SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
FIRST STATE FINANCIAL SERVICES, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
FIRST STATE FINANCIAL SERVICES, INC.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14a.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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Notes:
FIRST STATE FINANCIAL SERVICES, INC.
1120 BLOOMFIELD AVENUE, CN 2449
WEST CALDWELL, NEW JERSEY 07007-2449
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders (the
"Annual Meeting") of First State Financial Services, Inc. ("First State" or the
"Company"), which will be held on January 17, 1996, at 10:00 a.m., Eastern Time,
at Mayfair Farms, 481 Eagle Rock Avenue, West Orange, New Jersey.
The attached Notice of the Annual Meeting of Shareholders and Proxy
Statement describe the formal business to be transacted at the Annual Meeting.
Also enclosed is our 1995 Annual Report to Shareholders, which contains
financial statements and other information relating to First State. Directors
and officers of the Company, as well as representatives of our independent
auditors, will be present to respond to any questions which shareholders may
have.
YOUR VOTE IS IMPORTANT. The Proxy is your opportunity as a shareholder to
vote on corporate matters. Please separate the Proxy Card from the other
enclosed material and follow the instructions for its completion. You are urged
to sign, date and mail the enclosed Proxy Card promptly in the postage-paid
envelope provided. If you attend the Annual Meeting, you may vote in person
even if you have already mailed in your Proxy Card. However, if you are a
shareholder whose shares are not registered in your own name, you will need
additional documentation from your record holder to vote personally at the
Annual Meeting. A majority of the common stock outstanding must be present,
either in person or by proxy, to constitute a quorum for the conduct of
business.
On behalf of the Board of Directors, officers and all employees of First
State, I wish to thank you for your continued support and interest in our
Company.
Sincerely yours,
Michael J. Quigley, III
Chairman of the Board,
President and Chief
Executive Officer
December 12, 1995
FIRST STATE FINANCIAL SERVICES, INC.
1120 BLOOMFIELD AVENUE, CN 2449
WEST CALDWELL, NEW JERSEY 07007-2449
(201) 575-5800
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 17, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of First State Financial Services, Inc. ("First State" or the
"Company") will be held at Mayfair Farms, 481 Eagle Rock Avenue, West Orange,
New Jersey, on January 17, 1996, at 10:00 a.m., Eastern Time.
A Proxy Statement and Proxy Card for this Annual Meeting are enclosed
herewith. The Annual Meeting is for the purpose of considering and voting upon
the following matters:
1. The election of three directors for terms of three years each;
2. Such other matters as may properly come before the Annual Meeting or
any adjournments thereof.
Pursuant to the Company's Bylaws, the Board of Directors has fixed December
1, 1995 as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting and any adjournments thereof. Only
record holders of the Common Stock of the Company as of the close of business on
that date will be entitled to notice of, to vote at, and to attend the Annual
Meeting or any adjournments thereof. In the event there are not sufficient
votes for a quorum or to approve or ratify any of the foregoing proposals at the
time of the Annual Meeting, the Annual Meeting may be adjourned in order to
permit further solicitation of proxies by the Company. A list of stockholders
entitled to vote at the Annual Meeting will be available at 1120 Bloomfield
Avenue, West Caldwell, New Jersey for a period of ten days prior to the Annual
Meeting and will also be available for inspection at the meeting itself.
EACH SHAREHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL MEETING, IS
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
By Order of the Board of Directors
Marie G. Martino
Secretary
West Caldwell, New Jersey
December 12, 1995
FIRST STATE FINANCIAL SERVICES, INC.
1120 BLOOMFIELD AVENUE, CN 2449
WEST CALDWELL, NEW JERSEY 07007-2449
(201) 575-5800
______________________
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JANUARY 17, 1996
______________________
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is being furnished to shareholders of First State
Financial Services, Inc. ("First State" or the "Company") in connection with the
solicitation by the Board of Directors of proxies to be used at the Annual
Meeting of Shareholders (the "Annual Meeting") to be held at Mayfair Farms, 481
Eagle Rock Avenue, West Orange, New Jersey, on January 17, 1996 at 10:00 a.m.,
Eastern Time and at any adjournments thereof.
Regardless of the number of shares of Common Stock owned, it is important
that shareholders be represented by proxy or be present in person at the Annual
Meeting. Shareholders are requested to vote by completing the enclosed Proxy
Card and returning it signed and dated in the enclosed postage-paid envelope.
Shareholders are urged to indicate the way they wish to vote in the spaces
provided on the proxy card. PROXIES SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY WILL BE VOTED IN ACCORDANCE WITH THE DIRECTIONS GIVEN THEREIN. WHERE NO
INSTRUCTIONS ARE INDICATED, SIGNED PROXIES WILL BE VOTED FOR THE ELECTION OF
EACH OF THE NOMINEES FOR DIRECTOR NAMED IN THIS PROXY.
The 1995 Annual Report to Shareholders, including financial statements for
the fiscal year ended September 30, 1995, accompanies this Proxy Statement and
Proxy Card, which is first being mailed to shareholders on or about December 18,
1995.
A proxy may be revoked at any time prior to its exercise by the filing of a
written notice of revocation with the Company, by delivering to the Company a
duly executed proxy bearing a later date, or by attending the Annual Meeting and
voting in person. However, if you are a shareholder whose shares are not
registered in your own name, you will need additional documentation from your
record holder to vote personally at the Annual Meeting.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxyholders discretionary authority to vote
the shares in accordance with their best judgment on such other business, if
any, that may properly come before the Annual Meeting or any adjournments
thereof.
The cost of solicitation of proxies in the form enclosed herewith will be
borne by First State. In addition to the solicitation of proxies by mail,
proxies may also be solicited personally or by telephone or telegraph by
directors, officers and regular employees of the Company, without additional
compensation therefor. First State will also request persons, firms and
corporations holding shares in their names, or in the name of their nominees,
which are beneficially owned by others, to send proxy
material to and obtain proxies from such beneficial owners, and will reimburse
such holders for their reasonable expenses in doing so.
VOTING SECURITIES
The securities which may be voted at the Annual Meeting consist of shares
of common stock of First State, par value $.01 per share (the "Common Stock"),
with each share entitling its owner to one vote on all matters to be voted on at
the Annual Meeting, except as described below. The close of business on
December 1, 1995 has been fixed by the Board of Directors as the record date
(the "Record Date") for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting and any adjournments thereof. The total
number of shares of Common Stock outstanding on the Record Date was 3,874,405.
The presence, in person or by proxy, of at least a majority of the total number
of shares of Common Stock entitled to vote (after giving effect to the
limitation described below, if applicable) is necessary to constitute a quorum
at the Annual Meeting. In the event there are not sufficient votes for a quorum
at the time of the Annual Meeting, the Annual Meeting may be adjourned in order
to permit the further solicitation of proxies.
As provided in the Company's Certificate of Incorporation, record holders
of Common Stock who beneficially own in excess of 10% of the outstanding shares
of Common Stock (the "Limit") are not entitled to any vote with respect to the
shares held in excess of the Limit. A person or entity is deemed to
beneficially own shares owned by an affiliate of, as well as persons acting in
concert with, such person or entity. The Company's Certificate of Incorporation
authorizes the Board of Directors (i) to make all determinations necessary to
implement and apply the Limit, including determining whether persons or entities
are acting in concert, and (ii) to demand that any person who is reasonably
believed to beneficially own stock in excess of the Limit supply information to
the Company to enable the Board to implement and apply the Limit.
VOTING PROCEDURES AND METHOD OF COUNTING VOTES
As to the election of directors, the proxy card being provided by the Board
of Directors enables a shareholder to vote for the election of the nominees
proposed by the Board, or to withhold authority to vote for one or more of the
nominees being proposed. Under Delaware law and the Company's Certificate of
Incorporation and Bylaws, directors are elected by a plurality of shares voted,
without regard to either (i) broker non-votes; or (ii) proxies as to which
authority to vote for one or more of the nominees being proposed is withheld.
All proxies solicited hereby will be returned to the Board, and will be
tabulated by the inspector of election designated by the Board, who will not be
an employee, or a director, of the Company or any of its affiliates.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Persons and groups owning in excess of 5% of the Company's Common Stock are
required to file certain reports regarding such ownership with the Company and
with the Securities and Exchange Commission in accordance with the Securities
Exchange Act of 1934. The following table sets forth certain information as to
persons known to be beneficial owners of more than 5% of the Company's shares of
Common Stock outstanding on December 1, 1995:
AMOUNT AND
NATURE PERCENT OF
NAME AND ADDRESS OF BENEFICIAL SHARES
OF BENEFICIAL OWNER OWNERSHIP OUTSTANDING
- - ------------------- ------------- ------------
Michael J. Quigley, III 272,002 shares (1) 6.7%
First State Financial Services, Inc.
1120 Bloomfield Avenue, C 2449
West Caldwell, NJ 07007-2449
Austin Bernet, Inc. 314,325 shares (2) 8.1%
340 North Avenue
Cranford, New Jersey 07106
FMR Corp. 286,900 shares (3) 7.4%
82 Devonshire Street
Boston, Massachusetts 02109
Basswood Partners, L.P. 344,500 shares (4) 8.9%
52 Forest Avenue
Paramus, NJ 07652
________________
(1) Includes 155,600 shares that may be acquired pursuant to presently
exercisable stock options.
(2) According to the most recent Schedule 13D filed with respect to these
shares, Robert E. Brennan is president, director and sole stockholder of
Austin Bernet, Inc. ("ABI") and Roger Barnet is vice president and a
director of ABI. By virtue of their positions with ABI, Messrs. Brennan and
Barnet may each be deemed the beneficial owner of these shares.
(3) Fidelity Management & Research Company, a wholly-owned subsidiary of FMR
Corp. and an investment advisor registered under Section 203 of the
Investment Advisors Act of 1940, is the beneficial owner of the shares as a
result of acting as an investment advisor to several investment companies.
(4) According to the most recent Schedule 13D filed with respect to these
shares, Basswood Partners, L.P., Matthew Lindenbaum and Bennett Lindenbaum
are deemed to be the beneficial owners of these shares.
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1 - ELECTION OF DIRECTORS
Pursuant to the Bylaws, the number of directors of the Company currently is
set at nine (9). The three nominees proposed by the Board for election at the
Annual Meeting are Messrs. Ciccone and Davis and Ms. Martino. Each nominee is
presently a Director of First State. Except as to Ms. Martino, each of the
members of the Board of Directors of the Company also serves on the Board of
Directors of First DeWitt Bank (the "Bank" or "First DeWitt"), the wholly-owned
subsidiary of First State. Directors are elected for staggered terms of three
years each, with the term of office of only one class of Directors expiring in
each year. Directors serve until their successors are elected and qualified.
3
In the event that any nominee listed below is unable to serve or declines
to serve for any reason, it is intended that proxies will be voted for the
election of the other nominees named herein and for such other persons as may be
designated by the present Board of Directors. The Board of Directors has no
reason to believe that any of the persons named will be unable or unwilling to
serve. UNLESS AUTHORITY TO VOTE FOR ANY OR ALL THE DIRECTORS IS WITHHELD, IT IS
INTENDED THAT THE SHARES REPRESENTED BY THE ENCLOSED PROXY CARD, IF EXECUTED AND
RETURNED, WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES PROPOSED BY THE BOARD
OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES NAMED
IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO THE NOMINEES AND CONTINUING DIRECTORS
The names of the three nominees to the Board of Directors are set forth
below, along with certain other information concerning such individuals and the
other members of the Board, as of December 1, 1995.
TERM TO EXPIRE PERCENT
FOLLOWING FISCAL SHARES OF COMMON OF
NAME AND BUSINESS EXPERIENCE YEAR ENDING STOCK BENEFICIALLY COMMON
FOR PAST FIVE YEARS SEPTEMBER 30, OWNED (1) STOCK
- - -------------------------------- ------------- ------------------ -------
NOMINEES
Patrick N. Ciccone, M.D., Age 54 ................. 1998 13,175 (2) .3%
Dr. Ciccone is a physician with Urology
Consultants, Inc. in Belleville, N.J. He has been
a Director of the Bank since 1993 and of the
Company since February 1994.
Walter J. Davis, Age 76 .......................... 1998 29,001 (2) .7
Mr. Davis served as director of government
relations for New Jersey Bell Telephone Co.
from 1962 to 1984 and as government
relations manager for AT&T from 1985 to
1986. Mr. Davis is currently retired. He has
been a Director of the Bank since 1962 and
of the Company since its formation in 1987.
Marie G. Martino, Age 55 ......................... 1998 10,186 (3) .3
Secretary of the Company and Vice-President
and Secretary of the Bank. She has been a
Director of the Company since 1989.
4
CONTINUING DIRECTORS
TERM TO EXPIRE PERCENT
FOLLOWING FISCAL SHARES OF COMMON OF
NAME AND BUSINESS EXPERIENCE YEAR ENDING STOCK BENEFICIALLY COMMON
FOR PAST FIVE YEARS SEPTEMBER 30, OWNED (1) STOCK
- - ------------------------------------- ------------- ------------------ ------
Henry F. Albinson, Age 81........................... 1997 19,211 (2)(4) .5%
Mr. Albinson has been retired from the
practice of law since 1980. He has been a
Director of the Bank since 1962 and of the
Company since its formation in 1987.
Frank H. Bridge, Age 73............................. 1997 6,814 (2) .2
President of F.H. Bridge and Associates, a
general contracting firm ("FHBA"); and an
insurance broker for State Mutual Life
Insurance Co. He has been a Director of the
Bank since 1951 and of the Company since
its formation in 1987.
Theodore F. Cox, Age 67............................. 1996 42,724 (2) 1.1
Retired; former President of Cedar Grove
Garden Center, Inc., a landscape nursery and
retail store, from 1950 to 1990. He has been
a Director of the Company and the Bank since
1991.
Clarence R. Lommerin, Age 88........................ 1996 10,124 (2) .3
Retired; formerly associated with C. Johnson
Real Estate, a realtor firm, Branchville, New
Jersey. He has been a Director of the Bank
since 1937 and of the Company since its
formation in 1987.
Michael J. Quigley, III, Age 55..................... 1996 272,002 (5) 6.7
Chairman of the Board, President and Chief
Executive Officer of the Company and the Bank.
He has been a Director of the Bank since 1962
and of the Company since its formation in 1987.
Ralph M. Riefolo, Age 55............................ 1997 51,340 (2) 1.3
President of Riefolo Construction Co.,
Beleville, New Jersey. He has been a
Director of the Bank and of the Company
since 1987.
All officers and directors as a group (18 persons) -- 692,394 (6)(7) 16.8%
(FOOTNOTES ON NEXT PAGE)
5
_________________________
(1) Each person or relative or spouse of such person whose shares are included
herein, exercises sole or shared voting or dispositive power as to the
shares reported.
(2) Includes 3,175 shares that may be acquired pursuant to the exercise of
stock options.
(3) Includes 310 shares held in trust for her grandchildren and 900 shares of
Common Stock that may be acquired pursuant to the exercise of stock
options.
(4) Includes 2,227 shares owned by Mutual Finance Corporation over which sole
voting and dispositive power is held.
(5) Includes 155,600 shares of Common Stock that may be acquired pursuant to
presently exercisable stock options. Also includes 8,402 shares held in
trust for his daughter and 1,108 shares owned by his wife as trustee of a
testamentary trust.
(6) Includes 251,997 shares of Common Stock that may be acquired pursuant to
presently exercisable stock options, and 60,394 shares owned by two
directors of the Bank who are not also directors of the Company.
(7) Includes 48,970 shares of Common Stock owned by the Bank's Employee Stock
Ownership Plan ("ESOP") and allocated to the accounts of executive
officers, as to which shares they may direct the voting. Excludes the
remaining 134,508 shares of Common Stock owned by the ESOP, for the benefit
of other employees of the Bank. The ESOP Administrative Committee of the
Board of Directors of First DeWitt Bank administers the ESOP. Under the
terms of the ESOP, shares of Common Stock allocated to the account of
employees are voted in accordance with the instructions of the respective
employees. Unallocated shares are voted by the ESOP trustee as directed by
the Administrative Committee. All ESOP shares have been allocated to the
account of employees.
MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD
During the fiscal year ended September 30, 1995 the Company's Board of
Directors held twelve meetings. No incumbent director attended fewer than 75%
of the total number of meetings of the Board of Directors and any committee on
which he or she served, including meetings of the Board and committees of the
Bank. Set forth below is certain information regarding certain Board committees
of the Company and the Bank.
The Board of Directors of the Company maintains an Audit Committee. The
Audit Committee, comprised of Directors Cox (Chairman), Albinson, Lommerin and
Davis, met four times in fiscal 1995. The Audit Committee reviews internal
accounting and audit reports in addition to audit and examination reports of the
Company and the Bank from its independent auditors and regulatory agencies.
The full Board of Directors serves as a Nominating Committee for the annual
selection of nominees for election as directors. While the Board of Directors
will consider nominees recommended by shareholders, it has not actively
solicited recommendations from the shareholders for nominees. Nominations by
shareholders must comply with certain procedural and informational requirements
set forth in the Company's bylaws. See "Notice of Business To Be Conducted at
an Annual Meeting." The Board of Directors met two times during the past fiscal
year in its capacity as the Nominating Committee.
The Compensation Committee of the Company and the Bank, comprised of
Company Directors Albinson (Chairman), Bridge and Davis, and Bank Director
Jerold L. Zaro, met four times in fiscal 1995. The Compensation Committee
recommends salary policies, awards bonuses and administers the Employee Stock
Ownership Plan.
DIRECTORS COMPENSATION
FEES. Directors of the Bank and the Company who are not officers receive
an annual retainer from the Bank of $12,000, plus $500 per month if the Director
attends at least one meeting during that month and $300 per committee meeting
attended. Directors of the Bank do not receive additional fees from the Company
for services on the Company's Board.
6
DIRECTORS' STOCK OPTION PLAN. The 1993 Stock Option Plan for Outside
Directors (the "Directors Option Plan"), which was approved by shareholders at
the 1993 Annual Meeting, authorizes the grant of non-statutory options as to an
aggregate of 63,500 shares of Common Stock. Each member of the Board of
Directors of the Company or the Bank who is not an officer or employee of the
Bank or Company (nine persons) has been granted a single non-qualified option to
purchase 6,350 shares of Common Stock, which options vest in four equal
installments commencing on the first anniversary date of the grant. The
exercise prices are the fair market value of the Common Stock as of the date of
the grant. None of the options granted to Directors under the Directors Option
Plan have been exercised.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. Under rules
established by the Securities and Exchange Commission ("SEC"), the Company is
required to provide certain data and information in regard to the compensation
and benefits provided to the Company's Chief Executive Officer and other
executive officers of the Company. The disclosure requirements for a Chief
Executive Officer and such other executive officers include the use of tables
and a report explaining the rationale and considerations that led to fundamental
compensation decisions affecting those individuals. In fulfillment of this
requirement, the compensation committee of the Bank, at the direction of the
Board of Directors, has prepared the following report for inclusion in the proxy
statement. The members of the Compensation Committee are Company Directors
Albinson, Bridge, and Davis and Bank Director Zaro, each of whom is an Outside
Director.
The Company does not pay direct cash compensation to the executive officers
of the Company. However, the Company's executives are also executive officers
of the Bank and are compensated by the Bank. All decisions by the Compensation
Committee relating to the compensation of the Company's executive officers are
reviewed by the full Board of Directors, except for decisions about awards under
certain of the Company's stock-based compensation plans, which must be made
solely by the Committee. The Committee meets at least annually to review and
make recommendations to the Board of Directors regarding the compensation of the
Chief Executive Officer and other executives.
The decisions made by the Compensation Committee as to executive
compensation are subjective in nature, and not subject to specific criteria.
Set forth below are certain considerations taken into account in determining
compensation for the Chief Executive Officer ("CEO") and the executive officers:
BASE SALARIES - In determining the base salaries for the CEO and other
executive officers, the committee reviews salaries offered for similar
positions by financial institution competitors in the Bank's market place,
the officer's educational background and experience, and the officer's past
accomplishments. Increases in base salary are generally based on the
following factors: (1) the officer's performance and contribution toward
the Company's and Bank's goals and objectives during the review period; (2)
the financial and overall performance of the Company during the review
period; (3) competitive market factors; and (4) cost of living. The
performance of the individual is the major determinant in granting base
salary increases.
INCENTIVE COMPENSATION - Incentive compensation for the executive officers
generally consists of cash bonuses and also long-term benefits such as
stock option plans, etc. There is no established incentive compensation or
bonus plan. Historically, the Compensation Committee has granted cash
bonuses to executive officers based on profitability and/or other factors
regarding individual accomplishments and performance towards meeting
overall Company and Bank goals and objectives. Other factors would include
actions such as an exhibition of exemplary
7
management skills, an outstanding use of creative abilities, and
accomplishment in community affairs or activities.
Long-term incentive compensation benefits are generally provided based on
the level and importance of the management position to the overall long-
term success of the Company and Bank, and are intended to provide further
incentives to management to enhance value to all holders of common stock.
Between 1987 and 1993, the only long-term incentive compensation plans of
the Company and the Bank were the stock benefit plans adopted in 1987 in
connection with the conversion of the Bank to stock form and the Company's
initial public offering. No grants were made under these plans since 1987.
At the Annual Meeting of Shareholders of the Company held in January 1994,
shareholders approved the 1993 Long-Term Incentive Stock Benefit Plan
pursuant to which an aggregate of 254,000 shares of Common Stock are
reserved for issuance pursuant to the exercise of options to be granted
thereunder or pursuant to grants of restricted stock. During fiscal year
ended 1995, options to purchase an aggregate of 43,800 shares of common
stock were granted to executive officers, and restricted stock grants for
an aggregate of 10,200 shares of Common Stock were awarded to executive
officers.
With respect to fiscal 1995, the Compensation Committee recommended that
there be a $38,875 increase in the CEO's salary. The Committee also
recommended that a bonus of $30,300 be paid to the Chief Executive Officer.
The Chief Executive Officer was also granted an option to purchase 16,000
shares of Common Stock. In making the cash compensation decisions, the
Committee considered the overall level of base salary, the management of
the Bank's nonperforming assets during 1995, the significant increase in
earnings, the significant growth in assets, the receipt of regulatory
approvals to open two new branch offices, and the significant appreciation
in the trading price of the Company's Common Stock. With respect to the
option grant and in addition to the above-mentioned factors, the Committee
considered that the Chief Executive Officer had not received an option
grant since 1987.
COMPENSATION COMMITTEE
Henry F. Albinson, Esq. Walter J. Davis
Frank H. Bridge Jerold L. Zaro
8
STOCK PERFORMANCE GRAPH. The following table shows a five year comparison
of cumulative total shareholder return on the Company's Common Stock, based on
the market price of the Common Stock, with the cumulative total return of
companies in the NASDAQ Stock Market and in a peer group (which consists of
publicly traded savings institutions in New Jersey with assets under $1
billion). Stock price performance for the past five years is not necessarily
indicative of future results. All stock price performance includes the
reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG FIRST STATE FINANCIAL SERVICES, THE NASDAQ STOCK MARKET-US INDEX
AND PEER GROUP
[PERFORMANCE GRAPH APPEARS HERE]
FIRST STATE NASDAQ
Measurement Period FINANCIAL PEER STOCK
(Fiscal Year Covered) SERVICES GROUP MARKET-US
- - --------------------- --------------- --------- ----------
Measurement Pt-09/30/1990 $100.00 $100.00 $100.00
FYE 09/30/1991 $74 $134 $157
FYE 09/30/1992 $125 $176 $230
FYE 09/30/1993 $231 $279 $382
FYE 09/30/1994 $233 $397 $499
FYE 09/30/1995 $321 $606 $609
* $100 INVESTED ON 09/30/90 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
9
SUMMARY COMPENSATION TABLE. The following table shows, for the fiscal
years ended September 30, 1995, 1994 and 1993, the cash compensation paid by the
Bank, as well as certain other compensation paid or accrued for those years, to
the Chief Executive Officer and certain other executive officers of the Bank
("Named Executive Officer") who received an amount in salary and bonus in excess
of $100,000 in the fiscal year ended September 30, 1995.
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-----------------------------------------------------------------------
AWARDS PAYOUTS
---------------------------------------- ALL
YEAR OTHER OTHER
NAME AND ENDED ANNUAL RESTRICTED COMPENSATION
PRINCIPAL POSITION 9/30 SALARY BONUS COMPENSATION STOCK OPTIONS/ LTIP (3)(4)(5)
(1) AWARDS SARS (#) PAYOUTS
=========================================================================================================================
Michael J. Quigley, III 1995 $293,649 $30,300 $ -- $-- 16,000 $ -- $76,451
Chairman, President 1994 275,625 25,000 -- -- -- -- 70,609
and Chief Executive 1993 275,625 5,048 -- -- -- -- 72,183
Officer
- - -------------------------------------------------------------------------------------------------------------------------
Emil J. Butchko 1995 $101,681 $ 1,187 $ -- $11,600(2) 4,500 $ -- $10,491
Senior Vice President 1994 98,750 1,798 -- -- -- -- 8,130
and Treasurer 1993 92,260 1,715 -- -- -- -- 8,312
=========================================================================================================================
__________________________________
(1) Perquisites did not exceed the lesser of $50,000 or 10% of salary and bonus.
(2) Represents the value of an the market price of the Common Stock on the date
of grant. At September 30, Mr. Butchko's total award of 1,600 shares of
holdings of restricted stock were 1,600 restricted stock under the shares.
The market value of these shares at fiscal year end was $20,700.
(3) The Bank maintains a $1 million whole-life insurance policy for the benefit
of Mr. Quigley. The insurance company at the insured's death will pay to
the Bank the total amount of premiums for the policy which have been paid by
the Bank. The premiums paid in fiscal 1994 relating to this policy were
$22,450. The Company maintains a $1,850,000 Split Dollar Collateral
Assignment insurance policy for the benefit of Mr. Quigley. The policy
provides that the Company has as collateral security an interest in the
policy for any indebtedness of the insured that exists at the time of
settlement of the policy. The premium paid in fiscal 1995 for this policy
was $29,720.
(4) Under a Salary Continuation Agreement, upon the attainment of age 65 or in
the event of the termination of his employment for any reason except for
death or disability, Messrs. Quigley and Butchko will receive $24,444 and
$8,461, respectively, for each year of employment with the Bank, to be paid
in 120 equal monthly payments or in a lump sum. In the event of death prior
to reaching the age of 65, the Bank will pay their beneficiary the sum of
$440,000 and $110,000, respectively, to be paid in 120 monthly payments.
The Bank has acquired an insurance policy to fund its obligations under
these agreements and pays an annual premium of $13,608 for Mr. Quigley and
$5,554 for Mr. Butchko.
(5) Includes matching contributions by the Bank under the 401(k) Plan and other
plans of $10,673 in fiscal 1995, $4,831 in fiscal 1994, and $6,406 in fiscal
1993 for Mr. Quigley, and of $4,937 in fiscal 1995, $2,576 in fiscal 1994,
and $2,758 in fiscal 1993 for Mr. Butchko.
EMPLOYMENT AGREEMENT. The Company and the Bank entered into an
employment agreement with Mr. Quigley on December 28, 1987, which provided for a
five-year term. Commencing on the third anniversary date of each agreement and
continuing each anniversary date thereafter, the agreement automatically extends
for an additional year so that the remaining term is three years. The current
base salary under the agreement, which may be increased at the discretion of the
Board of Directors, is $314,500. In addition to the base salary, the agreement
provides, among other things, for participation in stock option plans and other
fringe benefits and benefit plans applicable to executive personnel.
The agreement provides for termination by the Bank and the Company for
"cause," as defined in the agreement, at any time. In the event the Bank and
the Company choose to terminate Mr. Quigley's employment for reasons other than
for cause, or in the event of his resignation from the Bank and Company, upon
the failure to reelect him to his current offices or because of a material
lessening of his functions, duties or responsibilities, or upon a breach of the
agreements, he or, in the event of death, his
10
beneficiary would be entitled to a sum equal to the greater of (i) thirty-six
times his highest monthly salary or (ii) the payments owed for the remaining
term of the agreement. The Bank and the Company would also continue his life,
health and disability insurance coverage for the earlier of the remaining term
of the agreements or until he is employed by another employer. If termination
follows a change in control of the Bank or the Company, as defined in the
agreement, Mr. Quigley would be entitled to (i) a severance payment equal to
thirty-six times the highest monthly salary paid to him under the agreements
($943,500 assuming termination as of September 30, 1995); (ii) continued
insurance benefits described above until the earlier of the executive's
employment by another employer or thirty-six months; and (iii) a "Special
Retirement Benefit" payment. The Special Retirement Benefit would be an
additional payment (in addition to any amounts Mr. Quigley is otherwise eligible
to receive under the retirement plan maintained by the Bank) equal to the
greater of (i) Mr. Quigley's retirement benefit under the retirement plan at his
actual age upon severance of employment or (ii) fifty percent of the amount his
retirement benefit would be if he had stayed as an employee until the age of 65.
Mr. Quigley currently has ten years of credited service under the retirement
plan and would have credited service of twenty years at age of 65. The agreement
also permits Mr. Quigley to terminate his employment voluntarily without reason
and receive a severance payment equal to his highest annual rate of salary paid
under such agreements for one year or until he obtains other employment, if
earlier. The agreements also provide that the Company will reimburse the
executive for any excise taxes that may be imposed under the federal income tax
code in connection with any payments made following a change in control.
SPECIAL TERMINATION AGREEMENTS. In 1987, the Company and the Bank entered
into a special termination agreement with Mr. Butchko (and other executive
officers of the Company). The agreement is for a term of three years, and
automatically renews each year so that the remaining term is three years, unless
prior notice of non-renewal is given. The agreement provides that if at any time
following a "change in control" (as defined in the agreements) of the Company,
the Company or the Bank were to terminate the officer's employment for any
reasons other than for "cause" (as defined in the agreements), or if the officer
were to terminate his own employment following his demotion, loss of title,
office, significant authority, a reduction in his annual compensation or
relocation of his principal place of employment, the officer would be entitled
to receive a payment in an amount equal to three times his average annual salary
and average incentive compensation over the three previous years of his
employment. If a change in control had occurred at September 30, 1995, the
amounts payable to Mr. Butchko upon a termination of employment would have been
$310,000. Certain insurance coverage maintained by the Bank and the Company at
the time of any such termination would be continued for a twelve-month period or
until the officer is employed by another employer, whichever is earlier. The
agreements also provide for a Special Retirement Benefit as determined above
under "Employment Agreements."
STOCK OPTION AND INCENTIVE PLANS. In 1987, the Company adopted the First
State Financial Services, Inc. Incentive Option Plan (the "1987 Option Plan"),
which reserved an aggregate of 266,700 shares of Common Stock for issuance
pursuant to the exercise of stock options. There are 247,700 shares that remain
reserved for issuance pursuant to the exercise of options granted under the 1987
Option Plan. There have been 19,000 shares issued pursuant to the exercise of
options granted under the 1987 Option Plan. At the Annual Meeting of
Stockholders held in January 1994, shareholders approved the 1993 Long-Term
Incentive Stock Benefit Plan, which reserves an aggregate of 254,000 shares of
Common Stock for issuance pursuant to the exercise of stock options or stock
grants.
11
Set forth below is information relating to options granted to the Named
Executive Officers during the fiscal year ended September 30, 1995.
==================================================================================================================
OPTION GRANTS IN LAST FISCAL YEAR
==================================================================================================================
INDIVIDUAL GRANTS
- - ------------------------------------------------------------------------------------------------------------------
PERCENT OF TOTAL OPTIONS
GRANTED TO EMPLOYEES IN EXERCISE OR BASE EXPIRATION
Name OPTIONS GRANTED FY 1995 PRICE DATE
NAME
==================================================================================================================
Michael J. Quigley, III
Chairman, President and Chief January 20,
Executive Officer 16,000 30.9% $7.25 2005
Emil J. Butchko, Senior Vice January 20,
President and Treasurer 4,500 8.7% $7.25 2005
==================================================================================================================
Set forth below is certain additional information concerning options
outstanding to the Named Executive Officers at September 30, 1995.
====================================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
====================================================================================================================
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT THE-MONEY OPTIONS AT
FISCAL YEAR-END YEAR-END (1)
-----------------------------------------------------------
SHARES ACQUIRED VALUE
NAME UPON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
(#) ($)
- - --------------------------------------------------------------------------------------------------------------------
Michael J. Quigley, III -- -- 155,600/12,800 $1,151,675/$72,800
Chairman, President and
Chief Executive Officer
Emil J. Butchko, Senior -- -- 34,400/3,600 $ 194,032/$20,475
Vice President and
Treasurer
====================================================================================================================
_____________________________________
(1) Equals the difference between the aggregate exercise price of such options
and the aggregate fair market value of the shares of Common Stock that
would be received upon exercise, assuming such exercise occurred on
September 30, 1995, at which date the average of the bid and ask price of
the Common Stock, as quoted on the Nasdaq National Market, was $12.9375.
RETIREMENT PLAN. The Bank maintains a tax-qualified non-contributory
defined benefit pension plan for its employees. All full-time employees age 21
or older who have completed at least six months of service participate in the
plan. The plan provides monthly benefits payable at the later of age 65 or 10
years of participation in the plan, equal to 2% of the employee's average
monthly earnings times the number of years of credited service, up to a maximum
of 25 years. Benefits are not subject to any reduction for social security.
12
The table below presents annual benefits under the Retirement Plan
assuming retirement during 1995 at various levels of compensation and years of
credited service. At September 30, 1995, Mr. Quigley had ten years of credited
service and Mr. Butchko had fourteen years of credited service under the
retirement plan. Under Section 415 of the Internal Revenue Code, a company with
one or more qualified pension plans must limit the maximum level of combined
benefits an individual may receive. Due to this Section 415 limit, Mr. Quigley's
retirement plan benefit is restricted to a total amount which is approximately
40% less than the annual benefit limit listed below.
ANNUAL RETIREMENT BENEFIT
FINAL AVERAGE SALARY WITH CREDITED SERVICE OF (1)
-------------------- ---------------------------------------------------
15 YEARS 20 YEARS 25 YEARS
------------ ------------ ------------
$ 60,000 $ 18,000 $ 24,000 $ 30,000
75,000 22,500 30,000 37,500
100,000 30,000 40,000 50,000
150,000 45,000 60,000 75,000
200,000 60,000 80,000 100,000
250,000 75,000 100,000 120,000 (2)
300,000 90,000 120,000 (2) 120,000 (2)
_________________
(1) The Internal Revenue Code (the "Code") requires that a calculation be
performed with respect to employees who participate in both a defined
benefit plan and a defined contribution plan of the Bank, such as the ESOP
and the 401(k) plan, in determining the amount of benefits and
contributions that may be credited to a particular employee for a
particular plan year. (2) The Code provides that, effective January 1,
1995, the annual benefit to an individual generally cannot exceed $120,000.
This limit is adjusted by the Internal Revenue Service.
Effective as of June 30, 1995, the Bank amended the Retirement Plan to
freeze benefit accruals as of that date. In 1995, the Bank recorded an expense
of approximately $440,000 with respect to its funding obligations relating to
the Retirement Plan.
SUPPLEMENTAL RETIREMENT INCOME PLANS. On October 1, 1994, the Bank
established certain non-tax-qualified executive supplemental retirement plans
(collectively the "SERP") for the benefit of certain executive officers. The
SERP provides a supplemental retirement income benefit in an annual amount equal
to the projected annual salary of the executive at retirement from the Bank
multiplied by a wage replacement percentage less any amounts received from other
benefit plans of the Bank. Mr. Quigley's wage replacement percentage is eighty
percent of his final average salary; for Mr. Butchko the wage replacement
percentage is seventy percent of his final average salary. Benefits under the
SERP are payable to the executive upon the attainment of each executive's normal
retirement date. In the event of an executive's voluntary or involuntary
termination of employment, other than for cause, the executive is entitled to
the vested portion of his or her accrued benefit under the SERP. In the event of
a change in control, however, Mr. Quigley and Mr. Butchko are entitled to a
benefit equal to their full retirement benefit under the SERP. Benefits will be
payable in a lump sum or in monthly installments beginning on the executive's
normal retirement date and continuing for a period of 180 months, or in the case
of benefits payable to Mr. Quigley or Mr. Butchko, 240 months. Payments to an
executive, or to his beneficiary, may be made from the SERP upon the executive's
death, or total or permanent disability. The SERP is considered an unfunded plan
for tax and ERISA purposes. However, the Bank has established a trust in order
to fund the benefits payable to the executives. In connection with the adoption
of the SERP, the Bank purchased life insurance on the participants. The cash
surrender value of that insurance was approximately $11.6 million at September
30, 1995. For financial statement purposes, the Bank recorded an expense of
$212,096 for fiscal 1995 relating to its obligations under the SERP. The cash
surrender value of the life insurance increased by $613,000 during fiscal 1995.
13
TRANSACTIONS WITH CERTAIN RELATED PERSONS
Indebtedness of Management and Transactions with Certain Related Persons.
------------------------------------------------------------------------
Prior to September 30, 1989, the Bank offered residential mortgage loans and
consumer loans to its directors, officers and employees in the ordinary course
of business and on substantially the same terms as those available to the
public, except that the Bank offered a preferred interest rate, which was 1.5%
above the Bank's cost of funds for residential mortgage loans or 1% below the
rate charged by the Bank to its consumer loan customers. The Bank required that
an eligible employee have been with the Bank for a minimum of one year. This
rate is charged as long as such employee remains employed by the Bank. If the
employee no longer works for the Bank, the rate charged is increased to the
market rate in effect at the inception of the loan. In addition, the Bank did
not charge eligible employees market percentage points normally charged to its
customers on originations. The Bank also has made loans to its directors,
officers and employees, and/or persons or entities related to them, on
substantially the same terms and at substantially the same rates offered to the
general public, and which loans do not involve more than the normal risk of
repayment or present other unfavorable features. The Financial Institution
Reform, Recovery and Enforcement Act of 1989 requires that all loans or
extensions of credit to executive officers and directors must be made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with the general public.
The following table sets forth information with respect to each director
and officer of the Bank who had borrowings of $60,000 or greater from the Bank
during the fiscal year ended September 30, 1995 and which borrowings included
any amounts that were on preferred terms in effect prior to September 30, 1989.
All mortgages are first liens on residential properties unless otherwise noted.
LARGEST
AMOUNT BALANCE
MATURITY OUTSTANDING AS OF
DATE OF DATE OF SINCE OCTOBER 1, SEPTEMBER 30, LOAN INTEREST
NAME LOAN LOAN 1994 1995 TYPE RATE
---- ---- ---- ---- ---- ---- ----
Frank H. Bridge.................................... 2/23/89 3/01/19 $169,089 $166,323 Mortgage 6.875%
Director of First DeWitt and First State 12/8/86 11/20/01 89,898 89,412 Home Equity (1)
7/31/92 7/31/98 55,486 43,846 Time Loan (2)
8/3/95 3/4/96 32,000 32,000 Time Loan 9.2
John H. Isemann.................................... 5/19/89 6/01/19 $170,789 $167,945 Mortgage 6.875
Vice President, First DeWitt and First State 7/2/90 7/20/04 14,470 13,146 Home Equity (1)
7/17/89 6/25/05 26,149 13,404 Home Equity (3)
Michael J. Quigley, III............................ 11/5/86 12/1/16 $182,278 $178,677 Mortgage 6.875
Chairman of the Board, President and 12/11/86 11/20/01 94,226 91,290 Home Equity (1)
Chief Executive Officer,
First DeWitt and First State
John A. Rogers..................................... 11/28/88 12/1/18 $145,196 $142,733 Mortgage 6.875
Senior Vice President, First DeWitt and 7/21/87 7/20/02 31,298 72,096 Home Equity (1)
Vice President of First State
_______________________
(1) Floating rate of 1.0% over the designated prime rate, which prime rate was
9.75% on September 30, 1995.
(2) Floating rate of 1.5% over the designated prime rate, which prime rate was
10.75% on September 30, 1995.
(3) Floating rate of 1.9% over the designated prime rate, which prime rate was
10.65% on September 30, 1995.
14
INDEPENDENT AUDITORS
The Board of Directors of the Company has not yet selected independent
auditors for the fiscal year ending September 30, 1996. The selection will be
based in general upon the accounting firm's overall fee structure for auditing
services, tax consulting, tax return review or preparation, and general
consultations. The independent auditors for the fiscal year ended September 30,
1995 were KPMG Peat Marwick LLP. A representative of KPMG Peat Marwick LLP is
expected to attend the Annual Meeting. The representative will be given the
opportunity to make a statement if so desired and will be available to respond
to questions from shareholders present at the Annual Meeting.
SHAREHOLDER PROPOSALS FOR THE 1995 ANNUAL MEETING
In order to be eligible for inclusion in the Company's proxy materials for
the next annual meeting of shareholders to be held in January 1996, a
shareholder proposal must be received by the Secretary of the Company at the
address set forth on the first page of this Proxy Statement, not later than
August 14, 1996. Any such proposal will be subject to Securities and Exchange
Commission Rule 14a-8 under the Securities Exchange Act of 1934.
NOTICE OF BUSINESS TO BE CONDUCTED AT AN ANNUAL MEETING
The Bylaws of the Company provide for an advance notice procedure for
certain business to be brought before an annual meeting. In order for a
shareholder to properly bring business or propose a nomination to the board
before an annual meeting, the shareholder must give written notice to the
Secretary of the Company not less than ninety (90) days before the time
originally fixed for such meeting; provided, however, that in the event that
less than one hundred (100) days notice or prior public disclosure of the date
of the meeting is given or made to shareholders, notice by the shareholder to be
timely must be received not later than the close of business on the tenth day
following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure was made. Accordingly, in order to bring
business before the annual meeting of shareholders to be held in January 1997,
notice must be provided to the Company prior to October 17, 1996, which is 90
days prior to the date anticipated to be fixed for such annual meeting. The
notice must include the shareholder's name, record address and number of shares
owned by the shareholder and describe briefly the proposed business, the reasons
for bringing the business before the annual meeting, and any material interest
of the shareholder in the proposed business, and certain other information
specified in the Bylaws.
REPORTS UNDER SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of
the Company's shares of Common Stock outstanding, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission. Officers,
directors and greater than ten-percent shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on a review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that during fiscal 1995, all Section 16(a) filing requirements
applicable to its executive officers and directors were complied with; except
that
15
a report of a change in beneficial ownership as to the sale by director Riefolo
in June of 1995 of 25,454 shares was filed on November 27, 1995.
OTHER MATTERS
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than as stated in the Notice of Annual
Meeting of Shareholders. If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are present at the Annual
Meeting and wish to vote your shares in person, your proxy may be revoked by
voting at the Annual Meeting.
By Order of the Board of Directors
Marie G. Martino
Secretary
WEST CALDWELL, NEW JERSEY
DECEMBER 12, 1995
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO SIGN AND
PROMPTLY RETURN THE ACCOMPANYING WHITE PROXY CARD IN THE ENCLOSED, POSTAGE-PAID
ENVELOPE.
16
REVOCABLE PROXY
FIRST STATE FINANCIAL SERVICES, INC.
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF SHAREHOLDERS
January 17, 1996
The undersigned hereby appoints Michael J. Quigley, III and Theodore F. Cox,
with full power of substitution, to act as attorney and proxy for the
undersigned, and to vote all shares of common stock of First State Financial
Services, Inc. (the "Company") which the undersigned is entitled to vote at the
Annual Meeting of Shareholders (the "Annual Meeting"), to be held on January 17,
1996, at 10:00 a.m., local time, at Mayfair Farms, 481 Eagle Rock Avenue, West
Orange, New Jersey, and at any and all adjournments thereof.
The proxies are instructed to vote as follows:
Please be sure to sign and date Date:
this Proxy in THE box below.
- - --------------------------------------------------------------------------------
Shareholder sign above Co-holder (if any) sign above
With- For All
For hold Except
1. The election of Directors: [ ] [ ] [ ]
PATRICK N. CICCONE,
WALTER J. DAVIS, and
MARIE G. MARTINO
(INSTRUCTION: To withhold your vote for any individual nominee, write that
nominee's name in the space provided below.)
- - --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
This proxy is revocable and will be voted as directed, but if no
instructions are specified, this proxy will be voted FOR the proposal listed. If
any other business is presented at the Annual Meeting, this proxy will be voted
by those named in this proxy in their best judgment. At the present time, the
Board of Directors knows of no other business to be presented at the Annual
Meeting.
The undersigned acknowledges receipt from First State Financial Services,
Inc., prior to the execution of this proxy, of a Notice of Annual Meeting of
Shareholders and of a Proxy Statement, each dated December 12, 1995 and of the
Annual Report to Shareholders.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
FIRST STATE FINANCIAL SERVICES, INC.
- - --------------------------------------------------------------------------------
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
- - --------------------------------------------------------------------------------