MCB FINANCIAL CORPORATION
1248 Fifth Avenue
San Rafael, CA 94901
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 21, 1997
TO THE SHAREHOLDERS OF MCB FINANCIAL CORPORATION:
NOTICE IS HEREBY GIVEN that pursuant to its Bylaws and the
call of its Board of Directors, the 1997 Annual Meeting of
Shareholders (the "Meeting") of MCB Financial Corporation ("MCB
Financial") will be held at MCB Financial, 1248 Fifth Avenue, San
Rafael, California 94901, on Wednesday, May 21, 1997 at 5:30
p.m., for the purpose of considering and voting on the following
matters:
1. Election of Directors. To elect the following eight
persons to the Board of Directors of MCB Financial to serve until
the 1998 Annual Meeting of Shareholders and until their
successors are elected and have been qualified:
John Cavallucci Gary T. Ragghianti
Robert E. Eklund Michael J. Smith
Timothy J. Jorstad Edward P. Tarrant
Catherine H. Munson Randall J. Verrue
2. Ratification of Independent Public Accountants. To
ratify the selection of Deloitte & Touche LLP to serve as MCB
Financial's independent auditors for the year ending December 31,
1997.
3. Other Business. To transact such other business as may
properly come before the Meeting and any other adjournment or
adjournments thereof.
Only those shareholders of record at the close of business on
March 21, 1997 will be entitled to notice of and vote at the
Meeting.
It is very important that every shareholder vote. We urge you
to sign and return the enclosed proxy as soon as possible,
whether or not you plan to attend the Meeting in person. If you
do attend the Meeting, you may then withdraw your proxy. If you
do not attend the Meeting, you may revoke the proxy prior to the
time it is voted by notifying the Corporate Secretary in writing
to that effect or by filing a later dated proxy.
In order to facilitate the provision of adequate
accommodations, please indicate on the proxy whether or not you
expect to attend the Meeting.
DATED: APRIL 21, 1997
BY ORDER OF THE BOARD OF DIRECTORS
Tina DeLeese, Corporate Secretary
MCB FINANCIAL CORPORATION
1248 Fifth Avenue
San Rafael, CA 94901
1997 ANNUAL MEETING OF MCB FINANCIAL SHAREHOLDERS
Introduction
This Proxy Statement is being furnished to MCB Financial
Shareholders in connection with the solicitation of proxies by
the MCB Financial Board of Directors for use at the 1997 Annual
Meeting of Shareholders of MCB Financial to he held on Wednesday,
May 21, 1997 at 5:30 p.m. at MCB Financial's office, 1248 Fifth
Avenue, San Rafael, California 94901, and at any adjournments
thereof ("MCB Financial Meeting"). This Proxy Statement, the
attached notice and the enclosed form of proxy are first being
mailed to MCB Financial Shareholders on or about April 21, 1997.
Matters to Be Considered
At the MCB Financial Meeting, MCB Financial Shareholders will
be asked to (i) elect a board of eight directors (see "ELECTION
OF DIRECTORS," herein); (ii) ratify the selection of Deloitte &
Touche LLP to serve as MCB Financial's independent auditors for
the year ending December 31, 1997 (see "RATIFICATION OF SELECTION
OF INDEPENDENT AUDITORS," herein); and (iii) transact such other
business as may properly come before the MCB Financial Meeting
and any and all other adjournments thereof (see "OTHER MATTERS,"
herein).
Record Date; Voting Information
The close of business on March 21, 1997 was the record date
("Record Date") for determining which of the MCB Financial
Shareholders were entitled to receive notice of and to vote at
the MCB Financial Meeting. On the Record Date, there were
947,042 shares of MCB Financial Common Stock outstanding, held by
454 holders of record. Each holder of MCB Financial Common Stock
will be entitled to one vote, in person or by proxy, for each
share of MCB Financial Common Stock standing is his name on the
books of MCB Financial as of the Record Date on any matter
submitted to the vote of the MCB Financial Shareholders at the
MCB Financial Meeting, except that, in connection with the
election of directors, the shares are entitled to be voted
cumulatively.
Cumulative voting entitles a MCB Financial Shareholder to give
one nominee a number of votes equal to the number of directors to
be elected multiplied by the number of votes to which that
shareholder's shares are normally entitled, or to distribute his
votes among as many candidates as the shareholder thinks fit.
However, no shareholder is entitled to cumulate votes unless such
nominee's name has been placed in nomination prior to the vote
and the shareholder has given notice before the voting, of his
intention to vote shares cumulatively. If any shareholder has
given such notice, all shareholders may cumulate their votes for
nominees. The Board of Directors does not, at this time, intend
to cumulate the votes it may hold pursuant to the proxies
solicited herein. If, however, other director nominations are
made, the Board of Directors intends to cumulate votes in such a
manner as to elect the maximum number of the Board of Directors'
nominees. Therefore, discretionary authority to cumulate votes
in such an event is solicited in this Proxy Statement and in such
an event the accompanying proxy grants discretionary authority to
the proxy holders to cumulate votes for the election or
directors.
Voting of Proxies; Revocability
A proxy for use at the MCB Financial Meeting is enclosed. All
shares of MCB Financial Common Stock represented by properly
executed proxies received by MCB Financial will, unless revoked,
be voted at the MCB Financial Meeting in accordance with the
instructions on such proxies. If no instruction is specified
with regard to a matter to be considered, the shares of MCB
Financial Common Stock represented by the proxy will be voted in
favor of (i) electing the eight nominees for directors; and (ii)
ratifying the selection of Deloitte & Touche LLP to serve as MCB
Financial's independent auditors for the year ending December 31,
1997.
The proxy also confers discretionary authority to vote the
shares represented thereby in accordance with the recommendations
of the MCB Financial Board of Directors on any matter that was
not known at the time this Proxy Statement was mailed which may
properly be presented for action at the MCB Financial Meeting and
the election of any person to any office for which a bona fide
nominee is named herein if such nominee is unable to serve or for
good cause will not serve. If any other business is properly
presented at the MCB Financial Meeting, the proxy will be voted
in accordance with the recommendation of the MCB Financial Board
of Directors.
Any MCB Financial Shareholder may revoke his proxy at any time
before it is voted by filing with MCB Financial's Corporate
Secretary an instrument revoking it or a duly executed proxy
bearing a later date, or by attending the MCB Financial Meeting
and advising the Chairman of his election to vote in person. A
proxy may also be revoked if written notice of the death or
incapacity of the MCB Financial Shareholder is received by MCB
Financial before the vote pursuant to that proxy is counted.
Solicitation of Proxies
This solicitation of MCB Financial Shareholders is being made
by the Board of Directors of MCB Financial. The expense of
preparing, assembling, printing and mailing this Proxy Statement
to MCB Financial Shareholders and the materials used in the
solicitation of proxies for the MCB Financial Meeting will be
borne by MCB Financial. MCB Financial contemplates that the
proxies will be solicited principally through the use of the
mail, but officers, directors and employees of MCB Financial may
solicit proxies personally or by telephone or telegraph without
receiving special compensation therefor. In addition, MCB
Financial may use the services of individuals or companies,
including a proxy solicitation firm, it does not regularly employ
in connection with the solicitation of proxies if deemed
advisable by the MCB Financial Board of Directors. Although
there are no formal agreements to do so, MCB Financial will
reimburse banks, brokerage houses and other custodians, nominees
and fiduciaries for their reasonable expenses in forwarding these
proxy materials to MCB Financial Shareholders, and will reimburse
such other expenses as may be incurred by any proxy solicitation
firm engaged by MCB Financial.
Required Vote
Except as specifically noted below, each of the proposals
described in this Proxy Statement requires the affirmative vote
of a majority of the shares of MCB Financial's Common Stock
represented and voting at the Annual Meeting of Shareholders
where a quorum is present. In the election of directors, the
eight directors receiving the most votes will be elected. If any
proposal requires the affirmative vote of the holders of a
specified percentage of MCB Financial's outstanding shares of
Common Stock, abstaining and broker non-votes will have the same
effect as a negative vote.
Security Ownership of Certain Beneficial Owners
Except as set forth below, management knows of no persons who
own beneficially more than five percent of the outstanding shares
of MCB Financial Common Stock. The following table provides
certain information as of March 21, 1997, with respect to the
only person who owns beneficially in excess of five percent of
MCB Financial Common Stock:
Amount
and Nature
Name and of Beneficial Percent of
Address of
Title of Beneficial Ownership Class
Class Owner
Common Stock John 155,078 16.02%
Cavallucci
1248 Fifth
Avenue
San Rafael,
CA 94901
Common Stock Martin 58,110 6.16%
Bramante
Velia
Bramante
P.O. Box 2126
San Rafael,
CA 94901
Security Ownership of Management
The following table provides certain information, as of March
21, 1997, with respect to the beneficial ownership of shares of
MCB Financial Common Stock by each MCB Financial director and
nominee, each executive officer3and by all of the directors and
executive officers of MCB Financial as a group. Unless otherwise
indicated, each person listed has sole investment and voting
power with respect to the shares listed.
Name and Amount and Percent
Nature of
Title of Address of Beneficial Beneficial of
Class Owner Ownership Class
Common John Cavallucci 155,078 16.02%
Stock
Common Robert E. Eklund 18,823 1.98%
Stock
Common Timothy J. Jorstad 23,288 2.44%
Stock
Common Catherine H. Munson 19,451 2.04%
Stock
Common Gary T. Ragghianti 12.208 1.28%
Stock
Common Michael J. Smith 18,391 1.93%
Stock
Common Edward P. Tarrant 21,448 2.25%
Stock
Common Randall J. Verrue 17,799 1.87%
Stock
Common Charles O. Hall 17,325 1.80%
Stock
Common Brian M. Riley 7,350 *
Stock
Common Current Directors and
Stock Executive
Officers as a Group (10 312,161 30.70%
persons)
*Less than one percent (*)
Changes in Control
Management of MCB Financial is not aware of any arrangement
which may, at a subsequent date, result in a change of control of
MCB Financial.
Prior to September 30, 1993, Mr. Cavallucci owned 100% of the
issued and outstanding common stock of MCB Financial. Mr.
Cavallucci's ownership reflected the initial capitalization of
MCB Financial, in the amount of $150, through his purchase on
January 21, 1993 of 100 shares of MCB Financial Common Stock at
$1.50 per share. Mr. Cavallucci used his personal funds to
capitalize MCB Financial. In accordance with the terms of a
stockholder agreement and a plan of reorganization, on September
30, 1993, upon consummation of the reorganization of Metro
Commerce into the wholly-owned subsidiary of MCB Financial, these
100 shares were repurchased by MCB Financial and canceled, and
804,194 shares of MCB Financial Common Stock were issued to Metro
Commerce 's shareholders in exchange for their shares of Metro
Commerce Common Stock at a rate of one share of MCB Financial
Common Stock for one share of Metro Commerce Common Stock. Mr.
Cavallucci's ownership interest in MCB Financial after
consummation of the reorganization was the same as his ownership
interest in Metro Commerce prior to the reorganization. (See
"INFORMATION CONCERNING THE BUSINESS AND PROPERTIES OF MCB
FINANCIAL -- MCB Financial," herein.) As of March 21, 1997, Mr.
Cavallucci is the beneficial owner of 16.02% of MCB Financial
Common Stock.
Recommendations
MCB Financial's Board of Directors unanimously recommends
electing the eight nominees to the MCB Financial Board of
Directors and ratifying Deloitte & Touche LLP as MCB Financial's
independent auditors for the year ending December 31, 1997.
These proposals are discussed in greater detail in the sections
of this Proxy Statement.
PROPOSAL ONE:
ELECTION OF DIRECTORS
MCB Financial's Bylaws provide that the number of directors
shall be determined from time to time by the Board of Directors
or the shareholders but may not be less than seven nor more than
thirteen. The number of directors is currently fixed at eight
members. MCB Financial Shareholders are being asked to elect
eight persons named below, who are currently serving as directors
of MCB Financial and are the nominees of the Board of Directors
for reelection as directors of MCB Financial, to serve until the
1998 Annual Meeting of Shareholders of MCB Financial and until
their successors are elected and have been qualified. Each of
the nominees listed below has consented to be named as a nominee
and to serve if elected to the MCB Financial Board of Directors.
Votes will be cast pursuant to the enclosed proxy in such a way
as to effect the election of said eight nominees, or as many
thereof as possible under the rules of cumulative voting. In the
event that any of the nominees should be unable to serve as a
director, it is intended that the shares represented by the
proxies solicited will be voted for the election of such
substitute nominee, if any, as shall be designated by the MCB
Financial Board of Directors. The MCB Financial Board of
Directors has no reason to believe that any nominees will become
unavailable to serve if elected. Each of the nominees also
serves as a director of Metro Commerce. It is intended that each
person elected a director of MCB Financial will also be elected a
director of Metro Commerce.
Metro MCB
Present Commer Financial
Position(s) ce
with MCB Direct Director
Financial or
Name Age and Metro Since Since
Commerce
John 55 Chairman, 1991 1993
Cavallucci President and
Chief Executive
Officer of MCB
Financial;
Chairman and
Chief Executive
Officer of
Metro Commerce
Robert E. 62 Director 1989 1993
Eklund
Timothy J. 45 Director 1989 1993
Jorstad
Catherine H. 69 Director 1989 1993
Munson
Gary T. 53 Vice Chairman 1989 1993
Ragghianti
Michael J. 56 Director 1989 1993
Smith
Edward P. 53 Director 1989 1993
Tarrant
Randall J. 53 Director 1989 1993
Verrue
Biographical Information of Directors
The following sets forth certain biographical information,
present occupation and business experience for at least the past
five years, of each of the nominees for director.
John Director of Metro Commerce since November 1991;
Cavallucci Chairman of Metro Commerce and MCB Financial since
May 1996; Chief
Executive Officer of Metro Commerce since
December 1995; President and Chief Executive
Officer of Metro Commerce from January 1992 to
December 1995; Director, President and Chief
Executive Officer of MCB Financial since January
1993.
Robert E. President and Architect, Robert Eklund
Eklund Architecture and Planning, Inc., an architectural
firm.
Timothy J. President and certified public accountant,
Jorstad Jorstad, Inc., a certified public accounting
firm.
Catherine H. President, Lucas Valley Properties, Inc., a real
Munson estate firm; also General Partner, McInnis Park
Golf Center, since 1992.
Gary T. Attorney and President, Gary T. Ragghianti, Inc.
Ragghianti
Michael J. General Partner, Shimek/Smith, a car care
Smith business since July 1993; Broker and owner,
Waterford Associates, LLC, a real estate firm
from October 1990 to present.
Edward P. Principal and Owner, Tarrant-Bell Properties, a
Tarrant property development and management company.
Randall J. President and Chief Executive Officer, HCV
Verrue Pacific Partners, a real estate company since
September 1989.
Meetings of the Board of Directors and Committees of MCB
Financial
The Board of Directors of MCB Financial held five meetings
during 1996. MCB Financial does not have an Audit Committee,
Personnel Committee or a Nominating Committee; the Board of
Directors performs such functions. During 1996 all of the
directors of MCB Financial attended at a minimum 75 percent of
all meetings of the Board of Directors and of the committees on
which they served.
The Board of Directors of Metro Commerce held twelve meetings
during 1996. The Board of Directors of Metro Commerce has an
Audit Committee and a Personnel Committee. Metro Commerce does
not have a Nominating Committee; the Board of Directors performs
such functions.
The Audit Committee currently consists of Timothy J. Jorstad,
Chairman, Charles O. Halll, Edward P. Tarrant and Randall J.
Verrue. The Audit Committee held six meetings during 1996. The
Audit Committee's function is to monitor MCB Financial's
financial organization and financial reporting, monitor and
analyze the results of external and regulatory examinations and
recommend the appointment of and oversee the independent auditor.
The Personnel Committee currently consists of Catherine H.
Munson, Chairwoman, Charles O. Hall, Robert E. Eklund and Gary T.
Ragghianti. The Personnel Committee held one meeting during
1996. The Personnel Committee's function is to review
compensation of Metro Commerce's executive officers and make
recommendations to the Board of Directors regarding compensation.
During 1996, all of the directors of Metro Commerce attended
at a minimum 75 percent of all meetings of the Board of
Directors.
Compensation of Directors
Each Metro Commerce director receives an annual retainer of
$9,600 for their services. MCB Financial directors do not
receive any compensation for their services.
Executive Officers
The following table sets forth certain information, as of
March 21, 1997, with respect to the current executive officers of
MCB Financial and Metro Commerce.
Present Position(s) with
Name Age MCB Financial and Metro Commerce17
John 55 Chairman, President and Chief Executive
Cavallucci Officer of MCB Financial; Chairman and
Chief Executive Officer of Metro Commerce
Charles O. 42 Director of Metro Commerce, President/Chief
Hall Operating Officer and Chief Credit Officer
of Metro Commerce
Brian M. 32 Chief Financial Officer of MCB Financial
Riley and Executive Vice President/Cashier and
Chief Financial Officer of Metro Commerce
Business Experience
The following sets forth the business experience, for at least
the past five years, of each of MCB Financial's and Metro
Commerce's executive officers.
John Cavallucci Information concerning the business
experience of Mr. Cavallucci is
provided under the section entitled
"Biographical Information of
Directors."
Charles O. Hall Director and President/Chief Operating
Officer and Chief Credit Officer of
Metro Commerce since December 1995;
Executive Vice President/Chief Credit
Officer of Metro Commerce from March
1992 to December 1995.
Brian M. Riley Executive Vice President/Cashier and
Chief Financial Officer of Metro
Commerce since December 1994; Senior
Vice President/ Cashier and Chief
Financial Officer of Metro Commerce
from August 1992 to December 1994;
Chief Financial Officer of MCB
Financial since January 1993; various
positions with Chino Valley Bank from
March 1984 to August 1992, most
recently as Vice President/Finance and
Accounting.
EXECUTIVE COMPENSATION OF MCB FINANCIAL AND METRO COMMERCE
The following table sets forth compensation information with
respect to MCB Financial's and Metro Commerce's Chief Executive
Officer and two highest compensated other named executive
officers of Metro Commerce who served as such at year end 1996
and whose total annual salary and bonus exceeded $100,000.
Comparative data is also provided for the two previous fiscal
years, where applicable. No cash compensation was paid by MCB
Financial to any named executive officer; however, each named
executive officer of MCB Financial also serves as an executive of
Metro Commerce and receives compensation from Metro Commerce for
services rendered in his or her capacity as such.
Summary Compensation Table
Long
Term
Annual Other Compensa
tion
Compensati Annual Awards All
on Other
Name and Salar Bon Compensa Options Compensa
y us tion tion
Principal Ye ($) ($) ($) (#) ($)
Position ar
John 19 120,0 25, 0 0 2,541
Cavallucci 96 00 890
Chief 19 75,90 0 0 0 2,410
Executive 95 1
Officer
19 144,0 27, 0 0 7,795
94 00 824
Charles O. 19 120,0 25, 0 6,30019 5,204
Hall 96 00 890
President/ 19 101,6 0 0 0 3,675
95 01
Chief 19 100,0 13, 0 0 1,372
Operating 94 51 912
Officer
Brian M. Riley 19 88,61 15, 0 0 5,415
96 5 000
Executive Vice 19 n/a n/a n/a
President/ 95
Chief 19 n/a n/a n/a
Financial 94
Officer
Employment Agreements
Mr. Cavallucci and Mr. Hall are each employed by Metro Commerce
pursuant to written employment agreements.
Mr. Cavallucci
Mr. Cavallucci's current agreement for employment as President
and Chief Executive Officer of Metro Commerce commenced on
January 1, 1995 and expires December 31, 2001. Mr. Cavallucci is
entitled to receive payment of (i) an initial annual base of
$144,000, payable semi-monthly, increased annually in accordance
with a change in the consumer price index for the San Francisco
Bay Area and increased at the sole discretion of Metro Commerce's
Board of Directors (Mr. Cavallucci voluntarily accepted
amendments to his contract providing for a salary of $75,901 in
1995 and $120,000 in 1996), and (ii) an annual bonus equal to one
and one-half percent of Metro Commerce's pre-tax income if Metro
Commerce's return on beginning equity equals or exceeds 10
percent during the fiscal year. Mr. Cavallucci is also entitled
to be paid directors fees in an amount equal to such fees paid to
other members of the Board of Directors so long as he remains a
Director. Among other things, pursuant to his employment
agreement, Mr. Cavallucci has been provided with an automobile,
Metro Commerce's standard health insurance coverage provided to
all Metro Commerce employees, vacation leave and a golf club
membership. Furthermore, Metro Commerce paid legal fees and
related costs in connection with Mr. Cavallucci's employment
agreement and acquisition of control of Metro Commerce. Mr.
Cavallucci was granted an incentive stock option to purchase
20,000 shares of MCB Financial of which 20 percent vests each
year. He was also granted a nonstatutory stock option,
exercisable on or before January 23, 1992, and exercised on
January 23, 1992, to purchase 125,944 shares of Metro Commerce
Common Stock which later became MCB Financial Common Stock.
In the event Mr. Cavallucci's employment is terminated for any
reason other than death, disability, voluntary retirement or
cause he shall be entitled to receive severance payment in an
amount equal to his then base salary for 36 months in one lump
sum. If Mr. Cavallucci's employment is terminated for reasons of
death, medical disability which would preclude performing duties
as the Chief Executive Officer for a period of six months or
voluntary retirement, he shall not be entitled to any severance
payment; provided, however, that if such termination occurs as a
result of such medical disability, he shall be entitled to
receive severance payment in an amount equal to 150 percent of
the annual base salary then in effect. In the event Mr.
Cavallucci's employment is terminated for cause, he will not be
entitled to any severance payment.
Mr. Hall
Mr. Hall's current employment agreement as President and Chief
Operating Officer commenced on January 1, 1996, and expires on
December 31, 1998. Mr. Hall is entitled to receive payment of
(i) an initial base salary in the amount of $120,000, payable not
less often than monthly, increased by the percentage increase in
the CPI for the San Francisco Bay Area as well as at the
discretion of the Board of Directors, and (ii) an annual bonus
equal to one and one-half percent of Metro Commerce's pre-tax
income if Metro Commerce's return on beginning equity equals or
exceeds 10 percent during the fiscal year. Mr. Hall has been
provided with an automobile, Metro Commerce's standard health
insurance coverage provided to all Metro Commerce employees,
vacation leave and a tennis club membership. Mr. Hall also
participates in Metro Commerce's Deferred Compensation Plan For
Executives into which Mr. Hall may elect to defer a portion of
his current compensation and Metro Commerce agrees to contribute
up to 50 percent of the amount of his deferral. Mr. Hall vests
50 percent in Metro Commerce contributions after completing all
of his contractual deferrals and vests the remaining 50 percent
upon reaching retirement age. Mr. Hall was granted an incentive
stock option to purchase 20,000 shares of MCB Financial Common
Stock of which 20 percent vests each year.
In the event Mr. Hall's employment is terminated for any
reason other than death, disability, voluntary retirement or
cause he shall be entitled to a receive severance payment in an
amount equal to his then annual base salary payable through
December 31, 1998. If Mr. Hall's employment is terminated for
reasons of death, disability, voluntary retirement or cause he
will not be entitled to any severance payment, except that, if
termination occurs as a result of a medical disability, he shall
be entitled to receive severance payment in an amount equal to
25% of his then annual base salary.
Stock Options
The following table sets forth information on the issuance of
stock options during the year ended December 31, 1996.
Percent
of Total
Number of Options Exercise Expiratio
Shares Granted Price n
During Date
1996
Charles 6,300 57.1% $7.14 1/25/06
O. Hall
The following table presents information regarding the 1996
fiscal year end value of unexercised stock options held by the
executive officers. There were no option exercises during the
1996 fiscal year. The market value as of December 31, 1996 was
$10.50 per share.
Aggregate Option Exercises in 1996 and 1996 Year-
End Option Values
Value of
Number of Unexercis
ed
Unexercised In-the-
Money
Options Options
at 1996 at 1996
Year-End (#) Year-End
($)
Exercisable/ Exercisab
le/
Name Unexercisabl Unexercis
e able
John Cavallucci 21,000 / -0- 41,370 /
N/A
Charles O. Hall 15,960 / 36,595 /
5,040 18,194
Brian M. Riley 7,350 / -0- 16,023 /
N/A
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
REGARDING MCB FINANCIAL AND METRO COMMERCE
Certain of the directors and executive officers of MCB
Financial and Metro Commerce, the companies or organization with
which they are affiliated, and members of their immediate
families are customers of, and had banking transactions with
Metro Commerce in the ordinary course of Metro Commerce's
business during 1996, and Metro Commerce expects to have banking
transactions with such persons in the future. All loans and
commitments to lend to such persons were made on substantially
the same terms, including interest rates, repayment terms and
collateral, as those prevailing at the time for comparable
transactions with other persons of similar creditworthiness and,
in the opinion of management of Metro Commerce, did not involve
more than a normal risk of collectibility or present other
unfavorable features. All of such loans are current as to both
principal and interest. As of February 28, 1997, extensions of
credit to MCB Financial directors, executive officers and
beneficial owners of more than five percent of MCB Financial
Common Stock, and their affiliates, as a group, was approximately
$2,725,906 which represents 26.4% of the equity capital accounts
of MCB Financial as of that date. The maximum aggregate amount
of credit extended to directors and executive officers of MCB
Financial or Metro Commerce at any one time during 1996 was
approximately $3,925,477 which, at that date, constituted
approximately 39.9% of MCB Financial's equity capital.
Legal Proceedings
There are various legal actions pending against MCB Financial
arising from the normal course of business. MCB Financial is
also named as defendant in various lawsuits in which damages are
sought. Management, upon the advice of legal cousel handling
such actions, believes that the ultimate resolution of these
actions will not have a material effect on the financial position
or results of operations of MCB Financial.
In September 1992, Chino Valley Bank filed a complaint
against Metro Commerce alleging that Metro Commerce and its Chief
Executive Officer, John Cavallucci, had engaged in unfair
competition with Chino Valley Bank. In June 1995, a jury
rendered a verdict in favor of Chino Valley Bank and against
Metro Commerce and Mr. Cavallucci in the amount of $795,000.
Subsequently during 1995 Metro Commerce established a legal
contingency reserve of $2.8 million, based on the amount of the
jury verdict, the legal costs expected to be incurred by Metro
Commerce, and the possibility of an award of attorneys' fees to
the plaintiff. In addition, Metro Commerce agreed to indemnify
Mr. Cavallucci for the amount of his personal liability to Chino
Valley Bank, and Metro Commerce and Mr. Cavallucci reached an
agreement with Metro Commerce's directors and officers liability
insurance carrier pursuant to which the carrier agreed to pay
$1.2 million of the amounts awarded to Chino Valley Bank. In
February 1996, the trial court awarded Chino Valley Bank costs
and attorneys' fees in the amount of $1,327,438. Subsequently,
in March 1996 Metro Commerce and Mr. Cavallucci entered into a
settlement agreement with Chino Valley Bank pursuant to which the
parties agreed to settle all claims upon the payment of $2.1
million to Chino Valley Bank. As a result of the settlement
agreement and the separate settlement with Metro Commerce's
insurance carrier, Metro Commerce recovered and reversed
approximately $1.8 million from the legal contingency reserve
during the first quarter of 1996. This recovery reflects the
final settlement of this matter.
PROPOSAL TWO:
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors of MCB Financial has selected and
appointed Deloitte & Touche LLP, independent auditors, to audit
the financial statements of MCB Financial for the year ending
December 31, 1997. Deloitte & Touche LLP has served as MCB
Financial's independent auditors since 1991. In recognition of
the important role of the independent auditors, the Board of
Directors has determined that its selection of the independent
auditors should be submitted to the shareholders for review and
ratification on an annual basis.
Deloitte & Touche LLP had no interest, financial or otherwise,
in MCB Financial or Metro Commerce.
In the event the appointment is not ratified through the
affirmative vote of a majority of the outstanding shares, the
adverse vote will be deemed to be an indication to the Board of
Directors that it should consider selecting other independent
auditors for 1997. Because of the difficulty and expense of
making any substitution of accounting firms after the beginning
of the current year, it is the intention of the Board of
Directors that the appointment of Deloitte & Touche LLP for the
1997 fiscal year will stand unless for other reasons the Board of
Directors deems it necessary or appropriate to make a change.
The Board of Directors also retains the power to appoint another
independent public accounting firm to replace an accounting firm
ratified by the shareholders in the event the Board of Directors
determines that the interests of MCB Financial require such a
change.
A representative of Deloitte & Touche is expected to be
present at the MCB Financial Meeting. The representative will
have an opportunity to make a statement if he or she desires to
do so and will be available to respond to appropriate questions
of shareholders.
SHAREHOLDER PROPOSALS
MCB Financial's 1998 Annual Meeting of Shareholders is
currently scheduled for May 22, 1998. To be included in MCB
Financial's 1998 Proxy Statement, proposals of shareholders
intended to be presented at the 1998 Annual Meeting must be
received by MCB Financial no later than January 22, 1998.
OTHER MATTERS
Management does not know of any matters to be presented at the
MCB Financial Meeting other than those set forth above. However,
if other matters come before the MCB Financial Meeting, it is the
intention of the persons named in the accompanying proxy to vote
said proxy in accordance with the recommendation of the MCB
Financial Board of Directors on such matters. Discretionary
authority to do so is included in the proxy.