SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A
(Amendment No. 1)
(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, 2002
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Commission file number 000-21553
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METROPOLITAN FINANCIAL CORP.
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(Exact Name of Registrant as Specified in Its Charter)
Ohio 34-1109469
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
22901 Millcreek Blvd., Highland Hills, Ohio 44122
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(Address of Principal Executive Offices) (Zip Code)
(216) 206-6000
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(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12 (b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, without par value
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(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
filing requirements for the past 90 days. Yes [X] No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, will not be contained, to the
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]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes No [X]
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State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the registrants most recently completed second quarter.
The aggregate market value at June 30, 2002 was $57,953,323.
As of March 12, 2003, there were 16,151,450 shares of the Registrant's Common
Stock issued and outstanding.
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METROPOLITAN FINANCIAL CORP.
2002 FORM 10-K/A
TABLE OF CONTENTS
PART III
Item 10. Directors and Executive Officers of the Registrant.............................................................. 3
Item 11. Executive Compensation.......................................................................................... 4
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.................. 5
Item 13. Certain Relationships and Related Transactions.................................................................. 7
2
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table lists, as of March 31, 2003, the directors of the
Registrant, Metropolitan Financial Corp. (the "Company") and its wholly owned
subsidiary, Metropolitan Bank and Trust (the "Bank"):
NAME AGE BUSINESS EXPERIENCE
MALVIN E. BANK 72 Mr. Bank has been the Secretary, Assistant Treasurer and a Director of the Company and
Secretary and Director of the Bank for more than six years and Chairman since June
2002. Mr. Bank is General Counsel of the Cleveland Foundation, a community foundation.
Mr. Bank also serves as a Director of Oglebay Norton Company. Mr. Bank also serves as a
Trustee of Case Western Reserve University, The Holden Arboretum, Chagrin River Land
Conservancy, Cleveland Center for Research in Child Development, Hanna Perkins School,
and numerous other civic and charitable organizations and foundations.
KENNETH T. KOEHLER 57 Mr. Koehler joined the Company in January 1999 as Executive Vice President. He has
served as President of the Company and the Bank since October 1999 and Chief Executive
Officer of both since June 2002. In addition, Mr. Koehler also serves as Assistant
Treasurer and Assistant Secretary for the Company and the Bank. Previously, Mr. Koehler
served as President and Chief Executive Officer of United Heritage Bank, Edison, NJ, a
community bank (1998-1999); and President and Chief Executive Officer of Golden City
Commercial Bank, New York, NY, a community bank (1994-1998). He has also served as a
director of Cumberland Farms/Gulf Oil Company, and as a trustee of Providence Performing
Arts Association and Catholic Charities Annual Appeal, Diocese of RI. He is currently a
trustee of the Great Lakes Theater Festival, Catholic Charities Corporation of the
Diocese of Greater Cleveland, and Diabetes Association of Greater Cleveland.
KENNETH R. LEHMAN 44 Mr. Lehman has served as Vice Chairman and a Director of the Company and the Bank since
June 2002. Mr. Lehman is retired from the law firm of Luse Gorman Pomerenk & Schick in
Washington DC. He was a partner with the firm for more than five years. Mr. Lehman
also served for several years as an Attorney Advisor with the Securities and Exchange
Commission in Washington DC.
DAVID P. MILLER 70 Mr. Miller has served as a Director of the Company and the Bank since 1992. Mr. Miller
has also held the positions of Treasurer and Assistant Secretary of the Company for more
than five years. Since 1986, Mr. Miller has been the President and Chief Executive
Officer of Columbia National Group, Inc., a Cleveland-based scrap and waste materials
wholesaler and steel manufacturer. He is currently a commissioner of the Ohio Lottery.
ROBERT R. BROADBENT 81 Mr. Broadbent has served as a Director of the Company and the Bank since 1992. From
1984 to 1989, Mr. Broadbent served as Chairman and Chief Executive Officer of The Higbee
Company, a Cleveland-based clothing and housewares retailer. Mr. Broadbent served as
the Chairman of the Rock and Roll Hall of Fame Museum, Inc. until May 1994 and is now on
the advisory board. Mr. Broadbent also serves as a director of PICO Holdings, Inc., as
well as a trustee of the Murphy Foundation.
MARJORIE M. CARLSON 62 Ms. Carlson has served as a Director of the Company and the Bank since 1994. She is the
retired Director of Development for The Cleveland Foundation. Ms. Carlson is a member
of the Board of Trustees of the College of Wooster, Playhouse Square Foundation, The
Gund Foundation and Exuma Foundation.
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NAME AGE BUSINESS EXPERIENCE
LOIS K. GOODMAN 69 Ms. Goodman has served as a Director of the Company and the Bank since 1994. Since
1990, she has been President of the Work & Family Consulting Group, Inc., a consulting
service for employers on managing working families. Ms. Goodman is also a member of the
Board of Trustees for the Cleveland Opera, the Jewish Community Federation, Starting
Point, Eldred Theater and The Montefiore Home (including serving as its immediate Past
President).
JAMES A. KARMAN 65 Mr. Karman has served as a Director of the Company and the Bank since 1992. Mr. Karman
has been affiliated with RPM, Inc., a manufacturer of protective coatings, sealants and
specialty chemicals, since 1963. From 1978 to 1999, Mr. Karman served as President and
Chief Operating Officer of RPM, Inc., and in 1999 was elected its Vice Chairman. Mr.
Karman serves as a member of the Board of Directors of RPM, Inc., A. Schulman, Inc. and
Shiloh Industries, Inc. In addition, Mr. Karman serves as a member of the Board of
Trustees of the Boys & Girls Club of Cleveland and The Western Reserve Historical
Society, a member of the Board of Visitors of the University of Wisconsin Business
School and is a member of the Corporate Council and Finance Committee of the Cleveland
Museum of Art.
RALPH D. KETCHUM 76 Mr. Ketchum has served as a Director of the Company and the Bank since 1991. Since
1987, Mr. Ketchum has been President of RDK Capital Inc., a general partner in a
partnership formed for the purposes of acquiring and managing companies serving the
aircraft industry. Before joining RDK Capital, Inc., he was a Senior Vice President and
Group Executive for the General Electric Company, Lighting Group. Mr. Ketchum is also a
member of the Board of Directors of Lithium Technologies.
ALFONSE M. MATTIA 61 Mr. Mattia has served as a consultant to the Bank since 1987 and as a Director of the
Company and the Bank since 1996. He is a Certified Public Accountant and a founding
partner of Amper, Politziner & Mattia, a regional public accounting and consulting
firm. Mr. Mattia is a charter member of the Rutgers University Family Business Forum, a
member of the Harvard Business School Club of New York and a member of several senior
committees of the American Institute of Certified Public Accountants.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to
compensation provided by the Company, including the Bank, during the years ended
December 31, 2002, 2001 and 2000, to its chief executive officer and the
Company's other executive officers whose annual salary and bonus exceed
$100,000.
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SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
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FISCAL YEAR OTHER RESTRICTED SECURITIES
NAME AND ENDED ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION DECEMBER 31 SALARY BONUS (6) COMPENSATION(7) GRANTS (8) OPTIONS/SARS COMPENSATION (9)
- ------------------ ----------- ------ --------- --------------- ---------- ------------ ----------------
Malvin E. Bank 2002(1) $ -- $ -- $ -- $ -- 8,000 $113,000
Chairman of the Board 2001 -- -- -- -- -- --
2000 -- -- -- -- -- --
Robert M. Kaye 2002 (2) 231,077 -- -- -- 87,645 20,876
Chairman of the Board 2001 485,558 30,000 -- -- 32,294 5,523
and Chief Executive 2000 474,994 -- -- -- -- 5,598
Officer
Kenneth T. Koehler 2002(3) 348,847 125,000 -- -- 66,055 7,522
Chief Executive 2001 299,245 70,000 -- -- 32,294 6,638
Officer, President, 2000 260,000 86,350 -- -- -- 4,621
Assistant Secretary and
Assistant Treasurer
Marcus Faust 2002(4) 139,615 50,000 -- -- 35,000 636
Executive Vice 2001 -- -- -- -- -- --
President - Chief 2000 -- -- -- -- -- --
Financial Officer
Leonard D. Kichler 2002 197,692 25,000 -- -- 10,000 4,535
Executive Vice 2001 188,654 22,500 -- -- 16,147 1,092
President - 2000(5) 77,404 31,500 -- -- 16,147 337
Relationship Banking of
the Bank
(1) - Mr. Bank became Chairman of the Board on July 1, 2002.
(2) - Mr. Kaye resigned his position as Chairman of the Board and Chief
Executive Officer on July 1, 2002.
(3) - Mr. Koehler added the title of Chief Executive Officer on July 1, 2002.
(4) - Mr. Faust did not join the Company until June 5, 2002.
(5) - Mr. Kichler did not join the Bank until July 17, 2000.
(6) - With the exception of Mr. Kaye's 2001 bonus and $1,350 of the 2000
bonuses for Mr. Koehler, bonuses are paid in the first quarter of the
following year.
(7) - Perquisites paid to the Named Executive Officers for 2002 did not exceed
the disclosure thresholds established under Commission regulations and
therefore are not included in these totals.
(8) - None of the Named Executive Officers holds restricted stock.
(9) - Includes the following amounts paid for 2002 for term life insurance and
the Bank's contributions to the Metropolitan Bank and Trust 401(k). Kaye
($874 and $4,229), (Koehler $2,022 and $5,500), Faust ($636 and $0),
Kichler ($1,143 and $3,392). Mr. Kichler did not participate in the
401(k) plan in 2001 and 2000. This also includes $113,000 in Directors'
Fees paid to Mr. Bank and $15,773 in Directors' Fees paid to Mr. Kaye
in 2002.
The following table provides information regarding grants of options
made during the year ended December 31, 2002, to each of the executive officers
named in the Summary Compensation Table
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OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
APPRECIATION FOR TEN YEAR
INDIVIDUAL GRANTS OPTION TERM
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NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES PRICE EXPIRATION
NAME GRANTED (#)(1) IN FISCAL YEAR(2) ($/SHARE) DATE 5% 10%
- ---- -------------- ----------------- --------- ---------- -- ---
Malvin E. Bank 8,000 2.74% $2.900 3/27/2012 $ 14,590 $ 36,975
Robert M. Kaye 30,000 10.26% $2.900 3/27/2012 $ 54,714 $138,656
48,130 16.47% $3.630 6/15/2012 $109,875 $278,446
9,515 3.26% $3.993 5/15/2012 $ 23,894 $ 60,552
Kenneth T. Koehler 60,000 20.53% $2.900 3/27/2012 $109,428 $277,311
6,055 2.07% $3.630 5/15/2012 $ 13,823 $ 35,030
Marcus Faust 35,000 11.97% $3.610 6/5/2012 $ 79,461 $201,369
Leonard D. Kichler 10,000 3.4% $2.900 3/27/2012 $ 18,238 $ 46,219
(1) - These options vest 50% on the third anniversary, 25% on the fourth
anniversary and 25% on the fifth anniversary from the date of grant. These
options also vest 100% on change in control.
(2) - Represents grants of incentive stock options, except for Mr. Kaye's
grants of 48,130 shares, which are non-incentive stock options.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
FISCAL YEAR-END AT FISCAL YEAR-END
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SHARES ACQUIRED
NAME ON EXERCISE VALUE REALIZED EXERCISABLE/UNEXERCISABLE(1) EXERCISABLE/UNEXERCISABLE(2)
- ---- ----------- -------------- ---------------------------- ----------------------------
Malvin E. Bank -- -- --/8,000 $--/$23,200
Robert M. Kaye -- -- 731,780/188,852 $--/$346,732
Kenneth T. Koehler -- -- 28,257/126,606 $--/$321,313
Marcus Faust -- -- --/35,000 $--/$126,350
Leonard D. Kichler -- -- --/42,294 $--/$91,667
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EQUITY COMPENSATION PLAN INFORMATION
NUMBER OF SECURITIES TO BE NUMBER OF SECURITIES
ISSUED UPON EXERCISE OF WEIGHTED AVERAGE REMAINING AVAILABLE FOR
PLAN OUTSTANDING OPTIONS AND RIGHTS EXERCISE PRICE (2) ISSUANCE UNDER PLAN
- ---- ------------------- ---------- ------------------ -------------------
Equity Compensation Plans
Approved by Stockholders 1,412,714(1) $7.73 64,732(3)
Equity Compensation Plans
Not Approved by
Stockholders -- $ -- --
Total 1,412,714 $7.73 64,732
(1) - Consists of options to purchase 1,412,714 shares of common stock under
the 1997 Stock Option Plan.
(2) - The weighted average exercise price reflects the exercise price of $7.73
per share for shares granted under the 1997 Stock Option Plan
(3) - Consists of options to purchase 64,732 shares under the 1997 Stock
Option Plan.
OTHER COMPENSATION AGREEMENTS
EMPLOYMENT CONTRACTS
Marcus Faust, Executive Vice President and Chief Financial Officer, has
an employment contract that expires on June 5, 2004. Mr. Faust's contract salary
is at least $220,000 per year for the life of the contract with additional
bonuses based upon performance.
CHANGE IN CONTROL ARRANGEMENTS
Kenneth Koehler, President and Chief Executive Officer, and Leonard
Kichler, Executive Vice President of the Bank, have change in control
arrangements that were enacted in September 2002. These arrangements supercede
any previous contracts that these employees had and agree to pay the named
executives a bonus, should a change in control happen. Mr. Koehler's bonus is
$300,000 and Mr. Kichler's is $100,000 should a change in control take place.
ITEM 12. OWNERSHIP OF THE REGISTRANT'S COMMON SHARES BY CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following tables list, as of March 31, 2003, information about the
Company's common shares beneficially owned by current directors of the Company,
by executive officers whose salary and bonus for the fiscal year ended December
31, 2001 exceeded $100,000, and by all directors and executive officers of the
Company and the Bank as a group. Except as otherwise noted, each beneficial
owner listed has sole investment and voting power with respect to the common
shares indicated. Total issued and outstanding shares at March 31, 2003 are
16,151,450 common shares.
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AMOUNT AND NATURE
OF BENEFICIAL
NAME OF INDIVIDUAL OR PERSONS IN GROUP OWNERSHIP PERCENT OF CLASS
-------------------------------------- ----------------- ----------------
Robert M. Kaye 11,844,940 (1) 73.33%
Malvin E. Bank 180,097 (2) 1.12%
Robert R. Broadbent 58,594 (3) *
Marjorie M. Carlson 72,468 *
Lois K. Goodman 35,526 *
James A. Karman 5,500 *
Ralph D. Ketchum 34,000 (4) *
Kenneth T. Koehler 185,543 (5) 1.15%
Kenneth R. Lehman 719,100 (6) 4.45%
Alfonse M. Mattia 120,472 (7) *
David P. Miller 102,513 *
Marcus O. Faust 764,100 (6) 4.64%
Leonard D. Kichler 51,824 (8) *
All directors and executive officers as a group (13 persons) 13,455,577 (9) 83.26%
* Represents less than 1% of The Company's outstanding common shares.
(1) Total includes 6,600 common shares held by Mr. Kaye as trustee with
sole investment and voting power, 8,865 shares attributable to Mr.
Kaye under the Company's Stock Purchase Plan, and 36,631 common shares
held indirectly under Metropolitan Bank and Trust Company 401(k) Plan.
Includes 76,000 shares held by the Robert M. Kaye Foundation, of which
Mr. Kaye is trustee, as to which Mr. Kaye disclaims beneficial
ownership. Total includes 947,631 stock options in which Mr. Kaye is
vested or which will vest within 60 days.
(2) Total includes 162,549 common shares held by Mr. Bank as trustee with
sole investment and voting power. Total includes 8,000 stock options
in which Mr. Bank will vest within 60 days.
(3) Total includes 6,500 common shares held by the Broadbent Family
Foundation, of which Mr. Broadbent is Chairman.
(4) Total includes 7,700 common shares held by Mr. Ketchum's spouse, as to
which Mr. Ketchum disclaims beneficial ownership.
(5) Total includes 154,863 stock options in which Mr. Koehler is vested or
will vest within 60 days.
(6) A partnership in which Mr. Lehman and Mr. Faust are general and
limited partners owns 719,100 shares of common stock. Mr. Lehman has
sole voting and investment power over 620,000 of such 719,100 shares,
and disclaims beneficial ownership of 99,100 of such shares. Mr. Faust
has sole voting and investment power over 99,100 of such shares and
disclaims beneficial ownership of 620,000 of such shares. Mr. Faust
owns an additional 10,000 shares through his IRA. Total also includes
35,000 of stock options in which Mr. Faust will vest within 60 days.
(7) Total includes 48,510 common shares held by Mr. Mattia as trustee and
2,540 common shares held by Mr. Mattia's spouse, as to which Mr.
Mattia disclaims beneficial ownership.
(8) Total includes 42,294 stock options in which Mr. Kichler will vest
within 60 days.
(9) To avoid double counting of shares, the total excludes shares held by
the limited partnership for which beneficial ownership is disclaimed
by Messrs. Lehman and Faust.
Except as set forth below, no person was known to the Company on
January 22, 2003 to own beneficially, within the meaning of the regulations of
the Securities and Exchange Commission, more than 5% of the Company's
outstanding common shares.
8
NAME AND ADDRESS OF BENEFICIAL AMOUNT AND NATURE
OWNER OF BENEFICIAL OWNER PERCENT OF CLASS
- ------------------------------ ------------------- ----------------
Robert M. Kaye
22901 Millcreek Boulevard 11,844,940 73.33%
Highland Hills, OH 44122
The Company has a revolving line of credit with Sky Bank that matures
on December 31, 2003. As collateral for the line of credit, Mr. Kaye agreed to
pledge a portion of his common shares of the Company's common stock in an amount
that exceeds 50% of the outstanding the Company's common shares. At December 31,
2002, the outstanding balance under the line of credit was $2.7 million.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
BANKING TRANSACTIONS: The Bank has had banking transactions, including
loans, with the Company's and the Bank's directors, officers, shareholders and
associates, and expects these transactions to continue into the future. The
transactions are in the ordinary course of the business of the Bank and are on
substantially the same terms, including interest rates and collateral on loans,
prevailing at the time for comparable transactions with other persons. The
transactions do not involve more than the normal risk of collectability or
present other terms unfavorable to the Bank.
MAJORITY SHAREHOLDER TRANSACTIONS: The Bank has had several
transactions during 2002 with its majority shareholder, Robert M. Kaye. First
and foremost among these was the settled reimbursement amount that Mr. Kaye owed
to the Bank of $3.5 million ($2.5 million net of taxes) that was paid in
December 2002. The reimbursement was required by the Office of Thrift
Supervision ("OTS") in its Supervisory Directive issued to the Bank and the
Company on July 8, 2002. In addition, Mr. Kaye agreed to purchase the Bank's
remaining artwork by March 15, 2003 for the greater of market or book value.
This transaction was completed in March 2003 and Mr. Kaye paid the Bank $5.3
million for the artwork which resulted in a gain of $17 thousand.
In December 2001, the Company also borrowed $2.0 million from Mr. Kaye
to make the required payment on its commercial bank loan. The Company repaid
this loan with the proceeds from its stock offering in March 2002.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENTS, AND REPORTS ON FORM 8-K
(c). Exhibits
99.1 Certification of Chief Executive Officer Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
99.2 Certification of Chief Financial Officer Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
99.3 Certification of Chief Executive Officer Regarding Disclosure
Controls and Procedures
99.4 Certification of Chief Financial Officer Regarding Disclosure
Controls and Procedures
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SIGNATURES
Pursuant to the requirements of Sections 13 and 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 CORP.
By: /s/ Kenneth T. Koehler
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Kenneth T. Koehler,
Chief Executive Officer
President,
Assistant Secretary,
Assistant Treasurer, and Director (Principal Executive Officer)
Date: April 30, 2003
---------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
By: /s/ Marcus Faust
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Marcus Faust,
Executive Vice President,
Chief Financial Officer,
(Principal Financial and Accounting Officer)
Date: April 30, 2003
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