SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
- OR -
TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-20987
Grand Premier Financial Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 36-4077455
State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
486 W. Liberty St., Wauconda, IL 60084-2489
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (847) 487-1818
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has
been subject to such filing requirements for the past 90 days. Yes X
or No
The number of shares of the registrant's Common Stock outstanding on
July 31, 1997 was 20,002,563 shares.
GRAND PREMIER FINANCIAL INCORPORATED
FORM 10-Q - QUARTERLY REPORT
FOR QUARTER ENDED JUNE 30, 1997
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets
June 30, 1997 (unaudited) and December 31, 1996. 1 - 2
Consolidated Statements of Income (unaudited)
Six Months Ended June 30, 1997 and 1996 3 - 4
Three Months Ended June 30, 1997 and 1996 5 - 6
Consolidated Statements of Cash Flow (unaudited)
Six Months Ended June 30, 1997 and 1996 7
Notes to Unaudited Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 9 - 11
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. A. Exhibits 12 - 14
B. Reports on Form 8-K 14
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(000's omitted
except share data)
June 30, December 31,
1997 1996
(Unaudited) (Audited)
Cash and non-interest bearing deposits $ 66,539 $ 49,441
Interest bearing deposits - 3,114
Federal funds sold 9,860 13,400
Cash and cash equivalents 76,399 65,955
Securities available for sale at fair value 490,044 535,687
Securities purchased under resale agreements 9,198 4,405
Loans 1,030,255 966,324
Less: Unearned discount (1,023) (842)
Allowance for possible loan losses (10,856) (10,116)
Net loans 1,018,376 955,366
Bank premises and equipment 34,899 33,321
Excess cost over fair value of net
net assets acquired 17,687 18,489
Accrued interest receivable 13,842 12,264
Other assets 13,508 17,051
Total assets $1,673,953 $1,642,538
The accompanying notes are an integral
part of these financial statements.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
(000's omitted
except share data)
June 30, December 31,
1997 1996
(Unaudited) (Audited)
Liabilities
Non-interest bearing deposits $ 183,967 $ 211,015
Interest bearing deposits 1,187,448 1,206,379
Total deposits 1,371,415 1,417,394
Short-term borrowings 85,169 23,486
Long-term borrowings 30,000 30,000
Other liabilities 18,243 13,569
Total liabilities 1,504,827 1,484,449
Stockholders' equity
Preferred stock - $1 par value, 2,000,000
shares authorized:
Series B convertible, $1,000 stated value,
8.00%, 7,250 shares authorized, issued
and outstanding 7,250 7,250
Series C perpetual, $1,000 stated value,
8.00%, 2,000 shares authorized, issued
and outstanding 2,000 2,000
Common stock - $.01 par value
No of Shares 6/30/97 12/31/96
Authorized 30,000,000 30,000,000
Issued 20,002,563 19,983,679
Outstanding 20,002,563 19,983,679 200 200
Surplus 49,735 49,670
Retained earnings 95,473 89,154
Unrealized gain on securities available
for sale, net of tax 14,468 9,815
Stockholders' equity 169,126 158,089
Total liabilities &
stockholders' equity $1,673,953 $1,642,538
The accompanying notes are an integral
part of these financial statements.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(000's omitted
except per share data)
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
1997 1996
Interest income
Interest and fees on loans $43,566 $38,811
Interest on securities
Taxable 11,889 13,531
Exempt from federal income tax 3,800 3,643
Other interest income 477 317
Total interest income 59,732 56,302
Interest expense
Interest on deposits 26,252 25,316
Interest on short-term borrowings 1,114 2,056
Interest on long-term debt 952 282
Total interest expense 28,318 27,654
Net interest income 31,414 28,648
Provision for loan losses 1,360 920
Net interest income after provision
for loan losses 30,054 27,728
Other income
Service charges on deposits 3,151 2,929
Other fees and operating income 1,715 2,545
Trust department income 1,705 1,647
Securities gains 2,824 509
Total other income 9,395 7,630
Other expenses
Salaries 10,346 10,674
Pension, profit sharing and other
employee benefits 2,348 2,578
Net occupancy of bank premises 2,362 2,202
Furniture and equipment 1,735 1,513
Amortization of excess cost over fair
value of net assets acquired 802 796
Other 7,098 7,394
Total other expenses 24,691 25,157
The accompanying notes are an integral
part of these financial statements.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Continued)
(000's omitted
except per share data)
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
1997 1996
Income before income taxes $14,758 $10,201
Applicable income taxes 4,867 2,817
Net income $ 9,891 $ 7,384
Weighted average common and common
equivalent shares outstanding 20,192,251 20,104,007
Earnings per common share $ .47 $ .34
The accompanying notes are an integral
part of these financial statements.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(000's omitted
except per share data)
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
1997 1996
Interest income
Interest and fees on loans $22,735 $19,595
Interest on securities
Taxable 5,792 6,770
Exempt from federal income tax 1,910 1,771
Other interest income 196 119
Total interest income 30,633 28,255
Interest expense
Interest on deposits 13,048 12,587
Interest on short-term borrowings 771 1,022
Interest on long-term debt 479 152
Total interest expense 14,298 13,761
Net interest income 16,335 14,494
Provision for loan losses 950 514
Net interest income after provision
for loan losses 15,385 13,980
Other income
Service charges on deposits 1,603 1,513
Other fees and operating income 772 1,415
Trust department income 858 859
Securities gains (losses) (616) 428
Total other income 2,617 4,215
Other expenses
Salaries 4,900 5,517
Pension, profit sharing and other
employee benefits 1,132 1,263
Net occupancy of bank premises 1,075 1,107
Furniture and equipment 926 704
Amortization of excess cost over fair
value of net assets acquired 401 398
Other 3,817 3,929
Total other expenses 12,251 12,918
The accompanying notes are an integral
part of these financial statements.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Continued)
(000's omitted
except per share data)
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
1997 1996
Income before income taxes $ 5,751 $ 5,277
Applicable income taxes 1,767 1,424
Net income $ 3,984 $ 3,853
Weighted average common and common
equivalent shares outstanding 20,193,503 20,114,011
Earnings per common share $ .19 $ .18
The accompanying notes are an integral
part of these financial statements.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(000's omitted)
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
1997 1996
Cash flows from operating activities:
Net earnings $ 9,891 $ 7,384
Adjustments to reconcile net earnings to
net cash from operating activities:
Amortization net, related to:
Investment securities 499 837
Excess of cost over net assets acquired 802 796
Other 392 169
Depreciation 1,652 1,536
Provision for possible loan losses 1,360 920
Gain on sale related to:
Investment securities (2,824) (509)
Loans sold to secondary market (84) (74)
Change in:
Other assets 1,965 1,406
Other liabilities 1,628 (119)
Net cash from operating activities 15,281 12,346
Cash flows from investing activities:
Purchase of securities available for sale (68,405) (206,574)
Proceeds from:
Maturities of securities available for sale 59,239 112,123
Sales of securities available for sale 64,832 121,518
Net increase in loans (64,651) (43,626)
Purchase of bank premises and equipment (3,257) (1,326)
Net increase in securities under resale agreements (4,793) -
Net cash from investing activities (17,035) (17,885)
Cash flows from financing activities
Net increase (decrease) in deposits (45,979) 28,196
Net increase (decrease) in short term borrowings 61,683 (29,039)
Net decrease in long term borrowings - (3,021)
Exercised stock options 65 153
Dividends paid (3,571) (2,700)
Net cash from financing activities 12,198 (6,411)
Net increase (decrease) in cash and cash equivalents 10,444 (11,950)
Cash and cash equivalents at beginning of year 65,955 77,303
Cash and cash equivalents at end of period $76,399 $ 65,353
The accompanying notes are an integral
part of these financial statements.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying consolidated financial statements include the
financial information of Grand Premier and its subsidiaries, all
of which are wholly owned. Significant intercompany balances
and transactions have been eliminated. The consolidated
financial statements as of June 30, 1997 and 1996 have not been
audited by independent public accountants. In the opinion of
management, the interim financial statements reflect all
adjustments (consisting only of adjustments of a normal
recurring nature) necessary for a fair presentation of Grand
Premier's financial position, results of operations and cash
flows for the interim periods presented. The results for such
interim periods are not necessarily indicative of the results
for the full year.
2. Earnings per share for the six and three months ended June 30,
1997 and 1996 were computed by dividing net income (less
preferred stock dividends) by the total of the average number of
common shares and stock options outstanding during such periods.
The aggregate amount of preferred stock dividends paid for the
six months ended June 30, 1997 and 1996 were $370,000 and
$553,125, respectively. The aggregate amount of preferred stock
dividends paid for the three months ended June 30, 1997 and 1996
were $185,000 and $276,562, respectively.
3. The Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 128, Earnings Per Share,
effective for financial statement periods ending after December
15, 1997. The new standard requires disclosure of basic earnings
per share and diluted earnings per share. Unlike primary
earnings per share currently reported by the Company, basic
earnings per share will exclude the dilutive effects of common
stock equivalents in computing the weighted average number of
shares outstanding during the reporting period. Currently, the
Company's only common stock equivalents are stock options issued
to key employees. Under the new standard, the Company will also
begin reporting diluted earnings per share. Fully diluted
earnings per share under current requirements are not reported
by the Company because of the immaterial difference from primary
earnings per share.
4. The merger of Northern Illinois Financial Corporation ("Northern
Illinois") and Premier Financial Services, Inc. ("Premier") with
and into the Company was consummated on August 22, 1996 and was
accounted for as a pooling of interests. Each outstanding share
of Northern Illinois and Premier common stock was converted into
4.25 shares and 1.116 shares of the Company common stock,
respectively. Total shares issued of the Company's common stock
was 19,940,181. Each of the 7,250 shares of Premier Series B
Preferred Stock was converted into one share of Grand Premier
Series B Preferred Stock, and each of the 2,000 shares of
Premier Series D Preferred Stock was converted into one share of
Grand Premier Series C Preferred Stock. The June 30, 1996
financial statements and information have been restated to
reflect the merger.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
Net earnings for the three month period ended June 30, 1997 totaled
$4.0 million, or $.19 per share versus $3.9 million, or $.18 per
share for the same period in 1996. Year-to-date earnings for the
six months through June 30, 1997 were $9.9 million or $.47 per
share, as compared to $7.4 million, or $.34 per share, in 1996.
Net after tax securities gains contributed $1.7 million ($.08 per
share) during the first six months of 1997 versus $312,000 ($.01
per share) in 1996. Return on average assets and equity was 1.21%
and 12.30%, respectively for the six months ended June 30, 1997 as
compared to .92% and 9.48% for the same period in 1996.
Tax equivalent net interest income increased $2.9 million (9.4%) to
$33.6 million for the six month period ended June 30, 1997 as
compared to $30.7 millions in 1996. The increase is a result of
increased earning assets and asset mix. Average earning assets
were $1.52 billion as of June 30, 1997 versus $1.47 billion in
1996. Average loans for the first six months of 1997 were $987.8
million, up 12.3% or $108.2 million from $879.7 million reported
for the same period in 1996. Year-to-date average loans as a
percentage of average earning assets increased to 65.0% at June 30,
1997 from 59.8% one year earlier. Grand Premier's net interest
margin was 4.46% at the end of the current quarter, reflecting a 25
basis point improvement over the same period in 1996 and a 12 basis
point improvement over the first quarter of 1997. An analysis of
the net interest margin components for the first six months of 1997
as compared to the same period in 1996 reflects yield on earning
assets increasing 22 basis points, from 8.00% to 8.22% and cost of
funds decreasing three basis points, from 3.79% to 3.76%. The 12
basis point improvement from first quarter to second quarter
reflects yield on earning assets increasing to 8.22% from 8.10%.
Quarter-to-quarter cost of funds remained unchanged.
GPFI's loan loss provision for the second quarter of 1997 totaled
$950,000, an increase of $436,000 from the same period in 1996 and
$410,000 higher than the first quarter of 1997. The increased
provision is primarily responsive to GPFI's continued loan growth.
Management evaluates the risk characteristics of the loan portfolio
and strives to maintain the reserve at a level sufficient to absorb
both potential losses on identified nonperforming assets as well as
general losses at historical and projected levels. GPFI's
allowance for possible loan losses totaled $10.9 million and $10.1
million at June 30, 1997 and December 31, 1996, respectively. The
allowance for possible loan losses as a percentage of outstanding
loans at June 30, 1997 was 1.05%, unchanged from year end 1996.
Net charge-offs for the first six months of 1997 totaled $620,000,
a modest increase over net charge-offs totaling $610,000 recorded
in the same period of 1996. Nonperforming loans (nonaccrual loans,
loans past due 90 days or more and still accruing and renegotiated
loans) totaled $7.7 million at June 30, 1997 versus $7.1 million at
December 31, 1996. The allowance for possible loan losses as a
percent of nonperforming loans was 141.1% and 141.0% as of June 30,
1997 and December 31, 1996, respectively.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(continued)
Other income (excluding net gains from sales of investment
securities) decreased $550,000 in the first six months of 1997 as
compared to the same period in 1996. Year-to-date gains from sale
of other real estate owned totaled $61,000 at June 30, 1997, a
$374,000 decrease from $435,000 recorded one year earlier. Also
contributing to the decline were reduced revenues of approximately
$200,000 associated with residential mortgage originations and fee
income from writing covered call options.
Total other expenses as of June 30, 1997 decreased $466,000, to
$24.7 million from $25.2 million in 1996. Salaries and benefits,
the largest component of other expense, totaled $12.7 million for
the first six months of 1997, a decrease of $558,000 as compared to
$13.3 million recorded for the same period in 1996. The decrease
is primarily a result of reducing full-time equivalent employees
from 694 at June 30, 1996 to 627 at June 30, 1997. Year-to-date
net occupancy, furniture and equipment expense increased $382,000
or 10.3% from one year ago. The majority of this increase is due
to upgrading and standardizing computer hardware/software
throughout the Company. The Company recently announced it will
close it's Homewood branch in the third quarter of 1997. Homewood
is a small, in-store branch located in a K-Mart facility. GPFI
will service its Homewood clients from existing offices in South
Chicago Heights and Tinley Park. GPFI anticipates net after tax
expenses relating to closing the branch will be approximately
$250,000. Other expenses decreased by $296,000 to $7.1 million for
the six months ended June 30, 1997 compared to $7.4 million for the
same period in 1996. The decrease is primarily due to the Company
expending approximately $580,000 in one-time organizational
expenses in the first six months of 1996. This favorable change
was partially offset by forgery losses of approximately $200,000.
GPFI completed merging its banking subsidiaries into one charter
during the second quarter of 1997. GPFI has recorded many of the
one-time expenses associated with the consolidation during the
first six months of 1997, but anticipates that non-interest
expenses will continue to reflect additional expenses for
completing the back-office consolidation during the remainder of
the year.
Income taxes through June 30, 1997 were $4.9 million compared to
$2.8 million in 1996. The increased tax provision is due to a
combination of an increase in taxable earnings and a higher
effective tax rate as the result of fully utilizing net operating
loss carry forwards for Illinois state income taxes during 1996.
The Company's effective tax rate for the six months ended June 30,
1997 was 33.0% versus 27.6% for the same period in 1996.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(continued)
Total assets increased from $1.64 billion at December 31, 1996 to
$1.67 billion at June 30, 1997. Loans outstanding at June 30, 1997
totaled $1.03 billion, a $63.9 million (6.6%) increase as compared
to year end 1996. Securities available for sale decreased $45.6
million ($53.3 million excluding effects of Statement of Financial
Accounting Standard No. 115) to $490.0 million. This decline
occurred as proceeds from sales and maturities were used to fund
loans instead of being reinvested in the portfolio. Total deposits
decreased $46.0 million (3.24%) from December 31, 1996, of which
$27.0 million was attributable to a decline in noninterest bearing
deposits. The decline in deposits was more than offset by an
increase totaling $61.7 million in short-term borrowings consisting
of Federal Home Loan Bank advances and federal funds purchased from
banks.
Stockholders' equity increased by $11.0 million, to $169.1 million
at June 30, 1997 from $158.1 million at year end 1996. The
increase is due to retained net earnings of $6.4 million and an
increase in after tax unrealized gain (loss) on securities
available for sale of $4.6 million since year end. At June 30,
1997, GPFI's total risk based capital and leverage capital ratios
were 12.77% and 8.25%, respectively.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The following was submitted to a vote of security holders during
the quarter ended June 30, 1997, at the Annual Meeting of Grand
Premier Financial, Inc., held on May 28, 1997.
1. Election of six (6) Class I directors for a term of three
years. Stockholders voted and elected the six nominees to
serve until the 2000 Annual Stockholders Meeting.
2. Ratification and approval of the 1996 Non-qualified Stock
Option Plan, which was adopted by the Board of Directors
effective August 22, 1996. Stockholders voted and approved
the plan with 14,713,382.5393 votes cast for the plan. Votes
cast against the plan totaled 2,617,125.0892 and 222,311.9123
votes abstained.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits as follows
The following exhibits are filed with, or incorporated by
reference in, this report. Each management contract or
compensatory plan or arrangement required to be filed as an
exhibit to this report has been marked with an asterisk.
2.1 Agreement and Plan of Merger, dated January 22, 1996,
among Northern Illinois Financial Corporation, Premier
Financial Services, Inc and the Company (incorporated
by reference to Exhibit 2.1 to the Company's
Registration Statement on Form S-4, as amended, File
No. 333-03327), as amended by the First Amendment
thereto, dated March 18, 1996 (incorporated by
reference to Exhibit 2.2 to the Company's Registration
Statement on Form S-4, as amended, File No. 333-03327),
and the Second Amendment thereto, incorporated by
reference to Exhibit 2.3 to the Company's Current
Report on Form 8-K, dated August 22, 1996, Commission
File No. 0-20987).
3.1 Amended and Restated Certificate of Incorporation of
the Company (incorporated by reference to Appendix F to
the final proxy-statement prospectus included in the
Company's Registration Statement on Form S-4, as
amended, File No. 333-03327).
3.2 By-laws of the Company (incorporated by reference to
Exhibit 3.4 to the Company's Registration Statement on
Form S-4, as amended, File No. 333-03327).
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
4 Rights Agreement, dated as of July 8, 1996, between
Grand Premier Financial, Inc. and Premier Trust
Services, Inc. (incorporated by reference to the
Company's Registration Statement on Form S-4, as
amended, File No. 333-03327).
10.1* Form of Change in Control Agreement, dated October
(2)/(8), 1996, entered into between the Company and
each of Richard L Geach, David L. Murray, Kenneth A.
Urban, Steven E. Flahaven and Scott Dixon.
10.2* Form of Change in Control Agreement, dated October
(2)/(8), 1996, entered into between the Company and
each of Robert Hinman, Alan Emerick, Jack Emerick,
Joseph Esposito, William Theobald, Reid French, Larry
O'Hara and Ralph Zicco.
10.3* Grand Premier Financial, Inc. 1996 Non-Qualified Stock
Option Plan (incorporated by reference to Exhibit 4.1
to the Company's Registration Statement on Form S-8,
File No. 333-11663).
10.4* Premier Financial Services, Inc. 1996 Non-Qualified
Stock Option Plan (incorporated by reference to Exhibit
4.2 to Post-Effective Amendment No. 1 on Form S-8 to
the Company's Registration Statement on Form S-4, File
No. 333-03327).
10.5* Premier Financial Services, Inc. 1988 Non-Qualified
Stock Option Plan (incorporated by reference to Exhibit
4.3 to Post-Effective Amendment No. 1 on Form S-8 to
the Company's Registration Statement on For S-4, File
No. 333-03327).
10.6* Premier Financial Services, Inc. Senior Leadership and
Directors Deferred Compensation Plan, as amended
(incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-8, File No.
333-11645).
10.7* Consulting Agreement, dated February, 17, 1995, between
Howard A. McKee and Grand National Bank (incorporated
by reference to Exhibit 10.1 to the Company's
Registration Statement on Form S-4, as amended, File
No. 333-03327).
10.8* Grand Premier Financial, Inc. Deferred Compensation
Plan (incorporated by reference to Exhibit 10.8 of the
Company's 1996 Form 10-K, File No. 0-20987).
10.9* Grand Premier Financial, Inc. Savings and Stock Plan
and Trust (incorporated by reference to Exhibit 10.9 of
the Company's 1996 Form 10-K, File No. 0-20987).
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
10.10* Employment and Consulting Agreement, dated May 1, 1997,
between Grand Premier Financial, Inc., and Howard A.
McKee.
11. Statement re computation of per share earnings (See
Note 2 to the Consolidated Financial Statements for the
six months ended June 30, 1997).
27. Financial Data Schedule, for the six months ended June
30, 1997
(B) Reports on Form 8-K
No Form 8-K was required to be filed during the quarter ended
June 30, 1997 as there were no events or transactions to be
reported.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
GRAND PREMIER FINANCIAL, INC
(Registrant)
August 4, 1997 /s/ David L. Murray
Date David L. Murray, Executive Vice President
and Chief Financial Officer
Exhibit 10.10
AGREEMENT
AGREEMENT made and entered into as of May 1, 1997 between
Grand Premier Financial, Inc. ("Company") and Howard A. McKee
("McKee").
McKee is currently a Director and Officer of the Company and
has served the Company and its predecessors (e.g., Northern
Illinois Financial Corporation) and its subsidiary bank(s)
continuously during the past 50 years as a principal executive
officer and has provided continuing legal services and advice to
the Company.
McKee's leadership and services have constituted a major
factor in the successful growth and development of the Company.
The Company desires to employ and retain the unique
experience, ability and services of McKee as an officer. The
Company also desires to retain his services in a legal advisory and
consulting capacity and to prevent any other competitive business
from securing his services and utilizing his experience, background
and expertise.
The terms, conditions and undertakings of this Agreement were
submitted to, and duly approved and authorized by, the Company's
Board of Directors at a meeting held May 28, 1997.
It is therefore agreed:
1. Employment
(a) Executive Employment. The Company employs McKee and
McKee accepts employment in a principal executive and managerial
capacity until December 31, 1999 ("Executive Employment"). After
December 31, 1999, however, McKee's Executive Employment shall be
renewable for additional successive one (1) year terms upon such
terms and conditions as the Company and McKee shall mutually agree.
(b) Consulting Services. The Company engages McKee to
perform services as an advisor and legal consultant ("Consulting
Services"), and McKee accepts such engagement until December 31,
1999 ("Consulting Period"). After December 31, 1999, however,
McKee's Consulting Services shall be renewable for additional
successive one (1) year terms upon such terms and conditions as the
Company and McKee shall mutually agree.
2. Duties. During the period on Executive Employment,
McKee shall serve as an Investment Officer and shall devote such
time as is necessary to perform such duties of employment. If
elected, he shall serve as a director of the Company and any of its
subsidiaries and affiliates and shall perform duties customarily
incident to such offices and all other duties the Board of
Directors may from time to time assign to him. McKee shall be
entitled to annual vacations in a manner commensurate with his
status as a principal executive, which shall not be less than the
annual vacation period to which he is presently entitled.
3. Executive Salary. During the period of Executive
Employment, the Company shall pay to McKee a salary ("Executive
Salary"), to be fixed by the Board of Directors from time to time
during that period. In no event, however, shall McKee's Executive
Salary be less than the following: $200,000.00 for the year 1997;
$150,000.00 for the year 1998; and $100,000.00 for the year 1999.
McKee shall be paid semi-monthly. In addition to all other
remuneration provided for in this Agreement, if McKee serves at any
time as a Director, he shall be entitled to receive the same
Director's fee for such services as that received by the other
salaried Directors.
4. Compensation for Consulting Services.
(a) Payment and Services. During the Consulting Period
and commencing on May 1, 1997 the Company shall pay to McKee a
monthly compensation equal to $8,350 ("Consulting Compensation"),
to be paid to McKee on or about the 1st day of each month. The
Consulting Compensation shall cover and include all costs and
expenses incurred by McKee in connection with his rendering of the
Consulting Services. While receiving such Consulting Compensation,
McKee shall at all reasonable times, to the extent his physical and
mental condition permits, be available to consult with and advise
the Company's officers, directors and other representatives.
(b) Restriction. McKee in his role and capacity as an
attorney at law shall, during his Consulting Period, be deemed to
be an independent contractor. He shall be permitted to engage in
any business and perform legal services for his own account and
other clients provided that such business and services shall not be
in competition with, or be for a company that is in competition
with, the Company or its affiliates or subsidiaries. Nothing
herein shall, however, prevent McKee from rendering such services
to Round Lake Bankcorp, Inc., First State Bank of Round Lake or any
other entity in which McKee is a shareholder.
5. Expenses. The Company recognizes that McKee will have
to incur certain out-of-pocket expenses related to his services and
the Company's business and that it will be extremely difficult to
account for such expenses. It is understood that McKee's
compensation is intended to cover all such out-of-pocket expenses.
The Company, however, shall reimburse McKee for any specific
expenditures incurred for travel, lodging, and entertainment,
provided such expenses have been approved in advance by the
appropriate regional president.
6. Employee Benefits. This Agreement shall not be in lieu
of any rights benefits and privileges to which McKee may be
entitled as an employee of the Company under any retirement,
pension, profit-sharing, insurance, hospital or other plans which
may now be in effect or which may hereafter be adopted. McKee
shall have the same rights and privileges to participate in such
plans and benefits as any other employee during his period of
employment.
7. Termination.
(a) Death. If McKee dies during the term of this Agreement
compensation payments and this Agreement shall terminate; however,
McKee's Executive Salary and Consulting Compensation shall be paid
through the last day of the month in which he dies. Such payment
shall be made to McKee's estate.
(b) Disability. If McKee becomes disabled during the term
of this Agreement, his Executive Salary and Consulting Compensation
shall continue at the same rate that it was on the date of such
disability. If such disability continues for a continuous period
of six (6) consecutive months, the Company, at its option, may
thereafter, upon written notice to McKee or his personal
representative, terminate this Agreement. If McKee receives
disability payments from insurance policies paid for by the
Company, the payments to McKee during any period of disability
shall be reduced by the amount of disability payments received by
McKee under any such insurance policy or policies. For the purpose
of this Agreement, disability shall mean mental or physical illness
or condition rendering McKee incapable of performing his normal
duties with the Company;provided that, if McKee does not agree with
a determination to terminate this agreement because of disability
or incapacity, the question of McKee's ability shall be submitted
to an impartial and reputable physician selected by the parties and
this physician's determination regarding disability or incapacity
shall be final and binding.
(c) Termination for Cause. The Company's Board of
Directors shall have the right, upon prior written notice of
termination to McKee, to terminate this Agreement for cause.
Termination for "cause" shall mean:
(i) The commission by McKee of an act of
dishonesty resulting in McKee's personal gain, which act
constitutes a felony; or
(ii) Deliberate and intentional conduct by
McKee that is materially injurious to the Company; provided,
however, that no cause shall exist unless and until the Company
has delivered to McKee a copy of a resolution duly adopted by
the affirmative vote of not less than three-quarters (3/4) of
the Board's entire membership at a Board meeting called and
held for this purpose (after reasonable notice to McKee and an
opportunity for McKee, together with his counsel, to be heard
before the board), finding that in the Board's good faith
judgment McKee was guilty of conduct set forth in this
subsection (c) and specifying the particulars thereof in
detail. "Cause" shall not result from: (x) any good faith act
or omission constituting negligence or bad judgement; (y) any
act or omission believed by McKee in good faith to be in the
Company's best interest; or (z) any act or omission that has
occurred more than twelve (12) months prior to McKee's receipt
of the resolution provided for hereinabove.
8. Nontransferability. Neither McKee, his wife, nor their
estates shall have any right to commute, anticipate, encumber or
dispose of any payment under this Agreement. Such payments and
accompanying rights are nonassignable and nontransferable, except
as otherwise specifically provided in this Agreement.
9. Binding Effect. This Agreement shall inure to the
benefit of, and be binding upon, McKee, his heirs, distributees and
personal representatives.
10. Waiver. The failure of either party to insist in any
one or more instances upon performance of any term or condition of
this Agreement shall not be construed a waiver of its future
performance. The obligations of either party with respect to such
term, covenant or condition shall continue in full force and
effect.
11. Entire Agreement. This Agreement supersedes all
previous agreements between McKee and the Company (all such
agreements being hereby terminated) and contains the entire
understanding and agreement between the parties with respect to its
subject matter. This agreement cannot be amended, modified or
supplemented in any respect except by a subsequent written
agreement entered into by both parties.
12. Headings. Headings in this Agreement are for
convenience only and shall not be used to interpret or construe its
provisions.
13. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Illinois.
14. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this
Agreement as of the day and year above written.
GRAND PREMIER FINANCIAL, INC.
BY: /S/ Richard L. Geach /S/ Howard A. McKee
Richard L. Geach, CEO Howard A. McKee
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