-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UrJAluHtyoyQOBH4SU6I8RpxVL5kWvZN5Z+g+caWWu0OZi2PD0GNDGNdiOv9+57G RUoMb6iDUxexPzz8J31n3g== 0000950109-99-003759.txt : 19991027 0000950109-99-003759.hdr.sgml : 19991027 ACCESSION NUMBER: 0000950109-99-003759 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19991026 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMERCIAL FEDERAL CORP CENTRAL INDEX KEY: 0000744778 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 470658852 STATE OF INCORPORATION: NE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: SEC FILE NUMBER: 001-11515 FILM NUMBER: 99734124 BUSINESS ADDRESS: STREET 1: 2120 S 72ND ST CITY: OMAHA STATE: NE ZIP: 68124 BUSINESS PHONE: 4025549200 MAIL ADDRESS: STREET 1: COMMERCIAL FEDERAL TOWER 13TH FLOOR STREET 2: 2120 SOUTHJ72ND STREET CITY: OMAHA STATE: NE ZIP: 68124 DEFA14A 1 DEFINITIVE PROXY MATERIALS 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 [_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2)) [_] Definitive Proxy Statement [X] Definitive Additional Materials [_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 Commercial Federal - -------------------------------------------------------------------------------- (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)(4) 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: ------------------------------------------------------------------------- Notes: [Commercial Federal Logo] Commercial Federal Corporation October 1999 Forward-Looking Statements - -------------------------------------------------------------------------------- This document contains certain forward-looking statements (within the meaning of the Private Securities Litigation Reform Act) which involve risks and uncertainties. The Corporation cautions readers that a number of important factors could cause actual results to differ materially from the forward-looking statements. These factors include unforeseen fluctuations in interest rates, inflation, adverse changes in government regulations, unexpected costs resulting from the process of integrating acquisitions, economic conditions, technology changes and increased competition in the geographic and business areas in which the Corporation conducts its operations. [logo] Commercial Federal Corporation Introduction - -------------------------------------------------------------------------------- . Demonstrated track record of shareholder oriented growth . Building a powerful and profitable franchise in high-growth urban and rural Midwest . Evolving to a more bank-like business mix . Invested in technology and upgrading and unifying systems to provide the best customer service in the markets we serve . Well-positioned for increased and sustainable growth and profitability [logo] Commercial Federal Corporation 1 Repositioning the Company - -------------------------------------------------------------------------------- Carefully Managed Growth (dollars in billions) 6/95 6/99 Growth ---- ---- ------ Assets $ 6.0 $12.8 115% Loans 4.0 9.3 134 Deposits 3.6 7.7 113 Equity 0.3 1.0 212 Loans/Assets 67% 73% Loans/Deposit 111 122 Tangible Common Equity/Assets 4.6 5.6 [logo] Commercial Federal Corporation 2 Expansion in Demographically Strong Markets - -------------------------------------------------------------------------------- Focused Acquisition Strategy (dollars in billions) Est. 5 Year Net Deposits Population Deposits Added Since Growth in States at 6/99 1995 CFB Markets* ------ ------- ---- ------------ Colorado $2.2 $1.0 10.4% Iowa 1.6 1.6 3.5 Nebraska 1.3 -- 4.0 Kansas 1.1 0.8 3.6 Oklahoma 0.8 -- 2.6 Missouri 0.5 0.5 5.2 Arizona 0.2 0.2 10.2 --- ---- ---- $7.7 $4.1 6.0% Nationwide Average -- -- 4.3% _______ *Weighted average by MSA based on deposits. [logo] Commercial Federal Corporation 3 Expansion in Demographically Strong Markets - -------------------------------------------------------------------------------- CFB Deposit Franchise [Regional Map Showing Branch Locations] [Legend] - -------- [icon] Commercial Federal [icon] Midland First Financial [icon] First Colorado Bancorp [icon] AmerUs Bank [logo] Commercial Federal Corporation 4 Expansion In Demographically Strong Markets - -------------------------------------------------------------------------------- Focused Acquisition Strategy Estimated 5 Year Population Growth CFB States Entire State CFB Markets(a) Advantage(b) ------ ------------ -------------- --------- Colorado 10.2% 10.4% 1.9% Iowa 1.8 3.5 94.4 Nebraska 2.8 4.0 42.8 Kansas 2.3 3.6 56.5 Oklahoma 2.4 2.6 8.3 Missouri 3.8 5.2 36.8 --- --- ---- Total (c) 4.9% 6.0% 22.4% _______ (a) Weighted average by MSA based on deposits. (b) Represents percentage growth advantage of CFB markets vs. entire state growth. (c) Weighted average based on deposits in states. [logo] Commercial Federal Corporation 5 Disciplined Acquisition Strategy - -------------------------------------------------------------------------------- Value-Enhancing Acquisitions . Each of CFB's 11 acquisitions since 1995 have been accretive to earnings per share . All acquisitions have met the following criteria established by CFB: . Should not be greater than 30% of CFB's total assets . Accretive to GAAP EPS within 12 months of the acquisition . Use cash when able to actively manage CFB's capital position . Pricing consistent with or below comparable transactions . Located in or adjacent to CFB market . Should result in immediate increase in perceived franchise value Thrift Transactions Bank Transactions -------------------------- -------------------------- Comparable CFB Deals Deals CFB Deals ------------- ----------- ------------- ----------- Number of Transactions 8 -- 3 -- Assets Acquired $4.8 billion -- $1.2 billion -- Price/Book 1.6x 2.1x 2.8x 2.8x Price/Tangible Book 1.6 2.3 3.0 2.9 Deposit Premium 10.5% 15.6% 15.6% 22.4% [logo] Commercial Federal Corporation 6 Maintaining Focus on Fundamentals - -------------------------------------------------------------------------------- Operating Performance and Efficiency (dollars in millions) 6/95 6/99 Growth ---- ---- ------ Operating Earnings $48.9 $119.5 144% Cash Earnings 55.6 131.9 137 Return on Assets 0.85% 1.00% 18% Cash Return on Assets 0.97 1.11 14 Efficiency Ratio 55.0% 51.6% 6% [logo] Commercial Federal Corporation 7 Maintaining Focus on Fundamentals - -------------------------------------------------------------------------------- Continued Expense Management Current initiatives underway which will result in further efficiencies include: . Consolidation of Recent Acquisitions . Completion of Major Data Processing Conversion . The completion of CFB's $36 million data processing conversion . Enhanced data processing capabilities will provide potential for significant economies of scale from future acquisitions as CFB will be able to add acquired operations to its systems without a proportionate increase in operation expenses . Potential Branch Rationalization . Commercial Federal is in the process of analyzing its entire branch franchise with the potential to divest selected unprofitable branches . Restructuring . Absorbed one-time charge with ongoing cost savings [logo] Commercial Federal Corporation 8 More Bank-Like Business Mix - -------------------------------------------------------------------------------- Accelerating the Company's Transition 6/95 6/99 ---- ---- Net Interest Margin 2.42% 2.99% Fee Income/Avg Assets 0.68 0.80 Consumer Loans ($Mil.) $234 $1,111 As a % of Loans 5.9% 11.9% Commercial Loans ($Mil.) $1 $383 As a % of Loans 0.0% 4.1% Core Deposits ($Mil.) $1,037 $3,100 As a % of Total Deposits 25.9% 40.0% [logo] Commercial Federal Corporation 9 More Bank-Like Business Mix - -------------------------------------------------------------------------------- Emphasizing "Bank-Like" Products . With a core of very experienced and respected consumer and commercial lenders, Commercial Federal is more sensitive to customer needs in its local markets, and will capitalize on its commitment to relationship banking which its larger competitors appear to have abandoned . Consumer loans have grown to represent 12% of the total loan portfolio, up from 6% in 1995, through internal growth and acquisition . CFB is focused on leveraging its consumer loan franchise through its new branches . CFB is currently upgrading its cash management services offered to small businesses . Focus on income property and commercial real estate loans . Becoming more of a community bank mortgage lender [logo] Commercial Federal Corporation 10 Delivery Systems - -------------------------------------------------------------------------------- Focused on Traditional and Alternative Delivery . Commercial Federal has actively analyzed and developed both its traditional branch network as well as alternative delivery channels . Supermarket Banking . Telephone Banking . Internet . Telephone Bill Pay . INVEST-mutual funds and annuities . Commercial Lending [logo] Commercial Federal Corporation 11 Capital Management - -------------------------------------------------------------------------------- Current Initiatives Commercial Federal will continue to actively manage its capital base through prudent use of: . Share Repurchase Programs . Since the Board reinitiated CFB's common stock repurchase program earlier this year by authorizing the repurchase of up to 3.0 million shares, CFB has acquired over 2.0 million shares of its outstanding common stock, representing approximately 3.9% of its common shares . During 1999, CFB invested approximately $48.1 million to repurchase its shares . CFB will continue to monitor its capital position, delivering capital back to shareholders through share repurchases . Dividend Payout Increases . Since implementing a cash dividend payout in October 1995, CFB has increased its dividend each year, including a 18% increase in 1999 to $0.26 per share . CFB plans to continue to examine its dividend payout ratio, currently at 16%, for possible future increases [logo] Commercial Federal Corporation 12 Total Returns to Shareholders - -------------------------------------------------------------------------------- Historically Strong Returns* [Bar chart showing returns of CFB and other institutions as indicated in the following table] CFB COFI WBST WM SVRN PHBK DME ASFC BNKU GPT RSLN - -------------------------------------------------------------------------------- 24.9% 22.8% 20.6% 19.9% 15.6% 8.9% 3.4% N/A N/A N/A N/A __________ *As of 10/22/99 [logo] Commercial Federal Corporation 13 Strategic Business Plan - 2000 and Beyond - -------------------------------------------------------------------------------- Strategic Initiatives to Build Value . Continued Expense Management . Data processing conversion . branch rationalization . Emphasizing "Bank-Like" Products, such as Commercial/Small Business Lending . Continued development and growth of fee revenue generating businesses . Capital Management . Franchise and Shareholder Value Enhancing Acquisitions [logo] Commercial Federal Corporation 14 Review of Franklin Proposal - -------------------------------------------------------------------------------- . Commercial Federal's Board has thoroughly analyzed and evaluated the director slate proposal from Franklin and their single issue platform to seek an immediate sale of the Company. It has unanimously and unequivocally rejected it. Upon further analysis of the proposal, the following issues were discussed: . Current weakness in the general M&A market for financial institutions, and thrifts, in particular . Depressed current valuation and strategic interest of CFB's most likely partners . Significant future growth opportunities currently available to CFB . Attractive earnings growth and profitability outlook for CFB given the successful consolidation of our recent acquisitions and our recent data processing conversion . Commercial Federal's board seeks the advice of industry experts, including Merrill Lynch, on an ongoing basis to help it evaluate the strategic landscape and alternatives facing the Company . We feel Franklin's proposals is a last ditch effort by its management to profit short term, not enabling CFB's long term shareholders to benefit from CFB's superior franchise and growth opportunities [logo] Commercial Federal Corporation 15 Conclusion - -------------------------------------------------------------------------------- . Demonstrated track record of shareholder oriented growth . Building a powerful and profitable franchise in high-growth urban and rural Midwest . Evolving to a more bank-like business mix . Invested in technology and upgrading and unifying systems to provide the best customer service in the markets we serve . Well-positioned for increased and sustainable growth and profitability [logo] Commercial Federal Corporation 16 -----END PRIVACY-ENHANCED MESSAGE-----