SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
UNITED FINANCIAL CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(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.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
<PAGE>
[LOGO]
UNITED
FINANCIAL
CORP.
120 FIRST AVENUE NORTH
GREAT FALLS, MONTANA 59403
(406) 727-6106
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
United Financial Corp. (the "Company") will be held at the Holiday Inn, 400
Tenth Avenue South in Great Falls, Montana on May 20, 1999, at 4:00 p.m.,
Mountain time, for the following purposes:
1. To elect three Directors of the Company to serve on the Board
of Directors until the annual meeting of shareholders to be
held in 2002 or until their successors are duly elected and
qualified;
2. To ratify the appointment of KPMG LLP as independent auditors
for the Company for the fiscal year commencing January 1,
1999; and
3. To consider and act upon any other matters that may properly
come before the meeting or any adjournments thereof.
The Board of Directors has selected April 13, 1999 as the record date
for the Annual Meeting. Only those shareholders of record at the close of
business on that date will be entitled to receive notice of and to vote at the
Annual Meeting or any adjournment or adjournments thereof.
By the Order of the Board of Directors
/s/ John M. Morrison
John M. Morrison
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Great Falls, Montana
April 20, 1999
<PAGE>
UNITED FINANCIAL CORP.
120 FIRST AVENUE NORTH
GREAT FALLS, MONTANA 59403
(406) 727-6106
PROXY STATEMENT
INFORMATION RELATING TO VOTING AT THE ANNUAL MEETING
This Proxy Statement (the "Proxy Statement") is being furnished to
shareholders of United Financial Corp., a Minnesota corporation (the "Company"),
in connection with the solicitation of proxies by the Company for use at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held at the Holiday
Inn, 400 Tenth Avenue South in Great Falls, Montana on May 20, 1999, at 4:00
p.m., Mountain time, and at any adjournment or adjournments thereof. The
approximate date of mailing of this Proxy Statement and the accompanying form of
proxy is April 20, 1999.
The Board of Directors of the Company has selected April 13, 1999 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting. A total of 1,698,312 shares of the Company's
Common Stock were outstanding as of the close of business on that date.
Shareholders will be entitled to cast one vote for each share of the Company's
Common Stock held by them of record at the close of business on the record date
on any matter that may be presented at the Annual Meeting for consideration and
action by the shareholders.
All valid proxies received in response to the solicitation will be
voted in accordance with the instructions indicated thereon by the shareholders
giving such proxies. If no contrary instructions are given, each such proxy will
be voted in favor of the election of the three Director nominees named in this
Proxy Statement, unless and to the extent authority to do so is withheld in the
enclosed proxy, and in favor of the proposal to ratify the appointment of KPMG
LLP as independent auditors for the Company. Shares voted as "withhold vote for"
one or more Directors will be counted as shares that are present and entitled to
vote for purposes of determining the presence of a quorum at the meeting and as
unvoted, although present and entitled to vote, for purposes of the election of
the Directors with respect to which the shareholder has abstained. If a broker
submits a proxy that indicates the broker does not have discretionary authority
to vote certain shares, those shares will be counted as shares that are present
and entitled to vote for purposes of determining the presence of a quorum at the
meeting, but will not be considered as present and entitled to vote with respect
to the matters voted on at the meeting.
The Board of Directors does not know of any business to be presented
for action at the Annual Meeting other than that described herein. If any other
business is properly presented at the Annual Meeting and may be properly voted
upon, the proxies solicited hereby will be voted on such matters in accordance
with the best judgment of the proxy holders named therein.
Any shareholder has the power to revoke his or her proxy at any time
before it is voted at the Annual Meeting by filing written notice of such
revocation to the Secretary of the Company (which notice shall be given by the
filing of a duly executed proxy bearing a later date) or by attending the Annual
Meeting and voting in person. Proxies solicited by the Company's Board of
Directors hereby are for use solely at the Annual Meeting and any adjournment or
adjournments thereof.
The expense of this proxy solicitation will be borne by the Company. To
the extent necessary, proxies may be solicited by personnel of the Company in
person, by telephone, or through other forms of communication. Company personnel
who participate in the solicitation will not receive any additional compensation
for such solicitation. The Company will request recordholders of shares
beneficially owned by others to forward this Proxy Statement and related
materials to the beneficial owners of such shares and will reimburse such
recordholders for their reasonable expenses incurred in doing so.
1
<PAGE>
HERITAGE MERGER
On February 3, 1998, Heritage Bancorporation ("Heritage") merged with
and into the Company (the "Merger"). In connection with the Merger, each
outstanding share of Heritage common stock was converted into shares of the
Company's Common Stock. An aggregate of 475,000 shares (or 28%) of the Company's
Common Stock was issued in connection with the Merger. Prior to the Merger, the
former shareholders of Heritage (the "Former Heritage Shareholders") owned
approximately 3.3% of the outstanding shares of the Company's Common Stock.
Immediately following the Merger, the Former Heritage Shareholders owned
approximately 30% of the outstanding shares of the Company's Common Stock. In
connection with the Merger, the Company's wholly-owned subsidiary, United
Savings Bank, F.A. (United Bank"), was merged with and into Heritage's
wholly-owned subsidiary, Heritage Bank, F.S.B. ("Heritage Bank").
In connection with, and as a condition of the consummation of, the
Merger, John M. Morrison, Kurt R. Weise, Janice M. Graser, Larry D. Albert and
Jerome Hentges (the "Heritage Nominees") were nominated by the Former Heritage
Shareholders and were elected to the Company's Board of Directors. Consequently,
the Heritage Nominees now constitute a majority of the Company's Board of
Directors. There are no contractual or other requirements for the Heritage
Nominees to be nominated or re-elected to the Company's Board of Directors in
the future. The Heritage Nominees, representing a majority of the Company's
Board of Directors, will be able to select and control the management of the
Company as well as the board of directors of the Company's subsidiary banks.
In addition, Mr. Morrison, the former majority shareholder of Heritage
and the current Chairman of the Board of Directors and Chief Executive Officer
of the Company, was granted certain rights of first refusal by shareholders of
the Company holding 263,200 shares, or approximately 15.5%, of the Company's
outstanding Common Stock. Under these rights of first refusal, such shareholders
may not sell their shares of the Company's Common Stock for a period of two
years from the merger date without first offering such stock to Mr. Morrison.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The only non-management persons known to the Company to own
beneficially more than 5% of the outstanding shares of the Company's Common
Stock as of February 28, 1999 are as follows:
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
------------------- -------------------- --------
Eighteen Seventy Financial Inc. 120,000 shares(1) 7.1
Two Manhattanville Road
Purchase, New York 10577
- ---------------------
(1) As reported by schedule 13D dated August 30, 1996 filed by Eighteen Seventy
Financial Inc. and its parent corporation, Eighteen Seventy Corporation.
2
<PAGE>
SECURITIES OWNERSHIP OF MANAGEMENT
The following table sets forth information as of February 28, 1999
concerning the shares of Company's Common Stock beneficially owned by each
Director, by each nominee for Director, by the Named Executive Officers (as
defined herein) and by all Directors and executive officers of the Company as a
group. Except as otherwise noted, each beneficial owner listed has sole
investment and voting power with respect to the Common Stock indicated.
Number of Shares
Name of Individual or of Common Stock Percent
Number of Persons in Group Beneficially Owned of Class
-------------------------- ------------------ --------
John M. Morrison 424,860(1) 25.0
Kurt R. Weise 31,000 2.0
J. William Bloemendaal 30,000(2) 1.8
Kevin P. Clark 26,250(3) 1.5
Steve L. Feurt 26,100(4) 1.5
Janice M. Graser 20,570 1.2
Elliott L. Dybdal 18,750 1.1
William L. Madison 1,700 *
Larry D. Albert 500 *
Jerome Hentges 1,300 *
All current Directors and executive
officers as a group (10 persons) 581,030 34.2
- ------------------------
* Less than 1%.
(1) Includes 63,000 shares held by Central Bancshares, Inc. ("Central
Bancshares") of which Mr. Morrison is the sole shareholder and 39,140
shares held by trusts for the benefit of Mr. Morrison's daughters of which
Mr. Morrison's spouse, Susan Morrison, is the trustee, and 1,000 shares
each held in the respective Individual Retirement Accounts of John Morrison
and Susan Morrison. Excludes 263,200 shares for which Mr. Morrison holds
contractual rights of first refusal to purchase from other United
shareholders. Mr. Morrison received such rights in connection with the
Merger. If all of such rights were triggered and Mr. Morrison exercised
such rights in full, he would own 40.5% of the outstanding shares of Common
Stock.
(2) Includes 4,100 shares held by Dr. Bloemendaal in an Individual Retirement
Account and 10,000 shares held by Great Falls Orthopaedic Associates Profit
Sharing and Pension Plans of which Dr. Bloemendaal is trustee. Voting and
investment power of 15,900 of such shares are shared with Dr. Bloemendaal's
spouse with whom shares are held jointly.
(3) Includes 1,150 shares held by Mr. Clark in an Individual Retirement
Account, and 1,350 shares held in the name of his children, for whom Mr.
Clark is custodian.
(4) Includes 4,975 shares held by Mr. Feurt in an Individual Retirement
Account.
PROPOSAL ONE--ELECTION OF DIRECTORS
In accordance with the Company's bylaws, the Company's Board of
Directors is divided into three classes, each class to have, as nearly as
possible, an equal number of members. The members of each class are elected for
terms of three years with one of the three classes of Directors to be elected
each year.
Larry D. Albert, Jerome H. Hentges and Steve L. Feurt have been
nominated for election to the Company's Board of Directors for three-year terms
expiring in 2002. Each of the nominees listed below has consented to being named
in this Proxy Statement and has indicated his willingness to serve if elected.
If any nominee becomes unable to serve, the proxy solicited hereby will be voted
for the election of such other person or persons as the Board of Directors shall
select. The affirmative vote of a majority of the shares of Common Stock present
and entitled to vote with respect to the election of Directors is required for
the election of the nominees to the Board of Directors.
3
<PAGE>
The following table sets forth the names of and certain information
concerning the nominees and continuing members of the Board of Directors of the
Company.
<TABLE>
<CAPTION>
Director Term of Positions Currently Held
Nominees for Director Age Since Office Expires With the Company
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Larry D. Albert 48 1998 1999 Director
Jerome H. Hentges 57 1998 1999 Director
Steve L. Feurt 43 1998 1999 Chief Credit Officer and Director
of the Company and Senior Vice
President and Chief Credit
Officer of Heritage Bank
Continuing Directors
--------------------
John M. Morrison 62 1998 2000 Chairman, Chief Executive
Officer and Director
Kurt R. Weise 42 1998 2000 President, Chief Operating Officer and
Director of the Company and Chief
Operating Officer, Vice President and
Treasurer of Heritage Bank
Janice M. Graser 44 1998 2000 Director
J. William Bloemendaal 69 1976 2001 Director
Elliott L. Dybdal 67 1980 2001 Director
William L. Madison 43 1996 2001 Director
Kevin P. Clark 43 1998 2001 Vice President, Secretary
and Director of the Company
and President and Chief Executive
Officer of Heritage Bank
</TABLE>
MR. ALBERT has served as President and Chief Executive Officer of
Central Bank, located in Stillwater, Minnesota, since 1996. Before joining
Central Bank, he served as President of AmeriBank, a community bank with $150
million in assets located in the Minneapolis/St. Paul, Minnesota area. He has
over 23 years of experience in banking.
MR. HENTGES is the President of Central Bank-Eden Prairie, and has been
with Central Bank since 1989. Before joining Central Bank, he held various
senior management positions in banks such as Firstar Bank Minnesota and Metro
Bank Bloomington. He has over 30 years of experience in banking in the
Minneapolis/St. Paul, Minnesota area.
MR. FEURT has served as Chief Credit Officer of the Company and Senior
Vice President and Chief Credit Officer of Heritage Bank since the Merger.
Before the Merger, he served as Senior Vice President, Senior Credit Officer and
a director of Heritage Bank since 1994. Mr. Feurt served as Senior Vice
President, Senior Credit Officer and a director of Bank of Montana Systems, a
bank holding Company with approximately $800 million is assets ("BMS"), and Bank
of Montana from 1984 until the sale of BMS to Norwest Corporation in 1994.
MR. MORRISON has served as Chairman and Chief Executive Officer of the
Company since the Merger. Before the Merger, he served as Chairman of Heritage
since 1994. Mr. Morrison is the Chief Executive Officer and sole shareholder of
Central Bancshares, the parent company of Central Bank, located in Stillwater,
Minnesota, which was founded by Mr. Morrison in 1988. He is also the sole
shareholder and Chairman of the Board of Directors of Central
4
<PAGE>
Financial Services ("CFS"), a bank consulting firm. Mr. Morrison was the
Chairman and majority shareholder of BMS prior to its sale to Norwest
Corporation. He is currently involved as a shareholder in various businesses,
including businesses involving cellular phone service and precision parts
manufacturing. Mr. Morrison is also a director of Fingerhut Corporation, a
publicly held company, which engages in direct marketing.
MR. WEISE has served as President, Chief Operations Officer and a
director of the Company and Vice President of Heritage Bank since the Merger.
Before the Merger, he served as Vice President, Treasurer and a director of
Heritage. Mr. Weise also serves as President of CFS and President of Central
Bancshares. He has been involved with the Central Bank group of companies since
they were founded in 1988. He was the Chief Financial Officer of BMS until its
sale to Norwest Corporation.
MS. GRASER is Executive Vice President and a director of Central
Bancshares and Executive Vice President of CFS. Prior to the Merger, she served
as a director of Heritage Bank.
DR. BLOEMENDAAL is a full-time physician specializing in orthopaedic
surgery. He has practiced medicine since 1961 and has been associated since 1975
with Great Falls Orthopaedic Associates, a five-person group actively practicing
orthopaedic surgery. Dr. Bloemendaal currently serves as President of Great
Falls Orthopaedic Associates.
MR. DYBDAL has been employed by Talcott Building Company in Great Falls
for over 34 years, serving for the last 21 years as its President and Chief
Executive Officer. He also serves as a director of Talcott Building Company.
MR. MADISON has served as President/owner of Johnson Madison Lumber
Co., Inc., a retail building materials business in Great Falls, Montana, since
1984.
MR. CLARK has served as Secretary of the Company and President and
Chief Executive Officer of Heritage Bank since the Merger. Mr. Clark was elected
as Vice President of the Company in May 1998. Before the Merger, he served as
President, Chief Executive Officer and a director of Heritage Bank since 1994.
Mr. Clark served in various capacities with BMS until its sale to Norwest
Corporation, including President, Chief Executive Officer and a director of Bank
of Montana, a subsidiary of BMS, and Regional Vice President of BMS. He has over
22 years of experience in banking.
BOARD MEETINGS AND COMMITTEES
During the fiscal year ended December 31, 1998, the Board of Directors
of the Company held 13 regularly scheduled and special meetings. All Directors
attended at least 75% of the meetings of (i) the Board of Directors held during
the period for which they served as Directors and (ii) the Board committees of
which they served during the periods such persons served on such committees. The
Company has a standing Compensation Committee and Audit Committee. The Company
does not have a standing Nominating Committee.
The Compensation Committee for the fiscal year ended December 31, 1998
consisted of Messrs. Dybdal, Madison, Morrison, Weise, and Dr. Bloemendaal. The
Compensation Committee is responsible for setting the compensation and benefits
of the Company's executive officers, including the Chief Executive Officer, on
behalf of the Board of Directors and the shareholders. The Compensation
Committee met once during the fiscal year ended December 31, 1998.
The Audit Committee for the fiscal year ended December 31, 1998
consisted of Messrs. Dybdal, Madison, Morrison, Weise, Clark and Dr.
Bloemendaal. The Audit Committee is responsible for selecting the outside audit
firm for the Company, reviewing the auditor's and the Securities and Exchange
Commission (the "Commission") and Office of Thrift Supervision (the "OTS")
reports of examination, and overseeing matters relating to internal controls.
The Audit Committee met once during the fiscal year ended December 31, 1998.
5
<PAGE>
COMPENSATION OF DIRECTORS
All Directors of the Company receive $250 for attendance at each
monthly meeting. In addition, Directors not employed by the Company receive a
monthly retainer of $250. Kurt R. Weise, Kevin P. Clark and Steve L. Feurt are
eligible to participate in the Company's Stock Appreciation Rights program. See
"Executive Compensation and Other Information - Stock Appreciation Rights
Program".
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE ELECTION
OF THE ABOVE NOMINEES FOR THE TERMS INDICATED.
PROPOSAL TWO--RATIFICATION OF APPOINTMENT OF AUDITORS
KPMG LLP was the Company's independent public accountant for the fiscal
year ended December 31, 1998. The Board of Directors has approved the selection
of KPMG LLP as its auditors for the fiscal year commencing January 1, 1999,
subject to ratification by the Company's shareholders. A representative of KPMG
LLP is expected to be present at the Annual Meeting to respond to shareholders'
questions and will have the opportunity to make a statement if he or she so
desires.
Ratification of the appointment of the auditors requires the
affirmative vote of a majority of the votes cast by the shareholders of the
Company at the Annual Meeting. THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE
COMPANY'S AUDITORS FOR THE FISCAL YEAR COMMENCING JANUARY 1, 1999.
6
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE. The following table shows the cash and
non cash compensation paid by the Company during the past three fiscal years, to
its Chief Executive Officers and each executive officer who received cash
compensation from the Company during the year ended December 31, 1998 exceeding
$100,000 (the "Named Executive Officers").
<TABLE>
<CAPTION>
Annual Compensation
Name of Individual Fiscal ------------------- All Other
and Principal Positions Year Salary Bonus SARs Compensation
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bruce K. Weldele(1) 1998 $ 45,500 - - $7,500(2)
Chairman of the Board, 1997 $160,200 - - $4,750(2)
President and Chief 1996 $155,100 - - $1,900(2)
Executive Officer and
Director
Kevin P. Clark 1998 $100,000 $16,100 5,000 $8,100(3)
Vice President,
Secretary and Director
John M. Morrison 1998 (4) - - -
Chairman of the Board,
Chief Executive Officer
and Director
</TABLE>
(1) Mr. Weldele retired on March 6, 1998 in connection with the Merger. See
"Executive Compensation and Other Information - Executive Officer
Severance Agreements".
(2) Represents the Company's or United Bank's contributions on behalf of
such officer to the Company's 401(k) Thrift Retirement Plan ("the 401
(k) Plan")
(3) Includes the Company's contributions on behalf of such officer to the
401(k) Plan of $4,800 and contributions to a deferred compensation plan
of $3,300.
(4) Mr. Morrison does not receive compensation for his services as the
Company's Chairman of the Board and Chief Executive Officer. He is
compensated for his services as a Director through the Directors' fees
he receives and for his services as an officer of the Company through
CFS. See "Proposal One - Election of Directors - Compensation of
Directors" and "Executive Compensation and Other Information - Certain
Relationships and Related Transactions Between Management and the
Company".
7
<PAGE>
STOCK APPRECIATION RIGHTS PROGRAM. In July 1998, the Company adopted a
stock appreciation rights ("SARs") plan. The plan is a cash bonus program tied
to the price movement of the Common Stock. During July 1998, the Company awarded
26,500 shares under the plan at a strike price of $28.06. As of December 31,
1998, 800 shares had been forfeited. The Company awarded an additional 2,400
shares during January 1999 at a strike price of $23.03. The cash award payable
under the plan will equal the number of shares awarded to an employee multiplied
by the employee's vesting percentage, multiplied by the excess of the then
current stock price over the strike price. Each award has a three-year vesting
period. As of December 31, 1998, no liability under the plan was necessary. As
of December 31, 1998, Mr. Weise had been granted 7,000 shares at a strike price
of $28.06 which are 33.33% vested for a total of 2,333 shares. Mr. Feurt had
been granted 5,000 shares at a strike price of $28.06 which are 33.33% vested
for a total of 1,667 shares.
SAR GRANTS TABLE. The following table shows the Company's stock awarded
to executive officers under the Stock Appreciation Rights program during the
year ended December 31, 1998.
SAR GRANTS IN 1998
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
% of Total Annual Rates of
SARs Stock Price
SARs Granted to Base Appreciation for
Granted Employees Price Expiration Option Term
Name (#) in 1998 ($/Sh) Date 5% ($) 10% ($)
---- --- ------- ------ ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Kevin P. Clark 5,000(1) 18.9% $28.06 July 1, 2008 (2) $88,300 $223,850
</TABLE>
- ------------------
(1) At December 31, 1998, shares were vested at 33.33% or 1,667.
(2) Although an expiration date is not stated in the program document, a 10
year life has been assumed for purposes of computing the potential
realizable value.
SAR EXERCISE AND VALUE TABLE. The following table sets forth SARs
exercises and values at December 31, 1998.
AGGREGATED SAR EXERCISES IN 1998 AND SAR 1998 YEAR END VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money SARs
SARs at December 31, 1998 at December 31, 1998
------------------------- --------------------
Name Exercisable Unexercisable
---- ----------- -------------
<S> <C> <C> <C>
Kevin P. Clark 1,667 3,333 (1)
</TABLE>
- -------------------
(1) No shares either exercisable or unexercisable were in-the-money as of
December 31, 1998
EXECUTIVE OFFICER SEVERANCE AGREEMENTS. During fiscal year 1993, the
Board of Directors approved change of control severance agreements for certain
former officers of the Company and United Bank. The agreements provided for
severance compensation for each of such officers in the event any company or
person acquired control of the Company, as determined in accordance with
applicable federal regulations. The Merger constituted a change in control of
the Company under the terms of such severance agreements. Pursuant to the terms
of his agreement and upon consummation of the Merger, Mr. Weldele became
entitled to and elected to receive compensation consisting of a lump-sum payment
of $320,400 and 24 months of continued welfare and employee benefits.
DEFERRED COMPENSATION PLAN. The Company has a deferred compensation
agreement with Kevin P. Clark that provides for predetermined periodic payments
over 15 years upon retirement or death. In the event of acquisition of the
Company by a third party, disability or early retirement, the predetermined
payments are based on years of service. Amounts expensed under this agreement
were approximately $3,300 during the year ended December 31, 1998.
8
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. The basic
objective of the Compensation Committee is to establish a compensation package
appropriate for each officer's scale of responsibility and performance,
commensurate with the marketplace compensation for executives of companies of
similar size as the Company, and to attract, motivate and retain executives of
the necessary caliber. In determining each officer's compensation, the
Compensation Committee reviews the compensation of each officer, the individual
achievements and performance of each officer and salary recommendations made by
the Chief Executive Officer covering all officers (other than the Chief
Executive Officer). The specific recommendations reflect the job
responsibilities assigned to each officer, the manner in which those duties have
been performed, and the prevailing market conditions relative to each position.
The Company maintains a bonus plan for its executive officers. Bonuses payable
under the plan are based on the Company's subsidiary banks' return on assets,
asset quality and the overall growth and performance of the Company's subsidiary
banks. The Company also provides long-term incentive to its executive officers
primarily through its SAR Program discussed above. SARs are granted to encourage
executives to seek the same objectives as shareholders, to retain executives
through vesting and to lower the overall cash cost of compensation.
Mr. Morrison does not receive compensation for his services as the
Company's Chairman of the Board and Chief Executive Officer. He is compensated
for his services as an officer of the Company through CFS. See "Executive
Compensation and Other Information - Certain Relationships and Related
Transactions Between Management and the Company."
William L. Madison J. William Bloemendaal Elliott L. Dybdal
John M. Morrison Kurt R. Weise
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS BETWEEN MANAGEMENT AND THE
COMPANY
The Company was a holding company for United Bank and, since the date
of the Merger, Heritage Bank. In August 1998, the Company organized a new
subsidiary, Heritage State Bank. These banks have made and may in the future
make mortgage and consumer loans to the Company's Directors, officers and
employees in accordance with regulations promulgated by the OTS and other
applicable statutes and regulations. These loans are currently made in the
ordinary course of business on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with nonaffiliated persons and, in the judgment of management, do
not involve more than the normal risk of collectibility or present other
unfavorable features.
CFS, of which John M. Morrison is the sole shareholder and Chairman of
the Board of Directors, Kurt R. Weise is the President and Janice M. Graser is
the Executive Vice President, provide to the Company and its subsidiary banks,
various management services, including accounting and tax services, investment
consulting, personnel consulting, insurance advisory services and regulatory
consulting. Fees for these services totaled approximately $209,000 for the
fiscal year ending December 31, 1998. Messrs. Morrison and Weise are compensated
for their services as officers of the Company through the fees paid to CFS.
Central Bank, of which Larry D. Albert is a President and Chief
Executive Officer and Jerome H. Hentges is a President, sold loan participations
to Heritage Bank in the aggregate original principal amount of $7,160,144 for
the fiscal year ended December 31, 1998 and will sell loan participations to the
Banks in the fiscal year ending December 31, 1999. Such loan participations have
been, and, in the future will be, sold on substantially the same terms as loan
participations are sold to nonaffiliated persons. Mr. Morrison is the sole
shareholder and Chief Executive Officer, Mr. Weise is the President and Ms.
Graser is Executive Vice President and a director, of Central Bancshares, the
parent of Central Bank.
9
<PAGE>
STOCK PRICE PERFORMANCE GRAPH(1)
The graph below compares cumulative total shareholder return of the
Company, the Standard & Poor's ("S & P") 500 Index, the S & P Savings and Loan
Index and the SNL Thrift Index. Total returns assume a $100 investment on
December 31, 1993 and are based on reinvestment of all dividends.
TOTAL RETURN PERFORMANCE
[PLOT POINTS CHART]
<TABLE>
<CAPTION>
PERIOD ENDING
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INDEX 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United Financial Corp. 100.00 74.32 86.61 100.03 138.53 124.11
S&P 500 100.00 101.32 139.39 171.26 228.42 293.69
S&P Savings & Loan Index 100.00 84.02 134.21 156.35 273.20 250.76
SNL Thrift Index 100.00 98.82 153.90 200.53 341.22 300.11
</TABLE>
(1) The years from 1993 through 1996 of the Stock Performance Graph incorporate
the performance of United Bank prior to the formation of the Company.
10
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's Directors and executive officers and all persons who
beneficially own more than 10% of the outstanding shares of the Company's Common
Stock to file with the Commission initial reports of ownership and reports of
changes in ownership of such Common Stock. Based solely on a review of the
copies of such forms furnished to the Company during the fiscal year ended
December 31, 1998, the Company believes all Section 16(a) filing requirements
applicable to the Company's Directors, executive officers and 10% shareholders
were satisfied.
SHAREHOLDER PROPOSALS
Any shareholder wishing to include a proposal in the Company's Proxy
Statement for its 2000 Annual Meeting of Shareholders must submit such proposal
for consideration in writing to the Secretary of the Company at the address
indicated on the first page of this Proxy Statement no later than December 19,
1999. Any such proposal will be subject to the requirements of the proxy rules
adopted under the Securities Exchange Act of 1934.
Management may use discretionary authority to vote against any
shareholder proposal presented at the Company's 2000 Annual Meeting of
Shareholders if: (1) such proposal has been properly omitted from the Company's
proxy materials under federal securities law, (2) notice of such proposal was
not submitted to the Secretary of the Company at the address indicated on the
first page of this Proxy Statement by March 1, 2000 or (3) the proponent has not
solicited proxies in compliance with federal securities laws from the holders of
at least the percentage of the Company's Common Stock required to carry the
proposal.
ADDITIONAL INFORMATION
The Company has filed with the Commission, for the year ended December
31, 1998, an Annual Report on Form 10-K, together with applicable financial
statements and schedules thereto. THE COMPANY WILL FURNISH, WITHOUT CHARGE, UPON
WRITTEN REQUEST OF ANY SHAREHOLDER WHO REPRESENTS IN HIS REQUEST THAT HE WAS THE
BENEFICIAL OWNER OF THE COMPANY'S COMMON STOCK ON APRIL 13, 1999, A COPY OF THE
ANNUAL REPORT ON FORM 10-K. Requests should be directed to: Paula Delaney, Vice
President, Heritage Bank, P.O. Box 2779, Great Falls, Montana 59403.
YOU ARE URGED TO VOTE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE AT YOUR EARLIEST CONVENIENCE, WHETHER OR NOT
YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING IN PERSON.
By the Order of the Board of Directors
/s/ John M. Morrison
JOHN M. MORRISON
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Great Falls, Montana
April 20, 1999
<PAGE>
UNITED FINANCIAL CORP.
REVOCABLE PROXY FOR 1999 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, having duly received the Notice of Annual Meeting of
Shareholders and Proxy Statement dated April 20, 1999, hereby appoints Kurt R.
Weise and Kevin P. Clark (each with the power to act alone and with the power of
substitution and revocation) to vote all shares of Common Stock of United
Financial Corp. which the undersigned is entitled to vote at the Annual Meeting
of Shareholders (the "Annual Meeting"), to be held at the Holiday Inn, 400 Tenth
Avenue South in Great Falls, Montana on May 20, 1999 at 4:00 p.m., Mountain
time, and at any and all adjournments thereof, as follows.
1. Election of directors for all nominees listed below (except as marked to
the contrary):
[ ] FOR [ ] WITHHELD
TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, PLACE A LINE THROUGH THE
NOMINEE'S NAME BELOW:
LARRY D. ALBERT, JEROME H. HENTGES, STEVE L. FEURT
2. Proposal to ratify the appointment of KPMG LLP as independent auditors of
United Financial Corp., for the fiscal year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote "FOR" propositions 1 and 2.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED.
(CONTINUED, AND TO BE COMPLETED AND SIGNED, ON THE REVERSE SIDE)
<PAGE>
(CONTINUED FROM THE OTHER SIDE)
This proxy may be revoked by filing a subsequently dated proxy or by
notifying the Secretary of United Financial Corp. of your decision to revoke
this proxy, either in person at the Annual Meeting or in writing.
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by the President
or other authorized officer. If a partnership, please sign in partnership name
by an authorized person.
Date: ___________________________, 1999
_______________________________________
Signature
_______________________________________
Signature if jointly held
PLEASE MARK, DATE AND RETURN THIS PROXY PROMPTLY
