MORGAN FINANCIAL CORP.
Fort Morgan, Colorado
Proxy Solicitation Materials
for the
1996 Annual Meeting
of Stockholders
<PAGE>
September 30, 1996
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Morgan Financial
Corp. (the "Corporation"), I cordially invite you to attend the 1996 Annual
Meeting of Stockholders ("Meeting") to be held at the Corporation's executive
offices at 205 West Kiowa Avenue, Fort Morgan, Colorado 80701 on Friday, October
25, 1996 at 1:30 p.m. The attached Notice of Annual Meeting and Proxy Statement
describe the formal business to be transacted at the Meeting. During the
Meeting, I will also report on the operations of the Corporation. Directors and
officers of the Corporation, as well as representatives of Baird, Kurtz &
Dobson, the Corporation's independent accountants, will be present to respond to
any questions stockholders may have.
Whether or not you plan to attend the Meeting, please sign and date the
enclosed Proxy Card and return it in the accompanying postage-paid return
envelope as promptly as possible. This will not prevent you from voting in
person at the Meeting, but will assure that your vote is counted if you are
unable to attend the Meeting. YOUR VOTE IS VERY IMPORTANT.
Sincerely,
/s/ Michael M. Berryhill
Michael M. Berryhill
President
<PAGE>
MORGAN FINANCIAL CORP.
205 WEST KIOWA AVENUE
FORT MORGAN, COLORADO 80701
(970) 867-2443
To be Held on October 25, 1996
NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of Stockholders
("Meeting") of Morgan Financial Corp. ("Corporation"), will be held at the
Corporation's executive offices at 205 West Kiowa Avenue, Fort Morgan, Colorado
80701, at 1:30 p.m. on Friday, October 25, 1996.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Corporation; and
2. The ratification of Baird, Kurtz & Dobson as independent
auditors of Morgan Financial Corp. for the fiscal year ending
June 30, 1997.
The Board of Directors may also vote on the transaction of such other
matters as may properly come before the Meeting or any adjournments thereof. The
Board of Directors is not aware of any other business to come before the
Meeting. Any action may be taken on the foregoing proposals at the Meeting on
the date specified above or on any date or dates to which, by original or later
adjournment, the Meeting may be adjourned. Stockholders of record at the close
of business on September 16, 1996 ("Record Date"), are the stockholders entitled
to vote at the Meeting and any adjournments thereof.
You are requested to complete and sign the enclosed Proxy Card which is
solicited by the Board of Directors and to return it promptly in the enclosed
envelope. The proxy will not be used if you attend and vote at the Meeting in
person.
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE MEETING, IS
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE
REVOKED BY FILING WITH THE SECRETARY OF THE CORPORATION A WRITTEN REVOCATION OR
A DULY EXECUTED PROXY BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE
MEETING MAY REVOKE HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT
BEFORE THE MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT
REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR
RECORD HOLDER TO VOTE PERSONALLY AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Penny L. Woolridge
PENNY L. WOOLDRIDGE
SECRETARY
Fort Morgan, Colorado
September 30, 1996
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE CORPORATION THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM AT THE
MEETING. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE>
PROXY STATEMENT
OF
MORGAN FINANCIAL CORP.
205 WEST KIOWA AVENUE
FORT MORGAN, COLORADO 80701
ANNUAL MEETING OF STOCKHOLDERS
October 25, 1996
General
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Morgan Financial Corp. (the "Corporation"),
the holding company of Morgan County Federal Savings and Loan Association (the
"Association"), to be used at the 1996 Annual Meeting of Stockholders of the
Corporation (the "Meeting") which will be held at the Corporation's executive
offices at 205 West Kiowa Avenue, Fort Morgan, Colorado on Friday, October 25,
1996, at 1:30 p.m., local time. The accompanying Notice of Meeting and this
Proxy Statement are being first mailed to stockholders on or about September 30,
1996.
At the Meeting, stockholders will consider and vote upon (i) the election
of two directors, and (ii) the ratification of Baird, Kurtz & Dobson as
independent auditors of the Corporation for the fiscal year ending June 30,
1997. The Board of Directors knows of no additional matters that will be
presented for consideration at the Meeting. Execution of a proxy, however,
confers on the designated proxyholder discretionary authority to vote the shares
represented by such proxy in accordance with their best judgment on such other
business, if any, that may properly come before the Meeting or any adjournment
thereof.
Voting and Revocability of Proxies
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Corporation at the address above or by the filing
of a later dated proxy prior to a vote being taken on a particular proposal at
the Meeting. A proxy will not be voted if a stockholder attends the Meeting and
votes in person. Proxies solicited by the Board of Directors of the Corporation
will be voted in accordance with the directions given therein. Where no
instructions are indicated, proxies will be voted for the nominees for director
set forth below and "FOR" the other listed proposals. The proxy confers
discretionary authority on the persons named therein to vote with respect to the
election of any person as a director where the nominee is unable to serve, or
for good cause will not serve, and matters incident to the conduct of the
Meeting.
<PAGE>
Voting Securities and Principal Holders Thereof
Voting Securities
Stockholders of record as of the close of business on September 16, 1996,
are entitled to one vote for each share of common stock of the Corporation, par
value $.01 per share ("Common Stock") then held. In December 1995, the
Corporation effected a 2-for-1 stock split. All share and per share numbers in
this Proxy Statement have been adjusted to reflect the stock split. As of
September 16, 1996, the Corporation had 834,058 shares of Common Stock issued
and outstanding.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the Meeting. In the event there are not sufficient votes for a quorum
or to ratify any proposals at the time of the Meeting, the Meeting may be
adjourned in order to permit the further solicitation of proxies.
As to the election of directors, the proxy card being provided by the
Board enables a stockholder to vote for the election of the nominees proposed by
the Board, or to withhold authority to vote for one or more of the nominees
being proposed. Under Colorado law and the Corporation's Articles of
Incorporation and the Bylaws, directors are elected by a plurality of votes
cast, without respect to either (i) Broker Non-Votes or (ii) proxies as to which
authority to vote for one or more of the nominees being proposed is withheld.
Concerning the ratification of Baird, Kurtz & Dobson as independent
auditors of the Corporation, as well as all matters that may properly come
before the Meeting, by checking the appropriate box, a stockholder may; (i) vote
"FOR" the item, or (ii) vote "AGAINST" the item, or (iii) "ABSTAIN" with respect
to the item.
Under the Corporation's Articles of Incorporation and Bylaws, unless
otherwise required by law, the ratification of Baird, Kurtz & Dobson as
independent auditors, and all other matters shall be determined by a majority of
votes cast affirmatively or negatively without regard to (a) Broker Non- Votes,
or (b) proxies marked "ABSTAIN" as to that matter.
Security Ownership of Certain Beneficial Owners
Persons and groups owning in excess of 5% of the Corporation's Common
Stock are required to file certain reports regarding such ownership pursuant to
the Securities Exchange Act of 1934, as amended ("1934 Act"). Based upon such
reports and information provided by the Corporation's Transfer Agent, the
following table sets forth, as of September 16, 1996, certain information as to
those persons who were beneficial owners of more than 5% of the outstanding
shares of Common Stock and as to the Common Stock beneficially owned by
executive officers and directors of the Corporation as a group. Management knows
of no person other than those set forth below who owns more than 5% of the
Corporation's outstanding shares of Common Stock at September 16, 1996.
-2-
<PAGE>
<TABLE>
<CAPTION>
Percent of Shares
Amount and Nature of of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding
- ----------------------------------- -------------------- -----------------
<S> <C> <C>
Jeffrey S. Halis 73,198 (1) 8.78%
500 Park Avenue, Fifth Floor
New York, New York 10022
John Hancock Advisors, Inc. 42,000 (2) 5.04%
101 Huntington Avenue
Boston, Massachusetts 02199
All Directors and Executive Officers
as a Group (11 persons) 190,179 (3)(4)(5)(6) 22.45%
</TABLE>
- ----------------------------------
(1) Based on a Schedule 13D filed with the Securities and Exchange
Commission and the Corporation on May 24, 1994, and as amended on July
11, 1994, Mr. Halis controls the voting of 73,198 shares of the
Corporation's Common Stock. Of those shares, 45,800 shares (5.6%) of
Common Stock are owned by Tyndall Partners, L.P., a Delaware limited
partnership, 5,000 shares (0.6%) are owned by Madison Avenue Partners,
L.P., a Delaware limited partnership and partnership of each of
Tyndall Partners, L.P. and 22,398 shares (2.7%) are owned individually
by Jeffrey S. Halis. Pursuant to the Agreement of Limited Partnership
of each Tyndall Partners, L.P. and Madison Avenue Partners, L.P., Mr.
Halis possesses sole voting and investment control over all securities
owned by each of Tyndall Partners, L.P. and Madison Avenue Partners,
L.P.
(2) Based on Schedule 13G filed with the Securities and Exchange
Commission on February 5, 1996.
(3) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust and other indirect ownership, over which
shares the individuals effectively exercise sole or shared voting and
investment power, unless otherwise indicated.
(4) Includes shares awarded under the Management Stock Bonus Plans and
Trusts over which shares the named individuals exercise sole or shared
voting rights. Members of the Management Stock Bonus Committee
disclaim beneficial ownership of shares held in trust for which they
exercise a fiduciary duty thereunder. See "Executive Compensation --
Management Stock Bonus Plans."
(5) Includes options to purchase an additional 13,168 shares held by
executive officers and directors that are exercisable or will become
exercisable within 60 days.
(6) Members of the ESOP Committee and ESOP Trustee disclaim beneficial
ownership of shares held by the ESOP for which they exercise a
fiduciary duty thereunder.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Common Stock of the Corporation is registered pursuant to Section
12(g) of the "1934 Act". The officers and directors of the Corporation and
beneficial owners of greater than 10% of the Corporation's Common Stock ("10%
beneficial owners") are required to file reports on Forms 3, 4 and 5 with the
Securities and Exchange Commission ("SEC") disclosing changes in beneficial
ownership of the Common Stock. Based on the Corporation's review of such
ownership reports, no officer, director or 10% beneficial owner of the
Corporation failed to file such ownership reports on a timely basis during the
fiscal year ended June 30, 1996.
-3-
<PAGE>
PROPOSAL I - ELECTION OF DIRECTORS
The Corporation's Articles of Incorporation require that directors be
divided into three classes, as nearly equal in number as possible, each class to
serve for a three-year period, with approximately one-third of the directors
elected each year. The Board of Directors currently consists of eight members.
Two directors will be elected at the Meeting, each to serve for a three-year
term, as noted below, or until their respective successors have been elected and
qualified.
William G. Hamlin and Michael J. Schingle have each been nominated by the
Board of Directors to serve as directors for three year terms. It is intended
that the persons named in the proxies solicited by the Board will vote for the
election of the named nominees. If any nominee is unable to serve, the shares
represented by all valid proxies will be voted for the election of such
substitute as the Board of Directors may recommend or the size of the Board may
be reduced to eliminate the vacancy. At this time, the Board knows of no reason
why any nominee might be unavailable to serve.
The following table sets forth the directors, the nominees for director,
their name, age, the year they first became a director of the Corporation or the
Association, the expiration date of their current term as a director, and the
number and percentage of shares of the Corporation's Common Stock beneficially
owned. Each director of the Corporation is also a member of the Board of
Directors of the Association.
<TABLE>
<CAPTION>
Shares of
Age at Year First Current Common Stock
June 30, Elected or Term to Beneficially Percent
Name 1996 Appointed(1) Expire Owned(2)(3)(4) of Class
- ---- ------- ------------ ------- -------------- --------
BOARD NOMINEES FOR TERMS TO EXPIRE IN 1999
<S> <C> <C> <C> <C> <C>
William G. Hamlin 45 (5) (5) 12,000 1.4%
Michael J. Schingle 42 1990 1996 7,352 (7)(8)(9) .9
DIRECTORS CONTINUING IN OFFICE
James C. Berryhill (6) 38 1994 1997 23,253 (7)(8) 2.8
Michael R. Tibbetts 39 1991 1997 10,784 (7) 1.3
Keith D. Williams 69 1966 1997 24,744 (7)(9) 3.0
Michael M. Berryhill(6) 41 1987 1998 36,002 (7)(8) 4.3
Keith Mesmer 61 1995 1998 1,082 (9) .1
</TABLE>
- --------------------------
(1) Refers to the year the individual first became a director of the
Association or Corporation. All directors of the Association as of
September 1992, became directors of the Corporation when it was
incorporated in September 1992.
(2) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust and other indirect ownership, over which shares
the individuals effectively exercise sole or shared voting and investment
power, unless otherwise indicated.
(3) Beneficial ownership as of September 16, 1996.
(4) Includes shares of Common Stock which have been awarded under the
Management Stock Bonus Plans and Trusts which are subject to forfeiture.
See "Executive Compensation -- Management Stock Bonus Plans".
(5) Mr. Hamlin was nominated for election to the Board on July 18, 1996, in
consideration of the retirement of John G. Hamlin and Jack Zurbrigen in
October, 1996, prior to the Annual Meeting.
(6) James C. Berryhill and Michael M. Berryhill are brothers. Each individual
disclaims beneficial ownership of shares held by the other.
(7) Includes stock options to purchase shares of Common Stock pursuant to the
Stock Option Plan, that are exercisable or become exercisable within 60
days in the amount of 2,270; 2,040; 1,416; 740; and 4,172
-4-
<PAGE>
held by Messrs. Schingle, James Berryhill, Tibbetts, Williams and Michael
Berryhill, respectively. See "Executive Compensation -- 1992 Stock Option
Plan."
(8) Excludes shares of Common Stock held under the Employee Stock Ownership
Plan ("ESOP") benefit for which such individual serves as a member of the
ESOP Committee or Trustee Committee. Such individual disclaims beneficial
ownership with respect to such shares held in a fiduciary capacity. See
"Voting Securities and Principal Holders Thereof - Security Ownership of
Certain Beneficial Owners."
(9) Excludes shares of Common Stock held under the Management Stock Bonus
Plans ("MSBP") for which such individual serves as a member of the MSBP
Committee. Such individual disclaims beneficial ownership with respect to
such shares held in a fiduciary capacity. See "Voting Securities and
Principal Holders Thereof -- Security Ownership of Certain Beneficial
Owners."
The principal occupation of each nominee and director of the Corporation
for the last five years is set forth below.
James C. Berryhill joined the Association in 1992, and now serves as
Executive Vice President, Treasurer and Controller. Previously, he worked for
four years as an auditor with the public accounting firm of Coopers & Lybrand,
and spent an additional year in the accounting and finance group of Solbourne
Computer, a computer hardware manufacturer. Mr. Berryhill is vice president of
the Morgan County Economic Development Corporation and vice president of the
Board of Trustees of the Fort Morgan Public Library.
Michael M. Berryhill joined the Association as Executive Vice President in
1986 after working nine years with Arthur Andersen & Co., an international
public accounting firm. He was elected President in 1988, and has been the Chief
Executive Officer since that time. Mr. Berryhill is currently chairman of the
Fort Morgan City Planning Commission and president of Morgan Community College
Foundation, Inc. He has previously served as a member of the Federal Home Loan
Bank of Topeka Advisory Committee; director and vice chairman of the Savings and
Loan League of Colorado; director and vice president of the Morgan Area Chamber
of Commerce; and director and president of the Fort Morgan Sunrise Optimist
Club.
William G. Hamlin is president and chief financial officer of Hamlin
Electric Company, an electrical contracting company. Mr. Hamlin is a member of
the Fort Morgan Chamber of Commerce and the Fort Morgan Elks Lodge, and a past
director of the Morgan County Economic Development Corporation.
Keith Mesmer has served as Chief Executive Officer of Colorado Plains
Medical Center since 1987. Mr. Mesmer is currently serving as a board member of
Colorado Hospital Association Shares Services, Inc. in Denver, the Fort Morgan
Chamber of Commerce and the Fort Morgan Country Club. He is also a past board
member of the Fort Morgan Lions Club, the Colorado Hospital Association, and the
Colorado Health Careers Council.
Michael J. Schingle has practiced law in his own firm since 1989. Prior to
1989, Mr. Schingle was managing partner and a general practitioner in the firm
of Schingle and Bartell, Fort Morgan, Colorado. He is a member of the American,
Colorado, 13th Judicial and Morgan County Bar Associations, the Colorado
Criminal Defense Bar, the National Speakers Association, and is Treasurer of the
Colorado Speakers Association. Mr. Schingle is a past city councilman of Fort
Morgan, a past director of the Fort Morgan Heritage Foundation and is a member
and past president of the Sunrise Optimist Club.
Michael R. Tibbetts is the owner, president and manager of an office
supplies, card, and gift shop. He is a member of Morgan County Community College
Greater Gifts Scholarships Board and a director of the Fort Morgan Heritage
Foundation. He is also past president of the Morgan County
-5-
<PAGE>
Economic Development Corporation, past Chairman of the Morgan Area Chamber of
Commerce Retail Council and past president of the Fort Morgan Rotary Club.
Keith D. Williams, presently owns a general contracting company and, for
many years, operated a soft water service company. Mr. Williams has served for
over 20 years as a board member of Fort Morgan Community Hospital and is a
member of the Morgan Area Chamber of Commerce, the Fort Morgan Optimist Club,
and the Elks Club.
Meetings and Committees of the Board of Directors
The Board of Directors of the Corporation conducts its business through
meetings of the Board and through its committees. All committees act for both
the Corporation and the Association. During the fiscal year ended June 30, 1996,
the Board of Directors of the Corporation held ten meetings. No director of the
Corporation attended fewer than 75% of the total meetings of the Board of
Directors and committee meetings on which such Board member served during this
period. The Association has no Executive Committee of the Board of Directors.
The Compensation Committee of the Association consists of all board
members. The committee meets annually to review the performance of the
Association's officers and employees, and to determine compensation programs and
adjustments. The Compensation Committee met once during fiscal 1996 to consider
compensation.
The Audit Committee consists of the entire Board of Directors except
Michael M. Berryhill and James C. Berryhill. In its capacity as the Audit
Committee, the Board is responsible for developing and monitoring the
Association's audit program. This committee meets with the Corporation's outside
auditors to discuss the results of the annual audit and any related matters. The
members of the committee also receive and review all the reports and findings
and other information presented to them by the officers of the Corporation and
Association regarding financial reporting policies and practices. The Board of
Directors met once in fiscal 1996 in its capacity as the Audit Committee.
The Nominating Committee, which consists of all members of the Board of
Directors, met once prior to the 1996 Annual Meeting.
Directors' Compensation
During the fiscal year ended June 30, 1996, each outside director of the
Corporation and the Association received compensation of $500 per month.
Directors receive no additional compensation for their duties as committee
members. The Association paid a total of $43,200 in directors' fees for the
fiscal year ended June 30, 1996, including $1,800 paid to the corporate
secretary who is not a director. Michael M. Berryhill and James C. Berryhill
receive no director fees.
-6-
<PAGE>
Executive Compensation
Summary Compensation Table. The following table sets forth the fiscal
years ended June 30, 1996, 1995 and 1994, certain information as to the total
remuneration received by Michael M. Berryhill, the President and the Chief
Executive Officer of the Corporation. No other executive officer of the
Corporation who served in such capacities during such periods received total
cash compensation in excess of $100,000.
<TABLE>
<CAPTION>
Annual Compensation(1) Long Term Compensation
Awards
------------------------------------------ ----------------------------
(a) (b) (c) (d) (e) (f) (g) (h)
Restricted Securities
Name and Principal Fiscal Other Annual Stock Underlying All Other
Position Year Salary Bonus Compensation(2) Award(s) Options(#)(3) Compensation(4)
- ------------------ ------ ------ ----- --------------- ---------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael M. Berryhill 1996 $79,850 $3,850 $969 $ -0- 2,314 shares $54,197
President and CEO 1995 75,650 5,000 969 -0- 250 shares 27,489
1994 70,750 3,400 784 -0- 250 shares 14,069
</TABLE>
- ----------------
(1) Compensation deferred at election of executive is included in category
and year earned.
(2) Includes perquisites.
(3) All options granted in 1994 and 1995, and 184 options granted in 1996
are subject to a three year vesting schedule.
(4) Includes Association's contribution to individual's account under the
Morgan County Federal Savings and Loan Association 401(k) Plan of
$1,115, $2,270 and $2,396 during the fiscal years ended June 30, 1994,
1995 and 1996, respectively. Includes 1,470, 2,690 and 4,456 shares of
Common Stock allocated under the ESOP during the fiscal years ended
June 30, 1994, 1995 and 1996, respectively. As of June 30, 1994, 1995
and 1996, the stock value of such shares was $8.8125 per share or
$12,954 total, $9.375 per share or $25,219 total and $11.625 per share
or $51,801 total, respectively.
Long Term Incentive Plans
The Corporation does not presently sponsor any long-term incentive plans
nor did it make any awards or payouts to Michael M. Berryhill under such plans
during the fiscal year ended June 30, 1996.
Compensation Committee Interlocks and Insider Participation
The Corporation's Compensation Committee serves as the salary review
committee for executive officers of the Corporation and the Association. Members
of the salary review committee are all non-employee directors of the Corporation
and the Association, except for Michael M. Berryhill who serves on the committee
and is President and Chief Executive Officer of the Corporation and the
Association. Mr. Berryhill abstains from voting on all matters regarding his own
compensation.
Report of the Compensation Committee on Executive Compensation
The executive officers of the Corporation and the Association consist of
Michael M. Berryhill (President, Chief Executive Officer and Chief Financial
Officer), Richard J. Sheldon (Senior Vice President and Director of Lending
Operations), and James C. Berryhill (Executive Vice President, Treasurer and
Controller).
The Association's Compensation Committee, which includes all board members,
meets annually to review compensation paid to executive officers and directors
and to determine the compensation levels for all Association employees. All
Committee decisions are reviewed and approved by the entire Board
-7-
<PAGE>
of Directors. The Committee reviews various published surveys of compensation
paid to employees performing similar duties for depository institutions and
their holding companies, with a particular focus on the level of compensation
paid by comparable institutions in and around the Association's market area,
including institutions with total assets of between $25 million and $100
million. Although the Committee does not specifically set compensation levels
for executive officers based on whether particular financial goals have been
achieved by the Association, the Committee does consider the overall
profitability of the Corporation when making these decisions. With respect to
each particular employee, his or her particular contributions to the Association
over the past year are also evaluated.
During the fiscal year ended June 30, 1996, Michael M. Berryhill, President
and CEO received an increase in salary from $75,650 to $79,850, and an award of
2,314 stock options, as disclosed in the Summary Compensation Table presented
above. The Committee will consider the annual compensation paid to chief
executive officers of financial institutions and financial institution holding
companies in the State of Colorado and surrounding states with assets of between
$25 million and $100 million and individual job performance with respect to
future increases in the compensation paid to the President.
Compensation Committee:
Michael M. Berryhill
Jack Zurbrigen
Keith D. Williams
Michael J. Schingle
John G. Hamlin
James C. Berryhill
Michael R. Tibbetts
Keith Mesmer
Performance Graph
Set forth below is a stock performance graph comparing the yearly
cumulative total stockholder return on the Corporation's Common Stock with (a)
the yearly cumulative total stockholder return on stocks included in the Nasdaq
Stock Market index and (b) the yearly cumulative total stockholder return on
stocks included in the Nasdaq Bank index, as prepared for Nasdaq by the Center
for Research in Securities Prices ("CRSP") at the University of Chicago. All
three investment comparisons assume the investment of $100 as of January 11,
1993. All of these cumulative total returns are computed assuming the
reinvestment of dividends at the frequency with which dividends were paid during
the applicable years. In the graph below, the years compared were the
Corporation's fiscal years ending June 30, 1993, 1994, 1995 and 1996. The
Corporation's Common Stock was first issued on January 8, 1993 and began trading
on January 11, 1993.
There can be no assurance that the Corporation's stock performance will
continue into the future with the same or similar trends depicted in the graph
below. The Corporation will not make nor endorse any predictions as to future
stock performance.
-8-
<PAGE>
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
=========================================================================================
1/11/93 6/30/93 6/30/94 6/30/95 6/30/96
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nasdaq Market 100.00 102.99 103.98 138.79 178.22
- -----------------------------------------------------------------------------------------
Nasdaq Bank 100.00 108.42 123.31 139.26 181.39
- -----------------------------------------------------------------------------------------
Morgan 100.00 152.30 185.64 217.61 288.65
=========================================================================================
</TABLE>
Other Benefits
Insurance. Full-time employees of the Association are provided with group
plan insurance that provides for broad coverage of health care expenses and
prescription drugs. This insurance is available generally and on the same basis
to all full-time employees following completion of 30 days of employment. The
Association pays dependent coverage for officers, but not for non-officers.
On August 17, 1993, the Compensation Committee voted to purchase group-term
life insurance policies for all employees with individual face amounts
approximately equal to three times salary. The group-term life insurance
replaced the life insurance coverage previously provided as part of the
-9-
<PAGE>
Association's defined benefit pension plan which was terminated as of January 5,
1993. In addition, the Association has relationships with certain insurance
providers whereby coverages for cancer, intensive care and disability may be
purchased through a payroll reduction program solely at the option and expense
of each employee.
On May 25, 1994, the Association implemented a tax-qualified cafeteria plan
through which participating employees may pay for their portions of medical
insurance premiums, resulting in tax savings to the employees and the
Association. A flexible spending account plan was simultaneously implemented to
reimburse employees for qualifying out-of-pocket medical and child day care
expenses. The flexible spending accounts are funded with employee contributions
through a payroll reduction program. These plans were established by an
insurance company at no cost to the Association, and are administered by the
Association at no cost to the participating employees.
401(k) Profit Sharing Plan. The Association sponsors a tax-qualified
defined contribution profit sharing plan, ("401(k) Plan"), for the benefit of
its employees. Employees become eligible to participate under the Plan after age
20-1/2 and completing six months of service. Under the 401(k) Plan, employees
may voluntarily elect to defer up to 20% of compensation, not to exceed
applicable limits under the Code (i.e., $9,500 in 1996). In addition, employees
may contribute up to an additional 10% of compensation on an after-tax basis.
The first 6% of employee savings shall be matched by a company contribution of
$.50 for each $1.00 of employee contribution. Such matching contributions shall
be 100% vested following completion of 1 year of service. Additionally, the
Association may contribute an annual discretionary contribution to the plan.
Such benefits are allocated to participant accounts as a percentage of base
compensation of such participant to the base compensation of all participants.
At the end of each fiscal year, the Board of Directors determines whether to
make a discretionary contribution and the amount of the contribution to the
401(k) Plan, based upon a number of factors, such as the Association's retained
earnings, profits, regulatory capital and overall employee performance.
Benefits are typically payable upon termination of employment, retirement,
death, disability or plan termination. It is intended that the 401(k) Plan
operate in compliance with the provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the requirements of Section
401(a) of the Code. Total matching contributions to the 401(k) Plan for all
employees for the fiscal years ended June 30, 1994, 1995 and 1996 were $8,800,
$10,800 and $10,600, respectively.
Employee Stock Ownership Plan. The Association maintains a non-contributory
tax-qualified Employee Stock Ownership Plan ("ESOP") for eligible employees.
Employees are eligible to participate in the plan after they have completed six
months of service and reach age 20-1/2. Benefits under the plan are allocated
based upon a participant's total compensation excluding bonus. Plan assets are
primarily invested in Common Stock. Distributions under the plan are made
following termination of employment, retirement, death, and in the event of
permanent and total disability. The Corporation financed the purchase of stock
by the ESOP in the initial stock offering of the Corporation. Total Association
contributions to the plan for the fiscal years ended June 30, 1995 and 1996,
amounted to $60,900 and $53,300 respectively, which funds were utilized by the
ESOP to make loan repayment of principal and interest to the Corporation related
to the ESOP debt.
1992 Stock Option Plan. In connection with the Conversion of the
Association to stock form and the acquisition of the outstanding stock of the
Association by the Corporation (the "Reorganization"), the Corporation's Board
of Directors adopted the Morgan Financial Corp. 1992 Stock Option Plan (the
"1992 Option Plan"). Pursuant to the 1992 Option Plan, 89,598 shares were
reserved for issuance by
-10-
<PAGE>
the Corporation upon exercise of stock options to be granted to officers,
directors and key employees of the Corporation and its subsidiaries from time to
time under the 1992 Option Plan. The purpose of the 1992 Option Plan is to
provide additional incentive to certain officers, directors and key employees by
facilitating their purchase of a stock interest in the Corporation. The 1992
Option Plan, provides for a term of ten years, after which no awards may be
made, unless earlier terminated by the Board of Directors pursuant to the 1992
Option Plan.
The 1992 Option Plan is administered by a committee of a least three
non-employee directors designated by the Board of Directors (the "Option
Committee"). Such members of the Option Committee shall be deemed
"disinterested" within the meaning of Rule 16b-3 pursuant to the 1934 Act.
Directors Schingle, Mesmer and Tibbetts serve as members of the Option
Committee. The Option Committee will select the officers and employees to whom
options are to be granted and the number of shares to be granted based upon the
individual's position at the Corporation, years of service and performance.
Officers, directors and key employees will be eligible to receive, at no
cost to them, options under the 1992 Option Plan. It is intended that options
granted under the 1992 Option Plan will constitute both incentive stock options
(options that afford favorable tax treatment to recipients upon compliance with
certain restrictions pursuant to Section 422 of the Code and that do not
normally result in tax deductions to the Corporation) and options that do not so
qualify. The option price may not be less than 100% of the fair market value of
the shares on the date of the grant, and no option shall be exercisable after
the expiration of ten years from the date it is granted; provided, however, that
in the case of any employee who owns more than 10% of the outstanding Common
Stock at the time the option is granted, the option price may not be less than
110% of the fair market value of the shares on the date of the grant, and the
option shall not be exercisable after the expiration of five years from the date
it is granted. Option shares may be paid for in cash, shares of the Common
Stock, or a combination of both. The Corporation will receive no monetary
consideration for the granting of stock options under the 1992 Option Plan. It
will receive no monetary consideration other than the option price per share of
Common Stock issued to optionees upon exercise of those options.
An initial grant of 71,674 options under the 1992 Option Plan was made to
officers, directors and employees upon completion of the Reorganization on
January 8, 1993, and the option exercise price is $5.00 per share. 2,250 and
10,080 options were granted to officers, directors and employees during the
fiscal years ended June 30, 1995 and 1996, respectively. As of September 16,
1996, 26,278 options have been exercised pursuant to the 1992 Option Plan, 5,324
options have been forfeited and no options are available for grant. President
Michael Berryhill received a grant of 1,574 options during the fiscal year ended
June 30, 1996.
Shares issuable under the 1992 Option Plan may be either authorized but
unissued shares or reacquired shares held by the Corporation in its treasury.
Any shares subject to an award which expires or is terminated unexercised will
again be available for issuance under the 1992 Option Plan. No award or any
right or interest therein is assignable or transferable except by will or the
laws of descent and distribution. The 1992 Option Plan has a term of ten years,
unless sooner terminated in accordance with Section 19 of the 1992 Option Plan.
1995 Stock Option Plan. The Board of Directors of the Corporation has
recently adopted the 1995 Stock Option Plan (the "1995 Option Plan") for the
benefit of its directors, officers, and key employees which was approved by the
Corporation's stockholders on November 15, 1995.
Pursuant to the 1995 Option Plan, 80,000 shares of Common Stock of
authorized shares equal to approximately 10% of the Common Stock outstanding at
the time the Board of Directors adopted the
-11-
<PAGE>
1995 Option Plan (i.e., September 21, 1995) (the "Effective Date"), were
reserved for issuance by the Corporation upon exercise of stock options to be
granted to officers, directors, and key employees of the Corporation and the
Association from time to time under the 1995 Option Plan. The purpose of the
1995 Option Plan is to attract and retain the best available personnel for
positions of substantial responsibility and to provide additional incentive to
officers, directors, and key employees of the Corporation, or any present or
future parent or subsidiary of the Corporation to promote the success of the
Corporation's business. The 1995 Option Plan, which requires stockholder
ratification, will continue for a term of ten years from the Effective Date,
after which no awards may be made.
The 1995 Option Plan is administered by a committee of three non-employee
directors appointed by the Corporation's Board of Directors (the "Option
Committee"). Members of the Option Committee shall be deemed "disinterested"
within the meaning of Rule 16b-3 pursuant to the 1934 Act. Directors Schingle,
Mesmer and Tibbetts serve as members of the Option Committee. The Option
Committee may select the officers and key employees to whom options are to be
granted and the number of shares to be granted based upon the individual's
position at the Corporation, years of service, and performance. A majority of
the entire Option Committee shall constitute a quorum and the action of a
majority of the members present at any meeting at which a quorum is present
shall be deemed the action of the Option Committee. In no event may the Option
Committee revoke outstanding options without the consent of the holder of such
option ("Optionee").
Officers, directors, and key employees are eligible to receive, at no cost
to them, options under the 1995 Option Plan. Each option granted pursuant to the
1995 Option Plan shall be evidenced by an instrument in such form as the Option
Committee shall from time to time approve. It is anticipated that options
granted under the 1995 Option Plan will constitute both Incentive Stock Options
(options that afford favorable tax treatment to recipients upon compliance with
certain restrictions pursuant to Section 422 of the Internal Revenue Code of
1986, as amended (the "Code") and that do not normally result in tax deductions
to the Corporation) and Non-Incentive Stock Options (options that do not qualify
for favorable tax treatment under Code Section 422). The Corporation will
receive no monetary consideration for the granting of stock options under the
1995 Option Plan. Further, the Corporation will receive no consideration other
than the option price per share of Common Stock issued to Optionees upon their
exercise of those options.
Officers, directors, directors emeritus, key employees, or other persons
who have been granted options may, if otherwise eligible, be granted additional
options. Except in the event of an Optionee's death or disability, a minimum of
six months must elapse between the date of grant of an option and the date of
sale of the Common Stock received through the exercise of such option. Common
Stock issuable under the 1995 Option Plan may be either authorized but unissued
shares or reacquired shares held by the Corporation in its treasury. Any Common
Stock subject to an option which expires or is terminated unexercised will again
be available for issuance under the 1995 Option Plan. No option or any right or
interest therein is assignable or transferable except by will or the laws of
descent and distribution. The 1995 Option Plan shall continue in effect for a
term of ten years from the Effective Date, unless sooner terminated in
accordance with the 1995 Option Plan.
Directors were granted 6,660 options on September 21, 1995, including 740
to President Michael Berryhill.
The average of the last bid and asked price of Common Stock as quoted on
the Nasdaq System as of the Record Date was $12.25 per share.
-12-
<PAGE>
The following tables set forth for the fiscal year ended June 30, 1996, the
grant of stock options pursuant to the Corporation's Option Plans to the chief
executive officer named in the Summary Compensation Table and the year end value
of such options.
<TABLE>
<CAPTION>
Options Granted in Fiscal Year ("FY") Ended June 30, 1996(1)
------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants for Option Term(2)
- -------------------------------------------------------------------------------- ----------------------
(a) (b) (c) (d) (e) (f) (g)
Number of % of Total
Securities Options
Underlying Granted Exercise
Options Employees in Price Expiration
Name Granted(#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- ---- ---------- ----------- -------- ----------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Michael M. Berryhill 740 7.34% $10.875 9/21/05 $ 5,061 $12,826
President and CEO 184 1.82 10.875 11/16/05 1,258 3,189
1,390 13.78 11.500 12/29/05 10,053 25,476
----- ----- ------ ------
2,314 22.94% $16,372 $41,491
===== ===== ====== ======
</TABLE>
(1) No Stock Appreciation Rights authorized under the plan.
(2) Based on 10 year option term and projected annual compounding of stock
price issued at the exercise price.
<TABLE>
<CAPTION>
Option Exercises and Year End Value Table
-----------------------------------------
Aggregated Option Exercises in Last Fiscal Year, and FY-End Option Value
------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of Unexercised Value of Unexercised
Options/Securities In-The-Money Options
Shares Acquired Underlying at FY-End (#) at FY-End ($)
Name on Exercise (#) Value Realized ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable(1)
- ---- -------------- --------------------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Michael M. Berryhill 3,584 $21,504 4,172/7,602 $11,392/$43,624
</TABLE>
- ------------------
(1) Market value of underlying securities at fiscal year-end (equal to bid
price of $11.00) minus the exercise price.
-13-
<PAGE>
Management Stock Bonus Plans. The Board of Directors of the Association has
adopted two Management Stock Bonus Plans (the "Stock Bonus Plan" or the "MSBP")
as a method of providing directors, officers, and key employees of the
Association with a proprietary interest in the Corporation in a manner designed
to encourage such persons to remain in the employment or service with the
Association. The Association contributed sufficient funds to the MSBP Trust
which enabled the MSBP Trust to purchase 35,838 shares of Common Stock. Awards
under the MSBP were made in recognition of prior and expected future services to
the Association of its directors and executive officers responsible for
implementation of the policies adopted by the Board of Directors, the profitable
operation of the Association, and as a means of providing a further retention
incentive and direct link between compensation and the profitability of the
Association.
Benefits under the MSBP may be granted in the sole discretion of two
committees composed of three directors who are not employees of the Association
or the Corporation (the "MSBP Committee") appointed by the Board of Directors of
the Corporation. The MSBP is managed by trustees (the "MSBP Trustees") who are
non-employee directors of the Corporation and who have the responsibility to
invest all funds contributed by the Association to the trust created for the
MSBP (the "MSBP Trust"). Unless the MSBP Committee specifies otherwise, the
shares granted will be in the form of restricted stock payable over a five-year
period at the rate of 20% of such shares per year after one year following the
date of grant of the award. Compensation expense in the amount of the fair
market value of the Common Stock at the date of the grant to the recipient are
recognized pro rata over the five years during which the shares are payable. A
recipient of such restricted stock will be entitled to all voting and other
stockholder rights, except that the shares, while restricted, may not be sold,
pledged or otherwise disposed of and are required to be held in escrow. Any
shares not so allocated shall be voted by the MSBP Trustees. If a holder of such
restricted stock terminates employment for reasons other than death, disability,
retirement, or a change in control of the Corporation or the Association, the
recipient forfeits all rights to the allocated shares under restriction. If the
recipient's termination of employment or service is caused by death, disability,
retirement or a change in control, all restrictions expire and all shares
allocated become unrestricted. The Board of Directors can terminate the MSBP at
any time, and if it does so, any shares not allocated will revert to the
Corporation.
Awards under the Stock Bonus Plan were determined by the MSBP Committee
based on the job position and responsibilities of the employees and directors,
the length and value of their services to the Association and/or its
subsidiaries, and the compensation paid to employees. Officers, directors and
employees of the Association were awarded a total of 35,838 shares of restricted
stock pursuant to the MSBPs at the close of the Reorganization on January 8,
1993. No awards of restricted stock pursuant to the MSBP were granted during the
fiscal year ended June 30, 1996, and 198 forfeited shares of Common Stock are
currently held by the MSBP Trusts which are unallocated.
-14-
<PAGE>
CERTAIN TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Association, like many financial institutions, has followed a policy of
granting various types of loans to officers, directors and employees. The loans
have been made in the ordinary course of business and on substantially the same
terms and conditions which apply to the Association's other customers, and do
not involve more than the normal risk of collectibility, nor present other
unfavorable features. All loans by the Association to its directors and
executive officers are subject to regulations of the Office of Thrift
Supervision ("OTS") restricting loans and other transactions with affiliated
persons of the Association. All such loans to executive officers, directors and
other affiliates are required to be made on terms and conditions comparable to
those for similar transactions with non-affiliates. In addition, loans to an
affiliate must be approved in advance by a disinterested majority of the Board
of Directors or be within other guidelines established as a result of OTS
regulations.
PROPOSAL II -- RATIFICATION OF APPOINTMENT OF AUDITORS
On June 20, 1996, the Board of Directors of the Corporation resolved to
engage the accounting firm of Baird, Kurtz & Dobson as the Corporation's
independent accountant for its fiscal year ended June 30, 1996. Effectively, the
services of the Corporation's former independent accountant, McGladrey & Pullen,
LLP, were simultaneously terminated as of June 20, 1996. The Denver office of
McGladrey & Pullen was acquired by Baird, Kurtz & Dobson on June 17, 1996. All
former audit engagement members with the exception of the audit partner, are now
with Baird, Kurtz & Dobson, and have been involved with the Corporation's Fiscal
1996 annual audit. McGladrey & Pullen's report on the financial statements for
the two most recent years did not contain an adverse opinion or disclaimer of
opinion, nor were such reports qualified or modified as to uncertainty, audit
scope or accounting principles.
During the two most recent fiscal years and the subsequent interim period
through the date of disengagement, there were no disagreements with McGladrey &
Pullen on any matter of accounting principals or practices, financial statement
disclosure or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of McGladrey & Pullen, would have caused it to make
reference to the subject matter of the disagreements in connection with its
reports.
The Board of Directors intends to renew the Corporation's arrangement with
Baird, Kurtz & Dobson to be its auditors for the 1997 fiscal year, subject to
ratification by the Corporation's stockholders. A representative of Baird, Kurtz
& Dobson is expected to be present at the Meeting to respond to stockholders'
questions and will have the opportunity to make a statement if he or she so
desires.
Ratification of the appointment of the auditors requires the affirmative
vote of a majority of the votes cast by the stockholders of the Corporation at
the Meeting. The Board of Directors recommends that stockholders vote "FOR" the
ratification of the appointment of Baird, Kurtz & Dobson as the Corporation's
auditors for the 1997 fiscal year.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the person or persons voting such proxies.
-15-
<PAGE>
MISCELLANEOUS
The cost of soliciting proxies will be borne by the Corporation. The
Corporation will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Corporation may solicit proxies
personally or by telegraph or telephone without additional compensation.
The Corporation's 1996 Annual Report to Stockholders, including financial
statements, has been mailed to all stockholders of record as of the close of
business on September 16, 1996. Any stockholder who has not received a copy of
such Annual Report may obtain a copy by writing to the Secretary of the
Corporation. Such Annual Report is not to be treated as a part of the proxy
solicitation material or as having been incorporated herein by reference.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Penny L. Wooldridge
PENNY L. WOOLDRIDGE
SECRETARY
Fort Morgan, Colorado
September 30, 1996
-16-
<PAGE>
MORGAN FINANCIAL CORP.
205 WEST KIOWA AVENUE
FORT MORGAN, COLORADO 80701
(303) 867-2443
ANNUAL MEETING OF STOCKHOLDERS
October 25, 1996
The undersigned hereby appoints the Board of Directors of Morgan Financial
Corp. ("Corporation"), or its designee, with full powers of substitution, to act
as attorneys and proxies for the undersigned, to vote all shares of Common Stock
of the Corporation which the undersigned is entitled to vote at the 1996 Annual
Meeting of Stockholders ("Meeting"), to be held at the Corporation's main
office, 205 West Kiowa Avenue, Fort Morgan, Colorado, on Friday, October 25,
1996, at 1:30 p.m. and at any and all adjournments thereof, as follows:
FOR WITHHELD
1. The election as director of both nominees
listed below for three year terms
(except as marked to the contrary): |_| |_|
William G. Hamlin
Michael J. Schingle
INSTRUCTIONS: To withhold your vote for any individual nominee, insert the
nominee's name on the line provided below.
FOR AGAINST ABSTAIN
2. The ratification of Baird, Kurtz & Dobson as
independent auditors of Morgan Financial Corp.
for the fiscal year ending June 30, 1997. |_| |_| |_|
The Board of Directors recommends a vote "FOR" all of the above listed
propositions.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS
IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS
PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting, or at
any adjournments thereof, and after notification to the Secretary of the
Corporation at the Meeting of the stockholder's decision to terminate this
proxy, the power of said attorneys and proxies shall be deemed terminated and of
no further force and effect. The undersigned may also revoke this proxy by
filing a subsequently dated proxy or by notifying the Secretary of the
Corporation of his or her decision to terminate this proxy.
The undersigned acknowledges receipt from the Corporation prior to the
execution of this proxy of Notice of the Meeting and a Proxy Statement dated
September 30, 1996.
Please check here if you
Dated: , 1996 [_] plan to attend the Meeting.
-----------------------------
_________________________________ __________________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
_________________________________ __________________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this Proxy card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE.
