABLE>
          <S>               <C>
          (10)(ii)          First Savings Bank of Rockingham County, Inc.,
                            SSB Management Recognition Plan

          (23)(i)           Consent of Brooks, Pierce, McLendon, Humphrey
                            & Leonard, L.L.P. (included in Exhibit 5)

          (23)(ii)          Consent of KPMG Peat Marwick LLP
</TABLE>

ITEM 9.  UNDERTAKINGS.

       The undersigned Registrant hereby undertakes:

       (1)  To file, during any period in which offers or sales are being made,
a post-effective amendment to the Registration Statement:

            (i)    To include any prospectus required by Section 10(a)(3) of the
                   1933 Act;

            (ii)   To reflect in the prospectus any facts or events arising
                   after the effective date of the Registration Statement (or
                   the most recent post-effective amendment thereof) which,
                   individually or in the aggregate, represent a fundamental
                   change in the information set forth in the Registration
                   Statement. Notwith standing the foregoing, any increase or
                   decrease in volume of securities offered (if the total dollar
                   value of securities offered would not exceed that which was
                   registered) and any deviation from the low or high end of the
                   estimated maximum offering range may be reflected in the form
                   of prospectus filed with the Commission pursuant to Rule
                   424(b) if, in the aggregate, the changes in volume and price
                   represent no more than a 20% change in the maximum aggregate
                   offering price set forth in the "Calculation of Registration
                   Fee" table in the Registration Statement;

            (iii)  To include any material information with respect to the plan
                   of distribution not previously disclosed in the Registration
                   Statement or any material change to such information in the
                   Registration Statement;

       Provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply 
       --------  -------                                                       
if the Registration Statement is on Form S-3 or Form S-8 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.

       (2)  That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

       (3)  To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the termination of
the offering.

                                       4
<PAGE>
 
       The undersigned Registrant hereby undertakes, that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

       Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to directors, officers, and controlling persons of the Registrant
pursuant to the provisions discussed in Item 6 thereof, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered hereby, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.

                                       5
<PAGE>
 
                                  SIGNATURES


     THE REGISTRANT.  Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Reidsville, State of North Carolina, on the 19th
day of June, 1996.


                                   FIRST SAVINGS FINANCIAL CORP.
                                   Registrant


                                   By:    /s/ David S. Kemp
                                          ----------------------------------
                                          DAVID S. KEMP, PRESIDENT


     Each person whose individual signature appears below hereby makes,
constitutes and appoints David S. Kemp to sign for such person and in such
person's name and capacity indicated below, any and all amendments to this
Registration Statement, including any and all post-effective amendments.

     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE> 
<S>                         <C> 
Date:  June 19, 1996        By:  /s/ David S. Kemp
                                 --------------------------------------------------------------
                                 DAVID S. KEMP, PRESIDENT AND CHIEF EXECUTIVE OFFICER
                                            (PRINCIPAL EXECUTIVE OFFICER)


Date:  June 19, 1996        By:  /s/ Cynthia F. Teague
                                 --------------------------------------------------------------
                                 CYNTHIA F. TEAGUE, VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND
                                            CHIEF ACCOUNTING OFFICER
                                            (PRINCIPAL FINANCIAL OFFICER AND
                                            PRINCIPAL ACCOUNTING OFFICER)


Date:  June 19, 1996        By:  /s/ Pat F. Brady
                                 --------------------------------------------------------------
                                 PAT F. BRADY, DIRECTOR


Date:  June 19, 1996        By:  /s/ Fred B. Coates
                                 --------------------------------------------------------------
                                 FRED B. COATES, DIRECTOR


Date:  June 19, 1996        By:  /s/ Phillip M. Hooper
                                 --------------------------------------------------------------
                                 PHILLIP M. HOOPER, DIRECTOR
</TABLE> 
<PAGE>
 
<TABLE> 
<S>                         <C>   
Date:  June 19, 1996        By:  /s/ George I. Richardson
                                 --------------------------------------------------------------
                                 GEORGE I. RICHARDSON, DIRECTOR


Date:  June 19, 1996        By:  /s/ Benton S. Smothers
                                 --------------------------------------------------------------
                                 BENTON S. SMOTHERS, DIRECTOR


Date:  June 19, 1996        By:  /s/ Gilbert R. Upchurch
                                 --------------------------------------------------------------
                                 GILBERT R. UPCHURCH, DIRECTOR
</TABLE> 
<PAGE>
 
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
                                                                Method of         Sequentially        
Exhibit No.                  Description                         Filing           Numbered Page       
- -----------                  -----------                        ---------         -------------       
<S>            <C>                                           <C>                  <C>                 
  (4)(i)       The Registrant's Articles of                  Incorporated by          - - -           
               Incorporation                                 Reference                                
                                                                                                      
  (4)(ii)      The Registrant's Bylaws                       Incorporated by          - - -          
                                                             Reference                                
                                                                                                      
  (4)(iii)     Specimen Stock Certificate for the            Filed Herewith                           
               Registrant                                                                             
                                                                                                      
    (5)        Opinion of Brooks, Pierce, McLendon,          Filed Herewith                           
               Humphrey & Leonard, L.L.P. as to                                                       
               legality of securities being registered                                                
                                                                                                      
  (10)(i)      First Savings Financial Corp. Stock           Filed Herewith                           
               Option Plan                                                                            
                                                                                                      
  (10)(ii)     First Savings Bank of Rockingham              Filed Herewith                           
               County, Inc., SSB Management                                                           
               Recognition Plan                                                                       
                                                                                                      
  (23)(i)      Consent of Brooks, Pierce, McLendon,          Filed Herewith                           
               Humphrey & Leonard, L.L.P. (included                                                   
               in Exhibit 5)                                                                          
                                                                                                      
  (23)(ii)     Consent of KPMG Peat Marwick LLP              Filed Herewith                            
</TABLE>

                                       8

<PAGE>
 
     NUMBER                                                    SHARES

     FSF
                         FIRST SAVINGS FINANCIAL CORP.

     INCORPORATED UNDER THE LAWS
     OF THE STATE OF NORTH CAROLINA          SEE REVERSE FOR CERTAIN DEFINITIONS
                                             CUSIP 33620B 10 6



THIS IS TO CERTIFY THAT

                                                   COUNTERSIGNED AND REGISTERED:
                                                  REGISTRAR AND TRANSFER COMPANY
                                BY      (CRANFORD, NEW JERSEY)    TRANSFER AGENT
                                                                  AND REGISTRAR


                                                            AUTHORIZED SIGNATURE



is the owner of



   FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK, NO PAR VALUE, OF

                         FIRST SAVINGS FINANCIAL CORP.

transferable only on the books of the Corporation in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.  The
security evidenced by this Certificate is not a deposit account or savings
account and is not federally insured or guaranteed.  See reverse side for
certain definitions and information.

     This Certificate is not valid until countersigned and registered by the
Transfer Agent and Registrar.
     WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.


Dated:


     /s/ Alecia S. Jones             [SEAL]            /s/ David S. Kemp
                       Secretary                                       President
<PAGE>
 
                         FIRST SAVINGS FINANCIAL CORP.

KEEP THIS CERTIFICATE IN A SAFE PLACE.  IF IT IS LOST, STOLEN OR DESTROYED, THE
CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A
REPLACEMENT CERTIFICATE.

The Corporation will furnish to any stockholders upon request and without charge
a copy of the Articles of Incorporation and Bylaws of the Corporation, which set
forth certain other provisions with respect to acquisition of shares of the
Corporation, as well as a description of the Corporation's authorized common and
preferred stock and other provisions affecting stockholder rights and corporate
governance.

     The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM -  as tenants in common  UNIF TRANSFERS MIN ACT-  
_______ Custodian ________
(Cust)            (Minor)

TEN ENT -  as tenants by the entireties               under Uniform Transfers to
                                                      Minors Act _______________
                                                                     (State)
JT TEN -   as joint tenants with right of
           survivorship and not as tenants in common

   Additional abbreviations may also be used although not in the above list.


For value received, _______________________________ hereby sell, assign and
transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------

________________________________________________________________________________

________________________________________________________________________________
 (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

shares of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint ____________________________________________
__________ Attorney to transfer the said stock on the books of the within named
Corporation with full power of substitution in the premises.

Dated ___________________________


                         _______________________________________________________
               NOTICE:   THIS SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH
                         THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN
                         EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR
                         ANY CHANGE WHATEVER.

 
                         _______________________________________________________
 SIGNATURES GUARANTEED:  THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
                         GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND
                         LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
                         AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM),
                         PURSUANT TO S.E.C. RULE 17Ad.15.

<PAGE>
 
      [LETERHEAD OF BROOKS, PIERCE, MCLENDON, HUMPHREY & LEONARD, L.L.P.]


                                 June 18, 1996
                                                                  (910) 271-3112



Board of Directors
First Savings Financial Corp.
501 South Main Street
Reidsville, North Carolina 27320

     Re:  First Savings Financial Corp. Stock Option Plan and Management 
          Recognition Plan --Registration Statement on Form S-8 Respecting the 
          Offering of up to 132,773 Shares of Common Stock

Gentlemen:

     We have acted as special counsel to First Savings Financial Corp. (the
"Holding Company"), in connection with the Holding Company's registration under
the Securities Act of 1933 on Form S-8 (the "Registration Statement") of its
offering of up to 132,773 shares of Common Stock, no par value (the "Shares"),
under the First Savings Financial Corp. Stock Option Plan (the "Stock Option
Plan") in connection with the exercise of stock options (the "Option Rights"),
and under the First Savings Bank of Rockingham County, Inc., SSB Management
Recognition Plan (the "MRP"). As such counsel, we have made such legal and
factual examinations and inquiries as we deemed advisable for the purpose of
rendering our opinions.

     For purposes of rendering our opinion, we have assumed that (i) the Shares
issuable pursuant to the exercise of Option Rights granted under the terms of
the Stock Option Plan will continue to be duly and validly authorized on the
dates the Shares are issued pursuant to the Options Rights; (ii) on the dates
the Option Rights are exercised, the Option Rights granted under the terms of
the Stock Option Plan will constitute valid, legal and binding obligations of
the Holding Company and will (subject to applicable bankruptcy, moratorium,
insolvency, reorganization and other laws and legal principles affecting the
enforceability of creditors' rights generally) be enforceable against the
Holding Company in accordance with their terms; (iii) no change occurs after the
date hereof in applicable law or the pertinent facts; and (iv) the provisions of
applicable "blue sky" and other state securities laws have been complied with to
the extent required.
<PAGE>
 
Board of Directors
First Savings Financial Corp.
June 18, 1996
Page 2


     Based on the foregoing, and subject to the assumptions set forth herein, it
is our opinion as of the date hereof that the Shares which have been or are to
be issued pursuant to the Stock Option Plan and the MRP have been duly and
validly authorized and, upon the issuance or sale of the Shares in accordance
with the Stock Option Plan and the MRP, and upon receipt of any consideration
required thereby, will be legally issued, fully paid and nonassessable.

     We hereby consent to the filing of this letter as an exhibit to the
Registration Statement.


                                        Sincerely yours,

                                        BROOKS, PIERCE, MCLENDON, HUMPHREY & 
                                        LEONARD, L.L.P.



                                        By: /s/ Edward C. Winslow III
                                           -------------------------------------

<PAGE>
 
                         FIRST SAVINGS FINANCIAL CORP.
                               STOCK OPTION PLAN


     THIS IS THE FIRST SAVINGS FINANCIAL CORP. STOCK OPTION PLAN ("Plan") of
First Savings Financial Corp. (the Holding Company"), a North Carolina
corporation, with its principal office in Reidsville, Rockingham County, North
Carolina, adopted by the Board of Directors of the Holding Company and effective
upon the approval of the Plan by a majority of the shareholders of the Holding
Company and the Federal Deposit Insurance Corporation (the "FDIC"), or as soon
as practicable thereafter, under which options may be granted from time to time
to eligible directors and employees of the Holding Company, First Savings Bank
of Rockingham County, Inc., SSB (the "Savings Bank") and of any corporation or
other entity of which either the Holding Company or the Savings Bank owns,
directly or indirectly, not less than fifty percent (50%) of any class of equity
securities (a "Subsidiary"), to purchase shares of common stock of the Holding
Company ("Common Stock"), subject to the provisions set forth as follows:

     1.   PURPOSE.  The purpose of this Plan is to aid the Holding Company, the
          -------                                                              
Savings Bank and any Subsidiary in attracting capable directors and employees
and to provide a long range incentive for directors and employees to remain in
the management of the Holding Company, the Savings Bank or any Subsidiary, to
perform at increasing levels of effectiveness and to acquire a permanent stake
in the Holding Company with the interest and outlook of an owner.  These
objectives will be promoted through the granting of options to acquire shares of
Common Stock pursuant to the terms of this Plan.

     2.   ADMINISTRATION.  The Plan shall be administered by the committee (the
          --------------                                                       
"Committee") which shall consist of three members of the Board of Directors of
the Holding Company (the "Board") who are "disinterested persons" as described
in Rule 16b-3(c)(2)(i) of the Rules and Regulations under the Securities Act of
1934 (the "Exchange Act").  Members of the Committee shall serve at the pleasure
of the Board.  In the absence at any time of a duly appointed Committee, this
Plan shall be administered by those members of the Board who are "disinterested
persons," and by the Board if there are less than three "disinterested persons."
The Committee may designate any officers or employees of the Holding Company,
the Savings Bank or any Subsidiary to
<PAGE>
 
assist in the administration of the Plan and to execute documents on behalf of
the Committee and perform such other ministerial duties as may be delegated to
them by the Committee.

     Subject to the provisions of the Plan, the determinations or the
interpretation and construction of any provision of the Plan by the Committee
shall be final and conclusive upon all persons affected thereby.  By way of
illustration and not of limitation, the Committee shall have the discretion (a)
to construe and interpret the Plan and all options granted hereunder and to
determine the terms and provisions (and amendments thereof) of the options
granted under the Plan (which need not be identical); (b) to define the terms
used in the Plan and in the options granted hereunder; (c) to prescribe, amend
and rescind the rules and regulations relating to the Plan; (d) to determine the
individuals to whom and the time or times at which such options shall be
granted, the number of shares to be subject to each option, the option price,
and the determination of leaves of absence which may be granted to participants
without constituting a termination of their employment for the purposes of the
Plan; and (e) to make all other determinations necessary or advisable for the
administration of the Plan.

     It shall be in the discretion of the Committee to grant options which
qualify as "incentive stock options" (as that term is defined in Section 422 of
the Internal Revenue Code of 1986, as amended) or which do not qualify as
incentive stock options and which will be given tax treatment as "nonqualified
stock options" (herein referred to collectively as "options;" however, whenever
reference is specifically made only to "incentive stock options" or
"nonqualified stock options," such reference shall be deemed to be made to the
exclusion of the other).  Any options granted which fail to satisfy the
requirements for incentive stock options shall become nonqualified stock
options.

     3.   STOCK AVAILABLE FOR OPTIONS.  The stock to be subject to options under
          ---------------------------                                           
the Plan shall be authorized but unissued shares of Common Stock or, in the
discretion of the Committee, issued shares of Common Stock which have been
reacquired by the Holding Company.  The total number of shares of Common Stock
for which options may be granted under the Plan is the number of shares equal to
ten percent (10%) of the total number of shares of Common Stock issued by the
Holding Company in connection with the

                                       2
<PAGE>
 
conversion of the Savings Bank from a North Carolina mutual savings bank to a
North Carolina stock savings bank on September 22, 1995 (the "Conversion").
Such number of shares is subject to any capital adjustments as provided in
Section 14.  In the event that an option granted under the Plan is forfeited,
expires or is terminated unexercised as to any shares covered thereby, such
shares thereafter shall be available for the granting of options under the Plan;
however, if the forefeiture, expiration or termination date of an option is
beyond the term of existence of the Plan as described in Section 19, then any
shares covered by forfeited, unexercised or terminated options shall not
reactivate the existence of the Plan and therefore may not be available for
additional grants under the Plan.  The Holding Company, during the term of the
Plan, will reserve and keep available a number of shares of Common Stock
sufficient to satisfy the requirements of the Plan.

     4.   ELIGIBILITY.  Options shall be granted only to individuals who meet 
          -----------    
all of the following eligibility requirements:

          (a)  Such individual must be an employee or a member of the Board of
     Directors of the Holding Company, the Savings Bank or a Subsidiary.  For
     this purpose, an individual shall be considered to be an "employee" only if
     there exists between the Holding Company, the Savings Bank or a Subsidiary
     and the individual the legal and bona fide relationship of employer and
     employee.  In determining whether such relationship exists, the regulations
     of the United States Treasury Department relating to the determination of
     such relationship for the purpose of collection of income tax at the source
     on wages shall be applied.

          (b)  Such individual must have such knowledge and experience in
     financial and business matters that he or she is capable of evaluating the
     merits and risks of the investment involved in the exercise of the options.

          (c)  Such individual, being otherwise eligible under this Section 4,
     shall have been selected by the Committee as a person to whom an option
     shall be granted under the Plan.

                                       3
<PAGE>
 
     In determining the directors and employees to whom options shall be granted
and the number of shares to be covered by each option, the Committee shall take
into account the nature of the services rendered by respective directors and
employees, their present and potential contributions to the success of the
Holding Company, the Savings Bank and any Subsidiary and such other factors as
the Committee shall deem relevant.  A director or employee who has been granted
an option under the Plan may be granted an additional option or options under
the Plan if the Committee shall so determine.

     If, pursuant to the terms of the Plan, it is necessary that the percentage
of stock ownership of any individual be determined, stock ownership in the
Holding Company or of a related corporation which is owned (directly or
indirectly) by or for such individual's brothers and sisters (whether by the
whole or half blood), spouse, ancestors, and lineal descendants or by or for any
corporation, partnership, estate or trust of which such employee is a
shareholder, partner or beneficiary shall be considered as owned by such
director or employee.

     5.   INITIAL GRANTS.  Subject to the provisions of this Plan, options shall
          --------------                                                        
be awarded to the directors and employees as set forth on Exhibit A.  Such
options shall be deemed granted as of the date the Plan is approved by a
majority of the Holding Company's shareholders and the FDIC, or as soon as
practicable thereafter, subject to execution by the optionee of a Stock Option
Grant and Agreement (the "Option Agreement") in the form attached hereto as
Exhibit B.  Such options shall be granted with the intention that they will be
nonqualified or incentive stock options as denominated in the Option Agreement.
Any option granted with the intention that it will be an incentive stock option
but which fails to satify the requirements for incentive stock options shall
continue to be valid and shall be treated as a nonqualified stock option.

     6.   OPTION PRICE.
          ------------ 

          (a)  The option price of each option granted under the Plan shall be
     not less than one hundred percent (100%) of the market value of the stock
     on the date of grant of the option.  In the case of incentive stock options
     granted to a shareholder who owns stock possessing more than 10 percent

                                       4
<PAGE>
 
     (10%) of the total combined voting power of all classes of stock of the
     Holding Company, the Savings Bank or a Subsidiary (a "ten percent
     shareholder"), the option price of each option granted under the Plan shall
     not be less than one hundred and ten percent (110%) of the market value of
     the stock on the date of grant of the option.  If the Common Stock is
     listed on a national securities exchange (including the NASDAQ National
     Market System) on the date in question, then the market value per share
     shall be not less than the average of the highest and lowest selling price
     on such exchange on such date, or if there were no sales on such date, then
     the market price per share shall be equal to the average between the bid
     and asked price on such date.  If the Common Stock is traded otherwise than
     on a national securities exchange on the date in question, then the market
     price per share shall be equal to the average between the bid and asked
     price on such date, or, if there is no bid and asked price on such date,
     then on the next prior business day on which there was a bid and asked
     price.  If no such bid and asked price is available, then the market value
     per share shall be its fair market value as determined by the Committee, in
     its sole and absolute discretion.  The Committee shall maintain a written
     record of its method of determining such value.

          (b)  The option price shall be payable to the Holding Company either
     (i) in cash or by check, bank draft or money order payable to the order of
     the Holding Company, or (ii) at the discretion of the Committee, through
     the delivery of shares of the common stock of the Holding Company owned by
     the optionee with a market value (determined in a manner consistent with
     (i) above) equal to the option price, or (iii) at the discretion of the
     Committee by a combination of (i) and (ii) above.  No shares shall be
     delivered until full payment has been made.  The Committee may not approve
     a reduction of such purchase price in any such option, or the cancellation
     of any such options and the regranting thereof to the same optionee at a
     lower purchase price, at a time when the market value of the shares is
     lower than it was when such option was granted.

                                       5
<PAGE>
 
     7.   EXPIRATION OF OPTIONS.  The Committee shall determine the expiration
          ---------------------                                               
date or dates of each option, but such expiration date shall be not later than
ten (10) years after the date such option is granted.  In the event an incentive
stock option is granted to a ten percent (10%) shareholder, the expiration date
or dates of each option shall be not later than five (5) years after the date
such option is granted.  The Committee, in its discretion, may extend the
expiration date or dates of an option after such date was originally set;
however, such expiration date may not exceed the maximum expiration date
described in this Section 7.

     8.   TERMS AND CONDITIONS OF OPTIONS.
          ------------------------------- 

          (a)  All options must be granted within ten (10) years of the
     Effective Date of this Plan as defined in Section 18.

          (b)  The Committee may grant options which are intended to be
     incentive stock options and nonqualified stock options, either separately
     or jointly, to an eligible employee.

          (c)  The grant of options shall be evidenced by a written instrument
     (an Option Agreement) containing terms and conditions established by the
     Committee consistent with the provisions of this Plan.

          (d)  Not less than 100 shares may be purchased at any one time unless
     the number purchased is the total number at that time purchasable under the
     Plan.

          (e)  An employee to whom an option has been granted shall have no
     rights as a shareholder with respect to any shares covered by his option
     until payment in full by him for the shares being purchased.  No adjustment
     shall be made for dividends (ordinary or extraordinary, whether in cash,
     securities or other property) or distributions or other rights for which
     the record date is prior to the date such stock is fully paid for, except
     as provided in Section 14.

          (f)  The aggregate fair market value of the stock (determined as of
     the time the option is granted) with respect to which incentive stock
     options are exercisable for

                                       6
<PAGE>
 
     the first time by any participant during any calendar year (under all
     benefit plans of the Holding Company, the Savings Bank or any Subsidiary,
     if applicable) shall not exceed $100,000; provided, however, that such
     $100,000 limit of this subsection (f) shall not apply to the grant of
     nonqualified stock options.  The Committee may grant options which are
     exercisable in excess of the foregoing limitations, in which case options
     granted which are exercisable in excess of such limitations shall be
     nonqualified stock options.

          (g)  All stock obtained pursuant to an option which qualifies as
     incentive stock options shall be held in escrow for a period which ends on
     the later of (i) two (2) years from the date of the granting of the option
     or (ii) one (1) year after the transfer of the stock pursuant to the
     exercise of the option.  The stock shall be held by the Holding Company or
     its designee.  The employee who has exercised the option shall, during such
     holding period, have all rights of a shareholder, including but not limited
     to the rights to vote, receive dividends and sell the stock. The sole
     purpose of the escrow is to inform the Holding Company of a disqualifying
     disposition of the stock within the meaning of Section 422 of the Internal
     Revenue Code of 1986, as amended, and it shall be administered solely for
     that purpose.

     9.   EXERCISE OF OPTIONS.
          ------------------- 

          (a)  An optionee receiving options by virtue of his position as a
     director must remain continuously a member of the Board of Directors of the
     Holding Company, the Board of Directors of the Savings Bank or the Board of
     Directors of one or more of the Subsidiaries from the date of the grant
     until the exercise of the option except as provided in Sections 10, 11 and
     12 of this Plan.  An optionee receiving options by virtue of his position
     as an employee must at all times be employed by the Holding Company, the
     Savings Bank or a Subsidiary from the date of grant until the exercise of
     the options granted except as provided in Sections 10, 11 and 12.  All
     options granted under the Plan shall be exercisable in annual installments
     in accordance with the following schedule:

                                       7
<PAGE>
 
          twenty percent (20%) of the shares beginning 1 year after the date of
          the grant of the options;

          twenty percent (20%) of the shares beginning 2 years after the date of
          the grant of the options;

          twenty percent (20%) of the shares beginning 3 years after the date of
          the grant of the options;

          twenty percent (20%) of the shares beginning 4 years after the date of
          the grant of the options; and

          twenty percent (20%) of the shares beginning 5 years after the date of
          the grant of the options.

     Notwithstanding the foregoing, options shall become exercisable with
     respect to all of the shares subject thereto upon the optionee's death or
     upon the optionee's disability within the meaning of Section 22(e)(3) of
     the Internal Revenue Code of 1986, as amended.

     The right to exercise options in annual installments shall be cumulative
     and any vested installments may be exercised, in whole or in part, at the
     election of the optionee.  The exercise of any option must be evidenced by
     written notice to the Holding Company that the optionee intends to exercise
     his option.

     In no event shall an option be deemed granted by the Holding Company or
     exercisable by a recipient prior to the mutual execution by the Holding
     Company and the recipient of the Option Agreement.

          (b)  The inability of the Holding Company or the Savings Bank to
     obtain approval from any regulatory body or authority deemed by counsel to
     be necessary to the lawful issuance and sale of any shares of Common Stock
     hereunder shall relieve the Holding Company and the Savings Bank of any
     liability in respect of the non-issuance or sale of such shares. As a
     condition to the exercise of an option, the Holding Company may require the
     person exercising the option to make such representations and warranties as
     may be

                                       8
<PAGE>
 
     necessary to assure the availability of an exemption from the registration
     requirements of federal or state securities law.

          (c)  The Committee shall have the discretionary authority to impose in
     the Option Agreements such restrictions on shares of Common Stock as it may
     deem appropriate or desirable, including but not limited to the authority
     to impose a right of first refusal or to establish repurchase rights or
     both of these restrictions.

     10.  TERMINATION OF DIRECTORSHIP OR EMPLOYMENT - EXCEPT BY DISABILITY OR
          -------------------------------------------------------------------
DEATH.  If any optionee receiving the grant of an option by virtue of his
- -----                                                                    
position as a director ceases to be either a director of the Holding Company,
the Savings Bank and any Subsidiary or if any optionee receiving the grant of an
option by virtue of his position as an employee ceases to be either an employee
of the Holding Company, the Savings Bank and any Subsidiary for any reason other
than death or disability (as defined in paragraph 11), he may, (i) at any time
within three (3) months after his date of termination, but not later than the
date of expiration of the option, exercise any option designated in the Option
Agreement as an incentive stock option and (ii) at any time prior to the date of
expiration of the option, exercise any option designated in the Option Agreement
as a nonqualified stock option.  However, in either such event, the Optionee may
exercise any option only to the extent it was vested and he or she was entitled
to exercise the option on the date of termination.  Any options or portions of
options of terminated directors or employees not so exercised shall terminate
and be forfeited.

     11.  TERMINATION OF DIRECTORSHIP OR EMPLOYMENT - DISABILITY. If any
          ------------------------------------------------------        
optionee receiving the grant of an option by virtue of his position as a
director ceases to be either a director of the Holding Company, the Savings Bank
and any Subsidiary or if any employee receiving the grant of an option by virtue
of his position as an employee ceases to be employed by either the Holding
Company, the Savings Bank and any Subsidiary due to his becoming disabled within
the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended, he may, (i) at any time within 12 months after his date of termination,
but not later than the date of expiration of the option, exercise any

                                       9
<PAGE>
 
option designated in the Option Agreement as an incentive stock option with
respect to all shares subject thereto and (ii) at any time prior to the date of
expiration of the option, exercise any option designated in the Option Agreement
as a nonqualified stock option with respect to all shares subject thereto.  Any
portions of options of terminated directors or employees not so exercised shall
terminate and be forfeited.

     12.  TERMINATION OF DIRECTORSHIP OR EMPLOYMENT - DEATH.  If an optionee
          -------------------------------------------------                 
receiving the grant of an option by virtue of his position as a director dies
while a director of the Holding Company, the Savings Bank or any Subsidiary or
if any employee receiving the grant of an option by virtue of his position as an
employee dies while in the employment of the Holding Company, the Savings Bank
or any Subsidiary, the person or persons to whom the option is transferred by
will or by the laws of descent and distribution may exercise the option at any
time until the option has expired, with respect to all shares subject thereto,
to the same extent and upon the same terms and conditions the optionee would
have been entitled to do so had he lived at any time until the option has
expired.  Any options or portions of options of deceased directors or employees
not so exercised shall terminate and be forfeited.

     13.  RESTRICTIONS ON TRANSFER.  An option granted under this Plan may not
          ------------------------                                            
be transferred except by will or the laws of descent and distribution and,
during the lifetime of the optionee to whom it was granted, may be exercised
only by such optionee.

     14.  CAPITAL ADJUSTMENTS AFFECTING COMMON STOCK.
          ------------------------------------------ 

          (a)  If the outstanding shares of Common Stock of the Holding Company
     are increased, decreased, changed into or exchanged for a different number
     or kind of shares or other securities of the Holding Company as a result of
     a recapitalization, reclassification, stock dividend, stock split,
     amendment to the Holding Company's Certificate of Incorporation, reverse
     stock split, merger or consolidation, an appropriate adjustment shall be
     made in the number and/or kind of securities allocated to the options
     previously and subsequently granted under the Plan, without change in the
     aggregate purchase price applicable to the unexercised portion of the
     outstanding options but with a corresponding

                                      10
<PAGE>
 
     adjustment in the price for each share or other unit of any security
     covered by the options.

          (b)  To the extent that the foregoing adjustments relate to particular
     stock or securities of the Holding Company subject to option under this
     Plan, such adjustments shall be made by the Committee, whose determination
     in that respect shall be final and conclusive.

          (c)  The grant of an option pursuant to this Plan shall not affect in
     any way the right or power of the Holding Company to make adjustments,
     reclassification, reorganizations or changes of its capital or business
     structure or to merge or to consolidate or to dissolve, liquidate or sell,
     or transfer all or any part of its business or assets.

          (d)  No fractional shares of stock shall be issued under the Plan for
     any such adjustment.

          (e)  Any adjustment made pursuant to this Section 14 shall be made in
     such manner as not to constitute a modification of any outstanding stock
     options within the meaning of Section 424(h) of the Internal Revenue Code
     of 1986, as amended.

     15.  INVESTMENT PURPOSE.  At the discretion of the Committee, any Option
          ------------------                                                 
Agreement may provide that the optionee shall, by accepting the option,
represent and agree, for himself and his transferees by will or the laws of
descent and distribution, that all shares of stock purchased upon the exercise
of the option will be acquired for investment and not for resale or
distribution, and that upon each exercise of any portion of an option, the
person entitled to exercise the same shall furnish evidence of such facts which
is satisfactory to the Holding Company.  Certificates for shares of stock
acquired under the Plan may be issued bearing such restrictive legends as the
Holding Company and its counsel may deem necessary to ensure that the optionee
is not an "underwriter" within the meaning of the regulations of the Securities
Exchange Commission.

                                      11
<PAGE>
 
     16.  APPLICATION OF FUNDS.  The proceeds received by the Holding Company
          --------------------                                               
from the sale of common stock pursuant to options will be used for general
corporate purposes.

     17.  NO OBLIGATION TO EXERCISE OPTION.  The granting of an option shall
          --------------------------------                                  
impose no obligation upon the optionee to exercise such option.

     18.  EFFECTIVE DATE OF PLAN.  The Plan will become effective upon the
          ----------------------                                          
approval of the Plan by a majority of the shareholders of the Holding Company,
or the date that the Savings Bank or the Holding Company is notified that the
FDIC approves or does not object to the terms of the Plan, whichever shall occur
later.

     19.  TERM OF PLAN.  Options may be granted pursuant to this Plan from time
          ------------                                                         
to time within ten (10) years from the effective date of the Plan.

     20.  TIME OF GRANTING OF OPTIONS.  Nothing contained in the Plan or in any
          ---------------------------                                          
resolution adopted or to be adopted by the Committee or the shareholders of the
Holding Company and no action taken by the Committee shall constitute the
granting of any option hereunder.  The granting of an option pursuant to the
Plan shall take place only when an Option Agreement shall have been duly
executed and delivered by and on behalf of the Holding Company at the direction
of the Committee.

     21.  WITHHOLDING TAXES.  Whenever the Holding Company proposes or is
          -----------------                                              
required to issue or transfer shares of stock under the Plan, the Holding
Company shall have the right to require the optionee to remit to the Holding
Company an amount sufficient to satisfy any Federal, state and/or local
withholding tax requirements prior to the issuance of any certificate or
certificates for such shares.  Alternatively, the Holding Company may issue or
transfer such shares of stock net of the number of shares sufficient to satisfy
the withholding tax requirements. For withholding tax purposes, the shares of
stock shall be valued on the date the withholding obligation is incurred.

     22.  TERMINATION AND AMENDMENT.  The Board may at any time alter, suspend,
          -------------------------                                            
terminate or discontinue the Plan, but may not, without the consent of the
holder of an option previously granted, make any alteration which would deprive
the optionee of

                                      12
<PAGE>
 
his rights with respect thereto; provided, however, that shareholder approval of
                                 --------  -------                              
certain amendments may be necessary if it is desirable for the Plan to continue
to satisfy the requirements of Rule 16b-3 of the Securities Exchange Commission;
and provided further, that in no event shall this Plan be terminated at the time
    -------- -------                                                            
of or following any merger or consolidation of the Holding Company or the
Savings Bank, unless and until the surviving entity shall have made provision
for an equivalent benefit for all the then current option holders.
Notwithstanding anything herein to the contrary, the Board may not amend Section
5 hereof or any other provisions of this Plan described in Rule 16b-
3(c)(2)(ii)(A) of the regulations promulgated pursuant to the Exchange Act more
than once every six months, other than to comport with changes in the Internal
Revenue Code, the Employee Retirement Income Security Act, or the rules
thereunder.

     23.  CAPTIONS AND HEADINGS; GENDER AND NUMBER.  Captions and paragraph
          ----------------------------------------                         
headings used herein are for convenience only, do not modify or affect the
meaning of any provision herein, are not a part, and shall not serve as a basis
for interpretation or construction of, this Plan.  As used herein, the masculine
gender shall include the feminine and neuter, and the singular number shall
include the plural, and vice versa, whenever such meanings are appropriate.

     24.  EXCULPATION AND INDEMNIFICATION.  In connection with this Plan, no
          -------------------------------                                   
member of the Board, no member of the Board of Directors of the Savings Bank, no
member of the Board of Directors of any Subsidiary, and no member of the
Committee shall be personally liable for any act or omission to act, nor for any
mistake in judgment made in good faith, unless arising out of, or resulting
from, such person's own bad faith, gross negligence, willfulness conduct, or
criminal acts.  To the extent permitted by applicable law and regulation, the
Holding Company shall indemnify, defend and hold harmless the members of the
Board, the members of the Board of Directors of the Savings Bank, the members of
the Board of Directors of any Subsidiary, and members of the Committee, and each
other officer or employee of the Savings Bank, the Holding Company or of any
Subsidiary to whom any power or duty relating to the administration or
interpretation of this Plan may be assigned or delegated, from and against any
and all liabilities (including any amount paid in settlement of a claim with the
approval of the Board), and any

                                      13
<PAGE>
 
costs or expenses (including counsel fees) incurred by such persons arising out
of or as a result of, any act or omission to act, in connection with the
performance of such person's duties, responsibilities and obligations under this
Plan, other than such liabilities, costs, and expenses as may arise out of, or
result from the bad faith, gross negligence, willful misconduct, or criminal
acts of such persons.

     25.  GOVERNING LAW.  Without regard to the principles of conflicts of laws,
          -------------                                                         
the laws of the State of North Carolina shall govern and control the validity,
interpretation, performance, and enforcement of this Plan.

     26.  INSPECTION OF PLAN.  A copy of this Plan, and any amendments thereto,
          ------------------                                                   
shall be maintained by the Secretary of the Holding Company and shall be shown
to any proper person making inquiry about it.

     27.  OTHER PROVISIONS.  The Option Agreements authorized under this Plan
          ----------------                                                   
shall contain such other provisions not inconsistent with the foregoing,
including, without limitation, increased restrictions upon the exercise of the
option, as the Committee may deem advisable.

                                      14
<PAGE>
 
                                   EXHIBIT A
                                   ---------

<TABLE>
<CAPTION>
                                                      PERCENTAGE OF TOTAL SHARES
                                                           SUBJECT TO OPTION
       OPTIONEE                                               UNDER PLAN
       --------                                        ------------------------
<S>                                                    <C>
Pat F. Brady                                                     5.00%   
                                                                         
Fred B. Coates                                                   5.00%   
                                                                         
Phillip M. Hooper                                                5.00%   
                                                                         
George I. Richardson                                             5.00%   
                                                                         
Benton S. Smothers                                               5.00%   
                                                                         
Gilbert R. Upchurch                                              5.00%   
                                                                         
David S. Kemp                                                   25.00%   
                                                                         
Cynthia F. Teague                                               15.00%   
                                                                         
Alecia S. Jones                                                 10.82%   
                                                                         
Yvonne O. Boaz                                                  13.22%   
                                                                         
Cheryl D. Chrismon                                               1.79%   
                                                                         
Brenda E. King                                                   1.19%   
                                                                         
Roxanne A. Smith                                                 2.39%   
                                                                         
Virginia P. Southard                                              .59%   
- ----------------------                                         ------    
                                                                         
     Total                                                     100.00%    
</TABLE>
<PAGE>
 
                                   EXHIBIT B
                                   ---------


                         FIRST SAVINGS FINANCIAL CORP.
                               STOCK OPTION PLAN
                        STOCK OPTION GRANT AND AGREEMENT

     THIS STOCK OPTION GRANT AND AGREEMENT ("Agreement"), being made according
to and subject to the terms and conditions of the FIRST SAVINGS FINANCIAL CORP.
STOCK OPTION PLAN ("Plan"), a copy of which is attached hereto as Annex A and is
hereby incorporated by reference and made a part of this Agreement, is herein
executed, granted, and effective the 19th day of April, 1996, between First
Savings Financial Corp. (the "Holding Company") and ____________________
("Optionee"):

     1.   GRANT.  As of the above date, the Holding Company hereby grants:  (i)
          -----                                                                
an incentive stock option (as that term is defined in Section 422 of the
Internal Revenue Code of 1986, as amended) to purchase  ________ shares of
Common Stock of the Holding Company to the Optionee at the price stated in this
Agreement; and/or (ii) a nonqualified stock option to purchase __________ shares
of Common Stock of the Holding Company to the Optionee at the price stated in
this Agreement.

     The option(s) granted under this section and as described in this entire
Agreement is (are) in all respects subject to and conditioned by the terms,
definitions, and provisions of this Agreement and of the Plan.  Capitalized
terms in this Agreement which are not otherwise defined but which are defined in
the Plan shall have the same meaning given to those terms in the Plan.

     2.   PRICE.  The option price is $11.125 for each share.
          -----                                              

     3.   EXERCISE OF OPTION.  The option(s) granted under this Agreement shall
          ------------------                                                   
be exercisable pursuant to the terms and conditions of the Plan and as set forth
below:

                                       1
<PAGE>
 
          (a)  Right to Exercise:  There are no other terms and conditions
               -----------------                                          
     imposed on the Optionee's right to exercise his options other than those
     imposed in the Plan except as stated below:

     ________________________________________________________________________
     ________________________________________________________________________
     ________________________________________________________________________
     ________________________________________________________________________

     
          (b)  Annual Installments:  The incentive stock options can be
               -------------------                                     
     exercised in annual installments as follows:

          _____________ shares beginning on April 19, 1997
          _____________ shares beginning on April 19, 1998
          _____________ shares beginning on April 19, 1999
          _____________ shares beginning on April 19, 2000
          _____________ shares beginning on April 19, 2001

     The nonqualified options can be exercised in annual installments as
     follows:

          _____________ shares beginning on April 19, 1997
          _____________ shares beginning on April 19, 1998
          _____________ shares beginning on April 19, 1999
          _____________ shares beginning on April 19, 2000
          _____________ shares beginning on April 19, 2001

     The right to exercise the option(s) in annual installments shall be
     cumulative.  In addition the option(s) shall be exercisable upon disability
     and death as set forth in the Plan.

          (c)  Method of Exercise:  The options under this Agreement shall be
               ------------------                                            
     exercisable by a written notice to the Secretary of the Holding Company
     which shall include the following:

               (1)  State the election to exercise the option, the number of
          shares in respect of which it is being exercised, the person in whose
          name the stock certificate or certificates for such shares of Common

                                       2
<PAGE>
 
          Stock is to be registered, his or her address, and social security
          number;

               (2)  Contain any such representation and agreements as to
          Optionee's investment intent with respect to such shares of Common
          Stock as may be required by the Holding Company;

               (3)  Be signed by the person entitled to exercise the option and,
     if the option is being exercised by any person or persons other than the
     Optionee, be accompanied by proof, satisfactory to the Holding Company, of
     the right of such person or persons to exercise the option in accordance
     with the Plan; and

               (4)  Be accompanied by payment of the purchase price of any
          shares with respect to which the option is being exercised which
          payment shall be in form acceptable to the Committee pursuant to
          Section 6(b) of the Plan.

          (d)  Representations and Warranties:  The person exercising this
               ------------------------------                             
     option makes the representations and warranties to the Holding Company as
     may be required by any applicable law or regulation, or as may otherwise be
     required pursuant to the Plan.

          (e)  All filings and approvals required by applicable law and
     regulations or pursuant to the Plan shall have been made and obtained.

     4.   NON-TRANSFERABILITY OF OPTION.  This option may not be transferred in
          -----------------------------                                        
any manner otherwise than by will or the laws of descent and distribution and
may be exercised during the life of the Optionee only by him or her.

     5.   INVESTMENT PURPOSE.  This option may not be exercised if the issuance
          ------------------                                                   
of shares upon such exercise would constitute a violation of any applicable
federal or state securities law or other law or valid regulation.

     6.   EXPIRATION OF OPTION.  This option shall expire on April 19, 2006.
          --------------------                                              

                                       3
<PAGE>
 
     7.   ESCROW.  All stock purchased pursuant to an incentive stock option
          ------                                                            
shall be held in escrow for a period which ends on the later of (i) two (2)
years from the date of the granting of the option or (ii) one (1) year after the
transfer of the stock pursuant to the exercise of the option.  The stock shall
be held by the Holding Company or its designee.  The optionee who has exercised
the option shall have all rights of a stockholder, including but not limited to,
the rights to vote, receive dividends and sell the stock.  The sole purpose of
the escrow is to inform the Holding Company of a disqualifying disposition of
the stock within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended, and it shall be administered solely for this purpose.

     8.   RESOLUTION OF DISPUTES.  Any dispute or disagreement which should 
          ----------------------            
arise under, or as a result of, or in any way relate to, the interpretation,
construction, or application of this Agreement will be determined by the
Committee designated in Section 2 of the Plan.  Any determination made hereunder
shall be final, binding, and conclusive for all purposes.

     9.   CONSTRUCTION CONTROLLED BY PLAN.  The options evidenced hereby shall
          -------------------------------                                     
be subject to all of the requirements, conditions and provisions of the Plan.
This Agreement shall be construed so as to be consistent with the Plan; and the
provisions of the Plan shall be deemed to be controlling in the event that any
provision should appear to be inconsistent therewith.

     10.  SEVERABILITY.  Whenever possible, each provision of this Agreement
          ------------                                                      
shall be interpreted in such a manner as to be valid and enforceable under
applicable law, but if any provision of this Agreement is determined to be
unenforceable, invalid or illegal, the validity of any other provision or part
thereof shall not be affected thereby and this Agreement shall continue to be
binding on the parties hereto as if such unenforceable, invalid or illegal
provision or part thereof had not been included herein.

     11.  MODIFICATION OF AGREEMENT; WAIVER.  This Agreement may be modified,
          ---------------------------------                                  
amended, suspended or terminated, and any terms, representations or conditions
may be waived, but only by a written instrument signed by each of the parties
hereto and only subject to the limitations set forth in the Plan.  No waiver

                                       4
<PAGE>
 
hereunder shall constitute a waiver with respect to any subsequent occurrence or
other transaction hereunder or of any other provision.

     12.  CAPTIONS AND HEADINGS; GENDER AND NUMBER.  Captions and paragraph
          ----------------------------------------                         
headings used herein are for convenience only, do not modify or affect the
meaning of any provision herein, are not a part, and shall not serve as a basis
for interpretation or construction, of this Agreement.  As used herein, the
masculine gender shall include the feminine and neuter, and the singular number
shall include the plural, and vice versa, whenever such meanings are
appropriate.

     13.  GOVERNING LAW; VENUE AND JURISDICTION.  Without regard to the
          -------------------------------------                        
principles of conflicts of laws, the laws of the State of North Carolina shall
govern and control the validity, interpretation, performance, and enforcement of
this Agreement.

     14.  BINDING EFFECT.  This Agreement shall be binding upon and shall inure
          --------------                                                       
to the benefit of the Holding Company, and its successors and assigns, and shall
be binding upon and inure to the benefit of the Optionee, and his or her heirs,
legatees, personal representative, executor, administrator and permitted
assigns.

     15.  ENTIRE AGREEMENT.  This Agreement and the Plan constitute and embody
          ----------------                                                    
the entire understanding and agreement of the parties hereto and, except as
otherwise provided hereunder, there are no other agreements or understandings,
written or oral, in effect between the parties hereto relating to the matters
addressed herein.

     16.  COUNTERPARTS.  This Agreement may be executed in any number of
          ------------                                                  
counterparts, each of which when executed and delivered shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.

                                       5
<PAGE>
 
     IN WITNESS WHEREOF, the parties have set their hands and seals the day and
year first above written.



ATTEST:                              FIRST SAVINGS FINANCIAL CORP.


_________________________            By:   ____________________________

(Corporate Seal)                           _________________ President



                                     OPTIONEE:

                                     _____________________________(SEAL)

                                       6

<PAGE>
 
              FIRST SAVINGS BANK OF ROCKINGHAM COUNTY, INC., SSB
                          MANAGEMENT RECOGNITION PLAN


     First Savings Bank of Rockingham County, Inc., SSB, a North Carolina
chartered savings bank (the "Bank"), does herein set forth the terms of the
Management Recognition Plan (the "Plan").

     1.   Purpose of this Plan.  The purpose of this Plan is to provide to the
          --------------------                                                
directors, officers and employees (the "Participants") of the Bank, of the
Bank's parent holding company, First Savings Financial Corp. (the
"Corporation"), and of any corporation or other entity of which the Bank owns,
directly or indirectly, not less than fifty percent (50%) of any class of the
equity securities thereof (a "Subsidiary"), an ownership interest in the
Corporation by making awards (hereinafter referred to as "Awards" or singularly,
"Award") of shares of common stock of the Corporation (the "Common Stock").  The
Board of Directors of the Bank (the "Board") believes that participation in the
ownership of the Corporation will induce Participants to continue to serve the
Bank or any Subsidiary as directors, officers and/or employees and encourage
them to contribute to the future growth and profits of the Bank and the
Corporation.  In addition, the existence of this Plan will make it possible for
the Bank, the Corporation and Subsidiaries to attract capable individuals to
serve as directors or officers of the Bank and its Subsidiaries.  The Board
believes that the existence of this Plan will provide incentives to the
directors, officers and employees of the Bank, the Corporation and any
Subsidiaries which will contribute materially to the success of such companies.

     2.   Administration of this Plan.
          --------------------------- 

          (a)  This Plan shall be administered by a committee  of the Board (the
"Committee") which shall consist of not less than three non-employee members of
the Board who are "disinterested persons" as described in Rule 16b-3(c)(2)(i) of
the Rules and Regulations under the Securities Exchange Act of 1934 (the
"Exchange Act").  In the absence of a duly appointed Committee, the Plan shall
be administered by those members of the Board who are "disinterested persons"
and by the Board if there are less than three "disinterested persons."  The
Committee shall have full power and authority to construe, interpret and
administer this Plan.  All actions, decisions, determinations, or
interpretations of the Committee shall be final, conclusive, and binding upon
all parties.
<PAGE>
 
          (b)  The Committee shall decide (i) to whom Awards shall be made under
this Plan except as provided in subparagraph 3(b) and paragraph 5 hereof, (ii)
the number of shares of Common Stock subject to each award except as provided in
subparagraph 3(b) and paragraph 5 hereof, (iii) the number of additional shares,
if any, to be purchased or allocated for the purposes of this Plan, (iv) the
determination of leaves of absence which may be granted to Participants without
constituting a termination of their employment for purposes of the Plan, and (v)
such additional terms and conditions for Awards as the Committee shall deem
appropriate, including, without limitation, any determinations as to the
restrictions or conditions on transfer of shares of Common Stock that are
necessary or appropriate to satisfy all applicable securities laws, rules,
regulations, and listing requirements.

          (c)  The Committee may designate any officers or employees of the Bank
or of any Subsidiary to assist in the administration of this Plan. The Committee
may authorize such individuals to execute documents on its behalf and may
delegate to them such other ministerial and limited discretionary duties as the
Committee may see fit.

          (d)  Any unallocated, undistributed or forfeited shares of Common
Stock held under this Plan shall be held by Phillip M. Hooper, George I.
Richardson and Benton S. Smothers (the "Trustees") and any successor or
successors who from time to time may be appointed by the Board.

     3.   Shares of Common Stock Available Under the Plan.
          -----------------------------------------------  

          (a)  The Plan shall acquire a number of shares of Common Stock of the
Corporation equal to four percent (4%) of the shares of Common Stock issued in
connection with the conversion of the Bank from a North Carolina chartered
mutual savings bank to a North Carolina chartered stock savings bank on
September 22, 1995 (the "Conversion"). Such shares of Common Stock may be
purchased by the Plan in the open market or, subject to approval of the Board of
Directors of the Corporation, may be acquired through the issuance by the
Corporation to the Plan of authorized but unissued shares of Common Stock on
such terms as may be approved by the Committee and the Board of Directors of the
Corporation.  Such shares (the "Plan Shares") shall be held or delivered by the
Trustees or shall be allocated and distributed pursuant to the terms of this
Plan.

                                       2
<PAGE>
 
          (b)  Upon the purchase of the Plan Shares as provided in subparagraph
(a) above, such Plan Shares shall be allocated as provided in paragraph 5
hereof.

     4.   Eligibility.  The Participants in this Plan to whom Awards may be made
          -----------                                                           
shall be the following:  members of the Board, members of the Board of Directors
of any Subsidiary, members of the Board of Directors of the Corporation, and
such officers and employees of the Bank, the Corporation and/or of any
Subsidiary as may be designated by the Board.  Notwithstanding the foregoing, no
member of the Committee is eligible to receive any grants or any awards of
shares under this Plan during the one-year period prior to serving on the
Committee or during such service, except for Awards of Plan Shares which are
distributed pursuant to the provisions hereof.

     5.   Award of Plan Shares.  Subject to the provisions of paragraph 7 
          --------------------      
hereof, effective on the date this Plan is approved by a majority of the
shareholders of the Corporation, or as soon as practicable thereafter, the Plan
Shares shall be awarded to Participants as is set forth in Exhibit A.

     6.   Vesting of Shares.
          ----------------- 

          (a)  Shares granted under this Plan shall vest and the right of a
Participant to the Plan Shares shall be nonforfeitable in accordance with the
following schedule:

<TABLE> 
<CAPTION> 
Date When Plan Shares                                     Percentage of Plan
    Become Vested                                            Shares Vested
- -------------------                                       -------------------
<S>                                                       <C> 
First Anniversary of Award of Plan Shares                           20%  
Second Anniversary of Award of Plan Shares                          20%
Third Anniversary of Award of Plan Shares                           20%
Fourth Anniversary of Award of Plan Shares                          20%
Fifth Anniversary of Award of Plan Shares                           20%
</TABLE> 


          (b)  In determining the number of shares vested under the above
vesting schedule, a Participant shall not receive fractional shares. If the
product resulting from multiplying the vested percentage times the allocated
shares results in a fractional share, then a Participant's vested right shall be
rounded down to the nearest whole number of shares.

                                       3
<PAGE>
 
          (c)  In the event any Participant to whom shares are awarded under
this Plan terminates employment with the Corporation, the Bank or any Subsidiary
(which employment resulted in such Participant receiving such Award) for any
reason, other than as provided in subparagraph 6(d)below, and such Participant
does not have a 100% vested interest in his or her shares under the Plan, then
any shares which are not vested, based upon the applicable schedule in
subparagraph 6(a) above, shall be forfeited and shall be available again for
Awards to Participants as may be determined by the Committee.

          (d)  In the event that the employment of a Participant with the
Corporation, the Bank or any Subsidiary (which employment resulted in such
Participant receiving such Award) should terminate because of such Participant's
disability or death prior to the date when all shares allocated to him or her
would be 100% vested in accordance with the schedule in subparagraph 6(a) above,
then, notwithstanding the foregoing schedule in subparagraph 6(a) above, all
shares allocated to such Participant shall immediately become fully vested and
nonforfeitable. For purposes of this Plan, the term "disability" shall be
defined in the same manner as such term is defined in Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended (the "Code").

     7.   Action Required of Participants.
          ------------------------------- 

          (a)  If required by the Committee, each Participant receiving an Award
of shares under this Plan shall represent to and agree with the Corporation, the
Bank, the Committee and the Trustees (i) that he is acquiring such shares on his
own behalf as an investment and not with a present intention of distribution or
re-sale and (ii) that there shall be placed upon the certificates representing
such shares a legend setting forth these representations and agreements or a
reference thereto. Such shares shall be transferable thereafter only if the
proposed transfer shall be permissible under this Plan and if, in the opinion of
counsel for the Corporation, such transfer shall at such time be in compliance
with all applicable federal and state securities laws and regulations.

                                       4
<PAGE>
 
          (b)  Each Participant receiving an Award of Plan Shares under this
Plan shall deliver to the Bank a Stock Grant Agreement, substantially in the
form attached hereto as Exhibit B, which shall be signed by such Participant.

     8.   Restrictions.
          ------------ 

          (a)  Plan Shares subject to an award made under this Plan shall
forthwith, after the Participant makes any representations required by paragraph
7 hereof, be issued in a certificate or certificates for such shares which shall
be prepared in the name of such Participant. Such Participant shall thereupon be
a shareholder with respect to all of the shares represented by such certificate
or certificates and shall have all of the rights of a shareholder with respect
to all of such shares, including the right to vote such shares and to receive
all dividends and other distributions with respect thereto, subject to possible
forfeiture as set forth in paragraph 6(c) hereof.

          (b)  Certificates of stock representing Plan Shares shall be imprinted
with a legend to the effect that the Plan Shares are subject to restrictions on
transfer and potential forfeiture in accordance with the terms of the Stock
Grant Agreement, and the transfer agent for Common Stock shall be instructed to
that effect with respect to such shares. In aid of such restrictions, the
Participant shall, immediately upon receipt of the certificate or certificates,
deposit such certificate or certificates together with a stock power or other
instrument of transfer, appropriately endorsed in blank, with the Trustees or
with such other escrow agent as may be designated by the Trustees, with the
expenses of any such escrow arrangement to be borne by the Bank.

          (c)  In addition, all Plan Shares which are awarded to directors or
executive officers of the Bank may not be sold during a period of one year
following the effective date of the Conversion, except upon death of the
director or executive officer. Certificates of stock representing Plan Shares
awarded to directors and executive officers of the Bank shall be imprinted with
a legend to that effect, and the transfer agent for such Plan Shares shall be
instructed to that effect with respect to such shares.

                                       5
<PAGE>
 
          (d)  In the event that, as the result of a stock split or stock
dividend or combination of shares or any other change or exchange for other
securities by reclassification, reorganization, merger, consolidation,
recapitalization, or otherwise, a Participant shall, as the owner of the shares
subject to an Award made under this Plan and subject to the restrictions
hereunder, be entitled to new or additional or different shares of Common Stock
or other securities, the certificate or certificates for, or other evidence of,
such new or additional or different shares or other securities, together with a
stock power or other instrument of transfer appropriately endorsed, shall also
be imprinted with one or more legends as provided in subparagraph 8(c) above and
deposited by such Participant with the Trustees, and all provisions of this Plan
relating to vesting, restrictions and lapse of restrictions herein set forth
shall thereupon be applicable to such new or additional or different shares or
other securities to the extent applicable to the shares with respect to which
they were distributed; provided, however, that if a Participant should receive
                       --------  -------     
rights, warrants or fractional interests in respect of any of such shares then
being held under the terms of this Plan, such rights or warrants may be held,
exercised, sold or otherwise disposed of, and such fractional interests may be
settled, by such Participant free and clear of the restrictions herein set
forth.

          (e)  The restriction to which shares subject to an Award made under
this Plan shall be subject is that if the directorship or employment of a
Participant (whichever position resulted in the Award) should be terminated for
any reason during the "restricted period" (as defined in subparagraph 12(b)
hereof), except as otherwise specifically provided in paragraph 6 hereof, the
Participant's interest in the shares issued under this Plan shall be forfeited
as provided in the applicable schedule in subparagraph 6(a) hereof.

     9.   Effect of Award on Status of Participant.  The fact that an Award is
          ----------------------------------------                            
made to a Participant under this Plan shall not confer on such Participant any
right to continued service on the Board or on the Board of Directors of the
Corporation or any Subsidiary, nor any right to continued employment with the
Bank, the Corporation or any Subsidiary; nor shall it limit the right of the
Bank, the Corporation, or any Subsidiary to remove such Participant from any
such boards, or to terminate his employment at any time.

                                       6
<PAGE>
 
     10.  Voting Rights; Dividends; Other Distributions.  After an Award of Plan
          ---------------------------------------------                         
Shares, a Participant shall have the full power to vote all of the Plan Shares
held by the Trustees in his name from time to time and shall be entitled to
receive all cash dividends declared upon any such Plan Shares held by the
Trustees in his name from time to time.  All shares of Common Stock or other
securities, including but not limited to stock dividends, issued in respect of
such Plan Shares or in substitution thereof, whether by the Corporation or by
another issuer, shall be held by the Trustees and shall be subject to all terms
and conditions of this Plan and shall be redelivered to a Participant or
delivered as instructed by the Committee under the same circumstances as the
shares with respect to, or in substitution for, which they were issued;
provided, however, that if a Participant should receive rights, warrants or
- --------  -------                                                          
fractional interests in respect of any of the shares held by the Trustees in his
name, such rights or warrants may be held, exercised, sold or otherwise disposed
of, and such fractional interests may be settled, by such Participant free and
clear of the restrictions herein set forth.

     Notwithstanding the foregoing, if a Participant hereunder forfeits any Plan
Shares pursuant to the terms of this Plan, the Participant shall, within 30 days
after the effective date of such forfeiture, pay the Corporation an amount equal
to the dividends received by such Participant with respect to such forfeited
Plan Shares.

     11.  Adjustment Upon Changes in Capitalization; Dissolution or Liquidation.
          ---------------------------------------------------------------------
In the event of a change in the number of shares of Common Stock outstanding by
reason of a reclassification, recapitalization, reorganization, or other similar
capital adjustment; merger or consolidation of the Corporation; or the sale by
the Corporation of all or a substantial portion of its assets, or the occurrence
of any other event which could affect the implementation of this Plan and the
realization of its objectives, the number or kind of shares subject to Awards
which have occurred, or could occur, under this Plan shall be proportionately
and equitably adjusted by the Committee.

     12.  Non-Transferability.
          ------------------- 

     (a)  Any shares subject to an Award made under this Plan shall not be sold,
exchanged, transferred, pledged, hypothecated or

                                       7
<PAGE>
 
otherwise disposed of during the "restricted period" (as defined in subparagraph
12(b) hereof).  Nothing herein shall preclude a Participant from making a gift
of any such shares to a spouse, child, stepchild, grandchild, parent or sibling,
or legal dependent of such Participant, or to a trust of which the beneficiary
or beneficiaries of the trust shall be either a person designated herein or such
Participant; provided, however, that any such shares so given by a Participant
             --------  -------                                                
shall remain subject to the restrictions, obligations and conditions set forth
in this Plan.  In addition, such shares may be tendered in response to a tender
offer for or a request or invitation to tenders of greater than fifty (50%)
percent of the outstanding Common Stock and may be surrendered in a merger,
consolidation or share exchange involving the Corporation; provided, however, in
                                                           --------  -------    
each case, that except as otherwise provided herein, the securities or other
consideration received in exchange therefor shall thereafter be subject to the
restrictions and conditions set forth in this Plan.

          (b)  The term "restricted period" with respect to shares subject to an
Award made under this Plan shall be the period commencing on the date of making
such Award of such shares to a Participant and ending on the date on which such
shares are no longer subject to forfeiture as provided in paragraph 6(c) hereof.
The date of making an Award shall be the date of execution by a Participant of a
Stock Grant Agreement in the form referred to in subparagraph 7(b) hereof.

     13.  Impact of Award on Other Benefits of Participant.  The value of any
          ------------------------------------------------                   
Award, either on the date of the Award or at the time such shares become vested,
shall not be includable as compensation or earnings for purposes of any other
benefit plan offered by the Bank, the Corporation or any Subsidiary.

     14.  Corporate Action.  The making of an Award under this Plan shall not
          ----------------                                                   
affect in any way the right or power of the Corporation or its shareholders or
the Bank or its shareholders to make or authorize any adjustment,
recapitalization, reorganization, or other change in the Corporation's or the
Bank's capital structure or its business, or any merger or consolidation of the
Corporation or the Bank, or to issue bonds, debentures, preferred or other
capital stock or rights with respect thereto, or the dissolution or liquidation
of the Corporation or the Bank, or any sale or transfer

                                       8
<PAGE>
 
of all or any part of the Corporation's or the Bank's assets or business.

     15.  Tax Withholding.  The Bank, the Corporation or any Subsidiary shall
          ---------------                                                    
have the right to deduct or otherwise effect a withholding of any amount
required by federal or state laws to be withheld with respect to the making of
an Award or the sale of shares acquired under this Plan in order for the Bank,
the Corporation or any Subsidiary to obtain a tax deduction otherwise available
as a consequence of such Award or sale, as the case may be.

     16.  Exculpation and Indemnification.  In connection with this Plan, no
          -------------------------------                                   
member of the Board, no member of the Board of Directors of the Corporation, no
member of the Committee and no Trustee shall be personally liable for any act or
omission to act in his capacity as a member of the Board, the Board of Directors
of the Corporation or the Committee or as a Trustee, nor for any mistake in
judgment made in good faith, unless arising out of, or resulting from, such
person's own bad faith, gross negligence, willful misconduct, or criminal acts.
To the extent permitted by applicable law and regulation, the Bank shall
indemnify, defend and hold harmless the members of the Board, the members of the
Board of Directors of the Corporation and the Committee and each Trustee and
each other officer or employee of the Bank, the Corporation or of any Subsidiary
to whom any duty or power relating to the administration or interpretation of
this Plan may be assigned or delegated, from and against any and all liabilities
(including any amount paid in settlement of a claim with the approval of the
Board) and any costs or expenses (including counsel fees) incurred by such
persons arising out of or as a result of, any act or omission to act in
connection with the performance of such person's duties, responsibilities, and
obligations under this Plan, other than such liabilities, costs, and expenses as
may arise out of, or result from, the bad faith, gross negligence, willful
misconduct, or criminal acts of such persons.

     18.  Amendment and Modification of this Plan.  The Board may at any time,
          ---------------------------------------                             
and from time to time, amend or modify this Plan (including the form of Stock
Grant Agreement) in any respect; provided, however, any amendment or
                                 --------  -------                  
modification of this Plan shall not in any manner affect any Award of shares
theretofore made to a Participant under this Plan without the consent of such

                                       9
<PAGE>
 
Participant or any permitted transferee of such Participant and further provided
                                                                ----------------
that no amendment shall be made to paragraph 5 of the Plan more than once every
six months other than to comport with changes in the Internal Revenue Code,
Employee Retirement Income Security Act or the rules thereunder.

     19.  Termination and Expiration of this Plan.  This Plan may be abandoned,
          ---------------------------------------                              
suspended, or terminated, in whole or in part, at any time by the Board;
provided, however, that abandonment, suspension, or termination of this Plan
- --------  -------                                                           
shall not affect any Awards theretofore made under this Plan; and provided
                                                                  --------
further, that in no event shall this Plan be terminated at the time of or
- -------                                                                  
following any merger or consolidation of the Corporation or the Bank, unless and
until the surviving entity shall have made provision for an equivalent benefit
for all the then current participants in the Plan.  Unless sooner terminated,
this Plan shall terminate at the close of business on the day that is the tenth
(10th) anniversary of the date of approval of the Plan by a majority of the
shareholders of the Corporation; and no Award of shares may be made under this
Plan thereafter.  Such termination shall not effect any Award of shares
theretofore made.  In the event that the Board terminates this Plan in whole,
any shares held by the Trustee pursuant to paragraph 2(d) which have not been
allocated to eligible Participants, together with any other trust assets, shall
revert to the Bank.

     20.  Effective Date.  This Plan has been adopted by the Board to be
          --------------                                                
effective as of the date of approval of the Plan by a majority of the
shareholders of the Corporation.

     21.  Captions and Headings; Gender and Number.  Captions and paragraph
          ----------------------------------------                         
headings used herein are for convenience only, do not modify or affect the
meaning of any provision herein, are not a part hereof, and shall not serve as a
basis for interpretation or construction of this Plan.  As used herein, the
masculine gender shall include the feminine and neuter, and the singular number
shall include the plural, and vice versa, whenever such meanings are
appropriate.

     22.  Expenses of Administration of Plan.  All costs and expenses incurred
          ----------------------------------                                  
in the operation and administration of this Plan shall be borne by the Bank or
by a Subsidiary.

                                      10
<PAGE>
 
     23.  Governing Law.  Without regard to the principles of conflicts of laws,
          -------------                                                         
the laws of the State of North Carolina shall govern and control the validity,
interpretation, performance, and enforcement of this Plan.

     24.  Inspection of Plan.  A copy of this Plan, and any amendments thereto,
          ------------------                                                   
shall be maintained by the Secretary of the Bank and shall be shown to any
proper person making inquiry about it.

                                      11
<PAGE>
 
                                   EXHIBIT A

 
<TABLE> 
<CAPTION> 
                                             Percentage of Total
     Name                                        Plan Shares 
     ----                                    -------------------  
<S>                                          <C> 
Pat F. Brady                                        4.29%

Fred B. Coates                                      4.29%

Phillip M. Hooper                                   4.29%

George I. Richardson                                4.29%

Benton S. Smothers                                  4.29%

Gilbert R. Upchurch                                 4.29%

David S. Kemp                                      25.00%

Cynthia F. Teague                                  14.28%

Alecia S. Jones                                    12.62%

Yvonne O. Boaz                                     15.40%

Cheryl D. Chrismon                                  2.09%

Brenda E. King                                      1.39%

Roxanne A. Smith                                    2.79%

Virginia P. Southard                                 .69%
- -------------------------                         ------- 

     Total                                        100.00%
</TABLE> 
<PAGE>
 
                                   EXHIBIT B


STATE OF NORTH CAROLINA
COUNTY OF ROCKINGHAM

                                                           STOCK GRANT AGREEMENT

     THIS STOCK GRANT AGREEMENT (the "Agreement") is made and entered into as of
the 19th of April, 1996 (the "Effective Date"), by and among First Savings Bank
of Rockingham County, Inc., SSB (the "Bank"), a North Carolina corporation,
___________________ (the "Participant") and Phillip M. Hooper, George I.
Richardson and Benton S. Smothers (the "Trustees").

     WHEREAS, a Management Recognition Plan (the "Plan") was adopted by the
Board of Directors of the Bank and approved by a majority of the shareholders of
First Savings Financial Corp., the holding company of the Bank (the
"Corporation").

     WHEREAS, the Committee, as defined in the Plan, has determined that it is
desirable and in the best interest of the Bank to make an award (the "Award") of
certain shares of the Common Stock of the Corporation, under the Plan, to the
Participant, subject to certain restrictions as specified below; and

     WHEREAS, capitalized terms not otherwise defined herein shall have the same
meaning given to such terms in the Plan.

     NOW, THEREFORE, the Parties agree as follows:

     1.   Date of Award.  The date of making the Award under this Agreement is
          -------------                                                       
the 19th day of April, 1996.  This Award has been made in recognition of the
Participant's status and service as a ____________________ of First Savings Bank
of Rockingham County, Inc., SSB.  The Participant is ____ or _____ is not a
director or executive officer of the Bank.

     2.   Receipt by Participant.  The Participant acknowledges receipt from the
          ----------------------                                                
Bank of _________________________________ (__________) shares of Common Stock
(the "Restricted Stock"), and agrees to the execution of stock powers or such
other transfer authorizations as the Committee shall request, in blank, covering

                                       1
<PAGE>
 
the Restricted Stock to be held by the Trustees until the Restricted Stock
becomes vested and nonforfeitable pursuant to the Plan and this Agreement.

     3.   Investment Representation and Transfer Restrictions.
          --------------------------------------------------- 

          (a)  Investment Representation.  Participant makes and agrees to the
               -------------------------                                      
investment representation, if any, attached hereto as Annex A, and the Committee
may cause a legend to be placed on any certificate representing any of the
shares of Restricted Stock to make appropriate reference to such restrictions.

          (b)  Securities Law and Regulations.  The Participant agrees that the
               -------------------------------                                 
Restricted Stock shall be subject to such stop-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of the Securities and Exchange Commission, any stock
exchange or interdealer quotation system upon which the Common Stock is then
listed and any other applicable federal or state securities laws, rules or
regulations, and the Board may cause a legend or legends to be placed on any
certificate representing any of the shares of Restricted Stock to make
appropriate reference to such restrictions.

          (c)  Other Transfer Restrictions.  If paragraph 1 above states that
               ---------------------------                                   
Participant is a director or an executive officer of the Bank, and if less than
one year has passed since the consummation of the Conversion (defined below),
the Participant agrees with the Bank that each certificate representing any of
the Restricted Stock may bear a legend, substantially in the form attached as
Annex B hereto, to the effect that, during the one year period following the
effective date of the conversion of the Bank from a North Carolina chartered
mutual savings bank to a North Carolina mutual savings bank to a North Carolina
chartered stock savings bank (the "Conversion"), the Restricted Stock
represented thereby may not be sold without the written consent of the
Administrator of the Savings Institutions Division, North Carolina Department of
Commerce, except upon the death of the Participant.

     4.   Vesting and Delivery of Restricted Stock by the Trustees.
          -------------------------------------------------------- 

          (a)  Periodic Vesting.  Restricted Stock shall vest and become
               ----------------                                         
nonforfeitable in accordance with the Plan.

                                       2
<PAGE>
 
          (b)  Delivery of Restricted Stock to the Participant. After (i) the
               -----------------------------------------------               
date on which shares of Restricted Stock have become vested as provided in the
Plan, the Committee shall instruct the Trustees to deliver to the Participant,
the Participant's designee, such other person as shall have been designated as
Participant's beneficiary in accordance with this Agreement, or any other
permitted recipient pursuant to the Plan, as applicable, certificates
representing the shares of Restricted Stock which have become vested and
nonforfeitable, as the Board shall determine, free from any restrictions imposed
by this Agreement other than such restrictions and conditions as may be deemed
necessary by the Board pursuant to paragraph 3 above.

          (c)  Delivery of Forfeited Restricted Stock.  If the Restricted 
               --------------------------------------          
Shares, or any of them, are forfeited pursuant to the Plan, the Board shall
instruct the Trustees concerning the disposition of such forfeited shares.
Thereafter such forfeited shares shall cease to be subject to this Agreement.

     5.   Repayment of Dividends.  If the Participant hereunder forfeits any
          ----------------------                                            
shares of Restricted Stock pursuant to the Plan, the Participant shall, within
30 days after the effective date of such forfeiture, pay the Corporation an
amount equal to the dividends received by the Participant with respect to
forfeited shares of Restricted Stock.

     6.   Designation of Beneficiary.  The Participant hereby designates the
          --------------------------                                        
person(s) described on Annex C as the beneficiary or beneficiaries who shall be
entitled to receive the Restricted Stock, if any, distributable to the
Participant upon his death. The Participant may, from time to time, revoke or
change his beneficiary designation without the consent of any prior beneficiary,
if any, by filing a new designation with the Committee.  The last such
designation received by the Committee shall be controlling; provided, however,
                                                            --------  ------- 
that no designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant's death, and in no event
shall it be effective as of a date prior to such receipt.

     If no such beneficiary designation is in effect at the time of the
Participant's death, or if no designated beneficiary survives the Participant,
or if such designation conflicts with law, the Participant's estate shall be
deemed to have been designated his

                                       3
<PAGE>
 
beneficiary and shall receive the Restricted Stock, if any, distributable to the
Participant upon his death.  If the Committee is in doubt as to the right of any
person to receive such distribution, the Committee may direct the Trustees to
retain the Restricted Stock, without liability for any interest in respect
thereof, until the rights thereto are determined, or the Committee may direct
the transfer of such Restricted Stock into any court of appropriate jurisdiction
and such transfer shall be deemed a complete discharge of the obligations of the
Bank, the Corporation, the Committee and the Trustees hereunder.

     7.   Effect of Award on Status of Participant.  The fact that an Award has
          ----------------------------------------                             
been made to the Participant under this Plan shall not confer on the Participant
any right to continued service on the Board or on the board of directors of the
Corporation or any Subsidiary, nor to continued employment with the Bank, the
Corporation or any Subsidiary; nor shall it limit the right of the Bank, the
Corporation or of any Subsidiary to remove the Participant from any such boards,
or to terminate his employment at any time without prior notice.

     8.   Impact of Award on Other Benefits of Participant.  The value of the
          ------------------------------------------------                   
Restricted Stock on the date of the Award or at the time the Restricted Stock
becomes vested, shall not be includable as compensation or earnings for purposes
of any other benefit plan offered by the Bank, the Corporation or any
Subsidiary.

     9.   Tax Withholding.  All Restricted Stock distributed pursuant to this
          ---------------                                                    
Agreement shall be subject to applicable federal, state and local withholding
for taxes.  The Participant expressly acknowledges and agrees to such
withholding without regard to whether the Restricted Stock may then be sold or
otherwise transferred by the Participant.

     10.  Notices.  Any notices or other communications required or permitted to
          -------                                                               
be given under this Agreement shall be in writing and shall be deemed to have
been sufficiently given if delivered personally or three business days after
deposit in the United States mail as Certified Mail, return receipt requested,
properly addressed and postage prepaid, if to the Bank or the Trustees at the
Bank's principal office at 501 South Main Street, Post Office Box 1885,
Reidsville, North Carolina 27323-1885; and, if to the Participant, at his last
address appearing on the books of the

                                       4
<PAGE>
 
Bank.  The Bank and the Participant may change their address or addresses by
giving written notice of such change as provided herein.  Any notice or other
communication hereunder shall be deemed to have been given on the date actually
delivered or as of the third (3rd) business day following the date mailed, as
the case may be.

     11.  Construction Controlled by Plan.  The Plan, a copy of which is
          -------------------------------                               
attached hereto as Annex D, is incorporated herein by reference.  The Award of
Restricted Shares shall be subject to the terms and  conditions of the Plan, and
the Participant hereby assumes, and agrees to comply with, all of the
obligations imposed upon the Participant in the Plan.  This Agreement shall be
construed so as to be consistent with the Plan; and the provisions of the Plan
shall be deemed to be controlling in the event that any provision hereof should
appear to be inconsistent therewith.

     12.  Severability.  Whenever possible, each provision of this Agreement
          ------------                                                      
shall be interpreted in such a manner as to be valid and enforceable under
applicable law, but if any provision of this Agreement is determined to be
unenforceable, invalid or illegal, the validity of any other provision or part
thereof shall not be affected thereby and this Agreement shall continue to be
binding on the parties hereto as if such unenforceable, invalid or illegal
provision or part thereof had not been included herein.

     13.  Governing Law.  Without regard to the principles of conflicts of laws,
          -------------                                                         
the laws of the State of North Carolina shall govern and control the validity,
interpretation, performance, and enforcement of this Agreement.

     14.  Modification of Agreement; Waiver.  This Agreement may be modified,
          ---------------------------------                                  
amended, suspended or terminated, and any terms, representations or conditions
may be waived, but only by a written instrument signed by each of the parties
hereto or their successors in interest.  No waiver hereunder shall constitute a
waiver with respect to any subsequent occurrence or other transaction hereunder
or of any other provision hereof.

     15.  Binding Effect.  This Agreement shall be binding upon and shall inure
          --------------                                                       
to the benefit of the parties hereto, and their respective heirs, legatees,
personal representatives, executors, and administrators, successors and assigns.

                                       5
<PAGE>
 
     16.  Entire Agreement.  This Agreement and the Plan constitute and embody
          ----------------                                                    
the entire understanding and agreement of the parties hereto and, except as
otherwise provided hereunder, there are no other agreements or understandings,
written or oral, in effect between the parties hereto relating to the matters
addressed herein.

     17.  Counterparts.  This Agreement may be executed in any number of
          ------------                                                  
counterparts, each of which when executed and delivered shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.

     18.  Substitution of Trustee.  In the event any new trustee is substituted
          -----------------------                                              
for any Trustee pursuant to the Plan, such substitute trustee shall also be
substituted as a Trustee hereunder.

                                       6
<PAGE>
 
     IN WITNESS WHEREOF, the Bank has caused this instrument to be executed in
its corporate name by its President, or one of its Vice Presidents, and attested
by its Secretary or one of its Assistant Secretaries, and its corporate seal to
be hereto affixed, all by, authority of its Board of Directors first duly given;
and each individual party hereto has hereunto set his hand and adopted as his
seal the typewritten word "SEAL" appearing beside his name, all done this the
day and year first above written.


                              FIRST SAVINGS BANK OF ROCKINGHAM
                              COUNTY, INC., SSB

                              By:   ______________________________
                                    _________________ President

ATTEST:

___________________________________
______________ Secretary

[Corporate Seal]


                              PARTICIPANT


                              _____________________________(SEAL)



                              _____________________________(SEAL)
                              TRUSTEE


                              _____________________________(SEAL)
                              TRUSTEE


                              _____________________________(SEAL)
                              TRUSTEE

                                       7
<PAGE>
 
                                    ANNEX A

                           Investment Representation
                           -------------------------
<PAGE>
 
                                    ANNEX B

                                 Form of Legend
                                 --------------



     The shares represented by this certificate are subject to restrictions on
transfer and, for a period ending September 22, 1996, may not be sold without
the written permission of the Administrator of the Savings Institutions
Division, North Carolina Department of Commerce, except in the event of the
death of the holder thereof.
<PAGE>
 
                                    ANNEX C

                          MANAGEMENT RECOGNITION PLAN
                         BENEFICIARY DESIGNATION FORM


     As Beneficiary to receive any shares of stock distributable on my behalf
pursuant to the First Savings Bank of Rockingham County, Inc., SSB Management
Recognition Plan, I hereby designate the following:



                       Name              Address       Relationship

Primary Beneficiary:   _______________________________________________

                       _______________________________________________

                       _______________________________________________

Contingent Beneficiary:
(if any)               _______________________________________________

                       _______________________________________________

                       _______________________________________________



If more than one primary beneficiary is named, shares will be paid in equal
shares to surviving primary beneficiaries.  Should the contingent beneficiaries
be eligible to receive the benefits (i.e., all primary beneficiaries are
deceased), such benefits will be paid in equal shares to such surviving
contingent beneficiaries.

Name of Spouse if not given above: ___________________________________



________________________________   ___________________________________
Witness                            Participant


                                   ___________________________________
                                   Date
<PAGE>
 
                                    ANNEX D

                          Management Recognition Plan
                          ---------------------------

<PAGE>
 
                        CONSENT OF INDEPENDENT AUDITORS


We consent to incorporation by reference in the Registration Statement on Form 
S-8 of First Savings Financial Corp. (the "Company") of our report dated January
22, 1996 relating to the consolidated statements of financial condition of First
Savings Financial Corp. as of December 31, 1995 and 1994, and the related
consolidated statements of income, stockholders' equity and cash flows for the
years then ended, which report was incorporated by reference in the December 31,
1995 Form 10-KSB of First Savings Financial Corp. Our report dated January 22,
1996, refers to the fact on January 1, 1994, the Company changed its method of
accounting for investments in debt and equity securities to adopt the provisions
of the Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities."

                                                  /s/ KPMG Peat Marwick LLP
                                        
                                                  KPMG Peat Marwick LLP



June 17, 1996


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