<PAGE>
Prospectus Filed Pursuant to
dated November 25, 1996 Rule 424(b)(1)
Registration No. 333-01831
$50,000,000
LOGO
COMMERCIAL FEDERAL CORPORATION
Subordinated Extendible Notes Due 2006
Interest on the Subordinated Extendible Notes due 2006 (the "Notes") issued by
Commercial Federal Corporation (the "Company") is payable monthly on the 15th
day of each month, commencing January 15, 1997, at an interest rate of 7.95%
per annum until December 1, 2001. The interest rate will reset at the
Company's option on December 1, 2001 to a rate and for a term of one, two,
three or five years determined by the Company and will reset thereafter at the
Company's option, upon the date of expiration of each such new interest period
prior to maturity (each such date, including December 1, 2001, an "Interest
Reset Date"). Any new interest rate determined by the Company with respect to
an Interest Reset Date shall not be less than 105% of the Effective Interest
Rate on Comparable Maturity U.S. Treasury Obligations (as defined herein). In
the event that the Company decides not to reset the interest rate on an
Interest Reset Date, the interest rate on the Notes shall continue to be the
interest rate in effect for the next year and each year thereafter unless and
until the Company shall reset the interest rate on a subsequent Interest Reset
Date. Until the interest rate is reset for a subsequent period, each December
1 shall be deemed to be an Interest Reset Date. The Notes are not redeemable
prior to December 1, 2001. The Notes are redeemable, in whole or in part, at
the option of the holder at par plus accrued interest to the date fixed for
redemption, on December 1, 2001 and on any subsequent Interest Reset Date. The
Notes are redeemable at the option of the Company in whole on December 1, 2001
and on any subsequent Interest Reset Date at par plus accrued interest to the
date fixed for redemption. See "Description of Notes."
The Notes have no sinking fund. The Notes will be issued only in fully
registered form and in denominations of $1,000 and integral multiples thereof.
The Notes will be unsecured general obligations of the Company and will be
subordinated to all existing and future Senior Indebtedness (as defined
herein) of the Company. As creditors of the Company, holders of the Notes will
be denied access to the assets of the Company's subsidiaries upon such
subsidiaries' liquidation or reorganization until all the prior claims of
creditors (including depositors) of such subsidiaries have been satisfied. At
September 30, 1996, the Company (excluding subsidiaries) had $34.9 million in
Senior Indebtedness consisting of $6.9 million of 10% Senior Notes due 1999,
which are expected to be redeemed on December 27, 1996 with the proceeds from
this offering, and a $28.0 million variable rate secured promissory note due
January 31, 1997. See "Use of Proceeds." The Notes have been approved for
listing on the New York Stock Exchange under the symbol "CFB 06," subject to
official notice of issuance.
Payment of principal on the Notes may be accelerated only in the case of
certain events relating to the bankruptcy, insolvency or reorganization of the
Company. There is no right to acceleration in the case of a default in the
payment of principal or interest on the Notes or in the performance of any
other covenant of the Company. See "Description of the Notes."
SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, ANY OTHER GOVERNMENTAL AGENCY OR
OTHERWISE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public Discount (1) Company (2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note .................................. 100.0% 3.0% 97.0%
- --------------------------------------------------------------------------------
Total ..................................... $50,000,000 $1,500,000 $48,500,000
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting estimated offering expenses of $385,000 payable by the
Company.
The Notes are being offered by the Underwriters named herein, subject to prior
sale and when, as and if delivered to and accepted by the Underwriters. It is
expected that delivery of the Notes will be made at the offices of Piper
Jaffray Inc. in Minneapolis, Minnesota on or about December 2, 1996.
Piper Jaffray inc.
Alex. Brown & Sons
<PAGE>
(MAP)
2
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and
Exchange Commission (the "Commission"). Copies of reports, proxy statements
and other information filed by the Company with the Commission may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following regional offices of the Commission: Citicorp
Center, 500 West Madison, Suite 1400, Chicago, Illinois 60661; and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material
also can be obtained at prescribed rates from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Reports,
proxy statements and other information that have been filed electronically
with the Commission may also be obtained from the Commission's Website, the
address of which is http://www.sec.gov. In addition, the Company's common
stock is listed and traded on the New York Stock Exchange. Reports, proxy
statements and other information may be inspected at the offices of the New
York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all exhibits and amendments thereto, called the
"Registration Statement") under the Securities Act of 1933, as amended, with
respect to the securities covered by this Prospectus. This Prospectus does not
contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is made to
the Registration Statement. Copies of the Registration Statement, including
any amendments and exhibits thereto, can be inspected and copied at the
offices of the Commission as set forth above. Statements contained in this
Prospectus as to the contents of any contract or any other document are not
necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Company which have been previously filed with
the Commission are hereby incorporated by reference in this Prospectus:
(a) the Company's Annual Report on Form 10-K for the Fiscal Year Ended June
30, 1996;
(b) the Company's Quarterly Report on Form 10-Q and Quarterly Report on
Form 10-Q/A for the Quarter Ended September 30, 1996; and
(c) the Company's Current Reports on Form 8-K dated August 21, 1996 and
November 18, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Notes shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from
the respective dates of filing such documents. Any statement contained herein
or in a document all or part of which is incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to any person to whom this
Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated by reference (other
than exhibits to such documents which are not specifically incorporated by
reference in such documents). Requests for such copies should be directed to
Commercial Federal Corporation, Corporate Secretary, 2120 South 72nd Street,
Omaha, Nebraska 68124, telephone number (402) 554-9200.
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS
CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995, WHICH CAN BE IDENTIFIED BY THE USE
OF FORWARD-LOOKING TERMINOLOGY SUCH AS "MAY," "WILL," "EXPECT," "ANTICIPATE,"
"ESTIMATE," OR "CONTINUE" OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON
OR COMPARABLE TERMINOLOGY. THE "RISK FACTORS" ON PAGE 10 OF THIS PROSPECTUS
CONSTITUTE CAUTIONARY STATEMENTS IDENTIFYING IMPORTANT FACTORS, INCLUDING
CERTAIN RISKS AND UNCERTAINTIES, WITH RESPECT TO SUCH FORWARD-LOOKING
STATEMENTS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN
SUCH FORWARD-LOOKING STATEMENTS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED HEREBY AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, THE OVER-THE-
COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and the Consolidated Financial
Statements of the Company, including the Notes thereto, appearing elsewhere in
this Prospectus or incorporated herein by reference.
THE COMPANY
The Company is a holding company for Commercial Federal Bank, a Federal
Savings Bank (the "Bank"), which is the largest depository institution
headquartered in Nebraska. At September 30, 1996, the Company had assets of
$6.7 billion and stockholders' equity of $359.7 million. Based upon total
assets at that date, the Company was the 19th largest publicly held thrift
holding company in the United States. The Bank is a consumer-oriented financial
institution that emphasizes single-family residential real estate lending,
consumer lending, retail deposit activities, including demand deposit accounts,
and mortgage banking. At October 1, 1996, following the acquisition of Heritage
Financial, Ltd. ("Heritage"), the Bank operated 34 branch offices in Nebraska,
20 branch offices in greater metropolitan Denver, Colorado, 19 branch offices
in Oklahoma, 24 branch offices in Kansas and seven branch offices in Iowa.
Throughout its 109 year history, the Bank has emphasized customer service. To
serve its customers, the Bank conducts loan origination activities through its
104 branch office network, loan offices of its wholly-owned mortgage banking
subsidiary and a nationwide correspondent network consisting of approximately
375 mortgage loan originators. The Bank also provides insurance and securities
brokerage and other retail financial services.
On October 1, 1996, the Company completed the acquisition of Heritage,
headquartered in Boone, Iowa, the holding company for Hawkeye Federal Savings
Bank. Heritage operated six branches in Iowa and at October 1, 1996, had $182.9
million in total assets, $157.9 million in deposits and $10.3 million in
stockholders' equity. See "Recent Developments."
The Company's strategy for growth emphasizes both internal and external
growth. Operations focus on increasing deposits, including demand accounts,
making loans (primarily single-family mortgage and consumer loans) and
providing customers with a full array of financial products and a high level of
customer service. As part of its long-term strategic plan, the Company intends
to expand its operations within its market areas either through direct
marketing efforts aimed at increasing market share, branch expansions, or
opening additional branches. The Company's retail strategy will continue to be
centered on attracting new customers and selling both new and existing
customers multiple products and services. Additionally, the Company will
continue to build and leverage an infrastructure designed to increase fee and
other income.
Complementing its strategy of internal growth, the Company will continue to
grow its five-state franchise through an ongoing program of selective
acquisitions of other financial institutions. Acquisition candidates will be
selected based on the extent to which the candidates can enhance the Company's
retail presence in new or underserved markets and complement the Company's
existing retail network.
The Company's principal executive offices are located at 2120 South 72nd
Street, Omaha, Nebraska 68124, and its telephone number is (402) 554-9200.
4
<PAGE>
THE OFFERING
Notes offered................. $50,000,000 principal amount of Subordinated
Extendible Notes due 2006. See "Description of
Notes--General."
Denominations................. $1,000 and integral multiples thereof.
Maturity...................... December 1, 2006.
Interest rate................. 7.95% per annum until December 1, 2001. The
Company will reset the interest rate for the
Notes, at its option, effective December 1,
2001 to a rate and for a term of one, two,
three or five years determined by the Company
and will reset the interest rate thereafter, at
its option, upon the date of expiration of each
such new interest period prior to maturity
(each such date, including December 1, 2001, an
"Interest Reset Date"). Any such new interest
rate shall not be less than 105% of the
Effective Interest Rate on Comparable Maturity
U.S. Treasury Obligations (as defined herein).
In the event that the Company decides not to
reset the interest rate on an Interest Reset
Date, the interest rate on the Notes shall
continue to be the interest rate in effect, for
the next year and each year thereafter, unless
and until the Company shall reset the interest
rate on a subsequent Interest Reset Date. Until
the interest rate is reset for a subsequent
period, each December 1 shall be deemed to be
an Interest Reset Date. See "Description of
Notes--Adjustable Interest Rate."
Interest payment dates........ Monthly, commencing January 15, 1997, and the
15th day of each month thereafter. The first
interest payment will represent interest from
the date of issuance of the Notes through
January 14, 1997.
Sinking fund.................. None.
Redemption at option of The Notes may not be redeemed prior to December
Company...................... 1, 2001. Thereafter, the Company may elect to
redeem the Notes, in whole on December 1, 2001
and on any subsequent Interest Reset Date at
par plus accrued interest to the date fixed for
redemption. See "Description of Notes--
Redemption at Option of the Company."
Redemption at option of Notes tendered on or before the fifth business
Holder....................... day prior to December 1, 2001 or any subsequent
Interest Reset Date will be redeemable, in
whole or in part, at par plus accrued interest
to the date fixed for redemption. See
"Description of Notes--Redemption at Option of
Holder."
Subordination................. The Notes will be unsecured general obligations
of the Company and will be subordinated to all
existing and future Senior Indebtedness (as
defined herein) of the Company. There are no
restrictions in the Indenture on the creation
of additional Senior
5
<PAGE>
Indebtedness. The Notes will be structurally
subordinated to all liabilities (including
deposits) of the Company's subsidiaries. At
September 30, 1996, the Company (excluding
subsidiaries) had $34.9 million in Senior
Indebtedness consisting of $6.9 million of 10%
Senior Notes due 1999 which the Company assumed
in its acquisition of Railroad Financial
Corporation ("Railroad") on October 2, 1995 and
a $28.0 million variable rate secured
promissory note due January 31, 1997. The $6.9
million of 10% Senior Notes due 1999 are
expected to be redeemed on December 27, 1996
with a portion of the proceeds from this
offering. The Company is in the process of
negotiating to refinance the $28.0 million
variable rate promissory note on a long-term
basis. Any such refinancing would be Senior
Indebtedness under the Indenture. See "Risk
Factors--Subordination of Notes," "Use of
Proceeds" and "Description of Notes--
Subordination."
Covenants..................... The Indenture pursuant to which the Notes will
be issued, among other things, limits the
ability of the Company to pay cash dividends or
to make other capital distributions under
certain circumstances. The Indenture also
limits in certain respects consolidations,
mergers and transfers of all or substantially
all of the Company's assets. See "Description
of Notes--Restrictions on Dividends and Other
Distributions" and "--Consolidation, Merger or
Transfer."
Limited rights of Payment of principal of the Notes may be
acceleration................. accelerated only in case of certain events
involving the bankruptcy, insolvency or
reorganization of the Company which constitute
an Acceleration Event (as defined herein).
There is no right of acceleration in the case
of a default in the payment of principal or
interest on the Notes or the performance of any
other covenant of the Company in the Indenture.
See "Description of Notes--Acceleration
Events."
Use of proceeds............... The net proceeds of this offering will be used
to refinance the Company's $40.25 million
10.25% Subordinated Notes due 1999 and $6.9
million 10% Senior Notes due 1999 and for
general corporate purposes. Pending such uses,
the proceeds will be invested in short-term,
investment-grade securities. See "Use of
Proceeds."
Listing....................... The Notes have been approved for listing on the
New York Stock Exchange under the symbol "CFB
06," subject to official notice of issuance.
Trustee....................... Harris Trust and Savings Bank.
6
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following summary consolidated financial data of the Company and its
subsidiaries as of and for the years ended June 30, 1996, 1995, 1994, 1993 and
1992 has been derived from the Company's audited Consolidated Financial
Statements. The following summary consolidated interim financial data for the
three months ended September 30, 1996 and 1995 has been derived from unaudited
consolidated interim financial statements which, in the opinion of management,
include all adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation. The summary consolidated financial data
should be read in conjunction with the Company's audited Consolidated Financial
Statements and related Notes incorporated herein by reference. The consolidated
financial data for the three months ended September 30, 1996 is not necessarily
indicative of the operating results to be expected for the entire fiscal year.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED JUNE 30,
---------------------- ----------------------------------------------------------
1996 1995 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Interest income......... $ 122,786 $ 122,702 $ 491,092 $ 454,368 $ 393,854 $ 404,628 $ 447,883
Interest expense........ 82,494 84,603 328,317 304,526 256,102 276,584 352,527
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income..... 40,292 38,099 162,775 149,842 137,752 128,044 95,356
Provision for loan loss-
es..................... (1,658) (1,583) (6,107) (6,408) (6,248) (6,185) (7,981)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income af-
ter provision for loan
losses................. 38,634 36,516 156,668 143,434 131,504 121,859 87,375
Non-interest income..... 13,603 11,389 49,646 45,066 44,693 34,442 77,817
General and administra-
tive expenses.......... 29,322 27,968 114,517 102,554 94,115 89,560 80,314
Federal deposit insur-
ance special assess-
ment................... 27,062 -- -- -- -- -- --
Amortization of goodwill
and core value of de-
posits................. 2,385 2,200 9,529 10,262 14,131 10,544 11,389
Valuation adjustment and
accelerated amortiza-
tion of
goodwill............... -- -- -- 21,357 52,703 -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before
income taxes,
extraordinary items and
cumulative effects of
changes in accounting
principles............. (6,532) 17,737 82,268 54,327 15,248 56,197 73,489
Income tax provision
(benefit).............. (2,482) 6,493 26,962 23,146 16,875 22,081 27,652
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before
extraordinary items and
cumulative effects of
changes in accounting
principles............. (4,050) 11,244 55,306 31,181 (1,627) 34,116 45,837
Extraordinary items(1).. -- -- -- -- -- -- (5,046)
Cumulative effects of
changes in accounting
principles(2).......... -- -- -- -- 6,597 -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)....... $ (4,050) $ 11,244 $ 55,306 $ 31,181 $ 4,970 $ 34,116 $ 40,791
========== ========== ========== ========== ========== ========== ==========
Earnings per common
share (fully dilut-
ed)(12):
Income (loss) before
extraordinary items
and cumulative effects
of changes in
accounting
principles............ $ (.27) $ .77 $ 3.72 $ 2.16 $ (.11) $ 2.42 $ 4.68
Extraordinary
items(1).............. -- -- -- -- -- -- (.52)
Cumulative effects of
changes in accounting
principles(2)......... -- -- -- -- .46 -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)...... $ (.27) $ .77 $ 3.72 $ 2.16 $ .35 $ 2.42 $ 4.16
========== ========== ========== ========== ========== ========== ==========
Dividends declared per
common share(12)....... $ .10 $ -- $ .40 $ -- $ -- $ -- $ --
========== ========== ========== ========== ========== ========== ==========
Book value per common
share(12).............. $ 25.96 $ 24.45 $ 27.39 $ 23.65 $ 21.51 $ 21.28 $ 20.95
========== ========== ========== ========== ========== ========== ==========
Tangible book value per
common share(12)....... $ 23.19 $ 21.99 $ 24.69 $ 21.04 $ 16.73 $ 15.00 $ 12.81
========== ========== ========== ========== ========== ========== ==========
STATEMENT OF FINANCIAL
CONDITION DATA:
Total assets............ $6,667,758 $6,582,215 $6,607,670 $6,569,579 $5,982,307 $5,262,336 $5,035,913
Investment securi-
ties(5)................ 292,292 295,509 253,043 300,481 290,807 254,889 316,366
Mortgage-backed securi-
ties(6)................ 1,153,826 1,345,285 1,180,046 1,364,907 1,350,402 952,539 779,969
Loans receivable,
net(7)................. 4,853,305 4,576,344 4,813,164 4,540,692 3,970,626 3,655,740 3,460,294
Goodwill and core value
of deposits............ 38,349 35,062 40,734 37,263 67,661 87,946 98,490
Deposits................ 4,274,844 4,050,507 4,304,576 4,011,323 3,675,825 2,731,127 2,660,489
Advances from Federal
Home Loan Bank......... 1,194,014 1,752,163 1,350,290 1,787,352 1,625,456 1,868,779 1,465,062
Other borrowings........ 711,299 259,720 439,301 273,676 224,072 231,828 499,790
Stockholders' equity.... 359,656 349,335 413,277 337,614 304,568 297,848 253,528
</TABLE>
(Table continued on following page)
7
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION, CONT.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED JUNE 30,
-------------- ---------------------------------
1996 1995 1996 1995 1994 1993 1992
------ ------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING RA-
TIOS(8):
Return on average assets
(9)....................... N/M .69% .84% .49% .09% .67% .79%
Return on average equity
(9)....................... N/M 13.18% 14.74% 9.98% 1.54% 12.39% 20.12%
Net yield on interest-earn-
ing assets................ 2.59% 2.45% 2.58% 2.46% 2.59% 2.65% 2.01%
Earnings to fixed charges
(10):
Excluding interest on de-
posits.................... .77x 1.56x 1.71x 1.43x 1.13x 1.41x 1.26x
Including interest on de-
posits.................... .92x 1.21x 1.25x 1.18x 1.06x 1.20x 1.13x
Dividend payout ratio (3).. N/M N/A 10.75% N/A N/A N/A N/A
General and administrative
expenses divided by
average assets (11)....... 2.09% 1.70% 1.75% 1.62% 1.67% 1.75% 1.55%
SELECTED CAPITAL AND ASSET
QUALITY RATIOS:
Regulatory capital ratios
of the Bank:
Tangible capital........... 5.81% 5.34% 6.18% 5.16% 4.69% 4.62% 2.95%
Core capital............... 6.02% 5.63% 6.41% 5.47% 5.53% 5.93% 4.63%
Risk-based capital:
Tier 1 capital............ 11.81% 12.31% 12.56% 12.02% 12.18% 11.93% 8.25%
Total capital............. 12.89% 13.42% 13.62% 13.12% 13.16% 12.81% 8.87%
Nonperforming assets to to-
tal assets................ 1.07% .96% 1.01% .95% 1.27% 1.97% 3.00%
Nonperforming assets to
total loans and
nonperforming assets...... 1.43% 1.35% 1.33% 1.32% 1.84% 2.71% 4.08%
Allowance for loan losses
to total loans............ 1.01% 1.06% .99% 1.04% 1.11% 1.26% 1.43%
Allowance for loan losses
to total nonperforming
assets.................... 69.71% 77.60% 74.05% 77.42% 59.04% 45.13% 33.58%
Net loans charged-off to
average loans outstand-
ing....................... .07% .10% .10% .06% .11% .13% .31%
</TABLE>
- --------
(footnotes for preceding tables)
(1) For fiscal year 1992, represents the loss on early extinguishment of debt,
net of income tax benefits, less the effect of the utilization of net
operating losses carried forward.
(2) For fiscal year 1994, represents the cumulative effect of the change in
the method of accounting for income taxes less the cumulative effect of
the change in accounting for postretirement benefits, net of income tax
benefit.
(3) Represents dividends declared per share divided by net income per share.
The Company established a quarterly common stock cash dividend policy on
October 4, 1995, and declared dividends totaling $1.4 million ($.10 per
common share) during the three months ended September 30, 1996, and $5.9
million ($.40 per common share) during fiscal year 1996. Such ratio for
the three months ended September 30, 1996 is not meaningful ("N/M") based
on the loss per share for such period.
(4) Calculated by dividing stockholders' equity, reduced by the amount of
goodwill and core value of deposits, by the number of shares of common
stock outstanding at the respective dates.
(5) Includes investment securities available for sale totaling $9.9 million,
$3.0 million, $9.9 million, $3.0 million, $5.4 million and $1.3 million at
September 30, 1996 and 1995, June 30, 1996, 1995, 1994 and 1993,
respectively. No investment securities were available for sale at June 30,
1992.
(6) Includes mortgage-backed securities available for sale totaling $255.3
million, $27.0 million, $263.2 million, $37.0 million, $45.0 million,
$41.3 million and $20.8 million at September 30, 1996 and 1995, June 30,
1996, 1995, 1994, 1993 and 1992, respectively.
(7) Includes loans held for sale totaling $87.3 million, $107.2 million, $89.4
million, $113.4 million, $187.7 million, $171.8 million and $158.4 million
at September 30, 1996 and 1995, June 30, 1996, 1995, 1994, 1993 and 1992,
respectively.
(8) Ratios for the three months ended September 30, 1996 and 1995 are
annualized. Such annualized data includes nonrecurring items and is not
necessarily indicative of results for the entire fiscal years.
8
<PAGE>
(9) Based on daily average balances during the three month periods ended
September 30, 1996 and 1995 and fiscal years 1996, 1995 and 1994, and on
average monthly balances for fiscal years 1993 and 1992. Return on average
assets ("ROA") and return on average equity ("ROE") for the three months
ended September 30, 1996, are .90% and 15.23%, respectively, excluding the
after-tax effect of the nonrecurring expenses totaling $17.3 million, $1.5
million and $103,000 associated with the Savings Association Insurance
Fund ("SAIF") special assessment, the repurchase of 1,250,100 shares of
the Company's common stock and the change in income taxes for tax bad debt
reserves, respectively. ROA and ROE for the three months ended September
30, 1995 are .76% and 14.63%, respectively, excluding the after-tax effect
of the nonrecurring expenses totaling $1.2 million associated with the
Railroad merger. ROA and ROE for fiscal year 1996 are .90% and 15.68%,
respectively, excluding the after-tax effect of the nonrecurring expenses
totaling $2.9 million and $585,000 associated with the Railroad merger and
the Company's 1995 proxy contest, respectively. ROA and ROE for fiscal
year 1995 are .83% and 16.82%, respectively, excluding the accelerated
amortization of goodwill totaling $21.4 million. ROA and ROE for fiscal
year 1994 are .75% and 13.11%, respectively, excluding the after-tax
effect of the intangible assets valuation adjustment and the cumulative
effects of changes in accounting principles totaling $43.9 million and
$6.6 million, respectively.
(10) The ratio of earnings to fixed charges has been computed by dividing
income (loss) before income taxes, extraordinary items and cumulative
effects of changes in accounting principles plus fixed charges by fixed
charges. Fixed charges represent all interest expense plus the portion of
rental payments under operating leases deemed to be interest. Earnings
were inadequate to cover fixed charges in the amount of $6.5 million for
the three months ended September 30, 1996.
(11) General and administrative expenses ("G&A") divided by average assets for
the three months ended September 30, 1996, is 1.64% excluding the
nonrecurring expenses totaling $27.1 million and $2.3 million associated
with the SAIF special assessment and the repurchase of 1,250,100 shares
of the Company's common stock, respectively. G&A divided by average
assets for the three months ended September 30, 1995 is 1.62% excluding
the nonrecurring expenses totaling $1.4 million primarily associated with
the Railroad merger, and for fiscal year 1996 is 1.68% excluding the
nonrecurring expenses totaling $3.6 million and $901,000 associated with
the Railroad merger and the Company's 1995 proxy contest, respectively.
(12) On November 18, 1996, the Board of Directors of the Company authorized a
three-for-two stock split to be effected in the form of a 50 percent stock
dividend. Par value will remain at $.01 per share. Fractional shares will
be paid in cash. The stock dividend, payable to stockholders of record as
of December 31, 1996, will be paid on January 14, 1997. Pro forma common
share information, giving retroactive effect to the stock split, is
presented below.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED JUNE 30,
-------------- -----------------------------------
1996 1995 1996 1995 1994 1993 1992
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings per common share
(fully diluted):
Income (loss) before
extraordinary items and
cumulative effects of
changes in accounting
principles............... $ (.18) $ .52 $ 2.48 $ 1.44 $ (.08) $ 1.62 $ 3.12
Extraordinary items....... -- -- -- -- -- -- (.34)
Cumulative effects of
changes in accounting
principles............... -- -- -- -- .31 -- --
------ ------ ------ ------ ------ ------ ------
Net income (loss)......... $ (.18) $ .52 $ 2.48 $ 1.44 $ .23 $ 1.62 $ 2.78
====== ====== ====== ====== ====== ====== ======
Dividends declared per com-
mon share................. $.0667 $ -- $ .267 $ -- $ -- $ -- $ --
====== ====== ====== ====== ====== ====== ======
Book value per common
share..................... $17.30 $16.30 $18.26 $15.77 $14.34 $14.19 $13.97
====== ====== ====== ====== ====== ====== ======
Tangible book value per
common share.............. $15.46 $14.66 $16.46 $14.03 $11.15 $10.00 $ 8.54
====== ====== ====== ====== ====== ====== ======
</TABLE>
Financial information contained elsewhere in this Prospectus has not been
adjusted to reflect the effect of the stock split.
9
<PAGE>
RISK FACTORS
Prospective investors should consider, among other things, the following
factors in connection with a decision to purchase the Notes offered hereby.
SOURCES OF PAYMENT FOR INTEREST AND PRINCIPAL OF THE NOTES
The Company's principal asset is its investment in the capital stock of the
Bank. Because it does not generate any significant revenues independent of the
Bank, the Company's ability to make interest and principal payments on the
Notes is dependent on the extent to which it receives dividends from the Bank.
The Bank's ability to pay dividends to the Company is dependent on its ability
to generate earnings and is subject to a number of regulatory restrictions and
tax considerations. Under current regulations of the Office of Thrift
Supervision (the "OTS"), in order to pay dividends without prior approval of
the OTS, a savings institution must satisfy all of its applicable regulatory
capital requirements. The Bank currently complies with its regulatory capital
requirements and is considered "well-capitalized" under applicable banking
regulations. At September 30, 1996, the Bank's regulatory capital ratios were
5.81%, 6.02%, and 12.89%, respectively, for tangible, core and risk-based
capital, compared to OTS minimum regulatory capital requirements of 1.50%,
3.00% and 8.00%, respectively. To be considered "well capitalized", the Bank
must maintain minimum Tier 1 leverage, Tier 1 risk-based and total risk-based
capital ratios of 5.00%, 6.00% and 10.00%, respectively. At September 30,
1996, the Bank's Tier 1 leverage, Tier 1 risk-based and total capital ratios
were 6.02%, 11.81% and 12.89%, respectively. Should the Bank in the future
fail to meet regulatory capital requirements, it might be unable to pay
dividends to the Company to fund interest and principal payments on the Notes.
Further, even assuming it continues to satisfy such requirements, the Bank
will be restricted by applicable OTS regulations from paying dividends beyond
a specified percentage of its earnings and excess capital, and will be
required to furnish the OTS with 30 days' prior written notice of any proposed
dividend. The OTS will have the opportunity to object to any proposed dividend
during such period. At September 30, 1996, the Bank had $73.5 million
available for the payment of dividends to the Company under current OTS
regulations. If the Company were denied access to the earnings of the Bank,
whether by regulatory restriction, inadequate earnings or deterioration in the
Bank's financial condition, the Company's ability to make debt service
payments on the Notes would be significantly impaired.
SUBORDINATION OF NOTES
The Notes are subordinated to all Senior Indebtedness of the Company. By
reason of such subordination, in the event of liquidation of the Company,
holders of the Notes will not receive payment until the holders of Senior
Indebtedness have been satisfied. While Senior Indebtedness excludes
indebtedness of the Company's subsidiaries, holders of the Notes, as creditors
of the Company, will be denied access to the assets of the Company's
subsidiaries upon such subsidiaries' liquidation or reorganization until all
the prior claims of creditors of such subsidiaries have been satisfied.
Obligors of the Bank, including depositors, have first claim on the assets of
the Bank in the event of liquidation of the Bank. There is no limitation in
the Indenture on the Company's creation of Senior Indebtedness or indebtedness
ranking in parity with the Notes. See "Description of Notes--General" and "---
Subordination."
POTENTIALLY ADVERSE IMPACT OF INTEREST RATES AND ECONOMIC AND INDUSTRY
CONDITIONS
The savings institution industry is affected by fluctuations in market
interest rates. Like most savings institution holding companies, the Company's
net interest income is affected by general economic and other factors that
influence market interest rates and the Company's ability to respond to
changes in such rates. General economic conditions may also affect the credit
quality of the Company's assets. Adverse economic conditions may affect the
ability of the Bank's borrowers to repay loans, particularly in the areas of
commercial real estate and consumer lending. To the extent that changes in
interest rates and economic conditions adversely affect the Company's
financial condition and results of operations, the Company's ability to make
debt service payments on the Notes may be impaired.
10
<PAGE>
Significant and rapid changes have occurred in the savings institution
industry in recent years, and the future of the industry is subject to various
uncertainties. The traditional role of savings institutions as the nation's
primary housing lenders is diminishing and savings institutions are subject to
increasing competition from commercial banks and mortgage bankers. The savings
institution industry also faces a volatile and uncertain regulatory
environment in which applicable laws, regulations and enforcement policies are
subject to significant change. There can be no assurance that changes in the
savings institution industry, regulatory and otherwise, will not adversely
affect the financial condition and results of operations of the Company and,
as a result, impair its ability to make debt service payments on the Notes.
LIMITED COVENANTS
The covenants in the Indenture are limited and are not designed to protect
holders of the Notes in the event of a material adverse change in the
Company's financial condition or results of operations. The provisions of the
Indenture should not be a significant factor in evaluating whether the Company
will be able to comply with its obligations under the Notes. See "Description
of the Notes."
LIMITED RIGHTS OF ACCELERATION OF NOTES
Payment of principal of or interest on the Notes may be accelerated only in
the case of the bankruptcy, insolvency or reorganization of the Company. There
is no right of acceleration in the case of a default in the payment of
principal or interest on the Notes or in the performance of any other covenant
of the Company. See "Description of Notes--Acceleration Events."
RECENT DEVELOPMENTS
Stock Split and Increase in Cash Dividend. On November 18, 1996, the Board
of Directors of the Company authorized a three-for-two stock split to be
effected in the form of a 50 percent stock dividend. Par value will remain at
$.01 per share. Fractional shares will be paid in cash. The Board also
increased its quarterly cash dividend from $.0667 per common share after
adjusting for the three-for-two stock split to $.07 per common share which
represents an increase of five percent. The stock dividend, payable to
stockholders of record as of December 31, 1996, will be paid on January 14,
1997. Except as otherwise noted, financial information contained elsewhere in
this Prospectus has not been adjusted to reflect the effect of the stock
split.
Recent Acquisition. On October 1, 1996, the Company completed the
acquisition of Heritage, the holding company for Hawkeye Federal Savings Bank.
Based on the closing stock price of the Company's common stock on October 1,
1996 of $43.00 per share, the total consideration paid for this acquisition
was approximately $22.8 million consisting of 451,633 shares of the Company's
common stock and $3.4 million in cash. At that date, Heritage operated six
branches in Iowa and had $182.9 million in total assets, $157.9 million in
deposits and $10.3 million in stockholders' equity. The acquisition of
Heritage was accounted for as a purchase transaction.
SAIF Special Assessment. During the quarter ended September 30, 1996, the
Company incurred an after-tax charge of $17.3 million ($27.1 million pre-tax)
as a result of the imposition of a special assessment by the Federal Deposit
Insurance Corporation ("FDIC") to recapitalize the Savings Association
Insurance Fund ("SAIF"). The FDIC operates two deposit insurance funds: the
Bank Insurance Fund (the "BIF") which generally insures the deposits of
commercial banks and the SAIF which generally insures the deposits of savings
associations such as the Bank. Because the reserves of the SAIF have been
below statutorily required minimums, institutions with SAIF-assessable
deposits, like the Bank, have been required to pay substantially higher
deposit insurance premiums than institutions with deposits insured by the BIF
since September 30, 1995. In order to recapitalize the SAIF and address this
premium disparity, the Deposit Insurance Funds Act of 1996, effective
September 30, 1996, authorized the FDIC to impose a one-time special
assessment on institutions with SAIF-assessable deposits based on the amount
determined by the FDIC to be necessary to increase the reserve levels of the
SAIF to the designated reserve ratio of 1.25% of insured deposits as of
October 1, 1996. Institutions were
11
<PAGE>
assessed at the rate of .657% based on the amount of their SAIF-assessable
deposits as of March 31, 1995. This nonrecurring special assessment totaling
$27.1 million before taxes is recorded in the general and administrative
expense section of the Consolidated Statement of Operations under a separate
line item captioned "Federal deposit insurance special assessment." Such
special assessment reduced the Bank's tangible, core and risk-based capital at
September 30, 1996, by $17.3 million and reduced the capital ratios as
follows: tangible capital by .26% to 5.81%, core capital by .26% to 6.02% and
risk-based capital by .51% to 12.89%. The Bank continues to exceed its minimum
OTS regulatory requirements and continues to meet the requirements to be
classified as a "well-capitalized" institution under applicable banking
regulations.
The FDIC has proposed a new assessment schedule for SAIF deposit insurance
pursuant to which the assessment rate for well-capitalized institutions with
the highest supervisory ratings would be reduced to zero and institutions in
the lowest risk assessment classification would be assessed at the rate of
0.27% of insured deposits. Until December 31, 1999, however, SAIF-insured
institutions will be required to pay assessments to
the FDIC at the rate of .064% to help fund interest payments on certain bonds
issued by the Financing Corporation ("FICO"), an agency of the federal
government established to finance takeovers of insolvent thrifts. During this
period, BIF members will be assessed for FICO obligations at the rate of
.013%. After December 31, 1999, both BIF and SAIF members will be assessed at
the same rate for FICO payments. Based on the Company's level of deposits as
of September 30, 1996, such a reduction in rates from the current level of
.23% of insured deposits to .064% of insured deposits effective January 1,
1997 for SAIF insurance premiums will result in an annual pre-tax increase in
operating earnings of approximately $7.0 million.
The Deposit Insurance Funds Act of 1996 provides that the BIF and the SAIF
will be merged into a single deposit insurance fund effective January 1, 1999
but only if there are no insured savings associations on that date. The
legislation directs the Department of Treasury to make recommendations to
Congress by March 31, 1997, for the establishment of a single charter for
banks and thrifts. Management of the Company cannot predict at this time what
effect this legislation will have on the Company.
Repurchase of Common Stock. On August 21, 1996, the Company consummated the
repurchase of 1,250,100 shares (8.3% of the outstanding shares of the
Company's common stock prior to the repurchase) of the Company's common stock
from CAI Corporation ("CAI"), a Dallas-based investment company, for an
aggregate purchase price of approximately $48.9 million, excluding $329,000 in
transaction costs incurred as of September 30, 1996. Such purchase price
consisted of cash of approximately $28.2 million and the surrender of a
warrant (valued at $20.7 million) which would have enabled the Company to
purchase 99 shares of non-voting common stock of CAI. The Company also
reimbursed CAI for certain expenses totaling $2.2 million and paid CAI cash
totaling $62,500 in lieu of the pro rata portion of any dividend CAI otherwise
would have been entitled to receive for the quarter ended September 30, 1996.
The cash portion of the repurchase was financed by a $28.0 million variable
rate secured promissory note due January 31, 1997 from a financial
institution. The Company is in the process of negotiating to refinance this
loan on a long term basis. Such loan is secured by a portion of the
outstanding shares of the common stock of the Bank. Concurrent with the close
of the repurchase, two directors of the Company, who also serve as executive
officers of CAI, resigned from the Board of Directors.
12
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes offered hereby
(after deducting the underwriting discount and estimated expenses of the
offering) will be approximately $48.12 million. A total of $47.15 million of
the net proceeds will be used to refinance the Company's $40.25 million of
10.25% Subordinated Notes due 1999 and $6.9 million of 10% Senior Notes due
1999, both of which are expected to be redeemed on December 27, 1996. The
remainder of the net proceeds will be used for general corporate purposes.
Pending such uses, the proceeds will be invested in short-term, investment-
grade securities.
CAPITALIZATION
The following table presents the consolidated capitalization of the Company
at September 30, 1996, and as adjusted to give effect to the issuance of the
Notes offered hereby and the application of the net proceeds as described
herein. In addition, at September 30, 1996, the Company had other funding
liabilities consisting of deposits ($4.3 billion), Federal Home Loan Bank
("FHLB") advances ($1.2 billion) and other borrowings ($711.3 million)
incurred in the ordinary course of business.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------
ACTUAL AS ADJUSTED
----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Parent Company Long-Term Debt:
Variable Rate Secured Promissory Note due January
31, 1997(1)...................................... $ 28,000 $ 28,000
10% Senior Notes due 1999......................... 6,900 --
10.25% Subordinated Notes due 1999................ 40,250 --
Subordinated Extendible Notes due 2006, offered
hereby........................................... -- 50,000
----------- -----------
Total parent company long-term debt.............. $ 75,150 $ 78,000
=========== ===========
Stockholders' equity:
Preferred stock, $.01 par value; 10,000,000 shares
authorized, none issued.......................... $ -- $ --
Common stock, $.01 par value; 25,000,000 shares
authorized,
13,856,566 issued and outstanding(2)............. 139 139
Additional paid-in capital........................ 126,967 126,967
Retained earnings(3).............................. 234,846 234,316
Unrealized holding loss on securities available
for sale, net.................................... (2,296) (2,296)
----------- -----------
Total stockholders' equity....................... $ 359,656 $ 359,126
=========== ===========
</TABLE>
- --------
(1) The Company is in the process of negotiating to refinance this loan on a
long term basis.
(2) Does not include 389,335 shares of common stock which are issuable upon
the exercise of outstanding options granted under the Company's 1984 Stock
Option and Incentive Plan, as Amended.
(3) The retained earnings of the Company are subject to certain restrictions.
See Notes 16 and 18 to Notes to the Company's Consolidated Financial
Statements, which are incorporated herein by reference. The reduction of
retained earnings results from the write-off of deferred offering expenses
($530,000 net of income taxes) relating to the 10.25% Subordinated Notes
due 1999 and the 10% Senior Notes due 1999.
13
<PAGE>
MANAGEMENT
The following table sets forth certain information about the directors and
executive officers of the Company.
<TABLE>
<CAPTION>
AGE AT
OCTOBER 7, DIRECTOR
NAME 1996 SINCE POSITION/BACKGROUND
---- ---------- -------- -------------------
<S> <C> <C> <C>
William A. Fitzgerald... 58 1984 Chairman and Chief Executive Officer of the
Company and the Bank.
Robert F. Krohn......... 63 1984 Vice Chairman and Chief Executive Officer
of PSI Group, Inc., a national document
processing company. Mr. Krohn serves as
President of Krohn Corporation, a
strategic planning firm. Mr. Krohn served
as Chairman of the Board of the Company
and the Bank from 1990 through 1994.
Robert S. Milligan...... 51 1987 Chairman of the Board and Chief Executive
Officer of MI Industries, a protein
processing company headquartered in
Lincoln, Nebraska, which produces products
for pharmaceutical, biological and
research markets throughout the world.
Charles M. Lillis....... 54 1988 President and Chief Executive Officer of U
S WEST Media Group, the international,
cellular, directory publishing and cable
television units of U S WEST, Inc.
Talton K. Anderson...... 59 1991 Owner and President of three automobile
dealerships in Omaha, Nebraska, as well as
one in Lincoln, Nebraska. Mr. Anderson is
also the President of a Nebraska-based
automobile leasing company and a
reinsurance company.
Carl G. Mammel.......... 63 1991 Chairman of the Board of Mammel &
Associates, a consulting firm providing
services in executive benefits, employee
benefits planning and wealth transfer
planning. He is also a managing partner
and Executive Vice President of M
Financial Corporation, a network of
financial service firms throughout the
United States.
James P. O'Donnell...... 48 1991 Senior Vice President and Chief Financial
Officer of ConAgra, Inc., an Omaha,
Nebraska-based international diversified
food company.
Robert D. Taylor........ 49 1996 Director and Consultant with Taylor
Financial, based in Wichita, Kansas, a
provider of financial consulting services
to small- and medium-sized multi-unit
operations. From December 31, 1990 to
October 2, 1995, Mr. Taylor served as
Chairman of the Board of Directors and
Chief Executive Officer of Railroad and
its wholly owned subsidiary, Railroad
Savings Bank, F.S.B. Railroad was acquired
by the Company effective October 2, 1995.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
AGE AT
OCTOBER 7, DIRECTOR
NAME 1996 SINCE POSITION/BACKGROUND
---- ---------- -------- -------------------
<S> <C> <C> <C>
Aldo J. Tesi............ 45 1996 President of First Data Resources, an
Omaha, Nebraska-based subsidiary of First
Data Corporation, which provides
cardholder services and relational
database marketing services to bank card
issuers throughout the world.
James A. Laphen......... 48 N/A President, Chief Operating Officer and
Chief Financial Officer of the Company and
the Bank.
</TABLE>
15
<PAGE>
DESCRIPTION OF NOTES
The Notes are to be issued under an indenture (the "Indenture"), dated as of
December 2, 1996, between the Company and Harris Trust and Savings Bank, as
trustee (the "Trustee"). The Notes are not savings accounts or deposits of the
Bank and are not insured by the FDIC, any governmental agency or otherwise.
The following summaries of certain provisions of the Indenture do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, the provisions of the Indenture (including the definition of
certain terms in the Indenture), the form of which has been filed as an
exhibit to the Registration Statement of which this Prospectus is part.
Wherever particular provisions and definitions of the Indenture are referred
to, such provision and definitions are incorporated by reference as part of
the statements made, and the statements are qualified in their entirety by
such reference. Article and Section references are to Articles and Sections of
the Indenture. For purposes of the "Description of Notes" section of this
Prospectus, "Company" refers to Commercial Federal Corporation, excluding its
subsidiaries, unless the subsidiaries are specifically included.
GENERAL
The Notes offered by this Prospectus will be general unsecured obligations
of the Company and will be limited to $50,000,000 aggregate principal amount.
The Notes will be issued in registered form only, without coupons, in
denominations of $1,000 and any integral multiple thereof. Interest on the
Notes will accrue from the date of original issuance and will be payable on
the fifteenth day of each month, commencing January 15, 1997 (each, an
"Interest Payment Date"), at the rate per annum stated on the cover page of
this Prospectus. Interest will be payable to the person in whose name the Note
is registered at the close of business on the seventh day of the month in
which such Interest Payment Date occurs. (Sections 201, 202, 203, 301, 302,
307, 308 and 311). The Notes will mature on December 1, 2006 unless redeemed
earlier at the option of the Company or the Holders as set forth below. See
"--Redemption at Option of the Company" and "--Redemption at Option of
Holder."
Principal and interest will be payable at an office or agency to be
maintained by the Trustee in New York, New York, except that, at the option of
the Company, principal and interest may be paid by check mailed to the person
entitled thereto. (Sections 301, 307 and 1002) The Notes may be presented for
registration of transfer or exchange at an office or agency to be maintained
by the Trustee in New York, New York. (Section 305) The Notes will be
exchangeable without service charge, but the Company may require payment to
cover taxes or other government charges. (Section 305) The Notes will not be
secured by the assets of the Company or any of its subsidiaries or affiliates
or otherwise and will not have the benefit of a sinking fund for the
retirement of principal. In addition, the rights of the Company to participate
in any distribution of assets of any subsidiary, including the Bank, upon its
liquidation or reorganization or otherwise (and thus the ability of the
Holders of the Notes to benefit indirectly from such distribution) are subject
to the prior claims of creditors of that subsidiary. Claims on the Company's
subsidiaries by creditors other than the Company may include substantial
obligations with respect to loans, deposit liabilities, FHLB advances, federal
funds purchased and securities sold under repurchase agreements.
So long as the Company is a reporting company under the Exchange Act, the
Company will furnish to holders of the Notes annual reports of the Company
containing audited financial statements and interim reports with unaudited
financial data on a quarterly basis. If the Company ceases to be a reporting
company under the Exchange Act, the Company will furnish to holders of the
Notes information which is substantially comparable to the information
provided as a reporting company. (Section 704)
The Indenture does not contain provisions that would provide protection to
Holders against a decline in credit quality resulting from recapitalizations
or similar restructurings.
ADJUSTABLE INTEREST RATE
The Notes will bear interest from the date of original issuance until
December 1, 2001 at the rate of 7.95% per annum. Thereafter, the Notes will
bear interest in accordance with the following procedures: On or before
16
<PAGE>
30 days prior to December 1, 2001, or the expiration date of any subsequent
Interest Rate Period (as defined herein, such date, including December 1,
2001, an "Interest Reset Date") the Company will establish, at its option, the
interest rate per annum (rounded to the nearest five hundredths of a
percentage point; each such rate a "Subsequent Interest Rate") for a period
(an "Interest Rate Period") of one, two, three or five years (but never
extending beyond December 1, 2006), commencing with such Interest Reset Date
and ending on, but not including the December 1 of such first, second, third
or fifth year, as the case may be. Any such Subsequent Interest Rate will not
be less than 105% of the Effective Interest Rate on Comparable Maturity U.S.
Treasury Obligations (as defined herein) established prior to the commencement
of each such subsequent Interest Rate Period. In the event that the Company
determines on the November 1 preceding such Interest Reset Date that, during
the ten calendar days preceding such November 1, no Weekly Comparable Maturity
Treasury Rate (as defined herein) has been published and the Alternate
Comparable Maturity Treasury Rate (as defined herein) could not be determined,
the Company will establish the Subsequent Interest Rate in its discretion
without limitation. (Section 202)
In the event that the Company establishes a Subsequent Interest Rate for a
subsequent Interest Rate Period, the Company will notify the Trustee of each
Subsequent Interest Rate and Interest Rate Period on or before 30 days prior
to an Interest Reset Date. Not later than the second business day after
notification to the Trustee by the Company of each Subsequent Interest Rate
and Interest Rate Period, the Trustee will mail such notice to each Holder.
(Section 202)
If the Company decides not to establish a Subsequent Interest Rate as
provided above, the interest rate for the prior Interest Rate Period will
continue to be the interest rate in effect for the next year and each year
thereafter, unless and until the Company shall establish a Subsequent Interest
Rate on or before November 1 of a subsequent year in which an Interest Reset
Date occurs for a subsequent Interest Rate Period as provided above,
commencing with December 1 of such year. Until establishment of such a
Subsequent Interest Rate for a subsequent Interest Rate Period, each December
1 shall be deemed to be an Interest Reset Date. (Section 202)
In the event that the Company decides not to establish a Subsequent Interest
Rate for a subsequent Interest Rate Period, the Company will so notify the
Trustee on or before 30 days prior to the Interest Reset Date. Not later than
the second business day after such notification to the Trustee by the Company,
the Trustee will mail such notice to each Holder.
As used herein, the following capitalized terms shall have the following
definitions (Section 101):
"Alternate Comparable Maturity Treasury Rate" means the average yields to
maturity of the daily closing bids (or less frequently if daily quotations
shall not be available), quoted by at least three recognized U.S.
Government securities dealers selected by the Company, for all marketable
U.S. Treasury securities with a maturity of not less than three months
shorter nor more than three months longer than the applicable Comparable
Maturity from the November 1 preceding an Interest Reset Date (other than
securities which can, at the option of the holder, be surrendered at face
value in payment of any Federal estate tax) for the most recent five
consecutive business days during which there had been at least three days
on which daily closing bids were quoted within the 25 calendar day period
preceding such November 1.
"Comparable Maturity" means, with respect to an Interest Rate Period of
one, two, three or five years, one, two, three or five years, respectively.
"Consolidated Net Income" means the amount of net income (loss) of the
Company and its subsidiaries determined in accordance with generally
accepted accounting principles; provided, however, that there shall not be
included in Consolidated Net Income (a) any net income (loss) of a
subsidiary for any period during which it was not a consolidated subsidiary
or (b) any net income (loss) of businesses, properties or assets acquired
or disposed of (by way of merger, consolidation, purchase, sale or
otherwise) by the Company or any subsidiary for any period prior to the
acquisition thereof or subsequent to the disposition thereof; and,
provided, further, any assessment, or the effect thereof, imposed by the
FDIC on the Bank as a result of the Bank's membership in the SAIF for the
purpose of recapitalizing such fund shall be excluded from the
determination of Consolidated Net Income.
17
<PAGE>
"Effective Interest Rate on Comparable Maturity U.S. Treasury
Obligations" means as of the November 1 preceding an Interest Reset Date
(i) if available, the most recent Weekly Comparable Maturity Treasury Rate
published during the 25 calendar day period preceding such November 1 or
(ii) if such Weekly Comparable Maturity Treasury Rate is not available, the
Alternate Comparable Maturity Treasury Rate as of such November 1.
"Weekly Comparable Maturity Treasury Rate" means the weekly average yield
to maturity values adjusted to a constant maturity of the Comparable
Maturity as read from the yield curves of the most actively traded
marketable U.S. Treasury fixed interest rate securities constructed daily
by the U.S.
Treasury Department as published by the Federal Reserve Board or any
Federal Reserve Bank or by a United States Government department or agency.
REDEMPTION AT OPTION OF THE COMPANY
The Notes may not be redeemed prior to December 1, 2001. On December 1,
2001, or at any subsequent Interest Reset Date, the Company may, at its
option, redeem the Notes in whole upon not less than 30 nor more than 60 days
notice mailed to the registered Holders at a redemption price equal to par,
without premium, together with interest accrued to the date fixed for
redemption (subject to the right of the registered Holder on the record date
for an interest payment to receive such interest). (Article Eleven)
REDEMPTION AT OPTION OF HOLDER
The Notes may be redeemable, in whole or in part, on December 1, 2001 or at
any subsequent Interest Reset Date at the option of the Holder thereof, at a
redemption price equal to par plus accrued interest to the date fixed for
redemption. To be redeemed, a Note must be presented to the Trustee at its
principal corporate trust office in Chicago, Illinois. The Trustee shall
notify Holders of any Interest Reset Date not later than two business days
after receipt of notice from the Company. Such notice from the Trustee, among
other things, shall set forth the Subsequent Interest Rate and the Interest
Rate Period (or that the Company has decided not to reset the interest rate,
as the case may be) and that the Holder must exercise his option to have his
Notes redeemed not later than the fifth business day before the Interest Reset
Date and that if a Holder elects to revoke his exercise of such option prior
to the redemption of the Notes, he must do so not later than the fifth
business day before the Interest Reset Date. (Article Twelve)
No particular form of request for redemption or authority to request payment
is necessary. However, in order for Notes to be validly tendered for
redemption, the Trustee must have received: (1) a written request for
redemption and (2) the Notes to be redeemed free of any liens or encumbrances.
Any Notes tendered or any request for redemption may be withdrawn by written
request received by the Trustee on or prior to the fifth business day before
an Interest Reset Date. A Holder who has tendered a Note for redemption shall
continue to receive all monthly interest payments prior to the date of
redemption. (Article Twelve)
SUBORDINATION
The Notes are subordinated, in the manner and to the extent hereinafter
described, to the prior payment of all Senior Indebtedness of the Company.
Senior Indebtedness is defined as the principal of, premium, if any, and
interest on (1) all indebtedness of the Company for money borrowed (including
indebtedness of others guaranteed by the Company) other than the Notes,
whether outstanding on the date of the Indenture or thereafter created,
assumed or incurred, (2) any amendments, renewals, extensions, modifications
and refundings of any such indebtedness, unless in either case in the
instrument creating or evidencing any such indebtedness or pursuant to which
it is outstanding it is provided that such indebtedness is not superior in
right of payments to the Notes, and (3) Derivative Obligations (as defined
herein). (Sections 101 and 1301) The Notes will be subordinated to the $6.9
million in aggregate principal amount of the Company's 10% Senior Notes due
1999 and the $28.0 million variable rate secured promissory note due January
31, 1997 and will rank pari passu with the $40.25 million in aggregate
principal amount of the Company's 10.25% Subordinated Notes due 1999 to the
18
<PAGE>
extent such 10% Senior Notes due 1999, variable rate secured promissory note
and 10.25% Subordinated Notes due 1999 remain outstanding after issuance of
the Notes. The Company intends to repay in full the entire principal amount of
its 10% Senior Notes due 1999 and 10.25% Subordinated Notes due 1999 with the
proceeds of this offering. The Company is in the process of negotiating to
refinance the $28.0 million variable rate secured promissory note due January
31, 1997 on a long term basis. Any such refinancing would be Senior
Indebtedness under the Indenture. See "Use of Proceeds."
For the purposes of the definition of Senior Indebtedness, "indebtedness for
money borrowed" is defined as (a) any obligation of the Company for the
repayment of borrowed money, whether or not evidenced by bonds, debentures,
notes or other written instruments, (b) any deferred payment obligation of the
Company for the payment of the purchase price of property or assets evidenced
by a note or similar instrument, (c) any obligation of the Company for the
payment of rent or other amounts under a lease of property or assets which
obligation is required to be classified and accounted for as a capitalized
lease on the balance sheet of the Company under general accepted accounting
principals. Notwithstanding the foregoing, Senior Indebtedness shall not
include any obligation of the Company that constitutes a trade payable or
accrued liability arising in the ordinary course of business. (Section 101)
"Derivative Obligations" are defined as any obligations of the Company to
make payment pursuant to the terms of any securities contracts and foreign
currency exchange contracts, derivative instruments, such as swap agreements
(including interest rate and currency and foreign exchange swap agreements),
cap agreements, floor agreements, collar agreements, interest rate agreements,
foreign exchange agreements, options, commodity futures contracts and
commodity options contracts (other than obligations on account of indebtedness
for money borrowed ranking pari passu with or subordinate to the Notes).
(Section 101)
Upon a distribution of assets, dissolution, winding up, total liquidation or
reorganization of the Company, if a default has occurred and is continuing
with respect to payment of principal or interest on any Senior Indebtedness or
if an Acceleration Event (as defined herein) shall have occurred and the
principal of the Notes has been declared due and payable and such declaration
has not been rescinded or annulled, then in any such instance all Senior
Indebtedness must be paid in full before any payment of principal or interest
on the Notes can be made. (Section 1301) Any subordination will not prevent
the occurrence of an Acceleration Event or an Event of Default (as defined
herein) under the Indenture.
By reason of the subordination of the Notes, in the event of liquidation of
the Company, the Holders of the Notes will not receive payment until the
holders of Senior Indebtedness have been satisfied, and in such event holders
of Senior Indebtedness may recover more than Holders of Notes. As of September
30, 1996, the Company had Senior Indebtedness in the amount of $34.9 million
in aggregate principal amount outstanding, consisting of the Company's $6.9
million of 10% Senior Notes due 1999, which are expected to be redeemed on
December 27, 1996 with the proceeds of this offering, and a $28.0 million
variable rate secured promissory note due January 31, 1997. The Company is in
the process of negotiating to refinance the $28.0 million variable rate
secured promissory note on a long term basis. Any such refinancing would be
Senior Indebtedness under the Indenture. While Senior Indebtedness excludes
indebtedness of the Company's subsidiaries, Holders of the Notes, as creditors
of the Company, will be denied access to the assets of the Company's
subsidiaries, upon such subsidiaries' liquidation or reorganization, until all
the prior claims of creditors of such subsidiaries have been satisfied.
Obligors of the Bank, for example, including depositors, have first claim on
the assets of the Bank in the event of liquidation of the Bank. There is no
limitation in the Indenture on the Company's creation of Senior Indebtedness
or indebtedness ranking in parity with the Notes.
RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS
The Indenture provides that the Company cannot declare or pay dividends on,
or purchase, redeem or acquire its capital stock, return any capital to
holders of capital stock as such, or make any distribution of assets to
capital stockholders as such, except that the Company may (a) declare and pay
a dividend in capital stock of the Company and (b) declare and pay a dividend,
purchase, redeem or acquire capital stock or make another distribution in cash
or property other than capital stock of the Company if the amount of such
dividend, redemption or distribution, together with the amount of all previous
such dividends and distributions after
19
<PAGE>
September 30, 1996, would not exceed in the aggregate the sum of (i) $52.0
million, plus (ii) 75% of the Company's Consolidated Net Income (as defined
herein) for each fiscal year commencing after the year ended June 30, 1996
(reduced by 100% of any consolidated net loss in any fiscal year), plus (iii)
100% of the net proceeds received by the Company for any capital stock issued
after June 30, 1996. (Section 1007)
CONSOLIDATION, MERGER OR TRANSFER
The Company may not consolidate with, merge into, or transfer all or
substantially all of its assets to another entity unless such other entity
assumes the Company's obligations under the Indenture and unless, after giving
effect thereto, no event shall have occurred and be continuing which, after
notice or lapse of time, would become an Event of Default (as defined herein),
each insured institution controlled by the surviving corporation shall be in
compliance with applicable minimum capital requirements or shall have filed a
capital plan acceptable to its primary regulator and certain other conditions
are met. (Section 801)
EVENTS OF DEFAULT
An Event of Default includes: (a) failure to pay the principal on the Notes
when due at Maturity, upon redemption or upon repayment, as provided in the
Indenture, whether or not prohibited by the subordination provisions of the
Indenture; (b) failure to pay any interest on the Notes for 10 days after such
interest becomes due and payable, whether or not prohibited by the
subordination provisions of the Indenture; (c) failure to perform any other
covenant set forth in the Indenture for 30 days after receipt of written
notice from the Trustee or Holders of at least 25% in aggregate principal
amount of the outstanding Notes specifying the default and requiring the
Company to remedy such default; (d) default in the payment at stated maturity
of indebtedness of the Company or certain subsidiaries for money borrowed
having an outstanding principal amount due at stated maturity greater than
$7.0 million and such default having continued for a period of 30 days beyond
any applicable grace period; (e) an event of default as defined in any
mortgage, indenture or instrument of the Company or certain subsidiaries shall
have happened and resulted in the acceleration of indebtedness which, together
with the principal amount of any other such indebtedness so accelerated,
aggregates $7.0 million or more, and such default shall not have been cured or
waived and such acceleration shall not have been rescinded or annulled; (f)
certain events of insolvency, receivership, or reorganization of the Company
or certain subsidiaries; and (g) entry of a final judgment, decree or order
against the Company or certain subsidiaries for the payment of money in excess
of $7.0 million in certain circumstances. Except as described under
"Acceleration Events" below, there is no right to acceleration in the case of
an Event of Default. (Section 501)
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of a "default" (meaning, for this purpose, the events specified
above without grace periods), mail to the Holders of the Notes notice of all
defaults known to it which have occurred and remain uncured; provided, that,
except in the case of a default in the payment of principal or interest on any
of the Notes, the Trustee shall be protected in withholding such notice if and
so long as it in good faith determines that the withholding of such notice is
in the interest of the Holders. (Section 602)
Upon the occurrence of any Event of Default the Company shall, upon demand
of the Trustee, pay to the Trustee, for the benefit of the Holders of the
Notes, all amounts then due and payable with respect to such Notes, with
interest upon the overdue principal and, to the extent that payment of such
interest shall be legally enforceable, upon any overdue installments of
interest at the rate of interest borne by the Notes. If an Event of Default
with respect to the Notes occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders of the Notes by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in the Indenture or such
Notes or in the aid of the exercise of any power granted in the Indenture or
the Notes, or to enforce any other proper remedy. (Section 503)
The Company must furnish annually to the Trustee an Officer's Certificate
stating whether to the best of the knowledge of the signers the Company is in
default under any of the provisions of the Indenture, and specifying all such
defaults and the nature thereof of which they have knowledge. (Section 1011)
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<PAGE>
A Holder will not have any right to institute any proceeding with respect to
the Indenture or for any remedy thereunder, unless (a) such Holder shall have
previously given to the Trustee written notice of a continuing Event of
Default, (b) the Holders of at least 25% in aggregate principal amount of the
outstanding Notes shall have made a written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as Trustee, (c) the
Trustee shall have failed to institute such proceeding within 60 days and (d)
the Trustee shall not have received from the Holders of a majority in
aggregate principal amount of the outstanding Notes a direction inconsistent
with such request. (Section 507) However, the Holder of any Note will have an
absolute right to receive payment of the principal of and interest on such
Notes on or after the respective due dates and to institute suit for the
enforcement of any such payment. (Section 508)
ACCELERATION EVENTS
The Indenture defines an "Acceleration Event" as an Event of Default
relating to bankruptcy, insolvency or reorganization of the Company. If an
Acceleration Event shall occur and be continuing, either the Trustee or the
Holders of at least 25% in aggregate principal amount of outstanding Notes may
accelerate the maturity of all such outstanding Notes. If an Acceleration
Event has occurred and a declaration of acceleration made before a judgment or
decree for payment of money due is obtained, Holders of a majority of the
outstanding Notes may rescind the acceleration of the Notes if all
Acceleration Events have been remedied and all payments due, other than those
due as a result of acceleration, have been made. (Section 502)
MODIFICATION AND WAIVER
With certain limited exceptions which permit modification of the Indenture
by the Company and the Trustee only, the Indenture may be modified by the
Company with the consent of Holders of not less than a majority in aggregate
principal amount of outstanding Notes; provided, however, that no such changes
shall without the consent of the Holder of each Note affected thereby (a)
change the maturity date of the principal of, or the due date of any
installment of interest on, any Note, (b) reduce the principal of, or the rate
of interest on, any Note, (c) change the currency in which any portion of the
principal of, or interest on, any Note is payable, (d) impair the right to
institute suit for the enforcement of any such payment, (e) reduce the above-
stated percentage of Holders of the outstanding Notes necessary to modify the
Indenture, (f) modify the foregoing requirements or reduce the percentage of
outstanding Notes necessary to waive any past default or (g) impair the
optional right to repayment provided the Holders. (Sections 513 and 902)
The Holders of a majority in aggregate principal amount of outstanding Notes
may waive compliance by the Company with certain restrictive provisions of the
Indenture. (Section 1012)
SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE
The Indenture provides that the Company may terminate its obligations under
the Indenture with respect to all Notes, by delivering to the Trustee, in
trust for such purpose, money, Government Obligations or both which, through
the payment of interest and principal in respect thereof in accordance with
their terms, will provide on the due dates of any payment of principal and
interest, or a combination thereof, money in an amount sufficient to discharge
the entire indebtedness of such Notes. (Section 401 and 402)
THE TRUSTEE
Harris Trust and Savings Bank will serve as Trustee under the Indenture and
is also the Note Registrar.
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<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in the Purchase
Agreement (a copy of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part), the Underwriters named below
have severally agreed to purchase, and the Company has agreed to sell to the
Underwriters, $50,000,000 in aggregate principal amount of Notes, at the
public offering price less the underwriting discount set forth on the cover
page of the Prospectus, in the dollar amount of Notes set forth opposite their
names in the table below:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------- -----------
<S> <C>
Piper Jaffray Inc. .......................................... $25,000,000
Alex. Brown & Sons Incorporated.............................. 12,500,000
Montgomery Securities........................................ 12,500,000
-----------
Total...................................................... $50,000,000
===========
</TABLE>
The nature of the Underwriters' obligation is such that if any of the Notes
are purchased, all of the Notes must be purchased. The Underwriters propose to
offer the Notes to the public at the Price to Public set forth on the cover
page of this Prospectus and to dealers at such price less a concession not in
excess of 1.75% of the principal amount of the Notes. The Underwriters may
allow and such dealers may reallow a concession not in excess of 0.50% of the
principal amount of the Notes to certain other brokers and dealers. After the
offering, the Price to Public, concession and reallowance may be changed by
the Underwriters.
The Notes have been approved for listing on the New York Stock Exchange
under the symbol "CFB 06," subject to official notice of issuance. There can
be no assurance, however, that an active trading market in the Notes will
develop or that the Notes will not trade at a discount to their principal
amount.
The Purchase Agreement provides that the Company will indemnify the
Underwriters against certain liabilities in connection with this offering,
including liabilities under the Securities Act of 1933, as amended.
LEGAL MATTERS
The legality of the Notes offered hereby will be passed upon for the Company
by Housley Kantarian & Bronstein, P.C., Washington, D.C. Certain legal matters
will be passed upon for the Underwriters by Dorsey & Whitney LLP, Minneapolis,
Minnesota. Both firms may rely as to matters of Nebraska law on the opinion of
Fitzgerald, Schorr, Barmettler & Brennan, Omaha, Nebraska.
EXPERTS
The consolidated financial statements of the Company as of June 30, 1996 and
1995 and for each of the three years in the period ended June 30, 1996
incorporated in this Prospectus by reference have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference (which report expresses an unqualified
opinion and includes an explanatory paragraph referring to a change in the
method of accounting for mortgage servicing rights in fiscal year 1996 and a
change in the method of accounting for income taxes, a change in the method of
accounting for postretirement benefits, and a change in the method of
accounting for intangible assets in fiscal year 1994), and have been so
included in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
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<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN CON-
NECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH IN-
FORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR ITS SUBSIDIARIES
OR THAT INFORMATION CONTAINED HEREIN IS CURRENT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SO-
LICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PER-
SON OR IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHO-
RIZED OR IN WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED
TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICI-
TATION IN SUCH JURISDICTION.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information...................................................... 3
Incorporation of Certain Documents by Reference............................ 3
Prospectus Summary......................................................... 4
Summary Consolidated Financial Information................................. 7
Risk Factors............................................................... 10
Recent Developments........................................................ 11
Use of Proceeds............................................................ 13
Capitalization............................................................. 13
Management................................................................. 14
Description of Notes....................................................... 16
Underwriting............................................................... 22
Legal Matters.............................................................. 22
Experts.................................................................... 22
</TABLE>
$50,000,000
[LOGO OF COMMERCIAL FEDERAL APPEARS HERE]
Subordinated Extendible Notes due 2006
----------------
PROSPECTUS
----------------
Piper Jaffray inc.
Alex. Brown & Sons
Incorporated
Montgomery Securities
November 25, 1996
