SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Subsection 240.14a-11(c) or
Subsection 240.14a-12
[ ] Confidential, For use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
QUANTUM FINANCIAL HOLDINGS, 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 fee 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:
____________________________________________
[QUANTUM LETTERHEAD]
May 2, 1997
Dear Stockholder:
We invite you to attend the 1997 Annual Meeting of
Stockholders of Quantum Financial Holdings, Inc. to be held at
the Holiday Inn, Glen Burnie #2 (North), 6323 Ritchie Highway,
Glen Burnie, Maryland on Thursday, May 22, 1997 at 4:00 p.m.
The accompanying notice and proxy statement describe the
formal business to be transacted at the meeting. During the
meeting, we will also report on the operations of the Company's
wholly-owned subsidiary, Baltimore American Savings Bank, F.S.B.
Directors and officers of the Company as well as representatives
of Wooden & Benson, Chartered, the Company's independent
auditors, will be present to respond to any questions the
stockholders may have.
ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO SIGN,
DATE AND RETURN THE ACCOMPANYING PROXY CARD AS SOON AS POSSIBLE
EVEN IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING. This
will not prevent you from voting in person but will assure that
your vote is counted if you are unable to attend the meeting.
Your vote is important, regardless of the number of shares you
own.
Sincerely,
/s/ Richard W. Kraus
Richard W. Kraus
President
QUANTUM FINANCIAL HOLDINGS, INC.
4023 ANNAPOLIS ROAD
BALTIMORE, MARYLAND 21227-0222
(410) 789-6882
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 1997
NOTICE IS HEREBY GIVEN that the annual meeting of
stockholders (the "Annual Meeting") of Quantum Financial
Holdings, Inc. (the "Company") will be held at the Holiday Inn,
Glen Burnie #2 (North), 6323 Ritchie Highway, Glen Burnie,
Maryland on Thursday, May 22, 1997 at 4:00 p.m., Eastern Time.
A proxy statement and proxy card for the Annual Meeting
accompany this notice.
The Annual Meeting is for the purpose of considering and
acting upon:
1. The election of two directors of the Company; and
2. The transaction of such other matters as may properly
come before the Annual Meeting or any adjournments
thereof.
The Board of Directors is not aware of any other business to
come before the Annual Meeting.
Any action may be taken on any one of the foregoing pro-
posals at the Annual Meeting on the date specified above or on
any date or dates to which, by original or later adjournment, the
Annual Meeting may be adjourned. Stockholders of record at the
close of business on April 2, 1997 are the stockholders entitled
to vote at the Annual Meeting and any adjournments thereof.
You are requested to fill in and sign the accompanying proxy
card which is solicited by the Board of Directors and to mail it
promptly in the accompanying envelope. The proxy card will not
be used if you attend and vote at the Annual Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ PETER G. ENSENAT
PETER G. ENSENAT
SECRETARY
Baltimore, Maryland
May 2, 1997
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE
COMPANY THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO
INSURE A QUORUM. THE ACCOMPANYING PROXY CARD IS ACCOMPANIED BY A
SELF-ADDRESSED ENVELOPE FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
PROXY STATEMENT
OF
QUANTUM FINANCIAL HOLDINGS, INC.
4023 ANNAPOLIS ROAD
BALTIMORE, MARYLAND 21227-0222
ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1997
GENERAL
This proxy statement is furnished in connection with the
solicitation by the Board of Directors of Quantum Financial
Holdings, Inc. (the "Company"), the holding company for Baltimore
American Savings Bank, F.S.B. ("Baltimore American" or the
"Bank"), of proxies to be used at the 1997 annual meeting of
stockholders of the Company and any adjournments or postponements
thereof (the "Annual Meeting") which will be held at the Holiday
Inn, Glen Burnie #2 (North), 6323 Ritchie Highway, Glen Burnie,
Maryland on Thursday, May 22, 1997 at 4:00 p.m. This proxy
statement and the accompanying notice and proxy card are being
first mailed to stockholders on or about May 2, 1997.
VOTING AND REVOCABILITY OF PROXIES
Stockholders who execute proxies retain the right to revoke
them at any time. Unless so revoked, the shares represented by
properly executed proxies will be voted at the Annual Meeting and
all adjournments or postponements thereof. Proxies may be
revoked by written notice to Peter G. Ensenat, Secretary of the
Company, at the address shown above, by filing a later dated
proxy prior to a vote being taken on a particular proposal at the
Annual Meeting or by attending the Annual Meeting and voting in
person. The presence of stockholders at the Annual Meeting alone
will not revoke such stockholders proxy.
Proxies solicited by the Board of Directors of the Company
will be voted in accordance with the directions given therein.
WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED FOR
THE NOMINEES FOR DIRECTORS SET FORTH BELOW. The proxy confers
discretionary authority on the persons named therein to vote with
respect to the election of any person as a director where the
nominee is unable to serve or for good cause will not serve, and
matters incident to the conduct of the Annual Meeting. If any
other business is presented at the Annual Meeting, proxies will
be voted by those named therein in accordance with the
determination of a majority of the Board of Directors. Proxies
marked as abstentions will not be counted as votes cast. In
addition, shares held in street name which have been designated
by brokers on proxy cards as not voted will not be counted as
votes cast. Proxies marked as abstentions or as broker non-
votes, however, will be treated as shares present for purposes of
determining whether a quorum is present.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The securities entitled to vote at the Annual Meeting
consist of the Company's common stock, par value $.01 per share
(the "Common Stock"). Stockholders of record as of the close of
business on April 2, 1997 (the "Record Date") are entitled to one
vote for each share then held. At the Record Date, the Company
had 106,924 shares of Common Stock issued and outstanding. The
presence, in person or by proxy, of at least a majority of the
total number of shares of Common Stock outstanding and entitled
to vote will be necessary to constitute a quorum at the Annual
Meeting.
-1-
Persons and groups owning in excess of 5% of the Common
Stock are required to file certain reports regarding such
ownership pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The following table sets forth, at
the latest practicable date, certain information as to the Common
Stock believed by management to be beneficially owned by persons
owning in excess of 5% of the Common Stock and by all directors
and executive officers of the Company as a group.
Amount and Percent of
Nature of Shares of
Name and Address Beneficial Common Stock
of Beneficial Owner Ownership(1) Outstanding(2)
- ------------------- ------------ --------------
Baltimore American Savings Bank, F.S.B.
Employee Stock Ownership Plan
4023 Annapolis Road
Baltimore, Maryland 21227 11,780 (3) 11.02%
Pearl J. Rogers
M. Bernard Rogers
1904 Todcaster Road
Catonsville, Maryland 21228 6,929 (4) 6.48%
Donald D. Rogers
2301 S. Ocean Drive, #2005
Hollywood, Florida 33019 6,125 5.73%
Hilda R. Recker,
Edgar H. Geisendaffer, Jr.
and Roland F. Recker, Jr.
380 Centerhill Avenue
Linthicum, MD 21090 5,625 5.26%
Peter G. Ensenat
Genevieve Ensenat
6439 Orchard Road
Linthicum, MD 21090 5,500 (4) 5.14%
All Officers and Directors
as a Group (7 persons) 22,073 (5) 20.64%
<FN>
____________
(1) For purposes of this table, a person is deemed to be the beneficial owner of any
shares of Common Stock with respect to which he or she has or shares voting or
investment power or has a right to acquire beneficial ownership at any time within
60 days from the Record Date. As used herein, "voting power" is the power
to vote or direct the voting of shares and "investment power" is the power to
dispose or direct the disposition of shares. Except as otherwise noted, ownership
is direct, and the named individuals and group exercise sole voting and investment
power over the shares of the Common Stock. For information relating to the
number of shares of Common Stock beneficially owned by each director of the
Company, see "Proposal I -- Election of Directors."
(2) In calculating percentage ownership for a given individual, the number of shares of
Common Stock outstanding includes unissued shares subject to options exercisable
within 60 days of the Record Date held by that individual.
(3) Shares owned by the Employee Stock Ownership Plan ("ESOP") are held in a suspense
account for allocation among participants on the basis of compensation as the loan
is repaid. Of the 11,780 shares held by the ESOP, 6,297 shares had been allocated
as of December 31, 1996. The ESOP Committee as appointed by the Board of
Directors, consists of Directors Rogers and Ensenat. Directors Copeland and
Ensenat, neither of whom are full-time employees of the Bank, serve as the ESOP
Trustee. The ESOP Trustee must vote all allocated shares held in the ESOP in
accordance with the instructions of the participating employees. Allocated shares
for which employees do not give instructions and unallocated shares are voted by
the ESOP Trustee as recommended by the ESOP Committee. The ESOP Trustee makes the
final determination as to the investment of the funds contributed to the ESOP, and
as to the voting of allocated shares for which employees do not give instructions
and unallocated shares.
(4) Includes options to purchase 500 shares of Common Stock.
(5) Includes options to purchase 4,700 shares of Common Stock which have been granted
to directors and executive officers which are exercisable within 60 days of the
Record Date. Includes certain shares of Common Stock owned by businesses in which
a director is an officer or major stockholder, or by spouses, or as a custodian or
trustee for minor children, over which shares the named individual or all officers
and directors as a group effectively exercise sole voting and investment power.
Includes 2,433 shares allocated to officers and held by the ESOP, but does not
include the remaining 5,483 shares held by the ESOP. See Footnote 3, above.
</FN>
-2-
PROPOSAL I -- ELECTION OF DIRECTORS
GENERAL
The Company's Board of Directors presently consists of seven
members. The Company's Articles of Incorporation require that
directors be divided into three classes, as nearly equal in number as
possible, with approximately one-third of the directors elected each
year. At the Annual Meeting, two directors will be elected for terms
to expire at the Annual Meeting to be held in the year 2000. The
Board of Directors has nominated Richard W. Kraus and Nancy H. Burger
to serve as directors for a three-year period. Under Maryland law,
directors are elected by a plurality of all votes cast at a meeting at
which a quorum is present.
If any nominee is unable to serve, the shares represented by all
valid proxies will be voted for the election of such substitute as the
Board of Directors may recommend or the size of the Board may be
reduced to eliminate the vacancy. At this time, the Board knows of no
reason why any nominee might be unavailable to serve.
The following table sets forth the names of the Board of
Directors' nominees for election as directors. Also set forth is
certain other information with respect to each person's age, the year
he or she first became a director of the Company's principal
subsidiary, Baltimore American, the expiration of his or her current
term as a director, and the number and percentage of shares of Common
Stock beneficially owned. All the Company's directors were initially
appointed to the Company's Board of Directors in 1995. Each director
of the Company is also a member of the Board of Directors of the Bank.
Shares of
Year First Common Stock
Age at Elected as Current Beneficially
December 31, Director Term Owned at the Percent
Name 1996 of the Bank to Expire Record Date(1) of Class(2)
- ---- ------------ ----------- --------- -------------- -----------
BOARD NOMINEES FOR TERM TO EXPIRE IN 2000
Richard W. Kraus 42 1988 1997 4,494 (3) 4.20%
Nancy H. Burger 65 1995 1997 1,100 1.02%
DIRECTORS CONTINUING IN OFFICE
Jack A. Copeland 45 1988 1998 2,050 (4) 1.91%
Peter G. Ensenat 77 1992 1998 5,500 (4) 5.14%
Pearl J. Rogers 78 1979 1999 6,929 6.48%
Jay C. Middleton 42 1988 1999 500 0.47%
Vernon F. Plack 55 1993 1999 1,500 1.40%
____________
(1) For the definition of "beneficial ownership," see footnote 1
to the table in the section entitled "Voting Securities and
Principal Holders Thereof." Except as otherwise noted below,
includes certain shares owned by businesses in which the
director is an officer or major stockholder, or by spouses,
by immediate family members, or as a custodian or trustee for
minor children, over which shares the named individual
effectively exercises sole voting and investment power,
unless otherwise indicated. Ownership figures for each
director (other than Mr. Kraus) include 500 shares which the
director has the right to acquire pursuant to options
exercisable within 60 days of the Record Date. Ownership
figures for Ms. Rogers and Mr. Ensenat include 409 shares and
5,000 shares, respectively, held jointly with their
respective spouses.
(Footnotes continued on following page)
-3-
(2) In calculating percentage ownership for a given individual,
the number of shares of Common Stock outstanding includes
unissued shares subject to options exercisable within 60 days
of the Record Date held by that individual.
(3) Includes 1,200 shares which Mr. Kraus has the right to
acquire pursuant to the exercise of options. Includes 2,433
shares held by the ESOP and allocated to the account of Mr.
Kraus as of the Record Date, as to which Mr. Kraus has voting
power but no investment power.
(4) Excludes 11,780 shares owned by the ESOP as of the Record
Date and over which shares Directors Copeland and Ensenat, in
their capacity as ESOP Trustee, exercise shared voting and
investment power. Of these 11,780 shares, 6,297 shares had
been allocated to ESOP participants who may direct the ESOP
Trustee regarding the voting of these shares. Allocated
shares for which participants do not provide instructions and
unallocated shares can be voted by the ESOP Trustee as
directed by the ESOP Committee.
The principal occupations of the directors of the Company
are set forth below. All directors and nominees have held their
present positions for at least five years unless otherwise
stated.
RICHARD W. KRAUS has been with the Bank since November 1988
and served as Vice President of Operations until November 1989
when he was promoted to Executive Vice President of the Bank. In
December 1990, he was appointed President and Chief Executive
Officer of the Bank. He has served as a Director since December
15, 1988. In 1995, Mr. Kraus was presented with the President's
Citation in recognition of his commitment to building strong
communities and he also received the City of Baltimore's Mayor's
Citation for his contributions to the civic welfare of
Baltimore's municipality and his continuing public service.
NANCY H. BURGER participates on several boards in the area
of civic activities and has been in the travel agency business
since 1977. She is currently affiliated with the Berney Travel
Agency.
JACK A. COPELAND has served as a director of the Bank since
1988. Dr. Copeland is a radiologist and a Partner in the firm of
Copeland, Hyman, Shackman P.A.
PETER G. ENSENAT has served the Bank as a Director since
June 1991. From 1946 to 1985, Mr. Ensenat was co-owner of Ense
Spaghetti House, Inc., a restaurant located in Glen Burnie,
Maryland. Since that time, Mr. Ensenat has been retired, yet
still remains active in managing his personal investment
portfolio.
PEARL J. ROGERS has been with the Bank since 1976. Ms.
Rogers has held the positions of Chief Executive Officer, First
Vice President, President, and Chairman of the Board. She is
presently Chairman of the Board. She has been a Director since
1979.
JAY C. MIDDLETON has served since 1980 as President of J.
Middleton Advisory, an investment advisory firm registered with
the Securities and Exchange Commission, which provides investment
management and comprehensive financial planning to individuals,
closely-held corporations, retirement plans, estates and trusts.
In spring 1985, Mr. Middleton was confirmed as a Chartered
Financial Consultant by the American College.
VERNON F. PLACK was nominated by the Board of the Bank in
July 1992 to complete the remainder of the term of Harold Glazer.
In 1968, Mr. Plack founded and operated V P Financial Services,
an accounting and tax service firm for small-to-medium sized
businesses. In addition, Mr. Plack has been General Sales
Manager of Bond Distributing Company since 1981. Bond
Distributing Company is a distributor for manufacturers of
beverages.
-4-
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following table sets forth information regarding the
executive officers of Baltimore American who presently do not
serve on the Board of Directors of the Company.
Age at
Name December 31, 1996 Title
---- ----------------- -----
Elisa S. Conn 41 Vice President and Chief
Underwriter
ELISA S. CONN has been with the Bank since December 1988,
and served as Administrator of Lending and Chief Underwriter. In
November 1993, Ms. Conn was promoted to Vice President of the
Bank. Ms. Conn has an FHA direct endorsement and is a VA
automatic underwriter for the Bank. Ms. Conn has a diverse
background in all aspects of banking, as well as in mortgage
banking.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Boards of Directors of the Company and the Bank hold
regular meetings and special meetings as needed. During the year
ended December 31, 1996, the Boards of the Company and the Bank
met 15 and 14 times, respectively. No director attended fewer
than 75% of the total number of meetings of the Board of
Directors of the Company or the Bank held during fiscal 1996 and
the total number of meetings held by all committees on which the
director served during such year. The Committees of the Company
and the Bank are identical in composition and have identical
responsibilities.
The full Board of Directors acts as the Audit Committee,
whereby it monitors the Company's internal accounting controls
and meets with the Bank's Administrator of Finance to review
internal audit findings, and meets with the 's independent
auditors regarding these internal controls to assure full
disclosure of the Company's financial condition. Discussions are
held and determinations are reached by the full Board during its
regularly scheduled monthly Board meetings.
The Compensation Committee is composed of Directors Plack,
Copeland, Ensenat and Middleton. The purpose of the Compensation
Committee is to evaluate and ascertain the appropriateness of
compensation levels pertaining to the Officers and Directors of
the Bank, and dividends paid to stockholders. Decisions of the
Compensation Committee are reviewed for ratification by the full
Board of Directors. This Committee meets as appropriate, and met
two times during the fiscal year 1996.
The Company's full Board of Directors acts as a nominating
committee for the annual selection of its nominees for election
as directors. While the Board of Directors will consider
nominees recommended by stockholders, it has not actively
solicited recommendations from the Company's stockholders for
nominees, nor established any procedures for this purpose.
During fiscal year 1996, the Board of Directors held one meeting
in order to make nominations for directors for the 1996 Annual
Meeting.
-5-
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth
the cash and noncash compensation for each of the last three
fiscal years awarded to or earned by the Chief Executive Officer
of the Company. No executive officer's salary and bonus earned
in fiscal year 1996 exceeded $100,000 for services rendered in
all capacities to the Company.
Long-Term
Compensation
Awards
Annual Compensation ----------
---------------------------- Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation Options Compensation
- ------------------ ---- ------ ----- ------------ ---------- ------------
Richard W. Kraus 1996 $98,000 $ -- $ -- -- $6,973 (2)
President of the 1995 98,000 -- -- -- 9,423
Company and the 1994 98,000 -- -- 3,000 (1) --
Bank
<FN>
________
(1) Options were granted under the Bank's 1988 Stock Option and
Incentive Plan on June 1, 1994 at an exercise price of $9.50
per share. Options become exercisable at the rate of 20%
per year beginning one year after the date of grant.
(2) Includes the cash value received for accumulated vacation
earned but not taken.
</FN>
AGGREGATED OPTION EXERCISES AND YEAR-END VALUE TABLE. The
following table sets forth information concerning the exercise of
options by the Chief Executive Officer during the last fiscal
year, as well as the value of such options held by such person at
the end of the fiscal year. No SARs have been granted to the
Chief Executive Officer.
Number of Securities Value of Securities
Underlying Unexercised Underlying Unexercised
Options at Fiscal Year-End Options at Fiscal Year-End(1)
---------------------------- -----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
Richard W. Kraus 1,200 1,800 -- --
<FN>
(1) Options and SARs are considered in-the-money if fair market
value of underlying stock exceeds exercise price. None of
Mr. Kraus' options were in-the-money at fiscal year-end.
</FN>
DIRECTOR COMPENSATION
Currently, all Directors of the Bank are paid $300 per
meeting on a monthly basis, except for Executive Officers
(President/CEO/CFO) who do not receive any Board fees, and the
Chairman of the Board, who receives $300 per meeting and an
additional $500 monthly for the additional responsibilities of
serving as the Chairman of the Board. Directors are paid only
for those meetings at which they attend, with allowances made for
vacation and illness (not to exceed two meetings missed).
Directors are not paid additional fees for committee meetings.
-6-
EMPLOYMENT AGREEMENTS
In February 1996, the Bank and the Company entered into
separate employment agreements (the "Employment Agreements") with
President and Chief Executive Officer Richard W. Kraus. The
Employment Agreements each have three-year terms. Under the
Employment Agreements, Mr. Kraus will receive an annual base
salary of $98,000, and annual increases equal to appropriate cost
of living increases, conditioned upon the Bank maintaining
required regulatory capital levels and specified interest rate
risk positions and asset quality measures.
Under the Employment Agreement with the Bank, Mr. Kraus will
be paid a bonus of $10,000 per year if net income for the fiscal
year is equal to or exceeds the prior fiscal year's net income,
with the net income of 1993 serving as the base. The Bank
Employment Agreement also provides that when the Bank
accomplishes, from year to year, a minimum of a 6% increase on
shareholder's equity, Mr. Kraus will be paid a performance
incentive for that year in an amount equal to such increased
percentage in shareholders' equity applied to Mr. Kraus' then
base salary. (Example: Should the Bank accomplish a 10%
increase in shareholders' equity, then Mr. Kraus will be paid a
bonus equal to 10% of his then base salary). The maximum
performance incentive that may be paid to Mr. Kraus under this
formula will be 25% of his then base salary in any fiscal year.
"Return on shareholder's equity" means the unadjusted return on
shareholders equity calculated by the Bank's internal staff
accountant and in accordance with generally accepted accounting
principles applied on a consistent basis from period to period
which shall be based upon the Bank's financial statements before
giving effect to any bonuses and/or any other extraordinary
items, except net operating loss carry forwards appropriately
classified as extraordinary items on the Bank's financial
statements. Loan losses are not to be construed as extraordinary
items.
Each Employment Agreement provides that Mr. Kraus will be
included in any discretionary bonus plans, retirement and medical
plans, and will receive customary fringe benefits, and vacation
and sick leave. The Employment Agreements may be terminated upon
Mr. Kraus' disability and will terminate upon his death. The
Employment Agreements are also terminable by the Company and the
Bank for "just cause" as defined in the Employment Agreements.
In the event of termination for just cause, no severance benefits
are available. If the Company or the Bank terminates Mr. Kraus'
employment without just cause or takes action constituting a
constructive discharge he will be entitled to a payment of his
salary up to the Employment Agreement's expiration date and, at
his election, either cash in an amount equal to the cost to him
of obtaining health, life, disability, and other benefits through
the Employment Agreement's expiration date, or continued
participation under the Bank benefit plans through the Employment
Agreement's expiration date, but only to the extent Mr. Kraus
continues to qualify for participation therein. Mr. Kraus is
able to voluntarily terminate his Employment Agreement by
providing 30 days' written notice to the Boards of Directors of
the Company and the Bank, in which case he is entitled to receive
only his compensation, vested rights and benefits up to the date
of termination.
In the event of Mr. Kraus' involuntary termination of
employment in connection with, or within one year after, any
change in control of the Bank or the Company, other than for
"just cause," Mr. Kraus will be paid within 10 days of such
termination an amount equal to the difference between (i) 2.99
times his "base amount," as defined in Section 280G(b)(3) of the
Internal Revenue Code, and (ii) the sum of any other parachute
payments, as defined under Section 280G(b)(2) of the Internal
Revenue Code, that Mr. Kraus receives on account of the change in
control. "Control" generally refers to the acquisition, by any
person or entity, of the ownership or power to vote more than 10%
of the Company's or the Bank's voting stock, the control of the
election of a majority of the Company's or the Bank's directors,
or the exercise of a controlling influence over the management or
policies of the Company or the Bank. Under the Employment
Agreements, a change in control also occurs when, during any
consecutive two-year period, individuals who at the beginning of
such period constitute the Board of Directors of the Company or
the Bank (the "Continuing Directors") cease for any reason to
constitute a majority of such Boards; provided that any
individual whose election or nomination for election as a member
of the Board was approved by a vote of at least a majority of the
Continuing Directors then in office shall be considered a
Continuing Director. The Employment Agreements also provide for
a similar lump sum payment to be made in the event of Mr. Kraus'
voluntary termination of employment within 30 days of a change in
control of the Company or the Bank. Alternatively, if Mr. Kraus
voluntarily terminates his employment within one year of a change
in control, he will be entitled to receive a similar payment,
upon the occurrence, or within
-7-
90 days thereafter, of certain specified events following the
change in control, which have not been consented to in writing by
him, including (i) the requirement that he perform his principal
executive functions more than 30 miles from his current primary
office, (ii) a material reduction in his base compensation as
then in effect, (iii) the failure of the Company or the Bank to
increase Mr. Kraus' salary in accordance with the Employment
Agreements, (iv) the failure of the Company or the Bank to
maintain existing or substantially similar employee benefit
plans, (v) the assignment to him of duties and responsibilities
which are materially different from those normally associated
with his position, (vi) a material reduction in his authority and
responsibility, (vii) the failure to re-elect him to the
Company's or the Bank's Board of Directors, and (viii) a material
reduction in the secretarial or other administrative support of
the Employee. The aggregate payments that would be made to Mr.
Kraus, assuming his termination of employment under the foregoing
circumstances at December 31, 1996, would have been approximately
$269,000.
TRANSACTIONS WITH MANAGEMENT
The Bank offers home mortgage and consumer loans to its
directors and employees. All currently outstanding loans to
directors and executive officers were made in the ordinary course
of business of the Bank and 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.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Wooden & Benson, Chartered, which audited the Company's
consolidated financial statements for the 1996 fiscal year, has
been retained by the Board of Directors to be the Company's
independent auditors for the 1997 fiscal year. A representative
of Wooden & Benson, Chartered is expected to be present at the
Annual Meeting to respond to appropriate questions from
stockholders and will have the opportunity to make a statement if
he or she so desires. Arthur Andersen LLP, served as the
Company's independent auditors for the 1995 fiscal year. On
November 7, 1996, Arthur Andersen LLP advised the Company that
they were resigning from their engagement. In connection with
their audit of the fiscal year ended December 31, 1995, there
were no disagreements with Arthur Andersen LLP on any matter of
accounting principles or practices, financial statement
disclosure, or auditing scope or procedure which, if not resolved
to the satisfaction of Arthur Andersen LLP, would have caused
them to make reference to the subject of such disagreement in
connection with their reports. In addition, during this period
there was no adverse opinion or disclaimer of opinion or any
opinion qualified or modified as to uncertainty, audit scope or
accounting principles.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to regulations promulgated under the Exchange Act,
the Company's officers and directors and all persons who
beneficially own more than ten percent of the Common Stock
("Reporting Persons") are required to file reports detailing
their ownership and changes of ownership in the Common Stock and
to furnish the Company with copies of all such ownership reports
that are filed. Based solely on the Company's review of the
copies of such ownership reports which is has received in the
past fiscal year or with respect to the past fiscal year, or
written representations from the Reporting Person that no annual
report of changes in beneficial ownership were required, the
Company believes that during fiscal year 1996 and prior fiscal
years all Reporting Persons have complied with these reporting
requirements.
OTHER MATTERS
The Board of Directors is not aware of any business to come
before the Annual Meeting other than those matters described
above in this proxy statement and matters incident to the conduct
of the Annual Meeting. However, if any other matters should pro-
perly come before the Annual Meeting, it is intended that proxies
in the accompanying form will be voted in respect thereof in
accordance with the determination of a majority of the Board of
Directors.
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MISCELLANEOUS
The cost of soliciting proxies will be borne by the Company.
The Company will reimburse brokerage firms and other custodians,
nominees and fiduciaries for reasonable expenses incurred by them
in sending proxy materials to the beneficial owners of Common
Stock. In addition to solicitations by mail, directors, officers
and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional
compensation therefor.
The Company's annual report to stockholders, including
financial statements, is being mailed to all stockholders of
record as of the close of business on the Record Date. Any
stockholder who has not received a copy of such annual report may
obtain a copy by writing to the Secretary of the Company. Such
annual report is not to be treated as a part of the proxy
solicitation material or as having been incorporated herein by
reference. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT
CHARGE TO EACH STOCKHOLDER AS OF THE RECORD DATE UPON WRITTEN
REQUEST TO THE SECRETARY, QUANTUM FINANCIAL HOLDINGS, INC., 4023
ANNAPOLIS ROAD, BALTIMORE, MARYLAND 21227-0222
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy
materials for next year's Annual Meeting of Stockholders, any
stockholder proposal to take action at such meeting must be
received at the Company's main office at 4023 Annapolis Road,
Baltimore, Maryland 21227-0222, no later than January 3, 1998.
Any such proposal shall be subject to the requirements of the
proxy rules adopted under the Exchange Act.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Peter G. Ensenat
PETER G. ENSENAT
SECRETARY
Baltimore, Maryland
May 2, 1997
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REVOCABLE PROXY
QUANTUM FINANCIAL HOLDINGS, INC.
ANNUAL MEETING OF STOCKHOLDERS
May 22, 1997
The undersigned hereby appoints Pearl J. Rogers and Peter G.
Ensenat with full powers of substitution, to act as proxies for
the undersigned, to vote all shares of Common Stock of Quantum
Financial Holdings, Inc. which the undersigned is entitled to
vote at the annual meeting of stockholders, to be held at the
Holiday Inn, Glen Burnie #2 (North), 6323 Ritchie Highway, Glen
Burnie, Maryland on Thursday, May 22, 1997 at 4:00 p.m. (the
"Annual Meeting"), and at any and all adjournments thereof, as
follows:
VOTE
FOR WITHHELD
--- --------
1. The election as directors of all
nominees listed below (except as
marked to the contrary below). [ ] [ ]
Richard W. Kraus
Nancy H. Burger
INSTRUCTION: To withhold your vote for any individual
nominee, insert that nominee's name on the line provided
below.
____________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED
NOMINEES.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES
LISTED ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL
MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN
ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF
DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF
NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING. THIS
PROXY CONFERS DISCRETIONARY AUTHORITY ON THE HOLDERS THEREOF TO
VOTE WITH RESPECT TO THE ELECTION OF ANY PERSON AS DIRECTOR WHERE
THE NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE
AND MATTERS INCIDENT TO THE CONDUCT OF THE ANNUAL MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
annual meeting or at any adjournment thereof and after notifica-
tion to the Secretary of the Company at the annual meeting of the
stockholder's decision to terminate this proxy, then the power of
said attorneys and proxies shall be deemed terminated and of no
further force and effect.
The undersigned acknowledges receipt from the Company prior
to the execution of this proxy of notice of the annual meeting, a
proxy statement and an annual report to stockholders for the 1996
fiscal year.
Dated: _______________________, 1997
__________________________ __________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
__________________________ __________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the envelope in
which this card was mailed. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title.
If shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN
THE ACCOMPANYING POSTAGE-PREPAID ENVELOPE.