<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for use of
the Commission Only (as
[X] Definitive Proxy Statement permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Section 240.14a-11(c) or Section 240.14a-12
THREE RIVERS FINANCIAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
<PAGE> 2
[THREE RIVERS LETTERHEAD]
September 28, 1998
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 28, 1998, at 9:00 a.m. at the Carnegie Center for the Arts, 107 N. Main,
Three Rivers, Michigan 49093 (the "Meeting").
The enclosed Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the Meeting. During the Meeting, members of
the Company's management will also report on operations and other matters
affecting the Company. Directors and officers of the Company, as well as a
representative of our independent auditors, Crowe, Chizek and Company LLP, are
expected to be present to respond to any questions that stockholders may have.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTAGE-PAID
ENVELOPE AS PROMPTLY AS POSSIBLE. This will not prevent you from attending the
meeting and voting in person, but will assure that your vote is counted if you
are unable to attend the meeting. YOUR VOTE IS VERY IMPORTANT.
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,
G. Richard Gatton
President
<PAGE> 3
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THREE RIVERS FINANCIAL CORPORATION
123 PORTAGE AVENUE
THREE RIVERS, MICHIGAN 49093
(616) 279-5117
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 28, 1998
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NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders (the
"Meeting") of Three Rivers Financial Corporation (the "Company") will be held at
the Carnegie Center for the Arts, 107 N. Main, Three Rivers, Michigan 49093 on
Wednesday, October 28, 1998 at 9:00 a.m., local time. The Meeting is for the
purpose of considering and acting upon:
1. The election of one director of the Company; and.
2. The ratification of 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, 1999.
Execution of a proxy in the form enclosed also permits the proxy holder to vote,
in their discretion, upon such other matters that may come before the Meeting.
As of the date of mailing, the Board of Directors is not aware of any other
matters that may come before the Meeting.
Action may be taken on any one of 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. Pursuant to the Company's Bylaws, the
Board of Directors has fixed the close of business on September 14, 1998 as the
record date for determination of the stockholders entitled to vote at the
Meeting and any adjournments thereof.
EACH STOCKHOLDER, WHETHER OR NOT 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 COMPANY 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 IN PERSON 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 IN PERSON AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
Martha Romig
Secretary
Three Rivers, Michigan
September 28, 1998
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE
MEETING. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
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<PAGE> 4
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PROXY STATEMENT
OF
THREE RIVERS FINANCIAL CORPORATION
123 PORTAGE AVENUE
THREE RIVERS, MICHIGAN 49093
(616) 279-5117
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ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 28, 1998
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GENERAL
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This Proxy Statement is furnished to holders of common stock, $0.01 par
value per share ("Common Stock") of Three Rivers Financial Corporation (the
"Company"). Proxies are being solicited by the Board of Directors of the Company
for use at the Annual Meeting of the Stockholders of the Company (the "Meeting")
to be held at the Carnegie Center for the Arts, 107 N. Main, Three Rivers,
Michigan 49093 on Wednesday October 28, 1998 and at any adjournments thereof.
The accompanying Notice of Annual Meeting and this Proxy Statement are first
being mailed to stockholders on or about September 28, 1998.
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VOTING AND REVOCABILITY OF PROXIES
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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 delivered in person or mailed to the Secretary of the Company at the
address of the Company shown 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 Company will be voted in accordance
with the directions given therein. WHERE NO INSTRUCTIONS ARE INDICATED, SIGNED
PROXIES WILL BE VOTED "FOR" THE PROPOSALS SET FORTH IN THIS PROXY STATEMENT FOR
CONSIDERATION AT THE MEETING OR ANY ADJOURNMENT THEREOF. The proxy confers
discretionary authority on the persons named therein to vote with respect to the
election of any person as a director should the nominee be unable to serve, or
for good cause, will not serve, matters incident to the conduct of the meeting,
and other proposals for which management did not have notice at least 45 days
prior to the date on which the Company mailed its proxy material for the prior
year's annual meeting of stockholders. As of the date of mailing, the Board of
Directors received no notice that any other matters may come before the Meeting.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Stockholders of record as of the close of business on September 14, 1998
(the "Voting Record Date") are entitled to one vote for each share then held on
any matter that may be presented for consideration by the stockholders at the
Meeting. As of the Voting Record Date, 783,313 shares of Common Stock were
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.
As to the election of directors as set forth under "I - Information with
Respect to Nominee for Director, Directors Continuing in Office, and Executive
Officers - Election of Directors," the proxy card being provided by the Board of
Directors enables a stockholder to vote for the election of the nominee proposed
by the Board, or to withhold authority to vote for the nominee being proposed.
Directors are elected by a plurality of votes cast, without regard to either (i)
broker non-votes or (ii) proxies as to which authority to vote for the nominee
being proposed is withheld.
<PAGE> 5
As to the ratification of auditors as set forth under "II - Ratification
of Appointment of Auditors," by checking the appropriate box, stockholders may
(i) vote "FOR" the ratification, (ii) vote "AGAINST" the ratification, or (iii)
vote to "ABSTAIN" from voting on ratification. To be ratified, this matter must
receive the affirmative vote of the majority of the shares present in person or
by proxy at the meeting and entitled to vote. Broker non-votes or proxies for
which the "ABSTAIN" box is selected as to the matter have the effect of a vote
AGAINST this matter.
As to other matters that may properly come before the Meeting, unless
otherwise required by law, the Certificate of Incorporation, or the Bylaws of
the Company, a majority of those votes cast by stockholders shall be sufficient
to pass on the matter.
Persons and groups owning in excess of 5% of the Common Stock are required
to file certain reports with the Securities and Exchange Commission ("SEC")
regarding such ownership pursuant to the Securities Exchange Act of 1934, as
amended ("1934 Act"). Other than as noted below, management knows of no person
or entity, including any "group" as that term is used in Section 13(d)(3) of the
1934 Act, who or which is the beneficial owner of more than 5% of the
outstanding shares of Common Stock on the Voting Record Date.
Information concerning the security ownership of management is included
under "I - Information with Respect to Nominee for Director, Directors
Continuing in Office, and Executive Officers."
<TABLE>
<CAPTION>
PERCENT OF SHARES OF
NAME AND ADDRESS AMOUNT AND NATURE OF COMMON STOCK
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OUTSTANDING
- ------------------- ------------------------ -----------
<S> <C> <C>
THREE RIVERS FINANCIAL CORPORATION EMPLOYEE 68,770 (2) 8.78%
STOCK OWNERSHIP PLAN
c/o First Bankers Trust Company, Trustee
Broadway at 12th Street
Quincy, Illinois 62305-3566
JEFFREY S. HALIS 79,400 (3) 10.14%
TYNDALL PARTNERS, L.P.
MADISON AVENUE PARTNERS, L.P.
500 Park Avenue, Fifth Floor
New York, New York 10002
JEFFREY L. GENDELL 47,600 (4) 6.08%
TONTINE PARTNERS, L.P.
TONTINE FINANCIAL PARTNERS, L.P.
200 Park Avenue, Suite 3900
New York, New York 10166
SALEM INVESTMENT COUNSELORS, INC. 66,600 (5) 8.50%
P. O. Box 25427
Winston-Salem, North Carolina 27114-5427
</TABLE>
- ----------------------------------
(1) Unless otherwise indicated, includes all shares held directly by the named
individuals as well as in other forms of indirect ownership, over which
shares the named individual effectively exercises sole voting and
investment power with respect to the indicated shares.
(Footnotes continued on following page)
2
<PAGE> 6
(Footnotes continued from previous page)
(2) 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. See "Compensation of
Directors and Executive Officers Benefits - Employee Stock Ownership
Plan."
(3) 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.
(4) Based on a Schedule 13D filed as of April 14, 1997. Jeffrey L Gendell has
shared voting and dispositive power with respect to these shares. Mr.
Gendell serves as the managing member of Tontine Management, L.L.C. which
is the general partner of Tontine Partners, L.P. and Tontine Financial
Partners, L.P.
(5) Based on a Schedule 13G filed as of April 24, 1997, and as amended by a
Schedule 13G filed as of February 13, 1998.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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The Common Stock is registered with the SEC pursuant to Section 12(b) of
the 1934 Act. The officers and directors of the Company and beneficial owners of
greater than 10% of the Common Stock ("10% beneficial owners") are required to
file reports on Forms 3, 4, and 5 with the SEC disclosing changes in beneficial
ownership of the Common Stock. With the exception of John A. Mathews, a former
director and currently a director emeritus of the Company, that filed one Form 4
late while a director, based solely on the Company's review of such ownership
reports, to the Company's knowledge, no officer, director, or 10% beneficial
owner of the Company failed to file such ownership reports on a timely basis for
the fiscal year ended June 30, 1998.
3
<PAGE> 7
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I - INFORMATION WITH RESPECT TO NOMINEE FOR DIRECTOR,
DIRECTORS CONTINUING IN OFFICE, AND EXECUTIVE OFFICERS
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ELECTION OF DIRECTORS
The Company currently has six directors serving on its Board. The
Certificate of Incorporation requires that directors be divided into three
classes, as nearly equal in number as possible, each class to serve for a term
of three years, with approximately one-third of the directors elected annually.
One director will be elected at the Meeting to serve for a three-year term or
until such director's successor is duly elected and qualified.
The following table sets forth for the nominee and the directors
continuing in office, such individual's name, age, the year the nominee first
became a director of the Company, and the number of shares and percentage of the
Common Stock beneficially owned. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE NOMINEE TO THE COMPANY'S BOARD OF DIRECTORS.
<TABLE>
<CAPTION>
Shares of
Name of Individual or Year First Current Common Stock
Number of Persons in Elected or Term to Beneficially Percent
Group Age (1) Appointed (2) Expire Owned (3)(4) of Class
- --------------------- ------- ------------- ------ ------------ --------
<S> <C> <C> <C> <C> <C>
BOARD NOMINEE FOR TERM TO EXPIRE IN 2001
Philip Halverson 77 1968 1998 2,820(5) 0.36%
DIRECTORS CONTINUING IN OFFICE
Larry A. Clark 57 1989 1999 6,820(6) 0.87%
G. Richard Gatton 55 1990 1999 24,152(7) 3.08%
G. Verglea Gotfryd 70 1989 2000 7,020(8) 0.90%
Thomas O. Monroe, Sr. 74 1982 2000 9,720(9) 1.24%
Stephen R. Olson 55 1983 2000 13,000(10) 1.66%
DIRECTOR EMERITUS
John A. Mathews 74 1974 n/a 7,900(11) 1.01%
All directors, directors emeritus, and
executive officers as a group (11
persons) 90,337(12) 11.53%
</TABLE>
- -------------
(1) As of June 30, 1998.
(2) Refers to the earlier of the year the individual became a director of the
Company or the Bank. All directors of the Bank became directors of the
Company upon its formation in April 1995.
(3) As of the Voting Record Date.
(4) Unless otherwise indicated, includes all shares held directly by the named
individuals as well as by spouses, minor children in trust, and other
forms of indirect ownership, over which shares the named individual
effectively exercises sole voting and investment power with respect to the
indicated shares. Excludes 49,475 unallocated shares of Common Stock held
under the ESOP for which such individuals may serve as a member of the
ESOP Committee. Excludes 22,565 unvested shares of Common Stock held by
the Company's Recognition and Retention Plan and Trust ("RRP") for which
such individuals may serve as a member of the RRP Committee or Trustee
Committee. Such individuals disclaim beneficial ownership with respect to
such shares held in a fiduciary capacity. See "Director and Executive
Officer Compensation - Benefits - Employee Stock Ownership Plan" and "-
Recognition and Retention Plan and Trust."
(Footnotes continued on following page)
4
<PAGE> 8
(Footnotes continued from previous page)
(5) Includes 1,300 shares of Common Stock subject to options exercisable
within 60 days of the Voting Record Date. Also, includes 1,000 shares of
Common Stock for which Mr. Halverson shares voting or dispositive power
with his spouse.
(6) Includes 1,300 shares of Common Stock subject to options exercisable
within 60 days of the Voting Record Date.
(7) Includes 6,000 shares of Common Stock subject to options exercisable
within 60 days of the Voting Record Date. Also, includes 10,100 shares of
Common Stock for which Mr. Gatton shares voting or dispositive power with
his spouse.
(8) Includes 1,300 shares of Common Stock subject to options exercisable
within 60 days of the Voting Record Date. Also, includes 5,460 shares of
Common Stock for which Ms. Gotfryd shares voting or dispositive power with
her son.
(9) Includes 1,300 shares of Common Stock subject to options exercisable
within 60 days of the Voting Record Date. Also includes 500 shares of
Common Stock owned by the spouse of Mr. Monroe for which Mr. Monroe has no
voting or dispositive power and which Mr. Monroe disclaims beneficial
ownership.
(10) Includes 1,300 shares of Common Stock subject to options exercisable
within 60 days of the Voting Record Date. Also, includes 3,820 shares of
Common Stock for which Mr. Olson shares voting or dispositive power with
his spouse and 560 shares of Common Stock owned by the spouse of Mr. Olson
for which Mr. Olson has no voting or dispositive power and which Mr. Olson
disclaims beneficial ownership
(11) Includes 1,300 shares of Common Stock subject to options exercisable
within 60 days of the Voting Record Date. Also, includes 5,000 shares of
Common Stock for which Mr. Mathews shares voting or dispositive power with
his spouse.
(12) Includes 22,720 shares of Common Stock subject to options exercisable
within 60 days of the Voting Record Date.
EXECUTIVE OFFICERS
The individuals set forth below hold the offices in the Company set forth
opposite their names.
<TABLE>
<CAPTION>
Name Age (1) Position Held with the Company
- ---- ------- ------------------------------
<S> <C> <C>
G. Richard Gatton 55 President, Chief Executive Officer, and Director
Martha Romig 59 Senior Vice President, Secretary, Treasurer, and Chief
Financial Officer
</TABLE>
- --------------
(1) As of June 30, 1998.
The Executive Officers of the Company are elected annually and hold office
until their respective successors have been elected and qualified or until
death, resignation, or removal by the Board of Directors.
BIOGRAPHICAL INFORMATION
The principal occupation during the past five years of each director,
nominee for director, and executive officer is set forth below. All directors,
the nominee, and executive officers have held their present positions for at
least five years, unless otherwise stated.
LARRY A. CLARK was employed by GTE Corporation, an independent telephone
company, from 1963 until his retirement in 1994. Mr. Clark last served as
Manager--Administrative Support in GTE's Muskegon, Michigan regional office.
G. RICHARD GATTON 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 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
5
<PAGE> 9
capacities during that time, including manager and owner. Ms. Gotfryd also
serves on the board of directors of the Three Rivers Area Hospital.
PHILIP HALVERSON is the 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.
THOMAS O. MONROE, SR. 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.
STEPHEN R. OLSON 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.
MARTHA ROMIG 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.
NOMINATIONS FOR DIRECTORS
Generally, nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote in the election of
directors. All nominations made by any stockholder must 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. In addition, a stockholder making such a nomination must
promptly provide any additional information the Company may reasonably request.
No person may be elected as a director of the Company unless the person is
nominated in accordance with the procedure set forth in the Certificate of
Incorporation or the Board of Directors has waived such procedure.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company conducts its business through
meetings of the Board and through activities of the committees of the Board.
During the fiscal year ended June 30, 1998, the Board of Directors held eight
regular meetings and one special meeting. No director attended fewer than 75% of
the total meetings of the Board or committees on which such director served
during the fiscal year ended June 30, 1998.
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 G. Richard Gatton, Stephen
R. Olson, and G. Verglea Gotfryd currently serve on such committee. The
Nominating Committee of the Company held two meeting during the fiscal year
ended June 30, 1998.
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
6
<PAGE> 10
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, 1998.
The Company does not have a compensation committee. 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 one meeting during the fiscal year ended June 30,
1998.
- --------------------------------------------------------------------------------
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
DIRECTOR COMPENSATION
Each non-employee director of the Company receives $350 per quarter for
meetings of the Board of Directors of the Company. Each non-employee director of
the Bank receives a retainer of $3,000 per year plus $255 per monthly Board
meeting attended and $250 for attendance at the annual meeting of the Board of
Directors of the Bank. Fees paid to all directors totaled $38,683 for the fiscal
year ended June 30, 1998.
Directors are also eligible to receive options to purchase Common Stock
pursuant to the Company's Stock Option and Incentive Plan. See "- Benefits -
Stock Option and Incentive Plan."
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth the name and
compensation of the Chief Executive Officer of the Company for the fiscal years
ended June 30, 1998, 1997, and 1996. No other executive officer received a
salary and bonus in excess of $100,000 during the fiscal years ended June 30,
1998, 1997, and 1996. All compensation was paid by the Bank.
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Other
annual
Name and principal position Year Salary Bonus Compensation(1)
- --------------------------- ---- ------ ----- ---------------
<S> <C> <C> <C> <C>
G. Richard Gatton 1998 $96,246 $14,000 --
President, Chief Executive
Officer, and Director
1997 $92,708 $14,000 --
1996 $89,059 $17,500 --
<CAPTION>
Long term
Compensation
------------
Restricted Securities
Stock Underlying All other
Name and principal position Award($)(2) Options (#)(3) Compensation
- --------------------------- ----------- -------------- ------------
<S> <C> <C> <C>
G. Richard Gatton -- -- $27,261(4)
President, Chief Executive
Officer, and Director
-- -- $21,550(5)
$82,150 15,000 $14,931(6)
</TABLE>
- ------------------
(1) For the fiscal years ended June 30, 1998, 1997, and 1996, there were no
(a) perquisites over the lesser of $50,000 or 10% of any of Mr. Gatton's
total salary and bonus; (b) payments of above-market preferential earnings
on deferred compensation; (c) tax payment reimbursements; or (d)
preferential discounts on stock.
(Footnotes continued on following page)
7
<PAGE> 11
(Footnotes continued from previous page)
(2) Represents the dollar value of the award of Common Stock (calculated by
multiplying $13.25 per share, the average of the bid and ask price of the
Company's unrestricted stock on the date of grant, by 6,200 shares, the
number of shares of restricted stock awarded) under the RRP. Dividends
received on the RRP shares are held in arrears until the restricted stock
becomes vested. At June 30, 1998, the RRP held shares of Common Stock
subject to forfeiture for the benefit of Mr. Gatton with a fair market
value of $72,075 (calculated by multiplying $19.375 per share, the average
of the bid and ask price of the Company's unrestricted stock on June 30,
1998, by 3,720 shares, the number of shares of Common Stock that remain
restricted).
(3) By their terms, options vest at a rate of 20% per year beginning on the
one year anniversary date of the grant.
(4) Represents $2,887 contributed to the Bank's 401(k) plan for the account of
Mr. Gatton and the value of 1,258 shares of Common Stock allocated to Mr.
Gatton's ESOP account for the fiscal year ended June 30, 1998.
(5) Represents $2,781 contributed to the Bank's 401(k) plan for the account of
Mr. Gatton and the value of 1,155 shares of Common Stock allocated to Mr.
Gatton's ESOP account for the fiscal year ended June 30, 1997
(6) Represents $2,667 contributed to the Bank's 401(k) plan for the account of
Mr. Gatton and the value of 935 shares of Common Stock allocated to Mr.
Gatton's ESOP account for the fiscal year ended June 30, 1996.
EMPLOYMENT AGREEMENT. The Bank entered into an employment agreement on
August 23, 1998 (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 $96,800. 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 Mr. Gatton has
met the required performance standards and that such Employment Agreement should
be extended. Unless the Employment Agreement is not renewed by the Board, the
Employment Agreement will terminate automatically upon Mr. Gatton 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 Mr. Gatton without just cause, Mr. Gatton
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), Mr. Gatton will receive
compensation for a period of two years or the remaining term of the Employment
Agreement, whichever is longer. Mr. Gatton may 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 Mr. Gatton 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
Mr. Gatton'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," Mr. Gatton 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 Mr. Gatton receives on account of
the change in control. The Employment Agreement also provides for a similar lump
sum payment to be made in the event of the Mr. Gatton's voluntary termination of
employment within one year following a change in control, upon the occurrence
of, or within 90 days thereafter, certain specified events following the change
in control. The aggregate payments that would be made to Mr. Gatton assuming his
termination of employment under the foregoing circumstances at June 30, 1998
would have been approximately $431,000.
These provisions may tend to discourage a non-negotiated takeover attempt
of the Company due to the increased expenses arising out of a change in
ownership or control of the Company.
CHANGE IN CONTROL SEVERANCE AGREEMENTS. The Company and the Bank entered
into severance agreements on August 23, 1998 (the "Severance Agreements") with
two executive officers of the Bank and the Company. The Severance Agreements
will terminate on the earlier of (a) two years after their effective
8
<PAGE> 12
date, and (b) the date on which the officer terminates employment with the
Company or 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. Unless the
Severance Agreements are not renewed by the Board, 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 pursuant to the Severance Agreements,
assuming termination of employment under the foregoing circumstances at June 30,
1998, would have been approximately $301,000.
These provisions may tend to discourage a non-negotiated takeover attempt
of the Company due to the increased expenses arising out of a change in
ownership or control of the Company.
BENEFITS
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. Contributions are matched by the Bank at a rate of $0.50 for
every $1.00 contributed by the participant up to the first 6% of the
participant's base salary.
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 or death. At June 30, 1998, G. Richard Gatton had
seven years of credited service under the Pension Plan. If Mr. Gatton were to
have retired as of June 30,
9
<PAGE> 13
1998, Mr. Gatton would be entitled to a pension payment of $1,302 per month
beginning upon his attainment of age 65.
EMPLOYEE STOCK OWNERSHIP PLAN. In August 1995, the Bank'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 ESOP 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 68,770 shares of the Common Stock from the Bank in connection with 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. For the fiscal years ended June 30,
1998 and 1997, $70,004 and $68,770 in principal payments were made on the ESOP
loan, respectively. The ESOP compensation expense for the fiscal years ended
June 30, 1998 and 1997, was $135,867 and $95,729, respectively. At June 30,
1998, 19,611 shares of Common Stock had been allocated to participants under the
ESOP.
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. 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.
STOCK OPTION PLANS. In April 1996, the Company's Board of Directors
adopted, and the stockholders approved, the Company's 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 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
10
<PAGE> 14
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, 1998, 4,000 options were granted and
no options were exercised under the Option Plan. As of June 30, 1998, options to
purchase 62,500 shares had been granted and are outstanding under the Option
Plan.
The following table sets forth certain information concerning stock option
exercises during the fiscal year ended June 30, 1998 and unexercised options
held at such date for the person named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED JUNE 30, 1998
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Value of
Number of unexercised
Shares unexercised in-the-money
acquired Value options at FY-End options at FY-end
Name on exercise realized exercisable/unexercisable exercisable/unexercisable (1)
- ---- ----------- -------- ------------------------- -----------------------------
<S> <C> <C> <C> <C>
G. Richard Gatton 0 $0 6,000 / 9,000 $36,750 / $55,125
</TABLE>
- ---------------
(1) The value of unexercised in-the-money options is the difference between
$19.375, the average of the bid and asked price of the Common Stock on
June 30, 1998, and $13.25, the exercise price of the options, multiplied
by the number of exercisable and unexercisable shares subject to the
options, respectively.
RECOGNITION AND RETENTION PLAN AND TRUST. In April 1996, the Company's
Board of Directors adopted, and the stockholders approved, the 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 RRP acquired 34,385 shares of Common Stock in the open market.
For the fiscal year ended June 30, 1998, 1,000 shares of restricted stock were
granted pursuant to the RRP.
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
11
<PAGE> 15
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.
- --------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
The Bank, like many financial institutions, has followed a policy of
granting various types of loans to its officers and directors. The loans made to
such persons: (a) were made in the ordinary course of business; (b) were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other customers of the
Bank; and (c) did not involve more than the normal risk of collectibility or
present other unfavorable features. All loans by the Bank to its officers and
directors are subject to OTS regulations restricting loans and other
transactions with affiliated persons of the Bank. Savings institutions are
permitted to make loans to executive officers, trustees, and principal
stockholders ("Insiders") on preferential terms, provided the extension of
credit is made pursuant to a benefit or compensation program of the Bank that is
widely available to employees of the Company or its affiliates and does not give
preference to any Insider over other employees of the Company or affiliates.
Loans to officers and employees of the Company, and their affiliates, amounted
to approximately $1.7 million, or 13% of the stockholders' equity at June 30,
1998.
- --------------------------------------------------------------------------------
II - RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors has approved to renew the Company's arrangements
with Crowe, Chizek and Company LLP to be its auditors for the fiscal year ending
June 30, 1999, subject to ratification by the stockholders. A proposal to ratify
the appointment of Crowe, Chizek and Company LLP for the fiscal year ending June
30, 1999 will be presented to the Company's stockholders at the Meeting.
Representatives of Crowe, Chizek and Company LLP are expected to be present at
the Meeting and available to respond to questions. The representatives will also
be provided an opportunity to make a statement, if they desire.
The ratification of the appointment of the Company's auditors must be
approved by a majority of the votes cast by the stockholders of the Company, in
person or by proxy, at the Meeting. THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF CROWE, CHIZEK AND
COMPANY LLP AS ThE AUDITORS OF THE COMPANY.
- --------------------------------------------------------------------------------
ANNUAL REPORT
- --------------------------------------------------------------------------------
Upon the written request, the Company will provide without charge to any
stockholder solicited hereby a copy of its Annual Securities Report on Form
10-KSB for the fiscal year ended June 30, 1998 filed with the SEC. Requests
should be directed to the Secretary of the Company, 123 Portage Avenue, Three
Rivers, Michigan 49093. The Annual Securities Report on Form 10-KSB is not to be
treated as a part of the proxy solicitation material or as having been
incorporated herein by reference.
The Annual Report to Stockholders for the fiscal year ended June 30, 1998,
including the financial statements, accompanies this Proxy Statement. Any
stockholder who has not received a copy of the Annual Report to Stockholders may
obtain a copy by writing to the Secretary of the Company. The Annual Report to
Stockholders is not to be treated as a part of the proxy solicitation material
or as having been incorporated herein by reference.
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<PAGE> 16
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any other matters to be presented
for action by stockholders at the Meeting. If, however, any other matters not
now known are properly brought before the Meeting, it is intended that the
persons named in the accompanying proxy will vote such proxy in accordance with
their judgment on such matters.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be considered for inclusion in the Company's proxy materials
for the Annual Meeting of Stockholders for the fiscal year ending June 30, 1998,
any stockholder proposal to take action at such meeting must be received at the
main office of the Company at 123 Portage Avenue, Three Rivers, Michigan 49093
no later than May 31, 1999. Any such proposals shall be subject to the
requirements of the proxy rules adopted under the 1934 Act.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
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.
BY ORDER OF THE BOARD OF DIRECTORS
MARTHA ROMIG
SECRETARY
September 28, 1998
13
<PAGE> 17
ANNEX A
REVOCABLE PROXY
THREE RIVERS FINANCIAL CORPORATION
This Proxy is solicited on behalf of the Board of Directors for the Annual
Meeting of Stockholders to be held on October 28, 1998 (the "Meeting").
The undersigned hereby appoints the Board of Directors of Three Rivers
Financial Corporation (the "Company"), or its designee, with the power of
substitution, to act as attorneys and proxies for the undersigned, to represent
and to vote, as designated below, all shares of Common Stock of the Company,
which the undersigned is entitled to vote at the Meeting and at any adjournment
thereof.
THE DIRECTORS RECOMMEND A VOTE "FOR" PROPOSALS 1 AND 2.
<TABLE>
<CAPTION>
<S><C>
FOR WITHHELD
--- --------
1. The election as a director the nominee
listed below: [ ] [ ]
PHILIP HALVERSON
FOR AGAINST ABSTAIN
--- ------- -------
2. The ratification of the appointment of Crowe, Chizek and Company LLP
as independent auditors of Three Rivers Financial Corporation
for the fiscal year ending June 30, 1999. [ ] [ ] [ ]
</TABLE>
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 proxy holder(s) upon any other matter which may properly come
before the Meeting.
<PAGE> 18
Should the signatory(ies) be present and elects to vote at the Meeting, or
at any adjournments thereof, and after notification to the Secretary of the
Company at the Meeting of such person'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 signatory(ies) may also revoke this proxy by filing a
subsequently dated proxy or by written notification to the Secretary of the
Company of his or her decision to terminate this proxy.
The signatory(ies) acknowledge(s) receipt from the Company prior to the
execution of this proxy of Notice of the Meetin, a Proxy Statement dated
September 28, 1998, and an Annual Report to Stockholders.
Please check here if you
Dated:________________, 199__ [ ] plan to attend the Meeting.
______________________________
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-PAID ENVELOPE.
- --------------------------------------------------------------------------------
