SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended December 31, 1993
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period _________ to ____________
Commission File Number 1-9018
METROPOLITAN FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
45-0388518
(I.R.S. Employer Identification Number)
1000 Metropolitan Centre, 333 South Seventh Street
Minneapolis, Minnesota 55402
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (612) 399-6000
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, Par Value $.01 Per Share
Name of Each Exchange on Which Registered
New York Stock Exchange, Inc.
Securities Registered Pursuant to Section 12(g) of the Act:
$2.875 Cumulative Perpetual Preferred Stock, Series B and
Warrants to Purchase Shares of Common Stock
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such requirements
for the past 90 days. [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
As of February 28, 1994, the Registrant had 30,927,864 shares of Common Stock
issued and outstanding. The aggregate market value of the voting stock held by
non-affiliates of the Registrant, based on the closing sale price per share of
the Registrant's Common Stock as reported on the New York Stock Exchange
composite tape on February 28, 1994, was $490,979,841. (The exclusion from
such amount of the market value of the shares owned by any person shall not be
deemed an admission by the Registrant that such person is an affiliate of the
Registrant.)
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II of this Annual Report on Form 10-K incorporate by reference
information (to the extent specific pages are referred to herein) from the
Registrant's Annual Report to Shareholders for the year ended December 31, 1993
(the "1993 Annual Report"). Part III of this Annual Report on Form 10-K
incorporates by reference information (to the extent specific sections are
referred to herein) from the Registrant's Proxy Statement for its Annual Meeting
to be held May 4, 1994 (the "1994 Proxy Statement").
1
PART I
Item 1.BUSINESS.
General
Metropolitan Financial Corporation (the "Company") is a regional financial
services holding company. The Company's mission is to be the premier provider
of community financial and home ownership services throughout its markets by
offering exceptional value to its customers, resulting in profitable growth,
fulfilling careers and community enhancement. The primary operations of the
Company are in North Dakota, Minnesota, Nebraska, Iowa, Kansas, South Dakota,
Wisconsin and Arizona.
The Company operates an FDIC insured consumer savings bank, Metropolitan Federal
Bank, fsb (the "Bank"), which concentrates on the traditional thrift business of
soliciting deposits and making residential mortgage and other secured consumer
loans. The Bank solicits deposits and makes residential mortgage and other
secured consumer loans through more than 190 full service branches. Through its
mortgage loan production offices in Minnesota and Arizona, as well as its branch
offices, the Bank originates and services first mortgage loans for the purchase
of one to four family residential properties. The Company's residential real
estate brokerage subsidiary, Edina Realty, Inc. ("Edina Realty"), and title
company subsidiary, Equity Title Services ("Equity Title") are among
Minnesota's largest providers of their respective services. Edina Realty and
Equity Title conduct their business in Minnesota and western Wisconsin.
Certain financial services products like annuities, uninsured investments,
such as mutual funds, and insurance are provided to customers through a
subsidiary operating as Metropolitan Financial Services ("MFS").
The Company's primary objective is to maximize shareholder value through the
traditional thrift mission of promoting savings and home ownership. To achieve
its objective, the Company has identified the goals of continuing to expand the
geographic area, presence and market share of its subsidiaries, thereby further
strengthening the Company's financial condition and enhancing its financial
performance.
The Company was organized under the laws of the State of Delaware in February
1984. All references to the Company or the Bank include its respective
consolidated subsidiaries, unless the context otherwise requires. The principal
executive office of the Company is located at 1000 Metropolitan Centre, 333
South Seventh Street, Minneapolis, Minnesota 55402. The Company's telephone
number is (612) 399-6000.
Additional discussion of the Company's business can be found in Management's
Discussion and Analysis of Financial Condition and Results of Operations and
Notes to Consolidated Financial Statements of the 1993 Annual Report, which is
incorporated herein by reference.
Page
Distribution of Assets, Liabilities, and Shareholders' Equity;
Interest Rates and Interest Differential 22, 33 & 35
Assets available for sale 41
Investment Portfolio 29, 30, 41 & 42
Loan Portfolio 26-29, 42 & 43
Summary of Loan Loss Experience 42 & 43
Deposits 31 & 44
Return on Equity and Assets 17
Short Term Borrowings 31, 44 & 45
Acquisitions 18, 19, 38 & 39
2
Competition
The Bank actively competes for savings deposits with thrift institutions and
banks located in its primary market areas. The deposit programs of thrift
institutions such as the Bank also compete with government securities, money
market mutual funds, and other investment alternatives. The Bank competes for
residential mortgage loans, with thrift institutions, banks, mortgage banking
companies, life insurance companies and other types of lenders. Interest
rate, loan origination fees and range of services offered are the primary
factors in competing for these loans. Access to prospective mortgage
customers is facilitated by the ownership of Edina Realty.
Edina Realty actively competes for real estate brokerage business in the
Minneapolis-St. Paul metropolitan area and other areas of Minnesota and western
Wisconsin. The primary sources of competition are other large regional and
national real estate brokerage firms. Attracting and retaining a large and
effective group of sales associates is the main factor in competing within the
real estate brokerage business. The Company seeks to accomplish these goals
through compensation and service.
Equity Title competes for mortgage title and closing business in the
Minneapolis-St. Paul metropolitan area and other areas of Minnesota and
western Wisconsin. Equity Title competes principally with local and regional
title closing companies. The main factors for competing in the industry are
price and service quality.
MFS, a registered broker-dealer, offers bank customers financial advice and an
array of investment products, including fixed and variable annuities, mutual
funds, unit investment trusts and life insurance. MFS' competition is
principally other financial institutions, brokerage houses and other
financial intermediaries. Access to prospective customers is facilitated by
the Bank.
Employees
At December 31, 1993, the Company had approximately 2,600 full time equivalent
employees. Edina Realty works with approximately 2,000 sales associates who
function as independent contractors.
The Company maintains a comprehensive employee benefit program providing, among
other benefits, a qualified pension plan, 401-K savings plan, stock purchase
plan, paid sick leave, hospitalization, dental and major medical insurance, life
insurance, short and long term disability insurance and education assistance.
Regulation
The following discussion is a summary of some of the important statutes and
regulations applicable to the Company and the Bank. It is not an exhaustive
description of applicable statutes and regulations, but rather an outline of
those which are most significant, and it is qualified in its entirety by
reference to the provisions described.
Regulatory Structure. The Company is a savings and loan holding company, and
the Bank is a federal savings association. As such, both the Company and the
Bank are subject to regulatory examination and supervision by the Office of
Thrift Supervision (the "OTS"), and in certain circumstances by the Federal
Deposit Insurance Corporation (the "FDIC") because the Bank's deposits are
insured by the FDIC. The Bank is also subject to some regulation by the
Federal Reserve Board.
The Bank is a member of the Federal Home Loan Bank ("FHLB") of Des Moines, which
is one of 12 regional FHLB's governed by the Federal Housing Finance Board.
As a member of a FHLB, the Bank is required to purchase and maintain stock in
its FHLB. The Bank meets the applicable requirement.
Regulatory Capital. Under regulatory capital regulations issued by the OTS,
thrift institutions are required to maintain the three following capital
standards.
3
First, thrift institutions must maintain a ratio of tangible capital to adjusted
total assets of at least 1.5%. Tangible capital is defined as common
shareholders' equity, noncumulative preferred stock, nonwithdrawable accounts
and pledged deposits, minority interests in fully consolidated subsidiaries,
and purchased mortgage servicing rights ("PMSRs"), (which may constitute up
to 50% of tangible capital), less total intangible assets (except for
includable PMSRs) and certain investments in subsidiaries that conduct
activities not permissible for a national bank.
Second, thrift institutions must maintain a ratio of core capital to adjusted
total assets of at least 3%. Core capital generally includes common
shareholders' equity, noncumulative preferred stock and related surplus, and
minority interests in fully consolidated subsidiaries, PMSRs and purchased
credit card relationships ("PCCRs") (which PMSRs may collectively constitute up
to 50% of core capital), less intangible assets (except for includable PMSRs
and PCCRs). Until 1995, thrift institutions which are in substantial
compliance with all applicable laws and regulations and are generally judged
to be safe and sound will also be permitted to include a percentage (.375%
at January 1, 1994, decreasing to 0% on January 1, 1995) of qualifying
supervisory goodwill (in existence on April 12, 1989) in core capital.
Third, thrift institutions must maintain a ratio of total capital to total risk
weighted assets equal to 8.0%. Total capital consists of core capital, plus
supplementary capital in an amount up to 100% of core capital. Supplementary
capital includes certain permanent capital instruments such as cumulative
perpetual preferred stock, certain subordinated debt securities and a limited
percentage of loan loss reserves. Total risk weighted assets are determined by
assigning a risk weight to each of the institution's assets depending on the
risk inherent in the type of asset. Certain off balance sheet items must be
included in the calculation of risk weighted assets by being converted into
balance sheet equivalent amounts and multiplied by the assigned risk weights.
The applicable risk weights, as defined by regulation, range from 0% for cash
and certain government obligations to 100%.
The OTS amended its risk-based capital requirements, generally effective
January 1, 1994, to require thrift institutions with more than a "normal"
level of interest rate risk to maintain additional total capital. A savings
institution's interest rate risk will be measured in terms of the sensitivity
of its "net portfolio value" to changes in interest rates. The interest rate
risk amendments have not had a material impact on the Company's regulatory
capital ratios.
As of December 31, 1993, the Bank met all three fully phased in capital
requirements. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations-Capital Adequacy" in the 1993 Annual Report on page
32.
Thrift institutions are subject to additional minimum regulatory capital
regulations that require thrift supervisory agencies to take certain prescribed
prompt corrective action in the event an institution fails to meet minimum
capital levels of its ratios of total capital to total risk-weighted assets
("risk-based"), core capital to total risk-weighted assets ("Tier 1 risk-
based"), and core capital to adjusted total assets ("leverage"). These three
ratios are used to classify thrift institutions into five separate capital
categories: well capitalized (10%, 6%, and 5%), adequately capitalized (8%,
4%, and 4% (or 3% if the institution is rated composite 1 under the OTS MACRO
rating system and is experiencing no significant growth)), and three
undercapitalized categories. Lower classification results in increasingly
severe supervisory restrictions on thrift activities, although the activities
of well and adequately capitalized thrifts are relatively unencumbered.
Under the prompt corrective action regulations, however, all institutions
are restricted from making any capital distributions or paying any management
fees that would cause the institution to fail to satisfy the minimum levels
for any of its capital requirements. Undercapitalized thrifts are required to
timely submit and adhere to a plan to restore capital to adequate levels. As
of December 31, 1993, the Bank was classified as well capitalized. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-Capital Adequacy" in the 1993 Annual Report on page 32.
Qualified Thrift Lender Status. In order to qualify as a qualified thrift
lender ("QTL"), an institution currently must maintain a minimum of 65% of
certain tangible assets in certain qualifying housing and consumer related
activities. At December 31, 1993, based on its asset composition, the Bank
was a "qualified thrift lender."
An insured institution that does not maintain its status as a QTL is subject to
the dividend, branching, and new activity restrictions applicable to banks, and
will be ineligible for new FHLB advances. An institution failing to regain QTL
status after three years will be required to divest investments in or
discontinue activities that are not permissible for banks. In addition, a
unitary savings and loan holding company, such as the Company, that owns a
thrift failing the QTL test becomes subject to activity restrictions applicable
to multiple savings and loan holding companies, unless the thrift regains its
QTL status within a one-year period.
4
Restrictions on Dividends. Savings associations are limited in the amount of
"capital distributions" that they are permitted to make, including cash
dividends, payments by a savings association to repurchase or otherwise
acquire its shares, payments to shareholders of another entity in a cash out
merger and other distributions charged against capital. The regulation also
applies to capital distributions that the Bank may make to the Company,
thereby affecting the dividends that the Company may pay to its shareholders.
The regulation requires that the Bank provide the OTS with 30 days prior
written notice of any capital distribution (which period begins to run from the
date of OTS receipt of notice). A dividend declared within the notice period,
or without giving the prescribed notice, is invalid. The regulation
establishes a three tiered system of regulation, with the greatest
flexibility being afforded to well capitalized institutions such as the Bank.
An institution that has regulatory capital that is at least equal to its
fully phased in capital requirements, and has not been notified that it "is
in need of more than normal supervision," is a Tier 1 institution. Any
institution that has regulatory capital at least equal to it minimum
capital requirement, but less than its fully phased in capital requirements,
is a Tier 2 institution. An institution having regulatory capital that is
less than its minimum capital requirements is a Tier 3 institution. At
December 31, 1993, the Bank qualified as a Tier 1 institution.
A Tier 1 institution is permitted, after prior notice to the OTS, to make
capital distributions up to the higher of 100% of its net income to date
during the calendar year plus the amount that would reduce by one-half its
"surplus capital ratio" (the percentage by which the ratio of its regulatory
capital to assets exceeds its fully phased in capital ratio) at the beginning
of the calendar year or 75% of its net income over the most recent four-quarter
period. Any additional amount of capital distributions would require prior
regulatory approval. A Tier 2 institution is permitted, after prior notice
to the OTS, to make capital distributions in amounts up to 75% of its net
income for the most recent four quarters, if it maintains total regulatory
capital equal to at least 8% of its risk weighted assets, which the amount
of capital distributions permitted is reduced by the amount of capital
distributions that the institution previously has made during the four
quarter period. A Tier 3 institution is not authorized to make any capital
distributions except with prior OTS approval or pursuant OTS approved
capital plan.
Liquidity. Applicable regulations require member institutions to maintain an
average daily balance of liquid assets equal to 5% of the sum of their average
daily balance of net withdrawable deposit accounts and current borrowings
(borrowings payable in one year or less). At December 31, 1993, the Bank was in
compliance with this requirement, with a liquidity ratio of 6.7%.
Loans to One Borrower Restrictions. Permissible lending limits for loans to one
borrower are the greater of $500,000 or 15% of unimpaired capital and surplus
(except for loans fully secured by certain readily marketable securities, in
which case this limit is increased to 25% of unimpaired capital and surplus).
At December 31, 1993, the Bank did not have any borrowers above the lending
limits.
Insurance of Accounts and Regulation by the FDIC. The Bank is a member of the
Savings Association Insurance Fund ("SAIF"), which is administered by the FDIC.
The FDIC has certain regulatory and oversight authority over federal savings
associations, such as the Bank. The deposits of the Bank are insured up to
$100,000 per insured depositor (as defined by law and regulations) by the
SAIF and are backed by the full faith and credit of the United States
Government. Pursuant to FDIC regulations, well capitalized thrifts may
accept brokered deposits, adequately capitalized institutions may do so only
with FDIC approval, while under capitalized thrift institutions may not accept
such deposits. As insurer, the FDIC is authorized to conduct examinations of
and to require reporting by FDIC insured institutions. It also may prohibit any
FDIC insured institution from engaging in any activity the FDIC determines by
regulation or order to pose a serious threat to the SAIF. The FDIC also has
the authority to initiate enforcement actions against savings associations,
after giving the OTS an opportunity to take such action. The FDIC has adopted
a risk-based assessment system that assesses insurance premiums
significantly higher than the premiums formerly charged and that places
higher assessments on those thrifts that pose a greater threat to the SAIF.
The system classifies SAIF insured institutions into one of three capital
categories, well capitalized, adequately capitalized or undercapitalized,
based on measurements of their risk-based, Tier 1 risk-based and leverage
ratios. These categories are very similar to those used for purposes of
prompt corrective action regulations. Within each of these three capital
groups, institutions are further classified into one of three subgroups
principally on the basis of supervisory evaluations by the institution's
primary supervisory authority. The assessment rate will vary from 0.23% of
deposits for well capitalized institutions in the highest subgroup to 0.31%
of deposits for undercapitalized institutions in the lowest subgroup. As of
January 1, 1994, the Bank was classified as well capitalized. In addition,
the FDIC has authority to increase SAIF assessment rates.
5
Transactions with Affiliates. All transactions involving a savings association
and its affiliates are subject to sections 23A and 23B of the Federal Reserve
Act ("FRA"). Generally, these sections restrict certain of these
transactions to a percentage of a savings association's capital and require such
transactions to be on terms consistent with safe and sound banking practice and
as favorable to the savings association as transactions with nonaffiliates.
The affiliates of a savings association include any company (i) that controls
the savings association, (ii) with which the savings association is under
common control, (iii) controlled by controlling shareholders of the savings
association or the company controlling the savings association, (iv) with a
majority of interlocking directors with the savings association or the
company controlling the savings association and (v) sponsored and advised on
a contractual basis by the savings association or any of its subsidiaries or
affiliates. The Bank's subsidiaries are not deemed affiliates; however,
transactions between the Bank or any of its subsidiaries and any affiliates
are subject to the requirements and limits of sections 23A and 23B.
Affiliated persons include insiders, i.e. officers, directors and controlling
(10%) shareholders. Regulations of the OTS also circumscribe the activities
between the bank and its subsidiaries and insiders. Loans to insiders are
subject to Sections 22(g) and 22(h) of the FRA and the regulations
promulgated thereunder. Among other things, such loans must be made on terms
substantially the same as for loans to non-insiders and are subject to the
loans to one borrower restrictions. See "Loans to One Borrower Restrictions."
Total loans to insiders may not, in the aggregate, exceed the Bank's
unimpaired capital and unimpaired surplus.
Change in Control Regulations. Savings and loan holding companies, such as the
Company, are prohibited from directly or indirectly acquiring (i) control of
another thrift institution or thrift holding company without prior OTS approval,
(ii) another thrift institution or thrift holding company or all or
substantially all of the assets of any thrift institution or thrift holding
company without prior OTS approval, (iii) more than 5% of the voting shares
of another thrift institution or thrift holding company which is not a
subsidiary, or (iv) control of an institution not insured by the FDIC.
Savings and loan holding companies are also subject to the Federal Change in
Bank Control Act, which imposes additional notification requirements on the
Company when it acquires control of an FDIC insured institution.
Additionally, savings associations may not acquire control of banks without
the prior approval of the OTS.
Safety and Soundness. On November 18, 1993, the OTS issued proposed regulations
that establish (for savings associations but not holding companies) general
operational and managerial standards for internal controls and information
systems, an internal audit system, loan documentation, credit underwriting,
interest rate exposure, asset growth and compensation matters. Savings
associations will be required to maintain a ratio of classified assets
(generally, substandard or doubtful assets) to total capital (including any
general valuation allowance not eligible for inclusion in total capital for
risk-based capital purposes) of no more than 1.0, or such lesser ratio
required by the OTS. Additionally, a savings association must have minimum
earnings sufficient to absorb losses without impairing capital. The proposed
regulations generally require a savings association holding company to not
pose a serious risk to its savings association subsidiary. The failure of a
savings association or holding company to comply with safety and soundness
standards will result in the required filing of a compliance plan with the
OTS and, potentially, the issuance of an OTS order or other enforcement action.
Possible Restrictions on the Activities of the Corporation and its
Subsidiaries. If the OTS determines there is reasonable cause to believe
that any of the Company's activities present a risk to the soundness or
stability of the Bank, the OTS may restrict the payment of dividends by the
Bank, transactions between the Bank and any affiliate or any Bank activity.
In addition, if the Bank loses its status as a Qualified Thrift Lender, it
could become ineligible to receive FHLB advances and the Company could be
subject to significant restrictions on its activities and additional
regulation. See "Qualified Thrift Lender Status."
Enforcement Powers. The OTS and the FDIC have substantial enforcement remedies,
including civil and criminal penalties, that may be assessed against an
institution or an institution's directors, officers, employees, agents or
independent contractors for failure to comply with OTS or FDIC regulations,
policies and directives. For known violations and under certain other
aggravated circumstances, civil or criminal penalties up to $1,000,000 per
day may be assessed, as well as jail sentences of up to five years. For
lesser violations, penalties of up to $25,000 or $5,000 per day, or lesser
jail sentences, may be imposed.
Item 2.PROPERTIES.
The Company's executive offices are located at 1000 Metropolitan Centre, 333
South Seventh Street, Minneapolis, Minnesota. The Bank's executive offices
are located at 1600 Radisson Tower, Fargo, North Dakota. At December 31,
1993, the Bank had branch offices located in North Dakota (32), Minnesota (58),
Nebraska (26), Iowa (31), Kansas (31), South Dakota (10), Wisconsin (6) and
Arizona (2). The Bank has two mortgage loan production offices in Minnesota
and one in
6
Arizona. In addition to its production offices, the Bank has loan officers
located in Edina Realty locations. Edina Realty which has 49 real estate sales
offices in the states of Minnesota and Wisconsin, has its headquarters
located in Edina, Minnesota. Equity Title, which has 9 closing offices in
the states of Minnesota and Wisconsin, is also headquartered in Edina,
Minnesota. The Company owns and operates 129 of the facilities listed. The
remaining 125 facilities are leased. All of these properties are well
maintained and are adequate to meet the Company's immediate needs.
The Company uses computer service bureaus to perform the primary data processing
functions on a fee for service basis. The Company owns and leases computers,
peripheral equipment and terminals which are used to interface with the service
bureau's equipment. Additional information regarding premises and equipment is
presented in Note I of Notes to Consolidated Financial Statement on page 43
of the 1993 Annual Report, which is incorporated herein by reference.
Item 3.LEGAL PROCEEDINGS.
The Company is not involved in any pending legal proceedings other than
nonmaterial proceedings which arise in the ordinary course of business.
Item 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the quarter ended December 31,
1993.
Item 4A.
EXECUTIVE OFFICERS OF THE REGISTRANT
Name and Age Position held with the Company Other Positions Held During Past Five Years*
on March 23, 1994 and Year First
Elected to Office Indicated
Norman M. Jones (63) Chairman of the Board and Chief
Executive Officer - 1983.
William P. Bartkowski (42) Executive Vice President and Chief Senior Vice President - 1988 and Vice
Administrative Officer - 1990 President - 1984, Director of Corporate
Communications
Jerry L. Record (53) Executive Vice President - 1993; Chairman and President of American
President and Chief Operating Officer Charter Federal Savings & Loan
of Metropolitan Federal Bank, fsb - 1993 Association, Lincoln, Nebraska
Steven B. Dewald (33) Executive Vice President - 1993, Senior Vice President, Corporate
Chief Financial Officer - 1992 Controller - 1990, and Chief Accounting
Officer - 1989
J. Michael Nilles (63) ** Executive Vice President and Partner, Nilles Law Firm, Ltd.
General Counsel - 1990
David J. Melroe (45) Senior Vice President and
Treasurer - 1986
Ronald J. Peltier (45) President and Chief Executive General Manager, Senior Vice President - 1988
Officer of Edina Realty - 1992 of Edina Realty and General Sales Manager -
1979
[FN]
Executive officers of the Company are elected annually by the Board of
Directors and hold office until their successors are duly elected and qualify or
until they resign or are replaced by the Board of Directors.
*All officers and positions described are with the Company except as noted.
** J. Michael Nilles and William O. Nilles, Vice Chairman of the Company, are
siblings.
7
PART II
Item 5.MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.
Information under the caption "Dividends per Common Share" on page 55 and
"Common Stock Prices" on page 56 of the 1993 Annual Report are incorporated
herein by reference. As of March 9, 1994, there were approximately 3,568
common stock record holders.
MFC has paid quarterly cash dividends on its common stock since the 1985 holding
company reorganization and has periodically issued stock dividends on the common
stock.
The Board of Directors considers the advisability and amount of each proposed
dividend. Future cash dividends on the Company's common stock will be
determined on the basis of the Company's income, financial condition, capital
needs, regulatory requirements and other factors deemed relevant by the
Board. There can be no assurance that cash or stock dividends on the common
stock will continue to be declared by the Company.
As a holding company without significant assets other than its equity
interest in the Bank and Edina Realty, the Company's ability to pay cash
dividends on its common stock primarily depends upon the cash dividends it
receives from these subsidiaries. Dividend payments from the Bank are
subject to regulation by the OTS. See "Item 1 - Business - Regulation -
Restrictions on Dividends" for a discussion of regulatory restrictions on the
ability of the Bank to pay dividends. The amount available for payment of
dividends by the Bank to the Company for 1994 is $89 million plus the total
of current year earnings. Edina Realty's ability to pay dividends is limited
by Minnesota's corporate law. Dividends payable by the Bank may also be
limited by tax law considerations. In addition, the Company's ability
to pay dividends is limited by the Delaware General Corporation Law.
Item 6.
SELECTED FINANCIAL DATA.
Selected Financial Data on pages 16 and 17 of the 1993 Annual Report is
incorporated herein by reference.
Item 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 16 through 32 of the 1993 Annual Report is incorporated
herein by reference.
Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Report of Independent Auditors and the Consolidated Financial Statements
included on pages 33 through 54 of the 1993 Annual Report are incorporated
herein by reference.
Quarterly Results of Operations on page 55 of the 1993 Annual Report are
incorporated herein by reference.
8
Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
None.
PART III
Item 10.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(a) Directors of the Registrant.
The information under the captions "Election of Directors-Information about
Directors and Nominees" in the Company's 1994 Proxy Statement is incorporated
herein by reference.
(b) Executive Officers of the Registrant.
Information concerning Executive Officers of the Company is included in this
Report under Item 4A. "Executive Officers of the Registrant."
Item 11.
EXECUTIVE COMPENSATION.
The information under the caption "Election of Directors-Director Compensation"
and "Compensation and Other Benefits" in the Company's 1994 Proxy Statement is
incorporated herein by reference.
Item 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information under the caption "Security Ownership of Management" in the
Company's 1994 Proxy Statement is incorporated herein by reference.
Item 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information under the caption "Certain Transactions" in the Company's 1994
Proxy Statement is incorporated herein by reference.
9
PART IV
Item 14.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) Financial Statements.
The following information appearing in the Company's 1993 Annual Report is
incorporated by reference in this Form 10-K Annual Report.
Pages in
Annual Report Section Annual Report
Consolidated Statements of Condition 33
Consolidated Statements of Income 34
Consolidated Statements of Changes in Shareholders' Equity 35
Consolidated Statements of Cash Flows 36
Notes to Consolidated Financial Statements 37 - 53
(a)(2) Financial Statement Schedules.
All financial statement schedules have been omitted as the required
information is inapplicable or has been included in the Consolidated
Financial Statements.
(a)(3) Exhibits.
The exhibits to this Report are listed in the Exhibit Index on pages 13, 14, 15
and 16 herein.
A copy of any of these exhibits will be furnished at a reasonable cost to any
person who is a shareholder of the Company as of March 23, 1994, upon receipt
from any such person of a written request for any such exhibit. Such
requests should be sent to Metropolitan Financial Corporation, 1000 Metropolitan
Centre, 333 South Seventh Street, Minneapolis, Minnesota, 55402,
Attention: Patricia Henning, Vice President, Corporate Communications and
Investor Relations.
The following is a list of each management contract or compensatory plan or
arrangement required to be filed as an Exhibit to this Annual Report on Form
10-K pursuant to Item 14 (c):
(1) 1982 Stock Option Plan and Incentive Plan..............Incorporated by reference to Exhibit 4 to the Company's
Registration Statement on Form S-8 (File No. 33-1385).
(2) 1990 Stock Option Plan.................................Incorporated by reference to Exhibit 10.10 to the Company's
Registration Statement on Form S-2 (File No. 33-37050).
(3) Amendment to 1990 Stock Option Plan....................Incorporated by reference to Exhibit 10.12 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1991 (File No. 1-9018).
10
(4) Executive Incentive Compensation Plan..................Incorporated by reference to Exhibit 10.13 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1991 (File No. 1-9018).
(5) Supplemental Retirement Arrangement between Incorporated by reference to a written description thereof
the Company and Norman M. Jones........................on page 8 of the Company's Proxy Statement dated March 27,
1991 (File No. 1-9018).
(6) Severance Agreement, dated December 1, 1990, between Incorporated by reference to Exhibit 10.14 to the Company's
the Company and Norman M. Jones....................... Annual Report on Form 10-K for the year ended December 31,
1990 (File No. 1-9018).
(7) Severance Agreement, dated December 1, 1990 between Incorporated by reference to Exhibit 10.15 to the Company's
the Company and Charles D. Kalil...................... Annual Report on Form 10-K for the year ended December 31,
1990 (File No. 1-9018).
(8) Trust Agreement, dated October 19, 1989, between Incorporated by reference to Exhibit 10.16 to the Company's
the Company and First Trust National Association, Annual Report on Form 10-K for the year ended December 31,
as Trustee, and Norman M. Jones as Trust Beneficiary... 1990 (File No. 1-9018)
(9) First Amendment to Trust Agreement, dated October 19, Incorporated by reference to Exhibit 10.17 to the Company's
1989, between the Company, First Trust National Annual Report on Form 10-K for the year ended December 31,
Association, as Trustee, and Norman M. Jones, as 1990 (File No. 1-9018)
Trust Beneficiary
(10) Employee Stock Purchase Plan...........................Incorporated by reference to Exhibit 10.19 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1991 (File No. 1-9018).
(11) Non-Employee Director Stock Option Plan............... Incorporated by reference to Exhibit 10.13 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1992 (File No. 1-9018).
(12) Directors' Retirement Plan.............................Filed herewith.
(13) 1993 Stock Option and Incentive Plan...................Filed herewith.
(14) Employment Agreement, dated May 29, 1993, between
the Company and J. Michael Nilles......................Filed herewith.
(15) Board resolution setting forth Charles D. Kalil
compensation...........................................Filed herewith.
11
(16) Separation Agreement, dated June 15, 1993, between
the Company and Stan K. Dardis.........................Filed herewith.
(17) Executive Management Severance Pay Plan................Filed herewith.
(18) Executive Management Change in Control Severance Pay
Plan...................................................Filed herewith.
(b) Reports on Form 8-K.
During the quarter ended December 31, 1993, the Company filed no Reports on Form
8-K.
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
METROPOLITAN FINANCIAL CORPORATION
/S/ Norman M. Jones
NORMAN M. JONES
(Duly Authorized Representative)
March 23 ,1994
(Date)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
Signature Title Date
/s/ Norman M. Jones Chairman, Director and Chief March 23, 1994
NORMAN M. JONES Executive Officer (Principal Executive Officer)
/s/ Steven B. Dewald Executive Vice President and Chief March 23, 1994
STEVEN B. DEWALD Financial Officer (Principal Financial Officer)
/s/ William T. Cox Senior Vice President and March 23, 1994
WILLIAM T. COX Controller (Principal Accounting Officer)
/s/ William O. Nilles Vice Chairman and Director March 23, 1994
WILLIAM O. NILLES
/s/ Charles D. Kalil Secretary and Director March 23, 1994
CHARLES D. KALIL
/s/ Lawrence E. Davis Director March 23, 1994
LAWRENCE E. DAVIS
/s/ R. Douglas Larsen Director March 23, 1994
R. DOUGLAS LARSEN
/s/ William C. Marcil Director March 23, 1994
WILLIAM C. MARCIL
/s/ Dr. Trueman E. Tryhus Director March 23, 1994
DR. TRUEMAN E. TRYHUS
/s/ Karol D. Emmerich Director March 23, 1994
KAROL D. EMMERICH
/s/ Steven G. Rothmeier Director March 23, 1994
STEVEN G. ROTHMEIER
13
METROPOLITAN FINANCIAL CORPORATION
Exhibit Index to Annual Report on Form 10-K
For Fiscal Year Ended December 31, 1993
Item No. Item Method of Filing
3.1 Restated Certificate of Incorporation Incorporated by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-8 (File No.
33-35207).
3.2 Bylaws of the Company as amended Filed herewith.
4.1 Specimen form of the Company's Common
Stock Certificate Incorporated by reference to Exhibit 7 to the
Company's Registration Statement Form 8-A (File No.
1-9018).
4.2 Specimen form of Preferred Stock Certificate for
the Company's $2.875 Cumulative Perpetual
Preferred Stock, Series B Incorporated by reference to Exhibit 1.1 to the
Company's Report on Form 8 dated November 19, 1990,
amending the Company's Registration Statement on
Form 8-A (file no. 1-9018).
4.3 Certificate of Designations of the Company's
$2.875 Cumulative Perpetual Preferred Stock,
Series B Incorporated by reference to Exhibit 2.1 to the
Company's Report on Form 8 dated November 19,
1990, amending the Company's Registration
Statement on Form 8-A (file no. 1-9018).
4.4 Specimen form of Warrant Certificate Incorporated by reference to Exhibit 1.2 to the
Company's Report on Form 8 dated November 19,
1990, amending the Company's Registration
Statement on Form 8-A (File No. 1-9018).
4.5 Warrant Agreement Incorporated by reference to Exhibit 2.2 to the
Company's Report on Form 8 dated November 19,
1990, amending the Company's Registration
Statement on Form 8-A (File No. 1-9018).
4.6 Indenture, dated September 1, 1992, between the Company
and First Trust National Association, as trustee Incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-3 (File
No. 33-51522).
10.1 1982 Stock Option Plan and Incentive Plan Incorporated by reference to Exhibit 4 to the
Company's Registration Statement on Form S-8 (File
No. 33-1385).
14
10.2 Termination Agreement, dated December, 18, 1991,
among the FDIC, the RTC, the Bank and the Company Incorporated by reference to Exhibit 10.10 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1991 (File No. 1-9018).
10.3 1990 Stock Option Plan Incorporated by reference to Exhibit 10.10 to the
Company's Registration Statement on Form S-2
(File No. 33-37050).
10.4 Amendment to 1990 Stock Option Plan Incorporated by reference to Exhibit 10.12 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1991 (File No. 1-9018).
10.5 The Executive Incentive Compensation Plan Incorporated by reference to Exhibit 10.13 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1991 (File No. 1-9018).
10.6 Supplemental Retirement Arrangement between
the Company and Norman M. Jones Incorporated by reference to a written descrip-
tion thereof on page 8 of the Company's Proxy
Statement dated March 27, 1991 (File No. 1-9018).
10.7 Severance Agreement dated December 1, 1990,
between the Company and Norman M. Jones Incorporated by reference to Exhibit 10.14 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1990 (File No. 1-9018).
10.8 Severance Agreement dated December 1, 1990,
between the Company and Charles D. Kalil Incorporated by reference to Exhibit 10.15 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1990 (File No. 1-9018).
10.9 Trust Agreement dated October 19, 1989, between
the Company and First Trust National Association,
as Trustee, and Norman M. Jones as Trust Beneficiary Incorporated by reference to Exhibit 10.16 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1990 (File No. 1-9018).
10.10 First Amendment to Trust Agreement dated
October 19, 1989, between the Company, First
Trust National Association, as Trustee, and
Norman M. Jones, as Trust Beneficiary Incorporated by reference to Exhibit 10.17 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1990 (File No. 1-9018).
15
10.11 The Employee Stock Purchase Plan Incorporated by reference to Exhibit 10.19 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1991(File No. 1-9018).
10.12 Non-Employee Director Stock Option Plan Incorporated by reference to Exhibit 10.13 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1992 (File No. 1-9018).
10.13 Agreement and Plan of Merger, dated July 21, 1992,
as amended, among the Company, Metropolitan
Federal Bank, fsb and American Charter Federal
Savings and Loan Association Incorporated by reference to Exhibit 10.14 to
the Company's Annual Report on Form 10-K for
the year ended December 31, 1992
(File No. 1-9018).
10.14 Agreement and Plan of Merger, dated November 16,
1992, among the Company, Metropolitan Federal
Bank, fsb, Western Financial Corporation and Columbia
Savings Association, F.A. Incorporated by reference to Exhibit 10.15 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1992 (File No. 1-9018).
10.15 Directors' Retirement Plan Filed herewith.
10.16 1993 Stock Option and Incentive Plan Filed herewith.
10.17 Employment Agreement, dated
May 29, 1993, between the Company and
J. Michael Nilles Filed herewith.
10.18 Board resolution setting forth
Charles D. Kalil compensation Filed herewith.
10.19 Separation Agreement, dated
June 15, 1993, between the Company and
Stan K. Dardis Filed herewith.
10.20 Executive Management Severance Pay Plan Filed herewith.
10.21 Executive Management Change In Control Severance Pay Plan Filed herewith.
16
11.1 Computation of Per Share Earnings Filed herewith.
13.1 Annual Report to Shareholders (Pages 16 to 56) Filed herewith.
21.1 Subsidiaries of the Registrant Filed herewith.
23.1 Consent of Ernst & Young Filed herewith.