<PAGE> 1
THREE RIVERS FINANCIAL CORPORATION
123 PORTAGE AVENUE
THREE RIVERS, MICHIGAN 49093
September 26, 1996
Dear Stockholder:
We invite you to attend the Annual Meeting of the stockholders of Three
Rivers Financial Corporation (the "Company"), which will be held on Wednesday,
October 23, 1996, at 9:00 a.m. at the Three Rivers Community Center, 103 S.
Douglas Avenue, Three Rivers, Michigan 49093.
Stockholders will be asked at the Annual Meeting to vote on the election
of directors and the additional proposals described in the accompanying notice
of meeting and proxy statement. During the meeting, members of the Company's
management will also report on operations and other matters affecting the
Company and will be available to respond to stockholders' questions.
Your vote is important, regardless of the number of shares you own. On
behalf of the Board of Directors, we urge you to sign, date and return the
enclosed proxy card as soon as possible, even if you currently plan to attend
the Annual Meeting. This will not prevent you from voting in person, but will
assure that your vote is counted if you are unable to attend the meeting.
Refreshments will be available prior to the meeting, during which time the
members of the Board of Directors hope to visit with you personally.
Sincerely,
/s/ G. Richard Gatton
---------------------
G. Richard Gatton
President
<PAGE> 2
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 23, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of the stockholders of
Three Rivers Financial Corporation (the "Company") will be held at the Three
Rivers Community Center, 103 S. Douglas Avenue, Three Rivers, Michigan 49093 on
Wednesday, October 23, 1996, at 9:00 a.m. for the following purposes:
1. To elect two directors to serve for a three year period.
2. To approve the appointment of Crowe, Chizek and Company LLP,
independent certified public accountants, as the auditors of the
Company for the fiscal year ending June 30, 1997.
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
The Board of Directors has selected September 16, 1996, as the record date
for the Annual Meeting. Only those stockholders of the Company of record at
the close of business on that date will be entitled to notice of and to vote at
the Annual Meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Martha Romig
----------------
Martha Romig
Secretary
Three Rivers, Michigan
September 26, 1996
<PAGE> 3
THREE RIVERS FINANCIAL CORPORATION
123 PORTAGE AVENUE
THREE RIVERS, MICHIGAN 49093
ANNUAL MEETING
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Three Rivers Financial Corporation (the
"Company") for use at the Annual Meeting of the stockholders of the Company to
be held on Wednesday, October 23, 1996 and at any adjournments thereof. The
approximate date of mailing of this proxy statement is September 26, 1996.
The close of business on September 16, 1996 has been selected as the
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting. On that date, 851,240 shares of the Company's
common stock, par value $.01 per share (the "Common Stock"), were outstanding.
Stockholders will be entitled to one vote for each share of the Company's
Common Stock held by them of record at the close of business on the record date
on any matter that may be presented for consideration and action by the
stockholders.
A majority of the outstanding shares will constitute a quorum at the
Annual Meeting. Abstentions and broker non-votes (shares as to which a broker
indicates that it does not have authority to vote) are counted for the purpose
of determining the presence of a quorum for the transaction of business at the
Annual Meeting.
A majority of the votes cast by stockholders at the Annual Meeting in
person or by proxy will be necessary for approval of Proposals 1 and 2
described herein. Abstentions are counted in tabulations of the votes cast on
proposals to stockholders, whereas broker non-votes are not counted for
purposes of determining whether a proposal has been approved. Under Delaware
law, abstentions and broker non-votes will have no effect on the outcome of the
proposals presented herein since such actions do not represent votes cast by
stockholders.
All valid proxies received in response to this solicitation will be voted
in accordance with the instructions indicated thereon by the stockholders
giving such proxies. If no instructions are given, such proxies will be voted
in favor of (1) the election of the directors named in this proxy statement;
(2) the appointment of auditors; and (3) in the discretion of the proxyholders
on such other matters as may properly be brought before the Annual Meeting.
The Board of Directors does not know of any business to be presented for
action at the Annual Meeting other than that described herein and procedural
matters incident to the conduct of the meeting. However, if any other business
is properly presented before the Annual Meeting and may properly be voted upon,
the proxies solicited hereby will be voted on such matters in accordance
with the best judgment of the proxyholders named therein. Any stockholder has
the power to revoke
<PAGE> 4
his or her proxy at any time before it is voted at the Annual Meeting
by giving written notice of such revocation to the Secretary of the Company
(including the filing of a duly executed proxy bearing a later date) or upon
request if the stockholder is present at the Annual Meeting and chooses to vote
in person.
PROPOSAL 1
ELECTION OF DIRECTORS
Two directors will be elected at the meeting to serve for a three-year
period. Unless authority is withheld, all proxies received in response to this
solicitation will be voted for the election of the nominees listed below. Each
nominee has indicated a willingness to serve if elected. However, if any
nominee becomes unable to serve, the proxies received in response to this
solicitation will be voted for a replacement nominee selected in accordance
with the best judgment of the proxyholders named therein.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES TO THE
COMPANY'S BOARD OF DIRECTORS.
NOMINEES FOR ELECTION AS DIRECTORS
<TABLE>
<CAPTION>
YEAR PRESENT
POSITIONS HELD DIRECTOR TERM WILL
NAME WITH COMPANY SINCE EXPIRE
--------------------- -------------------------- -------- ------------
<S> <C> <C> <C>
NOMINEES FOR THREE YEAR TERM:
Larry A. Clark Director 1995 1996
G. Richard Gatton President, Chief Executive 1995 1996
Officer and Director
DIRECTORS CONTINUING IN OFFICE:
G. Verglea Gotfryd Director 1995 1997
Philip Halverson Director 1995 1998
John A. Mathews Director 1995 1998
Thomas O. Monroe, Sr. Director 1995 1997
Stephen R. Olson Chairman of the Board 1995 1997
</TABLE>
2
<PAGE> 5
DIRECTORS AND NOMINEES
The business experience during the last five years of each director and
nominee is as follows:
Larry A. Clark (55) is currently employed by Tom Miller Pontiac Honda GMC.
From 1963 until his retirement in 1994, Mr. Clark was employed by GTE
Corporation, an independent telephone company. He last served as
Manager--Administrative Support in GTE's Muskegon, Michigan regional office.
Mr. Clark also serves as vice president of Senior Services, a community based
provider of services to senior citizens. Mr. Clark has been a director of
First Savings Bank, A Federal Savings Bank (the "Bank"), the Company's wholly
owned subsidiary, since 1989.
G. Richard Gatton (54) has served as President, Chief Executive Officer
and a director of the Bank since December 1990. From September 1988 to
December 1990, Mr. Gatton served as President and Chief Executive Officer of
First National Bank of Wabash, Indiana. Mr. Gatton has been involved in the
banking industry since 1966. He also serves as President and a director of
Alpha Financial, Inc. ("Alpha Financial"), a subsidiary of the Bank.
G. Verglea Gotfryd (69) is an independent life insurance agent licensed in
the State of Michigan. From 1949 to 1990, Ms. Gotfryd was associated with the
Paul F. Noecker Insurance Agency, serving in various capacities during that
time, including manager and owner. She also serves on the board of directors
of the Three Rivers Area Hospital. Ms. Gotfryd has served as a director of the
Bank since 1989.
Philip Halverson (75) is the manager and former owner of Halverson Chapel,
a funeral home located in Three Rivers, Michigan, which he founded in 1949.
Mr. Halverson also serves on the board of directors of Three Rivers Area
Foundation, a charitable foundation. Mr. Halverson has served as a director of
the Bank since 1968.
John A. Mathews (74) practiced optometry with the Mathews Eye Clinic in
Three Rivers, Michigan for 38 years until his retirement in 1988. Mr. Mathews
has served as a director of the Bank since 1974. Mr. Mathews also serves as a
director and vice president of Alpha Financial.
Thomas O. Monroe, Sr. (72) currently serves as Chairman Emeritus and a
member of the board of directors of Johnson Corporation, a manufacturer of
steam valves and other steam specialties. From 1986 through 1991, Mr. Monroe
served as president of Johnson Corporation and has held a variety of positions
with that company since 1947. Mr. Monroe also serves on the boards of
directors of Camp Wakeshma and the local American Red Cross. Mr. Monroe has
served as a director of the Bank since 1982.
Stephen R. Olson (53) has served as Manager of Morton Buildings, Inc., a
construction company located in Three Rivers, Michigan, since 1970. Mr. Olson
is also on the board of directors of Camp Wakeshma, a non-profit summer youth
camp. Mr. Olson has served as a director of the Bank since 1983.
3
<PAGE> 6
OFFICERS WHO ARE NOT DIRECTORS
William F. Cody (40) has served as the Vice President--Consumer Lending of
the Bank since 1993. From 1989 to 1993, Mr. Cody served as an Assistant Vice
President of the Bank.
R. Orville Poling (61) has served as the Vice President--Lending of the
Bank since 1985.
Martha Romig (58) has been employed by the Bank since 1970. She currently
serves as Senior Vice President, Secretary, Treasurer and Chief Financial
Officer of the Company and the Bank. She also serves as a director and
Secretary/Treasurer of Alpha Financial.
CORPORATE GOVERNANCE
The Board of Directors of the Company held nine meetings during the fiscal
year ended June 30, 1996. Each director attended at least 75% of all Board and
committee meetings of the Company during the fiscal year ended June 30, 1996.
The Company's Nominating Committee consists of three directors appointed
annually by the Chairman of the Board to nominate persons for election as
directors at the Company's Annual Meeting. Directors Larry A. Clark, G.
Richard Gatton and G. Verglea Gotfryd currently serve on such committee.
Stockholder nominations for directors may be made by giving written notice to
the Company's Secretary not less than 30 nor more than 60 days prior to the
meeting date; if less than 40 days notice of the meeting is given to
stockholders, such written notice shall be delivered to the Secretary no later
than the tenth day following the day on which notice of the meeting was mailed.
Notice given by a stockholder must set forth (i) the name, age, business
address and, if known, residence address of each proposed nominee; (ii) the
nominee's principal occupation; and (iii) the number of shares of Common Stock
owned by the nominee. The Nominating Committee of the Company held two
meetings during the fiscal year ended June 30, 1996.
The Company's Audit Committee examines and approves the audit report
prepared by the independent auditors of the Company, reviews the independent
auditors to be engaged by the Company and reviews the internal audit function
and internal accounting controls. The current members of the Audit Committee
are Directors Larry A. Clark, Thomas O. Monroe, Sr. and Stephen R. Olson. The
Audit Committee also meets as needed with the Company's independent auditors to
review the Company's accounting and financial reporting policies and practices.
The Audit Committee of the Company held three meetings during the fiscal year
ended June 30, 1996.
The Bank's Personnel and Compensation Committee, consisting of Directors
Larry A. Clark, G. Verglea Gotfryd, Philip Halverson and Stephen R. Olson,
performs the functions of the compensation committee on behalf of the Company,
the Bank and its subsidiary. The Personnel and Compensation Committee meets
periodically to evaluate the compensation and fringe benefits of the directors,
officers and employees and recommend changes and to evaluate employee morale.
The Personnel and Compensation Committee held two meetings during the fiscal
year ended June 30, 1996.
4
<PAGE> 7
The ESOP Committee oversees the day-to-day operations of the Company's
Employee Stock Ownership Plan ("ESOP") and directs the trustee as to
investments that may be made by the ESOP and loans that may be incurred for the
purchase of the Common Stock. Current members of this committee are Directors
Larry A. Clark, G. Verglea Gotfryd and Stephen R. Olson. The ESOP Committee
held two meetings during the fiscal year ended June 30, 1996.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information with respect to those persons
known to the Company who own or may be deemed to beneficially own more than 5%
of the Company's Common Stock as of September 16, 1996.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME AND ADDRESS OF COMMON STOCK OF
OF BENEFICIAL OWNER BENEFICIALLY OWNED CLASS
-------------------------- --------------------- -------
<S> <C> <C>
1. Three Rivers Financial Corporation 68,770 8.08%
Employee Stock Ownership Plan (1)
c/o First Bankers Trust Company,
Trustee Broadway at 12th Street
Quincy, Illinois 62305-3566
2. Jeffrey S. Halis (2) 85,100 9.99%
Tyndall Partners, L.P.
Madison Avenue Partners, L.P.
500 Park Avenue
Fifth Floor
New York, New York 10002
3. Salem Investment Counselors, Inc. (3) 59,500 6.99%
P. O. Box 25427
Winston-Salem, North Carolina 27114-5427
</TABLE>
- --------------------------
(1) Shares held by the ESOP and allocated to participating employees will be
voted by the ESOP Trustee in accordance with instructions by such
employees. The ESOP Trustee will not vote allocated shares for which no
timely direction is received and will vote unallocated shares in
accordance with the direction of the ESOP Committee.
(2) Based on a Schedule 13D dated September 7, 1995, as amended on October
18, 1995 and October 31, 1995, Jeffrey S. Halis has sole voting and
dispositive power with respect to these shares as he is the general
partner of Halo Capital Partners, L.P. which is the general partner of
Tyndall Partners, L.P. and Madison Avenue Partners, L.P.
5
<PAGE> 8
(3) Based on a Schedule 13G dated September 13, 1995, Salem Investment
Counselors, Inc. has sole voting and dispositive power with respect to
these shares.
SECURITIES OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth information concerning the shares of the
Company's Common Stock beneficially owned by each director of the Company and
by all directors and officers of the Company as a group as of September 16,
1996.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
NAME OF INDIVIDUAL OR COMMON STOCK PERCENT OF
NUMBER OF PERSONS IN GROUP BENEFICIALLY OWNED (1) CLASS
-------------------------- ---------------------- ----------
<S> <C> <C>
Larry A. Clark 5,000 .59%
G. Richard Gatton 12,644 (2) 1.49%
G. Verglea Gotfryd 5,200 (3) .61%
Philip Halverson 1,000 (4) .12%
John Mathews 5,000 (5) .59%
Thomas O. Monroe, Sr. 7,900 (6) .93%
Stephen R. Olson 10,480 (7) 1.23%
All Directors and Officers
as a group (10 persons) 57,302 (8) 6.73%
</TABLE>
- -----------------------
(1) Except as otherwise set forth in this Proxy Statement, the individuals
listed have sole voting and dispositive power with respect to the shares
owned by them.
(2) Mr. Gatton has sole voting and dispositive power with respect to 4,190
shares and shared voting and dispositive power with his spouse with
respect to 7,520 shares. Includes 934 shares allocated to Mr. Gatton
under the Company's ESOP.
(3) Ms. Gotfryd has shared voting and dispositive power with her son with
respect to these shares.
(4) Mr. Halverson has shared voting and dispositive power with his spouse
with respect to these shares.
(5) Mr. Mathews has shared voting and dispositive power with his spouse with
respect to these shares.
(6) Mr. Monroe has sole voting and dispositive power with respect to 5,000
shares as trustee of the Thomas O. Monroe Trust #1, sole voting and
dispositive power with respect to 2,400 shares as trustee of the Rollo D.
Monroe Trust and no voting or dispositive power with respect to 500 shares
owned by his spouse.
6
<PAGE> 9
(7) Mr. Olson has sole voting and dispositive power with respect to 6,100
shares, shared voting and dispositive power with his spouse with respect
to 3,820 shares and no voting or dispositive power with respect to 560
shares owned by his spouse.
(8) Includes 2,217 shares allocated to officers under the Company's ESOP.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file with the SEC initial reports of beneficial ownership and
reports of changes in beneficial ownership of equity securities of the Company.
Officers, directors and greater than 10% stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, based solely on a review of such reports
furnished to the Company and written representations that no other reports were
required, all of the Company's directors and officers made all required filings
during the fiscal year ended June 30, 1996.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table sets forth certain summary information concerning
compensation paid or accrued by the Company on behalf of the Company's Chief
Executive Officer. The annual salary and bonus of the Company's other four
most highly compensated officers did not exceed $100,000 during the last three
fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual compensation Long-Term Compensation
--------------------------- --------------------------------
Securities
Other Under-
annual Restricted Lying All other
Name and principal compen- Stock Options/ LTIP compen-
position Year Salary Bonus sation(1) Awards SARs Payouts sation
- -------------------- ------ ------ ------- ------------ ---------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $89,059 $17,500 --- 6,200 15,000 --- $14,931 (2)
G. Richard Gatton ------ ------ ------- ------------ ---------- --------- --------- ------------
President, Chief 1995 83,192 17,500 --- --- --- --- 582
Executive Officer ------ ------ ------- ------------ ---------- --------- --------- ------------
and Director 1994 80,308 15,500 --- --- --- --- ---
------ ------ ------- ------------ ---------- --------- --------- ------------
</TABLE>
7
<PAGE> 10
(1) Mr. Gatton received certain perquisites, but the cost of providing such
perquisites did not exceed the lesser of $50,000 or 10% of his salary and
bonus.
(2) Represents $2,667 contributed to the Bank's 401(k) plan for the account of
Mr. Gatton for the fiscal year ended June 30, 1996 and the value ($12,264)
of 934 shares of Common Stock allocated to Mr. Gatton's ESOP account as of
June 30, 1996.
Employment Agreement
The Bank entered into an employment agreement on August 23, 1995, as
amended on April 17, 1996 (the "Employment Agreement"), with G. Richard
Gatton, President and Chief Executive Officer of the Company and the Bank.
The Employment Agreement provides for a term of three years, with an annual
base salary payable by the Bank in the amount of $90,000. On each
anniversary date of the Employment Agreement, the term of the Employment
Agreement may be extended for an additional one-year period beyond the then
effective expiration date, upon a determination by the Board of Directors
that the performance of the Executive has met the required performance
standards and that such Employment Agreement should be extended. The
Employment Agreement will terminate automatically upon the Executive
attaining age 65, except that any vested rights will not be affected.
The Employment Agreement will terminate upon the Executive's death and
is terminable by the Bank for "just cause" as defined in the Employment
Agreement. In the event of termination for just cause, no severance benefits
are available. If the Company or the Bank terminates the Executive without
just cause, the Executive will be entitled to a continuation of his salary
and benefits for the remaining term of the Employment Agreement. If his
employment is terminated due to "disability" (as defined in the Employment
Agreement), the Executive will receive compensation for a period of two
years or the remaining term of the Employment Agreement, whichever is
longer. The Executive is able to voluntarily terminate his Employment
Agreement by providing 60 days' written notice to the Boards of Directors of
the Bank and the Company, in which case the Executive is entitled to receive
only his compensation and benefits up to the date of termination, except
that any vested rights will not be affected.
The Employment Agreement contains provisions stating that in the event
of the Executive's involuntary termination of employment in connection with,
or within one year after, any change in control of the Bank or the Company,
other than for "just cause," the Executive will be paid an amount equal to
the difference between (i) 2.99 times his "base compensation," as defined in
OTS Regulatory Bulletin 27a, and (ii) the sum of any other parachute
payments, as defined under Section 280G(b)(2) of the Internal Revenue Code,
that the Executive receives on account of the change in control. "Control"
generally is defined, by reference to the regulations of the Office of
Thrift Supervision ("OTS") 12 C.F.R., Part 574, as the acquisition, by any
person or entity, of the ownership or power to vote more than 25% of the
Bank's or Company's voting stock, the control of the election of a majority
of the Bank's or the Company's directors, or the exercise of a controlling
influence over the management or policies of the Bank or the Company. The
Employment Agreement also provides for a similar lump sum payment to be made
in the event of the Executive's voluntary termination of employment within
one year following a change in control, upon the occurrence, or within 90
days thereafter, of certain specified events following the change in
control, which have not been consented
8
<PAGE> 11
to in writing by the Executive, including (i) the requirement that the
Executive move his personal residence or perform his principal executive
functions more than 35 miles from the Bank's current primary office, (ii) a
material reduction in the Executive's base compensation as then in effect, (iii)
the failure of the Company or the Bank to maintain existing or substantially
similar employee benefit plans, including material vacation, fringe benefits,
stock option and retirement plans, (iv) the assignment to the Executive of
duties and responsibilities which are materially different from those normally
associated with his position with the Bank, (v) a material reduction in the
Executive's authority and responsibility, and (vi) the failure to re-elect the
Executive to the Company's or the Bank's Board of Directors. The aggregate
payments that would be made to Mr. Gatton assuming his termination of employment
under the foregoing circumstances at June 30, 1996 would have been approximately
$320,000. These provisions may have an anti-takeover effect by making it more
expensive for a potential acquiror to obtain control of the Company.
Change in Control Severance Agreements
The Company and the Bank entered into severance agreements on August 23,
1995, as amended on April 17, 1996 (the "Severance Agreements") with Martha
Romig, Senior Vice President, Secretary, Treasurer and Chief Financial Officer
of the Company and the Bank, and R. Orville Poling, Vice President-Lending of
the Bank. The Severance Agreements will terminate on the earlier of (a) two
years after their effective date, and (b) the date on which the officer
terminates employment with the Company and the Bank, provided that his or her
rights under the Severance Agreements will continue following termination of
employment if the Severance Agreements were in effect at the date of the change
in control. On each anniversary date from the date of commencement of the
Severance Agreements, the term of the Severance Agreements may be extended for
additional one year periods beyond the then effective expiration date, upon a
determination by the Board of Directors that the performance of the officer has
met the required performance standards and that such Severance Agreements
should be extended. Each Severance Agreement will terminate automatically upon
the officer attaining age 65, except that any vested rights will not be
affected.
The Severance Agreements contain provisions similar to those provisions of
the Employment Agreement that provide severance benefits under certain
circumstances following a change in control, except that the officers would be
entitled to receive two times their respective base compensation in such event.
The aggregate payments that would be made to Ms. Romig and Mr. Poling,
assuming termination of employment under the foregoing circumstances at June
30, 1996, would have been approximately $102,000 and $99,000, respectively.
These provision may have an anti-takeover effect by making it more expensive
for a potential acquiror to obtain control of the Company.
Stock Option and Incentive Plan
In April 1996, the Company's Board of Directors adopted, and the
stockholders approved, the Three Rivers Financial Corporation Stock Option and
Incentive Plan (the "Option Plan"). The purpose of the Option Plan is to
provide additional incentive to directors and key employees by facilitating
their purchase of the Common Stock or comparable ownership interest in the
Company. The Option Plan provides for a term of 10 years from the date of its
approval by the Company's
9
<PAGE> 12
stockholders, after which no awards may be made, unless the plan is
earlier terminated by the Board of Directors of the Company. Under the Option
Plan, 85,962 shares of Common Stock are reserved for issuance by the Company, in
the form of newly-issued or treasury shares, upon exercise of stock options or
stock appreciation rights. Options granted under the Option Plan are either
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 result in tax deductions to the Company unless
participants fail to comply with Section 422 of the Code) and options that do
not so qualify.
The Option Plan is administered by a committee consisting of Directors
Larry A. Clark, G. Verglea Gotfryd and Stephen R. Olson (the "Option
Committee"). The Option Committee will select the employees to whom awards are
to be granted, the number of shares to be subject to such awards, and the terms
and conditions of such awards (provided that any discretion exercised by the
Option Committee must be consistent with resolutions adopted by the Board of
Directors and the terms of the Option Plan).
During the fiscal year ended June 30, 1996, 39,000 options were granted to
employees and 19,500 options were granted to non-employee directors under the
Option Plan. No options were exercised during that period.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- ---------------------------------------------------------------------------------------------------------------------------------
Potential realizable value at
assumed annual rates of
stock price appreciation for
Individual Grants option term
- -------------------------------------------------------------------------------------------- --------------------------------
Number of Percent of
securities total options/
underlying SARs granted
option/SARs to employees Exercise or Expiration
Name granted in fiscal year base price date 5% 10%
- -------------------- --------------- ----------------------- ---------------- ---------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
G. Richard Gatton, 15,000 38.5% $13.25 4/16/06 $124,950 $316,800
President, Chief
Executive Officer
and Director
</TABLE>
Recognition and Retention Plan and Trust
In April 1996, the Company's Board of Directors adopted, and the
stockholders approved, the Three Rivers Financial Corporation Recognition and
Retention Plan and Trust ("RRP") as a means of providing the directors and
employees of the Bank and the Company with an ownership interest in the Company
in a manner designed to encourage such persons to continue their service with
the Bank and the Company. Directors Larry A. Clark, G. Verglea Gotfryd and
Stephen R. Olson serve as trustees of the RRP. In June 1996, the Bank
contributed $457,419 to the RRP which the RRP used to acquire 34,385 shares of
Common Stock in the open market.
10
<PAGE> 13
Awards are nontransferable and nonassignable, and during the lifetime of
the recipient can only be earned by and made to him or her. The shares which
are subject to an award vest and are earned by the recipient at a rate of 20%
of the shares awarded at the end of each full 12 months of service with the
Bank after the date of grant of the award. Awards are adjusted for capital
changes such as stock dividends and stock splits. Awards will be 100% vested
upon termination of employment or service due to death or disability. If
employment or service were to terminate for other reasons, the recipient's
nonvested awards will be forfeited. If employment or service is terminated for
cause (as defined in the RRP), or if conduct would have justified termination
or removal for cause, shares not already delivered under the RRP, whether or
not vested, could be forfeited by resolution of the Board of Directors of the
Company.
When shares become vested and could actually be distributed in accordance
with the RRP, the participants would also receive amounts equal to accrued
dividends and other earnings or distributions payable with respect thereto.
Prior to vesting, recipients of awards could direct the voting of the shares
allocated to them. Allocated shares and shares for which no instructions were
received would be voted by the Trustee of the RRP in the same proportion as the
shares that had been awarded and vested were voted.
Employee Stock Ownership Plan
In August 1995, the Company's Board of Directors adopted an ESOP for the
exclusive benefit of participating employees. Participating employees are all
employees of the Company, the Bank and their subsidiaries who have attained age
21 and completed one year of service with the Company. The Company received a
favorable determination letter from the IRS as to the tax-qualified status of
the ESOP, subject to certain minor changes to the ESOP.
The ESOP is funded by contributions made by the Company or the Bank in
cash or shares of Common Stock. The ESOP borrowed $687,700 from the Company to
purchase 8% of the Common Stock issued in the Bank's conversion from mutual to
stock form. This loan is secured by the shares of Common Stock purchased and
earnings thereon. Shares purchased with such loan proceeds are held in a
suspense account for allocation among participants as the loan is repaid over a
period of 10 years. The Bank expects to contribute sufficient funds to the
ESOP to repay such loan, plus such other amounts as the Bank's Board of
Directors may determine in its discretion.
Contributions to the ESOP and shares released from the suspense account
are allocated among accounts of participants on the basis of their annual
wages, plus any amounts withheld under a plan qualified under Sections 125 or
401(k) of the Code and sponsored by the Company or the Bank. Participants must
have completed at least 1,000 hours of service and be employed on June 30 of
each year in order to receive an allocation. A participant becomes 20% vested
in his or her ESOP contributions after completing three years of service with
the Company or the Bank, and an additional 20% vested for each year of service
thereafter, with 100% vesting after seven or more years. Prior to completing
three years of service, a participant has no vested right to ESOP benefits.
For vesting purposes, a year of service means any plan year (July 1 through
June 30) in which an employee completes at least 1,000 hours of service.
Vesting will be accelerated to 100% upon a participant's attainment of age 65,
death or disability or upon the termination of the ESOP or a complete
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<PAGE> 14
discontinuance of contributions thereafter. Forfeitures will be reallocated to
participants on the same basis as other contributions. Benefits are payable
upon a participant's retirement, death, disability or separation from service,
and will be paid in installments unless a participant elects to receive his or
her distribution in a lump sum in whole shares of Common Stock (with cash paid
in lieu of fractional shares). Dividends paid on allocated shares may be used
as repayment on the ESOP loan, credited to participant accounts within the ESOP
or paid to participants. Dividends on unallocated shares are expected to be
used to repay the ESOP loan.
The Company has appointed Directors Larry A. Clark, G. Verglea Gotfryd and
Stephen R. Olson to serve on the ESOP Committee which administers the
day-to-day operations of the ESOP. First Bankers Trust Company, N.A. serves as
trustee of the ESOP (the "ESOP Trustee"). The ESOP Trustee must vote all
allocated shares held in the ESOP in accordance with the instructions of the
participants. The ESOP Trustee will not vote allocated shares for which no
timely direction is received and will vote unallocated shares in accordance
with the direction of the ESOP Committee.
401(k) Plan
Effective April 1, 1995, the Bank established a 401(k) plan for all
eligible employees. To be eligible, an employee must attain age 21 and
complete one year of service with the Bank. Annual contributions to the plan
are made at the discretion of the Bank's Board of Directors under a formula
provided in the plan based upon each employee's salary. Contributions are
allocated among employee members of the plan who were in the employ of the Bank
on the last day of the plan year and who have at least 1,000 hours of service
during the plan year. Participants may elect to contribute to the plan between
1% and 10% of their base salary, which contributions may be matched by the
Bank.
Contributions by the Bank vest over a six year period commencing at the
end of the second full year of plan membership as to 20% of the Bank's
contribution and rising 20% a year to 100% at the end of the sixth full year of
plan membership. If a participant's employment is terminated for any reason,
the participant is entitled only to the vested portion, if any, of his or her
account.
Pension Plan
Effective December 1, 1994, the Bank became a participating employer in a
multi-employer pension plan sponsored by the Financial Institutions Retirement
Fund (the "Pension Plan"). The terms of the Pension Plan as it relates to the
Bank were determined in March 1995. All full-time employees of the Bank are
eligible to participate after one year of service and attainment of age 21. A
qualifying employee becomes fully vested in the Pension Plan upon completion of
five years of service or upon attainment of the normal retirement age of 65.
The Pension Plan is intended to comply with the Employee Retirement Income
Security Act of 1974, as amended.
The Pension Plan provides for monthly payments to each participating
employee at normal retirement age. The annual allowance payable under the
Pension Plan is based on an integrated fixed percentage formula which uses the
highest five consecutive years' average salary. A participant who is vested in
the Pension Plan may take an early retirement and elect to receive a reduced
monthly benefit beginning at age 55. The Pension Plan also provides for
payments in the event of disability
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<PAGE> 15
or death. At June 30, 1996, G. Richard Gatton had five years of
credited service under the Pension Plan.
The following table shows the estimated annual benefits payable under the
Pension Plan based on years of credited service and applicable average annual
salary, as calculated under the Pension Plan. Benefits under the Pension Plan
are not subject to offset for Social Security benefits.
<TABLE>
<CAPTION>
Years of Credited Service
-------------------------------------------
10 15 20 25 30
------- ------- ------- ------- -------
Remuneration
------------
<S> <C> <C> <C> <C> <C>
$ 20,000 $ 3,848 $ 5,778 $ 7,696 $ 9,626 $11,556
$ 40,000 8,344 12,528 16,687 20,872 25,056
$ 60,000 12,839 19,278 25,678 32,117 38,556
$ 80,000 17,335 26,028 34,669 43,363 52,056
$100,000 21,830 32,778 43,660 54,608 65,556
$120,000 26,326 39,528 52,651 68,853 79,056
</TABLE>
DIRECTOR COMPENSATION
The Company's outside directors receive $300 per quarterly meeting. The
Bank's outside directors receive an annual retainer of $3,000, $200 for each
Board meeting attended and $250 for attending the annual Board meeting. The
Company's and the Bank's directors fees totaled $7,200 and $31,870,
respectively, for the fiscal year ended June 30, 1996.
During the fiscal year ended June 30, 1996, the Company granted each
outside director 3,250 options under the Option Plan and 1,300 shares of
restricted stock under the RRP upon approval of such plans by the Company's
stockholders in April 1996.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In accordance with current law, the Bank has a policy of offering loans to
officers and directors in the ordinary course of business, on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, and all loans outstanding
at June 30, 1996 to directors and executive officers satisfied such conditions.
Further, these loans do not involve more than the normal risk of collectibility
or present other unfavorable features. All such loans were performing
according to their terms at June 30, 1996.
For non-executive employees, the Bank will grant a .5% interest discount
from the regular market rate for an adjustable-rate first mortgage loan on a
single-family owner-occupied home and up to a 1% discount on consumer loans.
All other loans to non-executive employees are made at market rates. At June
30, 1996, the total amount of loans outstanding to directors and executive
officers aggregating $60,000 or more to any one related party was approximately
$365,000, or 2.86% of stockholders' equity.
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<PAGE> 16
PROPOSAL 2
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Crowe, Chizek and Company
LLP, independent certified public accountants, to audit the consolidated
financial statements of the Company for the fiscal year ending June 30, 1997.
A proposal to approve the appointment of Crowe, Chizek and Company LLP will be
presented to the Company's stockholders at the Annual Meeting. Representatives
of Crowe, Chizek and Company are expected to be present at the Annual Meeting
and available to respond to questions. The representatives will also be
provided an opportunity to make a statement, if they desire.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
APPOINTMENT OF CROWE, CHIZEK AND COMPANY.
COSTS OF SOLICITATION
The costs of this proxy solicitation will be paid by the Company. To the
extent necessary, proxies may be solicited by personnel of the Company in
person or by telephone, telegram or other means. Company personnel will not
receive any additional compensation for solicitation of proxies unless such
solicitation requires such persons to work overtime. If deemed necessary, the
Company may retain a proxy solicitation firm. The Company will request record
holders of shares beneficially owned by others to forward this proxy statement
and related materials to the beneficial owners of such shares and will
reimburse such record holders for their reasonable expenses incurred therewith.
FORM 10-K ANNUAL REPORT
THE COMPANY WILL PROVIDE (WITHOUT CHARGE) TO ANY STOCKHOLDER SOLICITED
HEREBY A COPY OF ITS 1996 ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION UPON THE WRITTEN REQUEST OF SUCH STOCKHOLDER. REQUESTS
SHOULD BE DIRECTED TO THE COMPANY'S SECRETARY, 123 PORTAGE AVENUE, THREE
RIVERS, MICHIGAN 49093.
OTHER MATTERS
Management does not know of any other matters to be presented for action
by stockholders at the Annual Meeting. If, however, any other matters not now
known are properly brought before the meeting, the persons named in the
accompanying proxy will vote such proxy in accordance with their judgment on
such matters.
14
<PAGE> 17
STOCKHOLDER PROPOSALS
All proposals of stockholders to be presented for consideration at the
next annual meeting must be received by the Company no later than May 29, 1997.
By Order of the Board of Directors
THREE RIVERS FINANCIAL CORPORATION
/s/ Martha Romig
September 26, 1996 -----------------------------------
Martha Romig, Secretary
15
<PAGE> 18
<TABLE>
<S><C>
/X/ PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE THREE RIVERS FINANCIAL CORPORATION With-
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF 1. ELECTION OF DIRECTORS For hold Except
DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO / / / / / /
BE HELD ON OCTOBER 23, 1996. Larry A. Clark and
G. Richard Gatton
The undersigned hereby appoints R. Orville Poling and
William F. Cody, and each of them (with the power of substitution), INSTRUCTION: To withhold authority to vote for any
proxies for the undersigned to represent and to vote, as designated individual nominee, mark "Except" and write that nominee's
below, all shares of Common Stock of Three Rivers Financial name in the space provided below.
Corporation (the "Company"), which the undersigned would be entitled
to vote if personally present at the Annual Meeting and at any __________________________________________________________
adjournment thereof.
For Against Abstain
THE DIRECTORS RECOMMEND A VOTE "FOR" PROPOSALS 1 AND 2. 2. PROPOSAL TO APPROVE THE / / / / / /
APPOINTMENT OF CROWE,
CHIZEK AND COMPANY LLP, inde-
pendent certified public accountants, as the auditors of
the Company for the fiscal year ending June 30, 1997.
This proxy, when properly executed, will be voted in the
manner directed herein by the undersigned stockholder. If
no direction is made, this proxy will be voted FOR
Proposals 1 and 2. In addition this proxy will be voted
at the discretion of the proxyholder(s) upon any other
matter which may properly come before the Annual Meeting.
_________________ IMPORTANT: Please date and sign as your name appears
Please be sure to sign and date |Date | and mail promptly. When signing as executor,
this Proxy in the box below. | | administrator, trustee, guardian, etc., please give full
_____________________________________________|_______________| title as such. If the stockholder is a corporation, the
| | proxy should be signed in the full corporate name by a
| | duly authorized officer whose title is stated.
| |
|___Stockholder sign above____Co-holder (if any) sign above__|
- ------------------------------------------------------------------------------------------------------------------------------------
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
THREE RIVERS FINANCIAL CORPORATION
____________________________________________________________________________________________________________________________________
| |
| PLEASE ACT PROMPTLY |
| SIGN, DATE & MAIL YOUR PROXY CARD TODAY |
|__________________________________________________________________________________________________________________________________|
</TABLE>
