September 25, 2003
[Logo]
FFW Corporation
Holding Company For
First Federal Savings Bank of Wabash
Dear Fellow Stockholders:
On behalf of the Board of Directors and management of FFW Corporation, we
cordially invite you to attend the Annual Meeting of Stockholders of the
Company. The Meeting will be held at 2:30 p.m., Wabash, Indiana time, on October
28, 2003, at the office of the Company located at 1205 North Cass Street,
Wabash, Indiana.
An important aspect of the meeting process is the stockholder vote on
corporate business items. I urge you to exercise your rights as a stockholder to
vote and participate in this process. Stockholders are being asked to elect two
directors of the Company and to ratify the appointment of Crowe Chizek and
Company LLC as the Companys auditors. Your Board of Directors unanimously
recommends that you vote for the election of the director nominees named in this
proxy statement and for the ratification of the appointment of auditors.
We encourage you to attend the Meeting in person. Whether or not you plan
to attend, however, please read the enclosed Proxy Statement and then complete,
sign and date the enclosed proxy card and return it in the accompanying postpaid
return envelope as promptly as possible. This will save the Company additional
expense in soliciting proxies and will ensure that your shares are represented
at the Meeting.
Thank you for your attention to this important matter.
Very truly yours,
/s/ Roger K. Cromer
ROGER K. CROMER
President and Chief Executive Officer
FFW CORPORATION
1205 North Cass Street
Wabash, Indiana 46992
(260) 563-3185
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------------------------------
To be Held on October 28, 2003
Notice is hereby given that an Annual Meeting of Stockholders (the
"Meeting") of FFW Corporation ("FFW" or the "Company") will be held at the
office of the Company located at 1205 North Cass Street, Wabash, Indiana, at
2:30 p.m. Wabash, Indiana time, on October 28, 2003.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Company;
2. The ratification of the appointment of Crowe Chizek and Company LLC as
auditors for the Company for the fiscal year ending June 30, 2004;
and such other matters as may properly come before the Meeting or any
adjournments or postponements thereof. The Board of Directors is not aware of
any other business to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on the
date specified above, or on any date or dates to which the Meeting may be
adjourned or postponed. Stockholders of record at the close of business on
September 15, 2003 are the stockholders entitled to vote at the Meeting and any
adjournments or postponements thereof.
You are requested to complete and sign the enclosed proxy card, which is
solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend and vote at the
Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Wayne W. Rees
WAYNE W. REES
Chairman of the Board
Wabash, Indiana
September 25, 2003
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
PROXY STATEMENT
FFW CORPORATION
1205 North Cass Street
Wabash, Indiana 46992
(260) 563-3185
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ANNUAL MEETING OF STOCKHOLDERS
------------------------------
October 28, 2003
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of FFW Corporation ("FFW" or the "Company") of
proxies to be used at the Annual Meeting of Stockholders of the Company which
will be held at the office of the Company, located at 1205 North Cass Street,
Wabash, Indiana, on October 28, 2003, at 2:30 p.m., Wabash, Indiana time, and
all adjournments and postponements of the annual meeting. The accompanying
Notice of Meeting, proxy card and this Proxy Statement are first being mailed to
stockholders on or about September 25, 2003. Certain of the information provided
herein relates to First Federal Savings Bank of Wabash, a wholly-owned
subsidiary of the Company ("First Federal" or the "Bank").
Matters to be Considered at the Annual Meeting
At the annual meeting, stockholders of the Company will be asked to
consider and vote upon (i) the election of two directors of the Company and (ii)
the ratification of the appointment of Crowe Chizek and Company LLC ("Crowe
Chizek") as the Company's auditors for the fiscal year ending June 30, 2004.
Vote Required and Proxy Information
All shares of the Company's common stock, par value $.01 per share ("Common
Stock"), represented at the annual meeting by properly executed proxies received
prior to or at the annual meeting, and not revoked, will be voted at the annual
meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the election of the
director nominees named in this Proxy Statement and for the ratification of the
appointment of Crowe Chizek. The Company is not aware of any matters, other than
those described in the Notice of the Annual Meeting, that are to come before the
annual meeting. If any other matters are properly presented at the annual
meeting for action, proxies for the stockholder will have the discretion to vote
on such matters in accordance with their best judgment.
The holders of at least one-third of the outstanding shares of the Common
Stock, present in person or represented by proxy, will constitute a quorum for
purposes of the annual meeting. Proxies marked to abstain or withhold authority
to vote on one or more director nominees and broker non-votes will be counted
for purposes of determining a quorum.
Directors are elected by a plurality of the votes present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors. Plurality means that individuals who receive the largest number of
votes cast are elected up to the maximum number of directors to be chosen at the
meeting. In the election of directors, stockholders may either vote "FOR" all
nominees for election or withhold their votes from one or more nominees for
election. Votes that are withheld and shares held by a broker, as nominee, that
are not voted (so-called "broker non-votes") in the election of directors will
not be included in determining the number of votes cast, and therefore will
result in the director receiving fewer votes.
The ratification of the appointment of Crowe Chizek as the Company's
independent auditors requires the affirmative vote of a majority of the votes
present in person or represented by proxy at the meeting and entitled to vote on
the matter. For the proposal to ratify the appointment of the independent
auditors, stockholders may vote "FOR," "AGAINST" or "ABSTAIN" with respect to
this proposal. Proxies marked to abstain will have the same effect as votes
against the proposal, and broker non-votes will have no effect on the proposal.
A proxy given pursuant to the solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Company at or before the annual meeting a written notice of revocation
bearing a later date than the proxy; (ii) duly executing a subsequent proxy
relating to the same shares and delivering it to the Secretary of the Company at
or before the annual meeting; or (iii) attending the annual meeting and voting
in person (although attendance at the annual meeting will not in and of itself
constitute revocation of a proxy). Any written notice revoking a proxy should be
delivered to Christine K. Noonan, Secretary, FFW Corporation, 1205 North Cass
Street, Wabash, Indiana 46992.
Voting Securities and Principal Holders Thereof
Stockholders of record as of the close of business on September 15, 2003
(the "Voting Record Date"), will be entitled to one vote for each share of
Common Stock then held. As of that date, the Company had 1,292,229 shares of
Common Stock issued and outstanding. The following table sets forth information,
as of the Voting Record Date, regarding share ownership of: (i) those persons or
entities known by management to beneficially own more than five percent of the
outstanding shares of Common Stock; and (ii) all directors and executive
officers as a group. See "Proposal I - Election of Directors" for beneficial
share ownership of the directors.
Shares
Beneficially Percent
Beneficial Owner Owned of Class
- --------------------------------------------------- ------------ --------
First Manhattan Co.
437 Madison Avenue
New York, NY 10022 121,610 (1) 9.41%
Lee Ann George
30 Garden Drive
Wabash, IN 46992 127,683 9.88%
Directors and executive officers
of the Company and the Bank
as a group (10 persons) 218,567 (2) 16.64%
- ----------------------
(1) As reported in an amendment to a Schedule 13G filed with the SEC on
February 13, 2003, in which First Manhattan Co. reported sole voting and
dispositive power over all shares listed.
(2) Includes shares held directly, as well as, by family members residing in
the homes of the directors and executive officers, and shares held in a
fiduciary capacity with respect to which shares the listed individuals or
group members may be deemed to have voting and/or investment power. This
table includes 21,043 shares subject to options granted to directors and
executive officers as a group which are exercisable within 60 days of
September 15, 2003, 3,000 restricted shares, and 5,563 shares held in the
Bank's 401(k) plan (the "401(k) Plan") as of June 30, 2003. Excludes
options for 14,054 shares which are not exercisable within 60 days of
September 15, 2003.
Section 16(a) Beneficial Ownership Reporting Compliance.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own more than 10% of the Common
Stock to report their initial ownership of the Common Stock and any subsequent
changes in that ownership to the SEC. Specific due dates for these reports are
established by the SEC and the Company is required to disclose in this proxy
statement any late filings or failures to file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended June 30, 2003, the Company
believes that all Section 16(a) filing requirements applicable to our executive
officers, directors and greater than 10% beneficial owners were complied with.
PROPOSAL I - ELECTION OF DIRECTORS
General
The Company's Board of Directors currently consists of seven members
divided into three classes. Each year one class of directors is elected to serve
for a three-year period or until their respective successors are elected and
qualified. Directors generally must have their principal domicile in Wabash
County, Indiana, must have had a loan or deposit relationship with the Bank for
a continuous period of 12 months prior to their nomination to the Board, and
non-employee directors must have served as a member of a civic or community
organization based in Wabash County for at least a continuous period of 12
months during the five years prior to their nomination to the Board.
The following table below sets forth certain information, as of the Voting
Record Date, regarding the composition of the Company's Board of Directors,
including each director's term of office. A nominating committee consisting of
outside directors has recommended and approved the nominees identified in the
following table. It is intended that the proxies solicited on behalf of the
Board of Directors (other than proxies in which the vote is withheld as to a
nominee) will be voted at the annual meeting "FOR" the election of the nominees
identified below. If a nominee is unable to serve, the shares represented by all
valid proxies will be voted for the election of such substitute nominee as the
Board of Directors may recommend. At this time, the Board of Directors knows of
no reason why the nominee may be unable to serve, if elected. Except as
disclosed herein, there are no arrangements or understandings between the
nominee and any other person pursuant to which the nominee was selected.
Shares of
Director Director Common
of the of the Term Stock Percent
Position(s) Held Bank Company to Beneficially of
Name Age in the Company Since Since Expire Owned (1) Class
- -------------------- --- ---------------- -------- -------- ------ ------------ --------
Nominee
Wayne W. Rees 66 Chairman of the Board 1983 1992 2006 52,874 (2) 4.09%
Ronald D. Reynolds 57 Director 1991 1992 2006 22,874 (3) 1.77%
Directors Continuing
in Office
Roger K. Cromer 38 President, CEO and
Director 2001 2001 2004 25,762 (4) 1.98%
Thomas L. Frank 60 Director 1987 1992 2005 35,964 (5) 2.78%
Joseph W. McSpadden 56 Director 1987 1992 2004 22,874 (6) 1.77%
J. Stanley Myers 57 Director 1985 1992 2005 36,034 (7) 2.79%
John N. Philippsen 51 Director 2001 2001 2005 950 *
* Under 1% of outstanding shares
(1) Based upon information furnished by the respective directors and director
nominees. Under applicable regulations, shares are deemed to be
beneficially owned by a person if he or she directly or indirectly has or
shares the power to vote or dispose of the shares, whether or not he or she
has any economic power with respect to the shares. Includes shares owned by
members of the immediate families of the directors residing in their homes.
(2) Includes 40,950 shares held jointly with Mr. Rees' spouse and 2,000 shares
subject to stock options exercisable within 60 days of September 15, 2003.
(3) Includes 10,000 shares held jointly with Mr. Reynolds' spouse and 2,000
shares subject to stock options exercisable within 60 days of September 15,
2003.
(4) Includes 750 restricted shares, 7,999 shares subject to stock options
exercisable within 60 days of September 15, 2003, and 3,535 shares held in
the 401(k) Plan as of June 30, 2003. Excludes 9,998 shares subject to
options not exercisable within 60 days of September 15, 2003.
(5) Includes 20,000 shares held jointly with Mr. Frank's spouse and 2,000
shares subject to stock options exercisable within 60 days of September 15,
2003.
(6) Includes 2,000 shares subject to stock options exercisable within 60 days
of September 15, 2003. Excludes 2,000 shares held by a corporation in which
Mr. McSpadden is a minority shareholder and 2,600 shares held by Mr.
McSpadden's father.
(7) Includes 2,000 shares subject to stock options exercisable within 60 days
of September 15, 2003.
The principal occupation of each director of the Company is set forth
below. All directors have held their present position for at least five years
unless otherwise indicated.
Roger K. Cromer is the President and Chief Executive Officer of the Company
and Bank, positions he has held since July 2000. From October 1998 until July
2000, Mr. Cromer was the Chief Financial Officer and Treasurer of the Company
and Bank. He became a director of the Company and Bank in February 2001.
Joseph W. McSpadden. Mr. McSpadden is the Vice President and part owner of
Beauchamp & McSpadden, an insurance agency located in Wabash, Indiana.
Thomas L. Frank. Mr. Frank is the Controller for B. Walter & Company, a
manufacturer of metal components used in furniture located in Wabash, Indiana.
He is also Controller and part owner of Walter Dimension Co., a manufacturer of
wood furniture components located in Jameston, Tennessee.
J. Stanley Myers. Mr. Myers is the President of L.G.S. Systems, Inc., a
soft water appliance company located in Wabash, Indiana.
John N. Philippsen. Mr. Philippsen has served since 2000 as the Chief
Financial Officer of The Ford Meter Box Company, Inc., a waterworks brass and
pipe products manufacturer based in Wabash, Indiana. Theretofore from 1998 to
2000 he served as Chief Financial Officer of Kennedy Manufacturing Co., a tool
storage manufacturer based in Van Wert, Ohio.
Wayne W. Rees. Mr. Rees is the owner and publisher of The Paper of Wabash
County, Inc., a newspaper published in Wabash, Indiana. Mr. Rees has been
Chairman of the Board of the Company since December 1992. Mr. Rees has served as
Chairman of the Bank's Board of Directors since July 1992.
Ronald D. Reynolds. Mr. Reynolds is the owner and President of J. M.
Reynolds Oil Co., Inc., an oil supply company located in Wabash, Indiana.
Meetings and Committees of the Board of Directors
Meetings and Committees of the Company. Meetings of the Company's Board of
Directors are generally held on a monthly basis. The Board of Directors met 12
times during fiscal 2003. During fiscal 2003, no incumbent director of the
Company attended fewer than 75% of the aggregate of the total number of Board
meetings and the total number of meetings held by the committees of the Board of
Directors on which he served.
The Board of Directors of the Company has standing Audit, Stock Option and
Nominating Committees, as well as other committees which meet as needed.
The Audit Committee of the Company operates under a written charter adopted
by the full Board of Directors. The Audit Committee is composed of Directors
Frank, Philippsen and Myers. Each of these directors meets the requirements for
independence set forth in the Listing Standards of the National Association of
Securities Dealers. This committee is responsible for the review of the
Company's annual audit report prepared by our independent auditors. The
functions of the Audit Committee include:
o reviewing significant financial information for the purpose of giving
added assurance that the information is accurate and timely and that
it includes all appropriate financial statement disclosures;
o ascertaining the existence of effective accounting and internal
control systems; and
o overseeing the entire audit function (both internal and independent).
In fiscal 2003, the Audit Committee met six times.
The Stock Option Committee is comprised of Directors Frank, Myers and
Reynolds. This Committee is responsible for administering the Company's 1992
Stock Option and Incentive Plan and 1998 Omnibus Incentive Plan, as well as
reviewing compensation and benefit matters. This Committee met three times
during the fiscal year ended June 30, 2003.
The Nominating Committee is comprised of Directors Thomas L. Frank, J.
Stanley Myers, John N. Philippsen and Joseph W. McSpadden. This committee was
responsible for selecting nominees for election as directors. Pursuant to the
Company's By-laws, nominations by stockholders must be delivered in writing (as
prescribed by the By-laws) to the Secretary of the Company at least 90 days
before the date of the annual meeting; provided, however, that if less than 100
days' notice or prior disclosure of the date of the meeting is given or made to
stockholders (which notice or public disclosure includes the date of the annual
meeting specified in the Company's By-Laws if the annual meeting is held on such
date), notice by the stockholder must be received not later than the close of
business on the tenth day following the day on which notice of the date of the
meeting is mailed or public disclosure of the date of the meeting is made. This
Committee met one time during the fiscal year ended June 30, 2003.
Executive Officers of the Company Who Are Not Directors
The following information as to the business experience during the past
five years is supplied with respect to executive officers of the Company who do
not serve on the Company's Board of Directors. There are no arrangements or
understandings between the persons named and any other person pursuant to which
such officers were selected.
Christine K. Noonan, age 53, is Senior Vice President and Chief Operations
Officer and Secretary of First Federal, and also serves as Secretary of the
Company. She served as Vice President and Chief Operations Officer of the Bank
since 2000, and became Senior Vice President in 2002. Mrs. Noonan joined First
Federal in 1987 as secretary to the President and became the Data Processing
Manager in 1989. Other duties over the years include new accounts, customer
service, IRA administrator, loan clerk, mortgage lending, and compliance. Prior
to joining First Federal, Mrs. Noonan worked for a company in Warsaw, Indiana
for nine years that handled all aspects of qualified pension plans and financial
planning.
Timothy A. Sheppard, age 35, is Vice President and Controller of First
Federal, and also serves as Treasurer and Chief Accounting Officer of the
Company, positions he has held since October 2000. Prior to joining First
Federal, Mr. Sheppard was employed by Home Bancorp and Home Loan Bank fsb
located in Fort Wayne, Indiana from 1995 to 2000 in a variety of positions,
including Assistant Treasurer from 1995 to 1999 and Treasurer from 1999 to 2000.
Noah T. Smith, age 32, is Vice President of Commercial Loans of First
Federal, a position he has held since August 2000. Prior to joining First
Federal, Mr. Smith was employed by Indiana Lawrence Bank located in North
Manchester, Indiana from 1993 to 2000 in a variety of lending positions,
including Assistant Vice President from 1997 to 2000.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The following Report of the Audit Committee of the Board of Directors shall
not be deemed to be soliciting material or to be incorporated by reference by
any general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent FFW Corporation specifically incorporates this Report
therein, and shall not otherwise be deemed filed under such Acts.
The Board of Directors has adopted a charter for the Audit Committee. The
Audit Committee has issued the following report with respect to the audited
financial statements of the Company for the fiscal year ended June 30, 2003.
The Audit Committee (the "Committee") has reviewed and discussed with
management the Company's audited financial statements for the fiscal
year ended June 30, 2003. The Committee has discussed with Crowe
Chizek the matters required to be discussed by Statement on Auditing
Standards No. 61, Communication with Audit Committees, as amended, by
the Auditing Standards Board of the American Institute of Certified
Public Accountants. The Committee has received and reviewed the
written disclosures and the letter from Crowe Chizek required by
Independence Standard No. 1, Independence Discussions with Audit
Committees, as amended, by the Independence Standards Board, and has
discussed with the auditors the auditors' independence. Based on the
reviews and discussions referred to above, the Committee recommended
to the Board of Directors (and the Board of Directors subsequently
approved) that the financial statements referred to above be included
in the Company's Annual Report on Form 10-KSB for the fiscal year
ended June 30, 2003. The Committee has also considered whether the
provision of services by Crowe Chizek not related to the audit of the
financial statements referred to above is compatible with maintaining
Crowe Chizek's independence. The Committee has concluded that Crowe
Chizek's independence has been maintained with respect to the Company.
John N. Philippsen
Thomas L. Frank
J. Stanley Myers
Director Compensation
Cash Compensation. The Company's directors are paid a fee of $250 per
meeting attended for serving on the Company's Board of Directors. No fee is paid
for membership on the Board committees. All present members of the Company's
Board of Directors are also members of the Bank's Board of Directors for which
each director, other than the Chairman, receives a fee of $850 per meeting
attended. The Chairman of the Board of the Bank receives a fee of $950 per Bank
Board meeting attended. No fees are paid to directors of the Bank for committee
membership.
Deferred Compensation Plan ("DCP"). In 1986, First Federal adopted the DCP
for the benefit of its directors. The DCP is a voluntary deferred compensation
plan which permits directors of the Bank to defer receipt of all or a portion of
their regular board fees. This plan was established to attract and retain
quality directors by providing a retirement benefit in amounts related to Board
fees deferred annually. Under the DCP, a participant or his beneficiary will
receive retirement payments (equal to the amount deferred plus interest accrued
thereon) payable in monthly installments upon retirement from the Board at age
70.
If the director's service on the Board ceases for any reason other than
death or disability, prior to age 70, amounts deferred pursuant to the DCP will
be held by the Bank until the director reaches age 70. In the event of death or
disability of the director while serving on the Bank's board, monthly or annual
payments will be made to the director or his designated beneficiary. In the
event of the director's death following retirement, the remaining benefits will
be paid to the designated beneficiary. These benefit payments are not subject to
any reduction for Social Security benefits or other offset amounts. Until
disbursed, the amounts due and payable under the DCPs continue to be assets of
the Bank, subject to the claims of general creditors. During fiscal 2003, no
directors deferred compensation pursuant to the DCP.
Executive Compensation
The following table sets forth information regarding compensation paid to
the Chief Executive Officer of the Company during the three fiscal years ended
June 30, 2003. No other executive officer earned a salary and bonus for fiscal
2003 in excess of $100,000.
Summary Compensation Table
Long Term
Annual Compensation Compensation Awards
--------------------------------- -------------------------
Restricted All Other
Name and Stock Options/ Compensation
Principal Position Year Salary ($)(1) Bonus ($) Award(s)($) SARs (#) ($) (4)
- ------------------ ---- ------------- --------- ----------- -------- ------------
Roger K. Cromer 2003 $108,269 $27,058 -- -- $19,366
President and CEO 2002 103,270 21,798 -- -- 21,247
2001 98,131 18,268 $11,375 (2) 20,000 (3) 21,128
(1) Includes compensation deferred at Mr. Cromer's election pursuant to the
401(k) plan.
(2) Represents the value of 1,000 shares of restricted stock based on the
$11.375 closing price per share of the Common Stock on the Nasdaq Small Cap
Market on February 6, 2001, the date of grant. Twenty-five percent of the
1,000 shares vests on each annual anniversary date of the grant. Dividends
are paid on the restricted shares to the extent and on the same date as
dividends are paid on all other outstanding shares of Common Stock. Based
on the closing price per share of the Common Stock on the Nasdaq Small Cap
Market on June 30, 2003, the 750 restricted shares held by Mr. Cromer on
June 30, 2003, had a value of $14,370.
(3) Mr. Cromer was granted an option to purchase 20,000 shares of Common Stock
on February 6, 2001. The exercise price of this option is $11.375 per
share, the Nasdaq Small Cap Market closing price on the date of grant. This
option vests over four years with 25% vesting each year on the anniversary
of the grant date.
(4) Includes matching contributions to Mr. Cromer's 401(k) Plan account,
contributions to Mr. Cromer's ESOP account, split-dollar life insurance
premiums paid on behalf of Mr. Cromer, and director's fees.
Stock Options
The following table sets forth information regarding the number and value
of stock options held by Mr. Cromer at June 30, 2003.
Fiscal Year-End Option Values
Value of Unexercised
Number of Unexercised in-the-Money
Options at Fiscal Options at Fiscal
Year-End (#) Year-End ($)(1)
--------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------ ----------- ------------- ----------- -------------
Roger K. Cromer 7,999 9,998 $53,647 $77,834
(1) Represents the difference between the closing price per share of the Common
Stock on the Nasdaq Small Cap Market on June 30, 2003, which was $19.16 per
share, and the exercise price per share of the option, multiplied by the
number of shares underlying the option. An option is in-the-money if the
exercise price is less than the market value of the Common Stock subject to
the option. All of Mr. Cromer's options were in-the-money as of June 30,
2003.
No stock options were granted to or exercised by the Company's Chief
Executive Officer during fiscal 2003.
Employment Agreement with Roger K. Cromer
The Bank has an employment agreement with Mr. Cromer for a three-year term.
The term may be extended for an additional year on each anniversary of the
effective date of the agreement, subject to review and approval of the extension
by the Board of Directors of the Bank. The agreement provides for an annual base
salary no less than Mr. Cromer's base salary as of the effective date of the
agreement, subject to increase in the discretion of the Bank's Board of
Directors. The agreement also provides for bonuses to be awarded in the
discretion of the Bank's Board of Directors. The agreement provides for
termination in the event of Mr. Cromer's death, for cause or upon certain events
specified by Office of Thrift Supervision regulations. The agreement may be
terminated by Mr. Cromer upon 90 days notice to the Bank. The agreement provides
that if there is a change in control of the Company or the Bank, and Mr.
Cromer's employment terminates involuntarily in connection with such change in
control or within 12 months thereafter, he will be entitled to receive a lump
sum amount in cash equal to 299% of his "base amount" of compensation as of the
effective date of the agreement. If the payments provided for in the contract,
together with any other payments made to Mr. Cromer by the Bank are deemed to be
payments in violation of the "golden parachute" rules of the Internal Revenue
Code, such payments will be reduced to the largest amount which would not cause
the Bank to lose a tax deduction for such payments under such rules. Assuming a
change in control were to take place as of June 30, 2003, the termination
payment payable to Mr. Cromer pursuant to this change in control provision would
be approximately $310,477. The Bank has similar employment agreements with three
other executive officers, which provide for payments equal to their base amount
of compensation over a one year period. The aggregate payments to such three
officers as of June 30, 2003, in the event of their involuntary termination
within 12 months following a change in control would be approximately $165,681.
Salary Continuation Agreements
Effective January 1, 2003, the Company has entered into salary continuation
agreements with Messrs. Cromer, Sheppard, and Smith (each, an "Executive").
These agreements provide that upon normal retirement after age 55, in the case
of Mr. Cromer, and after age 62, in the cases of Mr. Sheppard and Mr. Smith,
each Executive is to receive an annual benefit payable on a monthly basis
throughout the year of $100,000, in the case of Mr. Cromer, and $50,000, in the
cases of Mr. Sheppard and Mr. Smith. This benefit is payable for ten years.
The Executive may receive monthly early retirement benefits payable over a
ten-year period with an annual payment equal to the vested portion of the
benefits which have been accrued by the Company ("Accrued Benefits") at the time
of the Executive's early termination of employment. These benefits vest at the
rate of 6.25% per year commencing with the initial date of employment of the
Executive with the Bank which was October 26, 1998, in the case of Mr. Cromer,
October 23, 2000, in the case of Mr. Sheppard, and July 31, 2000, in the case of
Mr. Smith. One hundred percent of the Executive's Accrued Benefit is payable
each year for ten years in the event his employment terminates by reason of
death, disability or within 12 months following a change of control of the
Company.
The Company has the discretion to increase benefits payable under these
agreements. In Mr. Cromer's case, benefits payable under the plan will be
reduced to the extent they would otherwise be deemed excess parachute payments
under Section 280G of the Internal Revenue Code. Under the agreements, if an
Executive is terminated for cause as defined in the agreements, all benefits
under the agreements are forfeited.
The Company has purchased paid-up life insurance on the lives of the
Executives covered by these agreements to fund the benefits payable under them.
The insurance is provided by Clarica and West Coast Life Insurance Company. At
June 30, 2003, the cash surrender value of the policies was carried on the books
of the Company at an amount equal to $20,517.
Split-Dollar Insurance Agreements
The Company has purchased insurance on the lives of its four executive
officers, including Mr. Cromer, and another officer of the Bank. Under
agreements between the Company and these five individuals, the covered
employee's designated beneficiary will be entitled to life insurance proceeds
payable in a lump sum equal to two times the employee's base salary at the
earliest of his date of death, the day he becomes disabled or the date he
attains 65. Each employee's right to these benefits terminates at any time he or
she is terminated for cause, retires, or terminates his or her employment before
age 65.
The Company pays all premiums on the split-dollar life insurance policies.
Each covered employee is taxed each year on the imputed economic benefit to him
or her of this arrangement. The Company may terminate the program at any time.
Certain Transactions
The Bank, like many financial institutions, has followed a policy of
granting to eligible officers, directors, employees and members of their
immediate families loans secured by the borrower's residence and consumer loans.
All such loans are made in the ordinary course of business and on the same
terms, including interest rate and collateral, and conditions as those of
comparable transactions prevailing at the time, and do not involve more than the
normal risk of collectibility or present other unfavorable features.
PROPOSAL II - RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors has renewed the Company's arrangement with Crowe
Chizek to be its auditors for the fiscal year ending June 30, 2004, subject to
the ratification of the Company's stockholders. A representative of Crowe Chizek
is expected to attend the Meeting to respond to appropriate questions and to
make a statement if desired.
Audit Fees
The firm of Crowe Chizek served as our independent public accountants for
each of our last two fiscal years ended June 30, 2002 and 2003. The aggregate
fees billed by Crowe Chizek for the audit of our financial statements included
in our annual report on Form 10-KSB and for the review of our financial
statements included in our quarterly reports on Form 10-QSB for our fiscal years
ended June 30, 2002 and 2003, were $44,050 and $46,800, respectively.
Audit-Related Fees
The aggregate fees billed in each of fiscal 2002 and 2003 for assurance and
related services by Crowe Chizek that are reasonably related to the audit or
review of our financial statements and that were not covered in the Audit Fees
disclosure above were $33,900 and $22,500.
Tax Fees
The aggregate fees billed in each of fiscal 2002 and 2003 for professional
services rendered by Crowe Chizek for tax compliance, tax advice or tax planning
were $16,455 and $8,120, respectively.
All Other Fees
During fiscal 2002 or 2003 and prior to May 6, 2003, $14,580 and $9,350 in
fees, respectively, were billed for additional professional services rendered by
Crowe Chizek not included in the disclosure above. Services rendered included
consulting services.
Our independent auditors performed all work described above with their
respective full-time, permanent employees.
Board of Directors Pre-Approval
Our Audit Committee formally adopted resolutions pre-approving our
engagement of Crowe Chizek to act as our independent auditor and other services
rendered for the last two fiscal years ended June 30, 2003. The Audit Committee
has not adopted pre-approval policies and procedures in accordance with
paragraph (c) (7) (i) of Rule 2-01 of Regulation S-X, because it anticipates
that in the future the engagement of Crowe Chizek will be made by the Audit
Committee and all non-audit and audit services to be rendered by Crowe Chizek
will be pre-approved by the Audit Committee.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF CROWE CHIZEK AS THE COMPANY'S AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30,
2004.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's next annual
meeting must be received by its Secretary at the main office of the Company,
located at 1205 North Cass Street, Wabash, Indiana 46992, no later than 90 days
in advance of September 25, 2004, to be eligible for inclusion in the Company's
proxy statement and form of proxy relating to the next annual meeting. Any such
proposal will be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934 and as with any stockholder proposal
(regardless of whether included in the Company's proxy materials), the Company's
certificate of incorporation, By-laws and Delaware law.
To be considered for presentation at the next annual meeting, but not for
inclusion in the Company's proxy statement and form of proxy for that meeting,
proposals must be received by the Company at least 90 days before the date of
the meeting. If, however, less than 100 days' notice or prior public disclosure
of the date of the next annual meeting is given or made to stockholders (which
notice or public disclosure includes the date of the annual meeting specified in
the Company's By-Laws if the annual meeting is held on such date), proposals
must instead be received by the Company by the tenth day following the day on
which notice of the date of the next annual meeting is mailed or public
disclosure of the date of the next annual meeting is first made. If a
stockholder proposal that is received by the Company after the applicable
deadline for presentation at the next annual meeting is raised at the next
annual meeting, the holders of the proxies for that meeting will have the
discretion to vote on the proposal in accordance with their best judgment and
discretion, without any discussion of the proposal in the Company's proxy
statement for the next annual meeting.
ANNUAL REPORTS
A copy of the Company's Annual Report on Form 10-KSB as filed with the SEC
will be furnished without charge to stockholders as of the Voting Record Date
upon written request to Timothy A. Sheppard, Treasurer, FFW Corporation, 1205
North Cass Street, Wabash, Indiana 46992.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
annual meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the annual meeting, it
is intended that holders of the proxies will act in accordance with their best
judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitation by mail,
directors, officers and regular employees of the Company and/or the Bank may
solicit proxies personally or by telegraph or telephone without additional
compensation.
REVOCABLE PROXY
FFW CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 28, 2003
The undersigned hereby appoints Timothy A. Sheppard and Roger K. Cromer,
with full power of substitution, to act as attorneys and proxies for the
undersigned to vote all shares of common stock of FFW Corporation (the
"Company") which the undersigned is entitled to vote at the Annual Meeting of
Stockholders (the "Meeting"), to be held on Tuesday, October 28, 2003 at the
office of the Company located at 1205 North Cass Street, Wabash, Indiana, at
2:30 p.m., local time, and at any and all adjournments or postponements thereof,
as follows:
I. The election of the following FOR WITHHOLD FOR ALL EXCEPT
directors for three-year terms: [ ] [ ] [ ]
WAYNE W. REES RONALD D. REYNOLDS
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
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II. The ratification of the
appointment of Crowe, Chizek
and Company LLC as independent
auditors of the Company for the
fiscal year ending June 30, 2004. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting or any adjournment or
postponement thereof.
The Board of Directors recommends a vote "FOR" the election of the nominees
named herein and "FOR" the ratification of the appointment of Crowe Chizek and
Company, LLC.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES NAMED HEREIN AND FOR
THE RATIFICATION OF THE APPOINTMENT OF CROWE CHIZEK AND COMPANY LLC. IF ANY
OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED AS DIRECTED
BY THE BOARD OF DIRECTORS IN ITS BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD
OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Please sign exactly as your name(s) appear(s) above on this card. When
signing as attorney, executor, administrator, trustee, guardian or corporate
officer please give your full title. If shares are held jointly, each holder
should sign.
Date ________________________________
_____________________________________ _____________________________________
Stockholder sign above Co-holder (if any) sign above
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Detach above card, sign, date and mail in postage-paid envelope provided.
FFW CORPORATION
This Proxy may be revoked at any time before it is voted by: (i) filing
with the Secretary of the Company at or before the Meeting a written notice of
revocation bearing a later date than the proxy; (ii) duly executing a subsequent
proxy relating to the same shares and delivering it to the Secretary of the
Company at or before the Meeting; or (iii) attending the Meeting and voting in
person (although attendance at the Meeting will not in and of itself constitute
revocation of this Proxy). If this Proxy is properly revoked as described above,
then the power of such attorneys and proxies shall be deemed terminated and of
no further force and effect.
The above signed acknowledges receipt from the Company, prior to the
execution of this Proxy, of Notice of the Meeting, a Proxy Statement and the
Company's Annual Report to Stockholders for the fiscal year ended June 30, 2003.
PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL
THIS PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE ENCLOSED
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