<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by Registrant: [_]
Filed by a Party other than the Registrant: [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Materials Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Matrix Bancorp, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(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:
2) Aggregate number of securities to which transaction applies:
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 is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[_] 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
MATRIX BANCORP, INC.
1380 Lawrence Street, Suite 1400
Denver, Colorado 80204
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 14, 1999
To the Shareholders of Matrix Bancorp, Inc.:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Shareholders (the
"Annual Meeting") of Matrix Bancorp, Inc., a Colorado corporation (the
"Company"), will be held at Hotel Teatro, 1100 14th Street, Denver, Colorado
80202, on the 14th day of May, 1999, at 10:00 a.m. (local time) for the
following purposes:
1. To elect two (2) directors to hold office until the 2002 Annual
Meeting of Shareholders or until their respective successors shall have
been duly elected and shall have qualified;
2. To ratify the appointment of Ernst & Young LLP as independent
auditors for the Company for the 1999 fiscal year; and
3. To transact any and all other business that may properly come
before the meeting or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on April 9, 1999 as
the record date (the "Record Date") for the determination of shareholders
entitled to notice of and to vote at such meeting or any adjournment(s) thereof.
Only shareholders of record at the close of business on the Record Date are
entitled to notice of and to vote at such meeting. The stock transfer books
will not be closed. A list of shareholders entitled to vote at the Annual
Meeting will be available for examination at the offices of the Company for ten
(10) days prior to the Annual Meeting.
You are cordially invited to attend the meeting; whether or not you expect
to attend the meeting in person, however, you are urged to mark, sign, date, and
mail the enclosed form of proxy promptly so that your shares of stock may be
represented and voted in accordance with your wishes and in order that the
presence of a quorum may be assured at the meeting. Your proxy will be returned
to you if you should be present at the meeting and should request its return in
the manner provided for revocation of proxies on the initial page of the
enclosed proxy statement.
BY ORDER OF THE BOARD OF DIRECTORS
T. Allen McConnell, Secretary
April 14, 1999
<PAGE>
MATRIX BANCORP, INC.
1380 Lawrence Street, Suite 1400
Denver, Colorado 80204
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 14, 1999
___________________________
SOLICITATION AND REVOCABILITY
OF PROXIES
The accompanying proxy is solicited by the Board of Directors on behalf of
Matrix Bancorp, Inc., a Colorado corporation (the "Company"), to be voted at the
1999 Annual Meeting of Shareholders of the Company (the "Annual Meeting") to be
held on May 14, 1999, at the time and place and for the purposes set forth in
the accompanying Notice of Annual Meeting of Shareholders (the "Notice") and at
any adjournment(s) thereof. When proxies in the accompanying form are properly
executed and received, the shares represented thereby will be voted at the
Annual Meeting in accordance with the directions noted thereon; if no direction
is indicated, such shares will be voted for the election of the director
nominees named herein pursuant to Proposal 1, in favor of Proposal 2 set forth
in the Notice, and the proxies will use their discretion with respect to any
matters referred to in Proposal 3 set forth in the Notice.
The executive offices of the Company are located at, and the mailing
address of the Company is, 1380 Lawrence Street, Suite 1400, Denver, Colorado
80204.
Management does not intend to present any business at the Annual Meeting
for a vote other than the matters set forth in the Notice and has no information
that others will do so. If other matters requiring a vote of the shareholders
properly come before the Annual Meeting, it is the intention of the persons
named in the accompanying form of proxy to vote the shares represented by the
proxies held by them in accordance with their judgment on such matters.
This proxy statement (the "Proxy Statement") and accompanying form of proxy
are being mailed on or about April 14, 1999. The Company's Annual Report to
Shareholders for 1998 is enclosed herewith, but does not form any part of the
materials for solicitation of proxies.
Any shareholder of the Company giving a proxy has the unconditional right
to revoke his proxy at any time prior to the voting thereof either in person at
the Annual Meeting by delivering a duly executed proxy bearing a later date or
by giving written notice of revocation to the Company addressed to T. Allen
McConnell, Secretary, Matrix Bancorp, Inc., 1380 Lawrence Street, Suite 1400,
Denver, Colorado 80204; no such revocation shall be effective, however, until
such notice of revocation has been received by the Company at or prior to the
Annual Meeting.
In addition to the solicitation of proxies by use of the mail, officers and
regular employees of the Company may solicit the return of proxies, either by
mail, telephone, telegraph, or through personal contact. Such officers and
employees will not be additionally compensated but will be reimbursed for out-
of-pocket expenses. Brokerage houses and other custodians, nominees, and
fiduciaries will, in connection with shares of voting Common Stock, par value
$.0001 per share (the "Common Stock"), registered in their names, be requested
to forward solicitation material to the beneficial owners of such shares of
Common Stock.
<PAGE>
The cost of preparing, printing, assembling, and mailing the Annual Report,
the Notice, this Proxy Statement, and the enclosed form of proxy, as well as the
cost of forwarding solicitation materials to the beneficial owners of shares of
the Common Stock, and other costs of solicitation, will be borne by the Company.
QUORUM AND VOTING
The record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting was the close of business on April 9, 1999
(the "Record Date"). On the Record Date, there were 6,724,911 shares of Common
Stock issued and outstanding.
Each holder of Common Stock shall be entitled to one vote for each share of
Common Stock on all matters to be acted upon at the meeting. Neither the
Company's Amended and Restated Articles of Incorporation, as amended, nor its
Bylaws, as amended, allow for cumulative voting rights. The presence, in person
or by proxy, of the holders of a majority of the issued and outstanding Common
Stock entitled to vote at the meeting is necessary to constitute a quorum to
transact business at the Annual Meeting. If a quorum is not present or
represented at the Annual Meeting, the shareholders entitled to vote thereat,
present in person or represented by proxy, may adjourn the Annual Meeting from
time to time, without notice other than announcement at the meeting, until a
quorum is present or represented. Assuming the presence of a quorum, the
affirmative vote of the holders of a plurality of the shares of Common Stock
voting at the meeting is required for the election of directors pursuant to
Proposal 1, and the affirmative vote of the holders of at least a majority of
the issued and outstanding shares of Common Stock represented in person or by
proxy at the Annual Meeting and entitled to vote is required for the approval of
Proposal 2.
An automated system administered by the Company's transfer agent tabulates
the votes. Abstentions will be included in vote totals and, as such, will have
the same effect on each proposal other than the election of directors as a
negative vote. Broker non-votes, if any, will not be included in vote totals
and, as such, will have no effect on any proposal.
PRINCIPAL SHAREHOLDERS AND STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of Common Stock as of the Record Date by (i) each person known by the
Company to own beneficially five percent or more of the outstanding Common
Stock; (ii) each of the Company's directors and advisory directors; (iii) each
of the executive officers named in the Summary Compensation Table (the "Named
Executive Officers"); and (iv) all directors, advisory directors and executive
officers of the Company as a group. Unless otherwise indicated, the address of
each person listed in the following table is 1380 Lawrence Street, Suite 1400,
Denver, Colorado 80204.
2
<PAGE>
<TABLE>
<CAPTION>
Shares
Beneficially
Owned (1)
----------------
Percent
Name Number of Class
- ----------------------------------------------------------- ---------------- ----------
<S> <C> <C>
Guy A. Gibson 1,149,875 17.1%
Richard V. Schmitz 1,151,375 17.1
D. Mark Spencer 1,147,876 17.1
Thomas M. Piercy 236,375 3.5
David W. Kloos 156,498 (2) 2.3
Thomas P. Cronin 13,089 (2) *
Stephen G. Skiba 16,000 (2) *
David A. Frank 11,000 (2) *
Peter G. Weinstock 8,500 (2) *
U.S. Bancorp
601 2nd Ave. South
Minneapolis, MN 55402-4302 658,413 (3) 9.8
Fleet Financial Group, Inc.
One Federal Street
Boston, MA 02211 366,900 (4) 5.5
Financial Stocks, Inc.
507 Carew Tower
441 Vine Street
Cincinnati, Ohio 45202 424,300 (5) 6.3
All directors, advisory directors and
executive officers as a group (13 persons) 3,958,628 (2) 58.3
</TABLE>
___________
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "Commission") and generally
includes voting or investment power with respect to securities. Except as
indicated in the footnotes to this table and subject to applicable
community property laws, the persons named in the table have sole voting
and investment power with respect to all shares of Common Stock
beneficially owned.
(2) Includes options that are currently exercisable, or become exercisable
within 60 days of the Record Date, to purchase from the Company the number
of shares of Common Stock indicated for the following persons: David W.
Kloos (14,000), Thomas P. Cronin (10,000), Paul E. Skretny (10,000), Gary
Lenzo (12,000), T. Allen McConnell (4,000), Stephen G. Skiba (6,000), David
A. Frank (6,000), and Peter G. Weinstock (6,000). Under the terms of the
Company's Employee Stock Purchase Plan (the "Purchase Plan"), participants
are issued fractional shares to the extent the money in their account is
not evenly divisible into a whole number of shares on the purchase date.
For ease of presentation, the number of shares of Common Stock outstanding
and the number of shares of Common Stock beneficially owned by the persons
described in this Proxy Statement have been rounded to the nearest whole
share.
(3) Based on a Schedule 13G filed by U.S. Bancorp on February 11, 1999. The
Schedule 13G discloses that U.S. Bancorp has sole power to vote or direct
the vote of no shares and the sole power to dispose or direct the
disposition of 658,413 shares.
(4) Based on a Schedule 13G filed by Fleet Financial Group, Inc. on February
12, 1999. The Schedule 13G discloses that Fleet Financial Group, Inc. has
sole power to vote or direct the vote of 279,200 shares and sole power to
dispose or direct the disposition of 366,900 shares.
(5) Based on a Schedule 13D filed by the Financial Stocks, Inc. on March 31,
1998. The Schedule 13D disclosed that Financial Stocks, Inc. has sole
voting power over 401,346 shares of common stock, shared voting power over
22,954 shares of common stock, sole dispositive power over 401,346 shares
of common stock and shared dispositive power over 22,954 shares of common
stock.
3
<PAGE>
ELECTION OF DIRECTORS
(Proposal 1)
General
Matrix Bancorp, Inc. ("Matrix Bancorp") is a unitary thrift holding company
that operates principally through the following operating subsidiaries: United
Financial, Inc. ("United Financial"), Matrix Financial Services Corporation
("Matrix Financial"), Matrix Capital Bank ("Matrix Bank"), United Special
Services, Inc. ("USS"), United Capital Markets, Inc. ("UCM"), Sterling Trust
Company ("Sterling") and First Matrix Investment Services Corporation ("First
Matrix").
The Bylaws, as amended, of the Company provide that the number of directors
that shall constitute the whole board shall be as fixed from time to time by the
Board of Directors. By resolution of the Board of Directors, the number of
directors comprising the Board of Directors has been set at seven (7).
The Board of Directors is divided into three classes. Directors for each
class are elected at the annual meeting held in the year in which the term for
such class expires and serve thereafter for three years or until their
successors are elected and qualified. All advisory directors serve at the
pleasure of the Board of Directors. Subject to any applicable employment
agreement provisions, all officers are appointed by, and serve at the discretion
of, the Board of Directors of the Company.
Nominees and Continuing Directors
Unless otherwise directed in the enclosed proxy, it is the intention of the
persons named in the proxy to nominate and to vote the shares represented by
such proxy for the election of the following named nominees for the office of
director of the Company, to hold office until the 2002 Annual Meeting of
Shareholders or until their respective successors shall have been duly elected
and shall have qualified. Proxies cannot be voted for a greater number of
persons than the nominees named.
Information regarding each nominee, each of the continuing directors of the
Company, and each advisory director of the Company is set forth in the table and
text below:
<TABLE>
<CAPTION>
Present Director's
Name Age Office(s) Held Term Expires
- ----------------------- -------- --------------------------------------- -----------------
<S> <C> <C> <C>
Nominees:
Richard V. Schmitz 36 Matrix Bancorp: Chairman of the Board 2002
United Financial: Chairman of the Board
D. Mark Spencer 39 Matrix Bancorp: Vice Chairman and Director 2002
Matrix Bank: Chairman of the Board
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Present Director's
Name Age Office(s) Held Term Expires
- ----------------------- -------- ---------------------------------------- --------------------
<S> <C> <C> <C>
Continuing Directors:
Thomas M. Piercy 34 Matrix Bancorp: Director 2000
United Financial: Managing Director
Stephen G. Skiba(1)(2) 44 Matrix Bancorp: Director 2000
Guy A. Gibson 34 Matrix Bancorp: President, Chief 2001
Executive Officer and Director
Matrix Financial: Chairman of the Board
David W. Kloos 37 Matrix Bancorp: Senior Vice 2001
President, Chief Financial Officer and Director
Matrix Bank: Executive Vice President and
Chief Financial Officer
David A. Frank(1)(2) 51 Matrix Bancorp: Director 2001
Advisory Director:
Peter G. Weinstock 37 Matrix Bancorp: Advisory Director --
</TABLE>
- -----------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Guy A. Gibson has served as the Chief Executive Officer and a director of
Matrix Bancorp since its formation in June 1993. Mr. Gibson has served as
Chairman of the Board of Matrix Financial since August 1990. Mr. Gibson was one
of the original founders of Matrix Financial and acted as its Chief Executive
Officer during 1990. Prior to his tenure with the Company, Mr. Gibson held the
position of Account Executive with the investment banking firms of PaineWebber
from 1987 to 1989 and Lincoln Financial Group, a Denver-based servicing
brokerage firm, from 1989 to 1990.
Richard V. Schmitz has served as a director of Matrix Bancorp since its
formation in June 1993 and was elected Chairman of the Board of Matrix Bancorp
in February 1996. Mr. Schmitz was one of the original founders of United
Financial, held the position of Chief Executive Officer of United Financial from
1990 until early 1997, and has been Chairman of the Board of United Financial
since that time.
D. Mark Spencer served as Chairman of the Board of Matrix Bancorp from June
1993 until February 1996. Mr. Spencer has also served as an executive officer
of the Company since June 1993. Mr. Spencer has served as Chairman of the Board
of Matrix Bank since October 1993, and has served as director of Matrix
Financial since August 1990. From 1985 through July 1990, Mr. Spencer served as
Vice President of Secondary Marketing for Austin Federal Savings and Loan, an
Austin, Texas savings and loan association.
5
<PAGE>
Thomas M. Piercy has served in various managerial capacities at United
Financial since October 1990, and currently serves as Managing Director of
United Financial. Mr. Piercy has served as a director of Matrix Bancorp since
June 1993. From 1986 to 1990, Mr. Piercy served as Managing Director of Lincoln
Financial Group.
David W. Kloos has served as a Vice President and Chief Financial Officer
of Matrix Bancorp since June 1993, and he has served as a director of Matrix
Bancorp also since June 1993. Mr. Kloos was appointed as Senior Vice President
of Matrix Bancorp in September 1996. Mr. Kloos has served as Executive Vice
President and Chief Financial Officer of Matrix Bank since October 1993. From
1989 through 1993, Mr. Kloos served as Senior Vice President and Chief Financial
Officer of Argo Federal Savings Bank, a Summit, Illinois federal savings bank.
From 1985 to 1989, Mr. Kloos, a certified public accountant, was employed by
KPMG Peat Marwick LLP.
Stephen G. Skiba, a director of Matrix Bancorp since March 1996, is
Director of Equity Research, focusing on banks and thrifts, for ABN AMRO Inc.,
an investment banking firm in Chicago, Illinois. From November 1990 to June
1996, Mr. Skiba was Senior Vice President, Chief Financial Officer and Treasurer
of N.S. Bancorp, Inc. in Chicago, Illinois. Prior to joining N.S. Bancorp, Inc.,
Mr. Skiba was an audit partner with KPMG Peat Marwick LLP.
David A. Frank was elected director of Matrix Bancorp in September 1996.
Mr. Frank is a private investor and a consultant for financial services
companies. He was President, Chief Executive Officer and founder of America's
Mortgage Source, a mortgage company involved in the origination of residential
mortgage loans, which operated from 1995 into 1998. From 1994 to 1995, Mr.
Frank served as President and Chief Executive Officer of Chemical Residential
Mortgage Corporation in Edison, New Jersey, and as a director of Chemical Bank,
N.A. Chemical Residential Mortgage Corporation was the primary mortgage banking
operation of Chemical Banking Corporation (now known as Chase Manhattan). Prior
to joining Chemical Residential Mortgage Corporation, Mr. Frank served from 1989
to 1994 as President and Chief Operating Officer of Margaretten Financial
Corporation, a publicly traded national mortgage banking company based in Perth
Amboy, New Jersey. From 1977 to 1989, Mr. Frank held various positions with
Primerica Corporation/American Can Company (now known as Citigroup), where he
was primarily involved in mergers, acquisitions, capital market activities and
in restructuring a manufacturing-based concern into a diversified financial
services company.
Peter G. Weinstock has served as an advisory director to Matrix Bancorp
since September 1996. In his capacity as advisory director, Mr. Weinstock is
invited to attend meetings of the Board of Directors and to participate in its
discussions. However, Mr. Weinstock is not entitled to vote in matters submitted
for approval and is not involved in the administration or management of the
Company. Mr. Weinstock is a member of the law firm of Jenkens & Gilchrist, a
Professional Corporation, where he has been employed for more than five years.
Jenkens & Gilchrist, a Professional Corporation, from time to time serves as
outside counsel to the Company.
The Board of Directors does not contemplate that any of the nominees for
director will refuse or be unable to accept election as a director of the
Company, or be unable to serve as a director of the Company. Should any of them
become unavailable for nomination or election or refuse to be nominated or to
accept election as a director of the Company, then the persons named in the
enclosed form of proxy intend to vote the shares represented in such proxy for
the election of such other person or persons as may be nominated or designated
by the Board of Directors.
6
<PAGE>
Executive Officers
The following sets forth the name, age, current position with the Company,
and the principal occupation during the last five years of each executive
officer of the Company. Information with respect to Messrs. Gibson, Schmitz,
Piercy, Spencer and Kloos is set forth above under the caption "--Nominees and
Continuing Directors."
George R. Bender, age 59, has been President and Chief Executive Officer of
Matrix Financial since October 1998. Prior to joining Matrix Financial, from
1990 to 1997, Mr. Bender served as Executive Vice President in charge of
mortgage banking operations for Bank United in Houston, Texas. From 1985 to
1990, Mr. Bender served as President and Chief Executive Officer of Centrust
Mortgage Corporation. Mr. Bender has been in the mortgage banking business for
more than 35 years, primarily serving during such time in various executive
capacities for subsidiaries of financial institutions and Wall Street investment
banking concerns.
Thomas P. Cronin, age 53, joined the Company in March 1997 as Vice Chairman
of Matrix Bancorp and Chief Executive Officer of United Financial. Prior to
joining the Company, Mr. Cronin held various positions with MCA Financial
Corporation, a Michigan-based financial services company, and its wholly owned
subsidiary, MCA Mortgage Corporation. Mr. Cronin's most recent management
position with MCA Financial Corporation was Vice Chairman. Mr. Cronin served as
a director of MCA Financial Corporation until January 1999. Mr. Cronin has over
30 years of experience in the mortgage banking industry and currently is the
Legislative Vice Chairman and board member for the Mortgage Bankers Association
of America. In February 1999, MCA Financial Corporation and several of its
affiliates, including MCA Mortgage Corporation, filed for reorganization under
Chapter 11 of the bankruptcy code. The petition for reorganization was filed by
a receiver for such entities, who was appointed in January 1999.
Gary Lenzo, age 48, has served as President and Chief Executive Officer and
a director of Matrix Bank since October 1993. From 1987 to 1992, Mr. Lenzo
served as Vice President of Austin Savings Association and Great Western Savings
Bank, both Austin, Texas based savings associations. From 1984 to 1986, Mr.
Lenzo served as Vice President of Unifirst American Mortgage Corporation, an
Austin, Texas mortgage company.
T. Allen McConnell, age 32, joined the Company in October 1997 as Senior
Vice President, Secretary and General Counsel. From September 1992 to October
1997, Mr. McConnell was an attorney with Jenkens & Gilchrist, a Professional
Corporation, in Dallas, Texas, where his practice focused on corporate finance
and mergers and acquisitions. Jenkens & Gilchrist, a Professional Corporation,
from time to time serves as outside counsel for the Company.
Paul E. Skretny, age 54, has served as Chief Executive Officer of Sterling
since May 1993 and as Chairman of the Board of First Matrix since March 1994.
Prior to his association with Sterling, Mr. Skretny was Senior Vice President of
APS Securities Corporation and Masterson, Moreland, Sauer, Whisman Inc. from
June 1988 to February 1993, providing investment services and assistance to
individual and institutional investors. From May 1975 to April 1988, Mr.
Skretny was employed by Jefferson Bancshares, Inc. and its subsidiaries serving
as President and Chief Executive Officer from 1984 to 1988. From June 1964 to
1975, he was employed by the Manufacturers & Traders Trust Company and the Bank
of Buffalo in various positions as Assistant Manager, Operations Officer,
Assistant Vice President and Vice President of Branch Office Administration.
Mr. Skretny holds professional certifications and licenses as a fully registered
general securities representative, general securities principal and uniform
securities agent.
7
<PAGE>
Committees of the Board of Directors
The Board of Directors currently has two standing committees: the
Compensation Committee and the Audit Committee. The Compensation Committee and
the Audit Committee are each comprised of Mr. Skiba and Mr. Frank. The
Compensation Committee is responsible for recommending to the Board of Directors
the Company's executive compensation policies for senior officers and
administering the 1996 Amended and Restated Stock Option Plan (the "Plan") and
the Purchase Plan. The Compensation Committee held three meetings during 1998,
and also acted on several occasions during 1998 by unanimous consent. The Audit
Committee is responsible for recommending independent auditors, reviewing the
audit plan, the adequacy of internal controls, the audit report and management
letter, and performing such other duties as the Board of Directors may from time
to time prescribe. The Audit Committee held two meetings during 1998.
The Board of Directors does not have a standing Nominating Committee.
The Board of Directors held thirteen meetings during 1998. During 1998,
each director attended at least 75% of the meetings of the Board of Directors
and committees on which he served.
Director Compensation
The Company pays each nonemployee director of the Company a $3,750
quarterly retainer and a fee of $1,000 ($250 if such director's attendance is
via teleconference) for each meeting of the Board of Directors of the Company
that he attends. The Company also reimburses each director for ordinary and
necessary travel expenses related to such director's attendance at Board of
Directors and committee meetings. Nonemployee directors are also eligible for
stock option grants under the Plan.
Each advisory director of the Company is paid a $2,500 quarterly retainer
and a fee of $1,000 ($250 if such advisory director's attendance is via
teleconference) for each meeting of the Board of Directors of Matrix Bancorp
that he attends. The Company also reimburses each advisory director for ordinary
and necessary travel expenses related to such advisory director's attendance at
Board of Directors meetings. Advisory directors are also eligible for stock
option grants under the Plan.
8
<PAGE>
Compensation of Executive Officers
The Summary Compensation Table below provides certain summary information
concerning compensation paid or accrued during 1996, 1997, and 1998 by the
Company to or on behalf of the Chief Executive Officer and the four other
highest paid executive officers of the Company whose salary and bonus for 1998
was in excess of $100,000:
<TABLE>
<CAPTION>
Annual Long-Term
Compensation(1) Compensation
----------------------------------------------- ------------
Other Annual Options/
Name and Principal Positions Year Salary Bonus Compensation SARs
- ------------------------------------------------------------------------------------------------- ------------
<S> <C> <C> <C> <C> <C>
Guy A. Gibson
President, Chief Executive Officer and Director 1998 $250,000 $50,000 $ -- --
of Matrix Bancorp; Chairman of the 1997 250,000 -- -- --
Board of Matrix Financial 1996 250,000 -- 47,514(2) --
Richard V. Schmitz
Chairman of the Board of Matrix Bancorp; 1998 $250,000 $50,000 $ -- --
Chairman of the Board of United Financial 1997 257,211 -- -- --
1996 250,000 -- -- --
D. Mark Spencer
Vice Chairman of Matrix 1998 $250,000 $50,000 $ -- --
Bancorp; Chairman of the Board of Matrix 1997 257,211 -- -- --
Bank 1996 250,000 -- -- --
Thomas M. Piercy
Director of Matrix Bancorp; 1998 $250,000 $ -- $ -- --
Managing Director of United Financial 1997 280,631 -- -- --
1996 293,626 -- -- --
Thomas P. Cronin
Vice Chairman of Matrix Bancorp; 1998 $250,000 $ --(8) $ -- --
Chief Executive Officer of United 1997 208,333 20,000 -- 25,000(5)
Financial 1996 -- -- -- --
<CAPTION>
All Other
Name and Principal Positions Compensation
- ------------------------------------------------ ------------
<S> <C>
Guy A. Gibson
President, Chief Executive Officer and Director $33,500 (3)(4)(7)
of Matrix Bancorp; Chairman of the 8,375 (3)(4)
Board of Matrix Financial 8,375 (3)(4)
Richard V. Schmitz
Chairman of the Board of Matrix Bancorp; $31,820 (3)(4)(7)
Chairman of the Board of United Financial 8,525 (3)(4)
8,375 (3)(4)
D. Mark Spencer
Vice Chairman of Matrix $34,920 (3)(4)(7)
Bancorp; Chairman of the Board of Matrix 9,025 (3)(4)
Bank 8,375 (3)(4)
Thomas M. Piercy
Director of Matrix Bancorp; $ --
Managing Director of United Financial 373 (6)
2,375 (4)
Thomas P. Cronin
Vice Chairman of Matrix Bancorp; $ 2,500 (4)
Chief Executive Officer of United --
Financial --
</TABLE>
___________
(1) Annual compensation does not include the cost to the Company of benefits
certain executive officers receive in addition to salary and cash bonuses.
The aggregate amounts of such personal benefits, however, did not exceed the
lesser of either $50,000 or 10% of the total annual compensation of such
executive officer. The bonus amount reflected for each such person for 1998
was actually paid in 1999.
(2) Amount specified represents payments made to Mr. Gibson during the year
shown in respect of Mr. Gibson's accrued tax liability during prior periods
in which the Company operated as an "s" corporation.
(3) Of this amount, $6,000 represents directors fees paid by Matrix Bank for
such person's service on that entity's board of directors for each of 1996,
1997 and 1998, except that such amount for 1997 is only $5,500 for Mr.
Schmitz.
(4) Of this amount, $2,375, $2,375, and $2,500, respectively, represents the
Company's contribution to such person's account maintained under the 401(k)
savings plan during 1996, 1997 and 1998, respectively.
(5) The exercise price for these options is $13.75. These options become
exercisable ratably over five years, with the first 20% exercisable as of
March 3, 1998.
(6) Represents the Company's contribution to Mr. Piercy's account maintained
under the 401(k) savings plan during 1997.
(7) Represents premium paid by the Company for life insurance policies owned by
and payable to the family of each executive officer. Annual premiums paid
in 1998 were $25,000 for Mr. Gibson, $23,320 for Mr. Schmitz, and $26,420
for Mr. Spencer.
(8) Amount of Mr. Cronin's bonus for 1998 has not yet been determined.
9
<PAGE>
Exercises of Options
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during fiscal 1998, and
unexercised options held as of December 31, 1998. No options were exercised by
the Named Executive Officers during 1998.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Number of Unexercised in-the-money
Shares options options
Acquired at FY-end: at FY-end:
on Exercisable/ Exercisable/
Name Exercise Value Realized Unexercisable Unexercisable(1)
- --------------------------- ----------- -------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Guy A. Gibson.............. -- -- --/-- $ --/--
Richard V. Schmitz......... -- -- --/-- --/--
D. Mark Spencer............ -- -- --/-- --/--
Thomas M. Piercy........... -- -- --/-- --/--
Thomas P. Cronin........... -- -- 5,000/20,000 --/--
</TABLE>
___________
(1) Values are stated based upon the closing price of $13.50 per share of the
Common Stock on the Nasdaq National Market on December 31, 1998, the last
trading day of the Company's fiscal year.
Compensation Committee Report on Executive Compensation
The Board of Directors has established a Compensation Committee to review
and approve the compensation levels of executive officers of the Company,
evaluate the performance of the executive officers, consider senior management
succession issues and any related matters for the Company. The Compensation
Committee is charged with reviewing with the Board of Directors in detail all
aspects of the cash compensation for executive officers of the Company. Stock
option compensation for the executive officers is also considered by the
Compensation Committee.
The philosophy of the Company's compensation program is to employ, retain
and reward executives capable of leading the Company in achieving its business
objectives. These objectives include preserving a strong financial posture,
increasing the assets of the Company, positioning the Company's assets and
business operations in geographic markets and industry segments offering long
term growth opportunities, enhancing stockholder value and ensuring the survival
of the Company. The accomplishment of these objectives is measured against
conditions prevalent in the industry within which the Company operates. In
recent years these conditions reflect a highly competitive market environment
and rapidly changing regional, geographic and overall industry market
conditions. The Compensation Committee is also mindful, however, of the fact
that several of the Company's executive officers have entered into employment
agreements in connection with their agreements to join the Company; accordingly,
with respect to those executive officers, the Compensation Committee recognizes
that, to a large degree, compensation for such persons is set by contract.
In late 1997, the Compensation Committee retained Bank Compensation
Strategies, Inc. ("BCS") to analyze and review the Company's management
compensation structure and elements. BCS made an initial proposal to the
Compensation Committee for an annual incentive plan. This plan was tabled in
mid-1998 during the pendency of the Company's proposed merger with Fidelity
National Financial, Inc. ("Fidelity"). Since the termination of such proposed
merger, the Compensation Committee is once again pursuing the proposal. The
proposed plan is based upon targeted goals and objectives and a comparison
10
<PAGE>
to a peer group of companies. The performance criteria include, depending on the
executive in question, the Company's return on equity and budgeted pretax net
income. The Compensation Committee expects formal implementation of the final
plan by the date of the Annual Meeting and that the criteria with respect to
such plan will apply to executive compensation beginning with the 1999 year.
The Compensation Committee has determined in general that the available
forms of executive compensation should include base salary, cash bonus awards
and stock options. Performance of the Company, including stock price
performance, for 1998 was targeted as a key consideration (to the extent that
such performance can fairly be attributed or related to such executive's
performance) for determining 1998 executive compensation, as well as the nature
of each executive's responsibilities and capabilities. The Company's
compensation philosophy recognizes, nevertheless, that stock price performance
is only one measure of performance and, given industry business conditions and
the long term strategic direction and goals of the Company, it may not
necessarily be the best current measure of executive performance. For example,
in 1998, the Company executed an agreement to merge the Company with Fidelity.
After termination of the proposed merger, the Company's stock price fell,
settling at levels approximating those immediately prior to the announcement of
the proposed merger. The Compensation Committee, therefore, did not place
significant weight on 1998 stock price performance in evaluating 1998 executive
compensation. The Company's compensation philosophy also gives consideration to
the Company's achievement of specified business objectives, such as earnings
expectations and return on equity, when determining executive officer
compensation. The Compensation Committee endeavors to compensate the Company's
executive officers based upon a Company-wide salary structure consistent for
each position relative to its authority and responsibility compared to industry
peers.
An additional objective of the Compensation Committee in determining
compensation is to reward executive officers with equity compensation in
addition to salary in keeping with the Company's overall compensation
philosophy, which attempts to place equity in the hands of its employees in an
effort to further instill shareholder considerations and values in the actions
of all the employees and executive officers. In making its determinations, some
consideration is given by the Compensation Committee to the number of options
already held by such persons and the existing amount of Common Stock already
owed by such persons.
Executive compensation for 1998 consisted of a base salary, cash bonuses
and option grants. As discussed more fully below, cash bonuses and option grants
for 1998 were paid or granted during 1999 after review by the Compensation
Committee of the Company's and management's performance during 1998. With
respect to base salary, the Compensation Committee met in early 1998 to set base
salary for each of the executive officers of the Company. In determining base
salary for the executive officers, the Compensation Committee reviewed several
factors, paying particular attention to the Company's results of operations and
return on average equity for the year ended December 31, 1997. The Compensation
Committee also reviewed the performance of the Company's stock price during
1997. The Compensation Committee noted that the Company's net income per share
for 1997 was $1.20, that the return on average equity for the Company for 1997
was 22.7%, and that the Company's stock price for 1997 had remained relatively
flat. In particular, the Compensation Committee noted that the return on average
equity for 1997 for the Company was generally favorable in comparison to
industry peers. Based upon such review, the Compensation Committee determined to
maintain the base salary for 1998 of Mr. Gibson, President and Chief Executive
Officer of the Company, and one of the principal shareholders of the Company, at
the 1997 level of $250,000. With respect to Messrs, Schmitz and Spencer, also
principal shareholders of the Company, their respective base salaries for 1998
were also maintained at the 1997 level of $250,000. The other executive officers
of the Company who were employed at the time of the decision by the Compensation
Committee generally received modest base salary increases for 1998 due to the
factors discussed above, as well as due to the overall growth of the Company
during 1997, which necessarily increased the duties of such executive officers.
The base salary of Mr. George Bender, President and Chief Executive Officer of
Matrix Financial, who joined the Company in October 1998 was determined
11
<PAGE>
by arms-length negotiation.
The cash bonuses to the executive officers of the Company for performance
during 1998 were paid in the first quarter of 1999. The Compensation Committee
met in February 1999 to consider the payment of cash bonuses to executive
officers for 1998 performance. The Compensation Committee reviewed the
Company's financial performance during 1998, including net income per share and
return on average equity, as well as the Company's stock price performance for
1998. With respect to the Company's stock price performance, the Compensation
Committee did not place significant weight on such performance due to the
factors discussed above with respect to the proposed merger with Fidelity, as
the Compensation Committee did not believe the Company's stock price during the
pendency of the proposed merger, or the price immediately after announcement of
the termination thereof, accurately reflected the Company's financial
performance. Based upon such factors, and in light of the fact that Mr. Gibson
had received no cash bonus for the several previous years, the Compensation
Committee determined to pay Mr. Gibson a cash bonus of $50,000. Similarly, the
Compensation Committee determined to pay Messrs. Schmitz and Spencer each a cash
bonus of $50,000. With the exception of Messrs. Bender and Cronin, the other
executive officers of the Company were paid cash bonuses that were consistent
with the cash bonuses paid to executive officers of the Company in prior years.
Option grants for performance during 1998 were also made to executive
officers during the first quarter of 1999. During its meetings, the
Compensation Committee reviewed a proposal by management to grant options to
various employees within the Company, including several executive officers. The
Compensation Committee generally reviewed the same factors as discussed above
with respect to cash bonuses paid in determining whether or not to grant options
to executive officers of the Company based upon 1998 performance. Messrs.
Gibson, Spencer and Schmitz were not granted options due to their significant
equity positions in the Company. The other executive officers were generally
granted options to purchase 5,000 or fewer shares of the Company's common stock
on terms, including vesting schedules, that were consistent with prior grants to
all employees of the Company.
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1 million
paid to any of the Chief Executive Officer and the four other most highly
compensated executive officers. Certain performance-based compensation, however,
is specifically exempt from the deduction limit. The Company does not have a
policy that requires or encourages the Compensation Committee to qualify stock
options or restricted stock awarded to executive officers for deductibility
under Section 162(m) of the Internal Revenue Code. However, the Compensation
Committee will consider the net cost to the Company in making all compensation
decisions.
COMPENSATION COMMITTEE
Stephen G. Skiba
David A. Frank
12
<PAGE>
Compensation Committee Interlocks and Insider Participation
There are no reportable compensation committee interlocks or insider
participation matters.
Common Stock Performance Graph
The following performance graph compares the cumulative return of the Common
Stock with that of the Broad Market (the NASDAQ Market Index) and a published
industry index (SIC Code 6035-Savings Institutions, Federally-Chartered). Each
index assumes $100 invested at October 18, 1996 and is calculated assuming
quarterly reinvestment of dividends and quarterly weighting by market
capitalization.
COMPARATIVE RETURNS
Matrix Bancorp, Inc., Broad Market and Published Industry Index
(Performance Results Through 12/31/98)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Beginning Year Ended Year Ended Year Ended
October 18, 1996 December 31, 1996 December 31, 1997 December 31, 1998
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Matrix Bancorp, Inc. 100.00 141.11 135.56 120.00
- ------------------------------------------------------------------------------------------------
Industry Index 100.00 106.35 180.28 153.17
- ------------------------------------------------------------------------------------------------
Broad Index 100.00 105.97 129.63 182.83
- ------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 31, 1998, the Company renewed a loan originally made to Mr.
Spencer, Vice Chairman of the Board and a shareholder of the Company, in
December 1994 in the amount of approximately $80,000. The loan to Mr. Spencer
accrues interest at the prime rate, is unsecured, and the entire principal and
all accrued interest is due and payable in one lump sum on December 30, 1999.
The Company has the option of extending the maturity of such loan to Mr. Spencer
in annual increments.
On September 9, 1998, the Company made a loan to Mr. Piercy, Managing
Director of United Financial and a director of the Company, in original
principal amount of $85,000. Subsequent to year end, this loan to Mr. Piercy
was cancelled. Prior to cancellation, the loan to Mr. Piercy accrued interest
at the prime rate, was unsecured, and the entire principal and all accrued
interest was due and payable in one lump sum on September 8, 1999. On
January 15, 1999, the Company made an additional loan to Mr. Piercy in original
principal amount of $195,000. This loan to Mr. Piercy accrues interest at 10%
per annum, is secured by shares of the Company held by Mr. Piercy, and the
entire principal balance and any accrued interest is due and payable upon demand
or December 31, 1999, whichever occurs first.
During 1998, Matrix Financial refinanced Mr. McConnell's mortgage loan in
the amount of approximately $320,000. Mr. McConnell is Senior Vice President and
General Counsel of the Company. Such mortgage loan was made in the ordinary
course of business of the Company, was made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and did not involve more than the
normal risk of collectibility or present other unfavorable features. Such
mortgage loan was subsequently sold by the Company to an unaffiliated third-
party investor at a fair market value.
Sterling Trust occupies approximately 11,300 square feet in Waco, Texas,
under a lease agreement that is in place until June 30, 2001, at a monthly
rental payment of $13,553. The lease agreement provides for renewal options and
allocation of certain expenses the lessee would reimburse over a specified
amount during the life of the lease. Mr. Skretny, President of Sterling Trust
and an executive officer of the Company, owns approximately 12.5% of the equity
interests of the lessor of such office space.
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 officers and directors, and persons who
own more than 10% of a registered class of the Company's equity securities (the
"10% Shareholders"), to file reports of ownership and changes of ownership with
the Commission and NASDAQ National Market. Officers, directors and 10%
Shareholders of the Company are required by Commission regulation to furnish the
Company with copies of all Section 16(a) forms so filed.
Based solely on review of copies of such forms received and written
representation letters from executive officers and directors, the Company
believes that, during the last fiscal year, all filing requirements under
Section 16(a) applicable to its officers, directors and 10% Shareholders were
timely, except that Mr. Skretny failed to file a Form 4 with respect to two
transactions (which transactions were reported on a Form 5 that was filed
timely).
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
EACH OF THE INDIVIDUALS NOMINATED FOR ELECTION AS A DIRECTOR.
Because management of the Company beneficially owns in excess of 50% of the
outstanding Common Stock entitled to vote at the Annual Meeting, and management
has indicated its intent to vote in favor of the nominees for director, election
of the nominees for director is virtually ensured.
14
<PAGE>
PROPOSAL TO RATIFY APPOINTMENT OF
INDEPENDENT AUDITORS
(Proposal 2)
The Board of Directors has appointed Ernst & Young LLP, independent
auditors, to be the principal independent auditors of the Company and to audit
its consolidated financial statements for the fiscal year ending December 31,
1999. Ernst & Young LLP served as the Company's independent auditors for the
fiscal year ended December 31, 1998, and has reported on the Company's
consolidated financial statements. Representatives of the firm will be present
at the Annual Meeting, will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions from
shareholders.
The Board of Directors has the responsibility for the selection of the
Company's independent auditors. Although shareholder ratification is not
required for the selection of Ernst & Young LLP, and although such ratification
will not obligate the Company to continue the services of such firm, the Board
of Directors is submitting the selection for ratification with a view towards
soliciting the shareholders' opinion thereon, which may be taken into
consideration in future deliberations. If the appointment is not ratified, the
Board of Directors must then determine whether to appoint other auditors before
the end of the current fiscal year, and in such case, shareholders' opinions
would be taken into consideration.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR
THE 1999 FISCAL YEAR.
Because management of the Company beneficially owns in excess of 50% of the
outstanding Common Stock entitled to vote at the Annual Meeting, and management
has indicated its intent to vote in favor of the ratification of the appointment
of Ernst & Young LLP, such ratification is virtually ensured.
15
<PAGE>
OTHER BUSINESS
(Proposal 3)
The Board of Directors knows of no other business to be brought before the
Annual Meeting. If, however, any other business should properly come before the
Annual Meeting, the persons named in the accompanying proxy will vote the proxy
as in their discretion they may deem appropriate, unless they are directed by
the proxy to do otherwise.
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS
For shareholder proposals to be considered for inclusion in the Proxy
Statement for the 2000 Annual Meeting, they must be received by the Company no
later than December 16, 1999. The Company's proxies may exercise their
discretionary authority to vote with respect to any shareholder proposal that
may be presented at the 2000 Annual Meeting if the Company first receives notice
of such proposal after February 29, 2000.
BY ORDER OF THE BOARD OF DIRECTORS
T. Allen McConnell, Secretary
April 14, 1999
Denver, Colorado
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE ANNUAL MEETING AND WISH THEIR STOCK TO BE VOTED ARE URGED
TO DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED SELF-ADDRESSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
16
<PAGE>
PROXY
MATRIX BANCORP, INC.
1380 Lawrence Street, Suite 1400
Denver, Colorado 80204
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David W. Kloos and T. Allen McConnell, and
each of them, as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and vote, as designated below, all of the
shares of the common stock of Matrix Bancorp, Inc. (the "Company"), held of
record by the undersigned on April 9, 1999, at the Annual Meeting of
Shareholders of the Company to be held on May 14, 1999, and any adjournment(s)
thereof.
(To Be Dated And Signed On Reverse Side)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED AND DATED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES UNDER PROPOSAL 1, IN
FAVOR OF PROPOSAL 2, AND THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO
ANY MATTERS REFERRED TO IN PROPOSAL 3.
1. PROPOSAL TO ELECT AS DIRECTORS OF THE COMPANY THE FOLLOWING PERSONS TO HOLD
OFFICE UNTIL THE 2002 ANNUAL ELECTION OF DIRECTORS BY SHAREHOLDERS OR UNTIL
THEIR SUCCESSORS HAVE BEEN DULY ELECTED AND QUALIFIED.
[_] FOR all nominees listed (except as marked below to the contrary)
[_] WITHHOLD AUTHORITY to vote for all nominees listed
D. Mark Spencer, Richard V. Schmitz
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
Withhold:
----------------------------------
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS FOR THE 1999 FISCAL YEAR.
[_] FOR [_] AGAINST [_] ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
[_] FOR [_] AGAINST [_] ABSTAIN
DATED: , 1999
-------------------------------------------
-------------------------------------------
(Signature)
-------------------------------------------
(Signature if Held jointly)
NOTE: Please execute this proxy as your name appears hereon. When shares are
held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by the
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person. PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
