CORPORATE RESTRUCTURING§7.210
February 1997 7-355A
METROPOLITAN BANCORP
PROSPECTUS
3,403,080 SHARES
COMMON STOCK
METROPOLITAN FEDERAL SAVINGS AND LOAN ASSOCIATION OF SEATTLE
PROXY STATEMENTFOR
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement-Prospectus is being furnished in connection with the solicitation of proxies by the Board of
Directors of Metropolitan Federal Savings and Loan Association of Seattle (“the Association” ) for use at the Annual
Meeting of Stockholders of the Association (the “Annual Meeting”) to be held on Wednesday, July 21, 1993 and at any
adjournment of such meeting. This Proxy Statement-Prospectus also serves as the Prospectus of Metropoli tan Bancorp
(the “Company”) under the Securities Act of 1933, as amended (the “Securities Act”) wi th respect to the issuance of
shares of common stock, par value $.01 per share (the “Company Common Stock”), in connection with forming a holding
company for the Association as described herein (the “Reorganization”). The approximate date of mailing of this Proxy
Statement-Prospectus is June 15, 1993.
This Proxy Statement-Prospectus does not cover any resales of the Company Common Stock received by the
Association’s stockholders upon completion of the Reorganization described herein. No person is authoriz ed to make any
use of this Proxy Statement-Prospectus in connection with any such resale or in connection with the offer or sale of any
other securities.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE “COMMISSION”), ANY STATE SECURITIES COMMISSION OR THE
OFFICE OF THRIFT SUPERVISION (“OTS”) OF THE DEPARTMENT OF THE TREASURY, NOR HAS TH E
COMMISSION, ANY STATE SECURITIES COMMISSION OR THE OTS PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement-Prospectus is June 15, 1993.
§7.210 PROXY STATEMENTS: STRATEGY & FORMS
© 1997 Jefren Publishing Company, Inc. 7-355B
CONTENTSPage
AVAILABLE INFORMATION ................................................................................................................. 3
SUMMARY ................................................................................................................................................ 4
ANNUAL MEETING OF STOCKHOLDERS .......................................................................................... 7
Introduction .......................................................................................................................................... 7
Outstanding Shares and Voting Rights ................................................................................................ 7
ELECTION OF DIRECTORS .................................................................................................................... 8 Information With Respect to Directors ................................................................................................ 8
Meetings and Committees of the Board of Directors ........................................................................... 9
Director Compensation ........................................................................................................................ 10
Executive Compensation ...................................................................................................................... 10
Change of Control Arrangements ........................................................................................................ 11
Compensation Committee Report ........................................................................................................ 11
Performance Graph .............................................................................................................................. 12
Certain Transactions With Management .............................................................................................. 12
Beneficial Ownership ........................................................................................................................... 14
HOLDING COMPANY FORMATION ..................................................................................................... 15 General ................................................................................................................................................. 15
Reasons for the Reorganization ............................................................................................................ 15
Proposed Debt Offering by the Company ............................................................................................ 16
Description of the Reorganization ........................................................................................................ 16
Capital Resources ................................................................................................................................. 16
Conditions to the Reorganization and Abandonment .......................................................................... 18
Tax Consequences of the Reorganization ............................................................................................ 18
Accounting Treatment of the Reorganization; Consolidated Federal Income Tax Returns ................ 19
Dissenters’ Rights ................................................................................................................................ 19
Board of Directors and Management of the Company ......................................................................... 19
Management Remuneration and Effect on Employee Benefit Plans ................................................... 20
Market for Company Common Stock; Anticipated Dividend Policy; Resales of Company
Common Stock .............................................................................................................................. 20
Regulation of the Company .................................................................................................................. 21
Description of Company Capital Stock ................................................................................................ 24
Comparison of Stockholder Rights ...................................................................................................... 25
Anti-Takeover Effects .......................................................................................................................... 29
AMENDMENT OF THE METROPOLITAN FEDERAL SAVINGS AND LOAN
ASSOCIATION OF SEATTLE STOCK OPTION AND INCENTIVE PLAN 31
Description of Amendments ................................................................................................................. 31
Description of Stock Option and Incentive Plan .................................................................................. 31
ADOPTION OF METROPOLITAN FEDERAL SAVINGS AND LOAN ASSOCIATION OF
SEATTLE STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS ........................................... 34
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS ............................................. 35
ADJOURNMENT OF ANNUAL MEETING ............................................................................................ 35
STOCKHOLDER PROPOSALS ................................................................................................................ 36
ANNUAL REPORTS AND FINANCIAL STATEMENTS ...................................................................... 36
OTHER MATTERS .................................................................................................................................... 36
EXPERTS ................................................................................................................................................... 36
LEGAL MATTERS .................................................................................................................................... 36
APPENDICES A Agreement and Plan of Reorganization
B Metropolitan Bancorp Articles of Incorporation
C Metropolitan Bancorp Bylaws
D Tax Opinion
CORPORATE RESTRUCTURING§7.210
February 1997 7-355C
E Metropolitan Federal Savings and Loan Association of Seattle Amended
Stock Option and Incentive Plan
F Metropolitan Federal Savings and Loan Association of Seattle Stock Option Plan for
Nonemployee Directors
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© 1997 Jefren Publishing Company, Inc. 7-355D
AVAILABLE INFORMATION
Under the rules and regulations of the Commission, the solicitation of stockholders of the Association to approve
the Reorganization constitutes an offering of Company Common Stock to be issued in connect ion therewith. Accordingly,
the Company has filed a Registration Statement on Form S-4 (the “Registration Sta tement”) under the Securities Act, with
respect to such offering and this Proxy Statement-Prospectus constitutes a Prospectus of the Com pany filed as part of the
Registration Statement. This Proxy Statement-Prospectus does not contain all of the i nformation set forth in the
Registration Statement, in connection with the Reorganization described herein. The Registration Statement, including
exhibits, may be inspected or copied at prescribed rates at the public reference fac ilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549; and at the Commission’s regional offices at Nort hwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade Center, Suite 1300, New York,
New York 10048.
The Association is subject to the information, reporting and proxy statement requirements of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and, in accordance therewith, file s reports, proxy statements and
other information with the OTS. Copies of such materials may be obtained at prescribed rates from the OTS, 1700 G
Street, N.W., Washington, D.C. 20552.
The Company currently is a wholly owned subsidiary of the Association that was formed solely for the purpose of
effecting the Reorganization described herein. As a wholly owned subsidiary, the Company has not previously been
subject to the requirements of the Exchange Act, and there is currently no public market for its common stock. However,
in connection with the proposed reorganization of the Association, the Company will become subj ect to the same
information, reporting and proxy statement requirements under the Exchange Act as currently a pply to the Association,
except that such filings will be required to be made with the Commission rather tha n the OTS and will be available for
inspection and copying at the offices of the Commission set forth above. The Associa tion’s reporting obligations under
the Exchange Act will terminate upon consummation of the reorganization of the Associ ation. The Association’s common
stock, par value $1.00 per share (the “Association Common Stock”) is quoted on the National Assoc iation of Securities
Dealers, Inc. Automated Quotation (“NASDAQ”) National Market System, and the Company Common St ock also will be
quoted on the NASDAQ National Market System upon consummation of the Reorganization.
The Company has filed an application on Form H-(e)1-S under the Home Owners’ Loan Act, as am ended
(“HOLA”), with the OTS. Such application may be inspected at the office of the OTS indicated above.
No person is authorized to give any information or to make any representation not contained or incorporated by
reference in this Proxy Statement-Prospectus and, if given or made, such information or repre sentation should not be
relied upon as having been authorized. This Proxy Statement-Prospectus does not constitute an offer to sell, or a
solicitation of an offer to purchase, the securities offered by this Proxy Statement-Prospectus i n any jurisdiction to or from
any person to whom it is unlawful to make such an offer or solicitation in such jurisdict ion. Neither the delivery of this
Proxy Statement-Prospectus nor any distribution of the securities being offered pursuant to this Proxy Sta tement-
Prospectus shall, under any circumstances, create an implication that there has been no change in the affairs of the
Company, the Association or the information set forth herein since the date of this Proxy Statement-Prospectus.
THE SHARES OF COMPANY COMMON STOCK OFFERED HEREBY ARE NOT DEPOSITS AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (“FDIC”) OR ANY OTHER
GOVERNMENT AGENCY.
The Association’s Annual Report on Form 10-K for the year ended March 31, 1993 (the “Form 10-K”), heretofore
filed with the OTS pursuant to the Exchange Act, is hereby incorporated by reference in this Proxy Statement-Prospectus.
CORPORATE RESTRUCTURING§7.210
February 1997 7-355E
The Association hereby undertakes to provide without charge to each person to whom a copy of this Proxy
Statement-Prospectus has been delivered upon oral or written request of such person, a copy of the Association Form 10-
K incorporated by reference in this Proxy Statement-Prospectus, other than exhibits to such docume nts. Requests for
copies should be directed to Ann R. Christensen, Secretary, Metropolitan Federal Savings and Loan Association of
Seattle, 1520 4th Avenue, Seattle, Washington 98101-1648, telephone (206) 625-1818.
SUMMARY
The following is a brief summary of certain information contained elsewhere in this Proxy Sta tement-Prospectus.
Reference is made to, and this Summary is qualified in its entirety by, the m ore detailed information contained in this
Proxy Statement-Prospectus, including the Agreement and Plan of Reorganization, Articles of Inc orporation and Bylaws
attached as appendices hereto.
Date, Time and Place of the Annual Meeting and Record Date. The Annual Meeting will be held at the Sheraton
Seattle Hotel, West Ballroom, 1400 Sixth Avenue, Seattle, Washington, on July 21, 1993 at 2:00 p.m. Pacific Daylight
Time and at any adjournment thereof. Stockholders of record at the close of business on June 1, 1993 are entitled to notice
of and to vote at the Annual Meeting.
Purposes of the Annual Meeting. At the Annual Meeting, stockholders will be asked to consider (1) a proposal to
elect three directors for three-year terms, in each case until their successors a re elected and qualified; (2) a proposal to
approve the Reorganization pursuant to an Agreement and Plan of Reorganization (“Agreeme nt”), dated May 27, 1993, by
and among the Association, the Company and Metropolitan Federal Interim Savings Associat ion (“Interim”), under which
(a) the Association will, subject to the receipt of all requisite approvals, becom e a wholly owned subsidiary of a newly
formed Washington corporation known as “Metropolitan Bancorp” and (b) each outstanding share of Association
Common Stock will become, by operation of law, one share of Company Common Stock; (3) a proposal t o adopt the
Metropolitan Federal Savings and Loan Association of Seattle Stock Option Plan for Nonemploye e Directors; (4) a
proposal to amend the Metropolitan Federal Savings and Loan Association of Seattle Stock Opt ion and Incentive Plan; (5)
a proposal to ratify the appointment of Deloitte & Touche as the Association’s independent auditors for the year ending
March 31, 1994; (6) a proposal to adjourn the Annual Meeting if necessary to solicit additional proxies; and (7) such other
business as may properly come before the Annual Meeting or any adjournment thereof.
Reason for the Reorganization. The Reorganization will provide greater operating flexibility and will permit
expansion into a broader range of financial services and other business activities than a re currently permitted to the
Association as a federally chartered savings bank. See “Holding Company Formation--Reasons for the Reorganization.”
Recommendations of the Board of Directors. The Board of Directors of the Association has approved the
Agreement, subject to the receipt of stockholder approval and all requisite regulatory approva ls. THE BOARD OF
DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH PROPOSAL DESCRIBED
ABOVE.
Required Stockholder Approval. The affirmative vote of the holders of a majority of the issued and outstanding
Association Common Stock is required to approve the Agreement in proposal two. Approval of the Reorga nization will be
deemed to be approval of certain other matters, including directors of the Company and t he transfer of the Association’s
Stock Option and Incentive Plan, Stock Option Plan for Nonemployee Directors, Employee Stock Ownership Plan and
Employee Stock Purchase Plan, including the obligation to issue stock pursuant to such plans from the Association to the
Company. As of March 31, 1993, directors and executive officers of the Association as a group (11 persons), beneficially
owned approximately 11% of the issued and outstanding shares of the Association Common Stock (excluding presently
exercisable
§7.210 PROXY STATEMENTS: STRATEGY & FORMS
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stock options), and, it is expected that such shares will be voted in favor of the Agreement in proposal two and the other
management proposals to be considered at the Annual Meeting. See “Election of Directors-- Beneficial Ownership” and
“Holding Company Formation.” Under the Association’s Federal Stock Charter and Bylaws and appli cable OTS
regulations, if a quorum is present at the meeting: (1) the three nominees for elec tion as directors who receive the greatest
number of votes cast for the election of directors at the meeting by the shares pre sent in person or represented by proxy at
the meeting and entitled to vote shall be elected directors, (2) the affirmati ve vote of a majority of the issued and
outstanding shares of Association Common Stock is required to approve the Agreement in proposal two, adopt ion of the
Stock Option Plan for Nonemployee Directors in proposal three and amendments to the Association’s Stock Option and
Incentive Plan in proposal four and (3) each of the other matters listed in the accom panying Notice of 1993 Annual
Meeting of Stockholders will be approved if the number of votes cast in favor of the matte r is a majority of the eligible
votes present at the meeting. For purposes of determining whether a quorum exists, a majority of the outstanding shares of
the Association entitled to vote must be represented at the meeting in person or by proxy. Abstentions are considered in
determining the presence of a quorum at the Meeting and votes withheld in connection wit h the election of directors will
not affect the plurality vote required for the election of directors. Because proposals 2, 3 and 4 are required to be approved
by a majority of the votes eligible to be cast at the Meeting an abstention or “broker non-vote” has the same effect as a
vote against the proposal. The affirmative vote of a majority of the eligible votes present at the Annual Meeting is
required for approval of proposal 5. Abstentions and “broker non-votes” will not be counted as votes cast for the proposal,
and accordingly also will have the same effect as a vote against this proposal. Unde r rules of the New York Stock
Exchange, proposals 2, 3 and 4 for consideration at the Annual Meeting are considered “non-discretionary” items where
there may be “broker non-votes” whereby brokerage firms may not vote in their discretion on be half of their clients if
such clients have not furnished voting instructions.
Dissenters’ Rights. Under regulations of the OTS, stockholders of the Association do not have dissenters’ rights
with respect to the Reorganization. See “Holding Company Formation--Dissenters’ Rights.”
Required Regulatory Approvals and Regulation. The Reorganization is subject to the approval of the OTS and an
application for approval of the Reorganization has been submitted to this agency. Upon consumm ation of the
Reorganization, the Company will be a savings and loan holding company subject to regulati on by the OTS under the
HOLA and by the Commission with respect to certain matters arising under federal sec urities laws. See “Holding
Company Formation--Regulation of the Company.”
Tax Consequences of the Reorganization. The Association has received a legal opinion in the form attached hereto
as Appendix D to the effect that none of the Company, the Association, Interim or the stockholders of the Association will
recognize gain or loss for federal income tax purposes as a result of the Reorganization. See “Holding Company
Formation--Tax Consequences of the Reorganization.”
Management of the Company. Directors and officers of the Company consist of persons who also currently serve as
directors and officers of the Association. See “Holding Company Formation--Board of Directors and Management of the
Company.”
Market for Company Common Stock. The Company Common Stock will be substituted for the Association
Common Stock on the NASDAQ National Market System under the symbol “MSEA” upon consummation of the
Reorganization. On April 27, 1993, the last full trading day on which shares of the Association C ommon Stock were
traded prior to the announcement of the Reorganization, the closing sales price of a share of the Association Common
Stock on the NASDAQ National Market System was $13.50. See “Holding Company Formation--Market for Company
Common Stock; Anticipated Dividend Policy; and Resales of Company Common Stock.”
Dividends. It is anticipated that the dividend policy of the Company will not differ from t he present dividend policy
of the Association. See “Holding Company Formation--Market for Company Common Stock: Anticipated Di vidend
Policy; and Resales of Company Common Stock.”
CORPORATE RESTRUCTURING§7.210
February 1997 7-355G
Effects of the Reorganization on Rights of Stockholders. Upon consummation of the Reorganization, there will be
certain differences in the rights of the shareholders of the Company, a Washington corporati on, and those of the
stockholders of the Association, a federally chartered savings and loan association. Such differe nces include provisions in
the Articles of Incorporation and Bylaws of the Company that, among other things, (1) limit director. liability under
certain circumstances, and (2) indemnify the Company’s directors, officers, employees and age nts under certain
circumstances, all as permitted by Washington law. In addition to the provisions contained in the Company’s Articles of
Incorporation and Bylaws, certain provisions of the Washington Business Corporation Act (“WBCA”), whic h will be
applicable to the Company, provide increased protection from hostile acquisition atte mpts. Such provisions could have the
effect of discouraging an acquisition of the Company or stock purchases in furtherance of an acqui sition, and could
accordingly, under certain circumstances, discourage transactions that might otherwise have a favorable effect on the price
of the Company Common Stock. See “Holding Company Formation--Comparison of Stockholders’ Rights.”
Adjournment of the Annual Meeting. Stockholders will be asked to consider at the Annual Meeting a proposal to
adjourn the Annual Meeting if necessary. The Association may seek an adjournment of the Annual Meeting for not more
than 29 days in order to enable the Association to solicit additional votes in favor of the Agreement or any of the matters
submitted for stockholder consideration if any of such proposals has not received the required vote of stockholders at the
Annual Meeting and has not received the negative votes of the holders of a majority of the Association Common Stock.
§7.210 PROXY STATEMENTS: STRATEGY & FORMS
© 1997 Jefren Publishing Company, Inc. 7-355H
METROPOLITAN FEDERAL SAVINGS AND LOANASSOCIATION OF SEATTLE
ANNUAL MEETING OF STOCKHOLDERS
Introduction This Proxy Statement-Prospectus is furnished to the stockholders of the Association in connection wit h the
solicitation of proxies on behalf of the Board of Directors, to be used at the Annual Meeti ng for the purposes set forth in
the Notice of Annual Meeting.
Each proxy solicited hereby, if properly signed and returned to the Association and not revoked pri or to its use, will
be voted in accordance with the instructions contained therein. If no contrary instructions are given, each proxy
received will be voted FOR the election of all of the Board of Directors’ nominees named herein, FOR approval of
the Agreement and the Reorganization contemplated thereby, FOR the adoption of the Metropolitan Federal
Savings and Loan Association of Seattle Stock Option Plan for Nonemployee Directors, FOR the approval of
amendments to the Metropolitan Federal Savings and Loan Association of Seattle Stock Option and Incentive
Plan, FOR ratification of Deloitte & Touche as independent auditors, FOR the adjournment of the Annual
Meeting if necessary to solicit additional proxies, and, in the discretion of the proxies, for any other matters that
may properly come before the Annual Meeting.
Any stockholder giving a proxy has the power to revoke it at any time before it is exercise d by: (1) filing with the
Secretary of the Association written notice thereof (Ann R. Christensen, Secretary, Metropoli tan Federal Savings and
Loan Association of Seattle, 1520 4th Avenue, Seattle, Washington 98101-1648), (2) submitting a duly exec uted proxy
bearing a later date, or (3) appearing at the Annual Meeting and giving the Secretary notice of his or her intention to vote
in person. Proxies solicited hereby may be exercised only at the Annual Meeting and any adjournment thereof and will not
be used for any other meeting. The proxies furnished hereby may not be voted for persons other than t he nominees listed
below or such replacement nominee or nominees recommended by the Board of Directors.
Outstanding Shares and Voting Rights
Only stockholders of record at the close of business on June 1, 1993 (“Record Date”) will be entitl ed to vote at the
Annual Meeting. On the Record Date, there were 3,264,080 shares of Association Common Stock outsta nding, and the
Association had no other outstanding class of equity securities. Each share of the Associati on Common Stock is entitled to
one vote at the Annual Meeting on all matters properly presented thereat. The presenc e, in person or by proxy, of at least a
majority of the total number of outstanding shares of Association Common Stock entitled to vote is necessary to constitute
a quorum at the Annual Meeting. Under the Association’s Federal Stock Charter and Bylaws, if a quorum is present at the
meeting: (1) the three nominees for election as directors who receive the greate st number of votes cast for the election of
directors at the meeting by the shares present in person or represented by proxy at the m eeting and entitled to vote shall be
elected directors, (2) the affirmative vote of a majority of the issued and outstandi ng Association Common Stock is
required to approve the Agreement in proposal two, the adoption of the Stock Option Plan for Nonemployee Directors in
proposal three and the amendments to the Association’s Stock Option and Incentive Plan in proposal four and (3) each of
the other matters listed in the accompanying Notice of 1993 Annual Meeting of Stockholders will be approved if the
number of votes cast in favor of the matter is a majority of the eligible votes present at the meeting. Abstentions are
considered in determining the presence of a quorum at the Meeting and votes withheld in connection with the election of
directors will not affect the plurality vote required for the election of directors. B ecause proposals 2, 3 and 4 are required
to be approved by a majority of the votes eligible to be east at the Meeting an abstention or “broker non-vote” has the
same effect as a vote against the proposal. The affirmative vote of a majority of the eligible votes present at the Annual
Meeting is required for approval of proposal 5. Abstentions and “broker non-votes” will not be counted a s votes cast for
the proposal, and accordingly also will have the same effect as a vote
CORPORATE RESTRUCTURING§7.210
February 1997 7-355I
against this proposal. Under rules of the New York Stock Exchange, proposals 2, 3 and 4 for consideration at t he Annual
Meeting are considered “non-discretionary” items where there may be “broker non-votes” whereby brokerage firms may
not vote in their discretion on behalf of their clients if such clients have not furni shed voting instructions. Stockholders of
the Association are not entitled to cumulate their votes for the election of directors.
ELECTION OF DIRECTORS (Proposal One)
The Association’s Board of Directors is divided into three classes as nearly equal in numbe r as possible. The term
of office of only one class of directors expires in each year, and their successors are ele cted for terms of three years and
until their successors are elected and qualified.
At the Meeting, three directors will be elected for a three-year term. Unless othe rwise specified on the proxy, it is
intended that the persons named in the proxies solicited by the Board will vote for the election of the nominees named
below. The Association’s Federal Stock Charter provides that stockholders may not cumulate t heir votes for the election
of directors at this Meeting.
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. At this time the Board knows of no reason why any nominee might
be unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL OF THE NOMINEES NAMED
BELOW FOR DIRECTORS OF THE ASSOCIATION.
Information With Respect to Directors
The following table sets forth the names of the Board of Directors’ nominees for election as directors and of those
directors continuing in office. Mr. Webster B. Anderson, currently a director of the Association, has announced his
retirement as a director effective immediately following the Annual Meeting of stockholders. The size of the Board of
Directors has been reduced to eight directors effective with Mr. Anderson’s retirement. Also set forth is certain other
information with respect to each person’s age, principal occupation(s) during the past five yea rs, the year he first became a
director and positions held with the Association.
Year First
Elected or Year
Position(s) Held Appointed Term
Name Age* With the Association Director Expires
Board Nominees
David C. Cortelyou ............................... 55 Director 1993 1996
Gordon Dowling ................................... 76 Director 1990 1996
Virgil Fassio ......................................... 65 Director 1993 1996
Directors Continuing in Office
Allen E. Doan ....................................... 59 Chairman of the Board of
Directors 1981 1994
Larry O. Hillis ...................................... 53 Director 1989 1995
John J. Knight ....................................... 66 Director 1965 1994
Patrick F. Patrick .................................. 51 President, Chief Executive Officer and Director 1990 1995
Donald E. Wahlquist ............................ 55 Executive Vice President and Director 1991 1994
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*As of March 31, 1993.
CORPORATE RESTRUCTURING§7.210
February 1997 7-355K
The principal occupation of each director of the Association is set forth below.
ALLEN E. DOAN, Director since 1981 and Chairman of the Board since 1992, has been a cardiologist in Bellevue,
Washington since 1966 and was chief of staff of Overlake Hospital from 1981 to 1982.
DAVID C. CORTELYOU, Director since March 1993, has been employed by UNICO Properties, Inc. sinc e 1963,
and has been president and chief executive officer of UNICO since February 1992. Among his many c ivic and charitable
activities, he is currently chair of the Downtown Seattle Association and vice president of Seattle Rotary #4, and chaired
the 1990 Seattle Public School Levy.
W. GORDON DOWLING, Director since April 1990, served as president and general manager of West Coast Fruit
and Produce for 25 years before retiring in 1989. He has been active in the Puget Sound banking comm unity for many
years, having served on the board of directors of State Mutual Bank prior to its acquisition by United Bank, a Savings
Bank, in 1985. He then served on the board of United Bank until it was acquired by Rai nier Bank, now Seafirst, in 1987.
Mr. Dowling is a former director of the Bank of Tacoma.
VIRGIL FASSIO, Director since March 1993, has been the publisher of the Seattle Post-Intelligence r since 1978.
He had earlier been an executive with several other newspapers including the Chicago T ribune and Detroit Free Press. He
is past chair of the Washington Council on International Trade, the Downtown Seattle Association, and the Seattle-King
County Convention and Visitors Bureau, and currently serves on the boards of various other civic and philanthropic
organizations.
LARRY O. HILLIS, Director since 1989, is a real estate investor and developer. He was the owner of Hillis Homes,
Inc., a well-known Puget Sound single-family residential real estate development company, from 1967 until he sold the
Company to Centex Corporation in 1980. Mr. Hillis currently serves as director of Commonweal th Land Title Company
of Snohomish County.
JOHN J. KNIGHT, Director since 1965, served as president of Pacific Equipment Company from 1965 until 1980.
Mr. Knight has been retired since 1980.
PATRICK F. PATRICK, President, Chief Executive Officer and a director, joined Metropolitan i n May 1990. From
May 1988 to May 1990 he was a consultant for the acquisition of troubled thrifts. From January 1983 unti l 1988 he was
the president and chief executive officer of Prudential Bancorporation and Prudential Ba nk, FSB, Seattle, Washington.
From 1985 to 1986 he was the chief executive officer of Mariner Federal Savings and Loan Assoc iation as part of the
FSLIC Management Consignment Program.
DONALD E. WAHLQUIST, Executive Vice President, Chief Lending Officer and a director, joined Metropolitan
in November 1990. From February 1961 to August 1990 he was an officer with University Savings Bank in Seatt le,
Washington. He served there as executive vice president and was a director.
Meetings and Committees of the Board of Directors
During the fiscal year ended March 31, 1993, the Board of Directors held 14 meetings. No director of the
Association attended fewer than 75% of the total meetings of the Board of Directors and committee meetings on which
such Board members served. The following describes the duties and responsibilities of cert ain committees of the Board of
Directors, current membership of these committees and the number of committee meetings held in fisca l year 1993.
The Audit Committee is composed of Directors Knight (Chairman), Doan, Dowling, Fassio and Hil lis and was
established by the Board of Directors on August 14, 1989. It serves as the liaison with the Associati on’s Internal Auditor.
The Committee meets quarterly. During the fiscal year ended March 31, 1993, this Committee met four time s.
The Compensation Committee of the Board of Directors is composed of Directors Cortelyou, Doan, Dowling,
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© 1997 Jefren Publishing Company, Inc. 7-355L
Fassio, Hillis and Knight. The Committee meets at least annually. During the fiscal year ended March 31, 1993, the
Compensation Committee met twice.
CORPORATE RESTRUCTURING§7.210
February 1997 7-355M
The entire Board of Directors acts as the Nominating Committee. This Committee makes nominations annually for
members of the Board of Directors. The Board of Directors met twice in its capac ity as the Nominating Committee during
the 1993 fiscal year. The Nominating Committee will consider proposals for nominees for di rector from stockholders that
are made in writing to the Corporate Secretary of the Association at 1520 4th Avenue, Sea ttle, WA 98101-1648. Such
nominations must be received by the Association not later than July 16, 1993.
Director Compensation
Members of the Association’s Board of Directors who are not officers of the Association receive a retainer of
$1,000 for each quarter and a fee of $500 per board meeting attended. Officers of the Association who se rve on the Board
of Directors currently receive no fee. No fees are currently paid to directors in connec tion with their service as committee
members. Directors who are not employees of the Association are eligible to partici pate in the Association’s Stock Option
Plan for Nonemployee Directors. See “Adoption of Metropolitan Federal Savings and Loan Association of Seattle Stock
Option Plan for Nonemployee Directors.”
Executive Compensation
The three tables set forth below provide information with respect to the annual and l ong-term compensation for
services in all capacities to the Association for fiscal years 1993, 1992 and 1991 and the opt ion grants and values in and at
the end of fiscal year 1993 of those persons who were, at March 31, 1993, the Association’s Chief Exec utive Officer and
the other most highly compensated executive officer whose salary and bonus exceeded $100,000 in fiscal 1993.
Summary Compensation Table
Year Annual Compensation Long-Term Compensation
Ended All Other
Name and Principal Position March 31 Salary($) Bonus($) Options(#) Compensation($)(1)
Patrick F. Patrick(2) 1993 $201,940 $16,667 25,000 $10,674(3)
Chief Executive Officer and Director 1992 150,000 6,250 15,000
1991 130,944 -- --
Donald E. Wahlquist(5) 1993 111,350 9,167 10,000 7,387(4)
Executive Vice President, 1992 100,000 4,167 10,000
Chief Lending Officer and Director 1991 38,204 -- --
(1) Disclosure for 1992 and 1991 is not called for by applicable rules of the SEC.
(2) Patrick F. Patrick became an executive officer of the Association effective May 21, 1990. The salary and bonus
shown for fiscal 1991 are for a partial year’s employment. The bonus shown for fiscal 1992 represents amount s paid
in fiscal 1993 for services rendered in fiscal 1992. The bonus shown for fiscal 1993 represents amounts pa id in
fiscal 1994 for services rendered in fiscal 1993.
(3) Represents approximately $821 in forfeitures allocated under the Association’s Deferred Profit Sha ring Plan and
approximately $9,853 in Association matching contributions under the 401(k) feature of the Deferred Profit Sharing
Plan.
(4) Represents approximately $456 in forfeitures allocated under the Association’s Deferred Profit Sha ring Plan and
$6,931 in Association matching contributions under the 401(k) feature of the Deferred Profit Sharing Plan.
(5) Donald E. Wahlquist became an executive officer of the Association effective Novembe r 24, 1990. The salary and
bonus shown for fiscal 1991 are for a partial year’s employment. The bonus shown for fiscal 1992 represents
amounts paid in fiscal 1993 for services rendered in fiscal 1992. The bonus shown for fiscal 1993 represents
amounts paid in fiscal 1994 for services rendered in fiscal 1993.
§7.210 PROXY STATEMENTS: STRATEGY & FORMS
© 1997 Jefren Publishing Company, Inc. 7-355N
Option Grants in Fiscal Year 1993
Individual Grants Potential Realizable
Percent of Total Value at Assumed
Options Annual Rates of Stock
Granted Exercise or Price Appreciation for
Options to Employees in Base Price Expiration Option Term(1)
Name Granted(#)(2) Fiscal Year ($/Sh) Date 5%($) 105%($)
Patrick F. Patrick ............. 25,000 29.5% $11.125 3/31/02 $174,875 $443,375
Donald E. Wahlquist ....... 10,000 11.8 11.125 3/31/02 69,950 177,350
(1) The dollar amounts under these columns are the result of calculations at the 5% a nd 10% assumed appreciation rates
set by the SEC and, therefore, are not intended to forecast possible future appreciation, if any, of the Association
Common Stock price. At the 5% and 10% assumed appreciation rates, the price per share of the Association
Common Stock would be $18.12 and $28.86, respectively.
(2) All options granted to the named executive officers become exercisable in three equal annual installments beginning
on the grant date. The per share option exercise prices represent the fair market value of the Association Common
Stock on the date of grant. The option term is 10 years. In the event of a change in control of the Association, all
options become immediately exercisable and the optionee may, at the discretion of the plan administrator, surrender
options in exchange for a cash payment by the Association. See “--Change-in-Control Arrangements.”
Aggregated Option Exercises in Fiscal Year 1993and Fiscal Year-End Option Values
Number of Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options at
Year-End(#) Fiscal Year-End($)(1)
Name Exercisable Unexercisable Exercisable Unexercisable
Patrick F. Patrick .................................... 31,666 8,334 $144,998.25 $21,876.75
Donald E. Walquist ................................ 16,666 3,334 84,998.25 8,751.75
(1) This amount represents the aggregate of the number of in-the-money options multiplied by the difference between
the closing price of the Association Common Stock on the NASDAQ National Market System on Ma rch 31, 1993
minus the exercise price for that option.
No options were exercised by the named executive officers during fiscal 1993.
Change of Control Arrangements Pursuant to the Association’s Stock Option and Incentive Plan (the “Stock Plan”), in the event of a change in
control or imminent change of control of the Association (as defined in the Stock Plan), al l outstanding stock options
become immediately exercisable and the optionee, in the discretion of the Plan administrator, is entitled to receive cash in
an amount equal to the fair market value of the Association Common Stock subject to the option minus the exercise price
for such option.
Compensation Committee Report
The Committee considers many factors in setting compensation for the President and Chi ef Executive Officer and
establishing guidelines for the compensation of other executive officers of the Association. Among the most important of
these factors are: (1) establishing compensation that is commensurate with the Associa tion’s performance, as measured by
operating, financial and strategic objectives (Association performance is measured a gainst previous performance,
budgeted goals, the results of the rest of the financial
CORPORATE RESTRUCTURING§7.210
February 1997 7-355O
industry, and of the economy as a whole); (2) individual. performance in terms of both qualitative and quantitative goals;
(3) industry surveys of compensation for comparable positions in the financial industry; and (4) retention of superior
executives by providing some equity-based compensation, currently in the form of stock options. It is the Committee’s
belief that officers who are owners of their company not only have longer tenure, but are al so more aligned with the long-
term performance expectations of stockholders. The
recommendations of the Compensation Committee are presented to the Board of Directors at least annuall y.
Performance Graph
Cumulative Total Return Comparison(1)
Fiscal Year Ending March 31,
(1) Assumes $100 invested on March 31, 1990 in (1) Metropolitan Federal Savings & Loan (MSEA) Common Stock, (2) NASDAQ Bank Stocks, and (3) CRSP Total Return Index for the NASDAQ Stock Market (U.S. Companies).
The graph then observes, in each case, stock price growth and dividends paid (assuming dividend rei nvestment)
over the following three years. The Association became a stock company on January 9, 1990.
Certain Transactions With Management Larry O. Hillis became a director of the Association on July 10, 1989. As of that date, Mr. Hi llis had outstanding
loans from the Association in the amount of $9.8 million, consisting of a real estate development loan in the original
amount of $7,143,750 entered into August 30, 1985 and a second real estate development loan in the original amount of
$2.0 million entered into June 30, 1987. As of March 31, 1993, such loans were outstanding in the aggregate amount of
$8.6 million. Virgil Fassio became a director of the Association in March 1993. As of tha t date and as of March 31, 1993,
Mr. Fassio had a single family residential loan from the Association in the amount of $252,300, which was entered into
December 16, 1992 in the original amount of $257,000. Each of such loans to Mr. Hillis and Mr. Fassio wa s made in the
ordinary course of business, was not on preferential terms and did not involve more than the norma l risk of collectability
or present other unfavorable features.
§7.210 PROXY STATEMENTS: STRATEGY & FORMS
© 1997 Jefren Publishing Company, Inc. 7-355P
Prior to the change in the Association’s employee loan policy in July 1985, the Association originated loans on
preferential terms to employees, including executive officers and directors of the Associa tion. The preferential terms
included reduced closing costs (i.e., no loan fee) and a note rate of interest at preva iling market rates but amortized based
on the Association’s cost of funds, plus 1.25%. The amortization rate was calculated and adjust ed quarterly. Provided
below is certain information relating to loans made to officers and directors of t he Association when total aggregate loan
balances exceeded $60,000 at any time during the fiscal year ended March 31, 1993, and which, at the time of loan
origination, were made on preferential terms.
Highest
Balance
Note Rate Outstanding,
of Interest Fiscal Year
Origination Current on the Ended Balance at
Name Type Date Balance Rate(1) Loan(2) 3/31/93 3/31/93
John Knight Residential 2/20/76 $75,000 N/A 9.75%
Real Estate 8/23/76 25,000 N/A 9.75
5/02/78 40,000 N/A 9.75 $91,554(1) $0(1)
(1) These loans were consolidated and the balance was paid in full prior to March 31, 1993.
(2) The Interest Rate charged on both loans originated in 1976 was 9.25%, which was subsequently rai sed to the lesser
of 9.75% or the Association’s cost of funds plus 1.25% by modification agreements executed in 1978.
Effective September 1, 1991, a new employee loan policy was implemented that doe s not provide for any
concession in note rate, but does waive the loan origination fee. Executive officers are not eligible to participate in the
employee loan program.
Section 16(a) of the Securities Exchange Act of 1934 requires the Association’s directors and exec utive officers,
and persons who own more than 10 percent of a registered class of the Association’s equity securit ies, to file with the
Corporate and Securities Division of the Office of Thrift Supervision initial reports of ownership a nd reports of changes in
ownership of Common Stock and other equity securities of the Association. Officers, directors, and greater-than-10-
percent shareholders are required by SEC regulation to furnish the Association with copies of all Section 16(a) forms they
file.
To the Association’s knowledge, based solely on review of the copies of such reports furnished to the Association
and written representations that no other reports were required during the two fiscal years ended March 31, 1993 and
March 31, 1992, all Section 16(a) filing requirements applicable to its officers, directors and greater-than-10-percent
beneficial owners were satisfied.
CORPORATE RESTRUCTURING§7.210
February 1997 7-355Q
Beneficial Ownership
The following table sets forth as of June 1, 1993 certain information regarding the benefic ial ownership of each
director, executive officer, all directors and executive officers as a group and each person known by the Association to
own beneficially 5% or more of the Association Common Stock.
Shares of
Common Stock Percent
Beneficially Owned of
Name at June 1, 1993(1) Class
Webster B. Anderson ................................ 1,500 *
David C. Cortelyou ................................... 1,000 *
Allen E. Doan ............................................ 26,250 *
W. Gordon Dowling .................................. 170,900(2) 5.25
Virgil Fassio .............................................. 7,000 *
Larry O. Hillis ........................................... 41,115 1.26
John J. Knight ............................................ 31,750 *
Patrick F. Patrick ....................................... 72,768 2.20
Donald E. Wahlquist ................................. 47,682 1.50
FMR Corp ................................................. 209,000 6.40
Edward C. Johnson, III
82 Devonshire St.
Boston, MA 02109
AXA Assurances I.A.R.D. Mutuelle .......... 187,000 5.70
AXA Assurances Vie Mutuelle
Alpha Assurances I.A.R.D. Mutuelle
Uni Europe Assurance MutuelleAXA
The Equitable Companies, Inc.
757 7th Avenue
New York, NY 10019
RCM Capital Management......................... 247,000 7.60
RCM Limited L.P.
RCM General Corporation
4 Embarcadero Center, Suite 2900
San Francisco, CA 94111
All Executive Officers and Directors as a Group (11 persons) .............................. 420,746(1)(2)(3) 12.6
*Less than 1%
(1) Includes shares owned by spouses, other immediate family members, in trust and other forms of ownership, over
which the person named in the table possesses shared voting and/or investment power. Also include s options to
purchase 31,666 shares granted to Mr. Patrick and options to purchase 16,666 shares granted to Mr. Wahlquist
under the Association’s Stock Option and Incentive Plan that may be exercised within 60 days of June 1, 1993.
(2) Includes 30,900 shares owned by Mr. Dowling directly. Also includes 110,000 shares owned in partnership with Mr. Herman Anderson, and 10,000 shares each owned by Mr. Anderson, Mr. Dowling’s son, and Mr. Anderson’s
daughter for which Mr. Dowling holds all voting rights.
(3) Including options to purchase 15,999 shares that may be exercised within 60 days of June 1, 1993 held by executive
officers other than Mr. Patrick and Mr. Wahlquist.
§7.210 PROXY STATEMENTS: STRATEGY & FORMS
© 1997 Jefren Publishing Company, Inc. 7-355R
[THE NEXT PAGE IS 7-356A]
CORPORATE RESTRUCTURING§7.210
February 1997 7-356A
HOLDING COMPANY FORMATION
(Proposal Two)
General Stockholders of the Association are being asked to approve the Agreement, pursuant to which Metropolitan
Federal Interim Savings Association (“Interim”) will merge with and into the Associat ion and, as a result, the Company
will become the parent holding company of the Association and all of the outstanding sha res of Association Common
Stock will be converted into shares of Company Common Stock on a one-for-one basis. The full text of the Agreement is
attached as Appendix A to this Proxy Statement-Prospectus, and the discussion below is qual ified in its entirety by
reference thereto.
The Company is a newly formed Washington corporation that was formed by the Association as a wholly owned
subsidiary for the purpose of becoming the parent holding company of the Association and, therefore, has no operating
history. As part of the Reorganization, the Association and the Company will organize Int erim as a wholly owned
subsidiary of the Company. If the Reorganization is approved by the stockholders of the Association, and subject to the
satisfaction of all other conditions set forth in the Agreement, Interim will be me rged with and into the Association, with
the Association as the surviving institution.
After the Reorganization, the Association will continue its existing business and opera tions as a wholly owned
subsidiary of the Company. The consolidated assets, liabilities, stockholders’ equity and incom e of the Company
immediately following the Reorganization will be the same as those of the Associ ation immediately prior to the
consummation of the Reorganization. The Board of Directors of the Company immediately following the Reorganization
will be identical to the Board of Directors of the Association and the executive officers of the Company will be the
executive officers of the Association. The Association will continue to operate under the name Metropolitan Federal
Savings and Loan Association of Seattle and its deposit accounts will continue to be insured by the FDIC to the maximum
extent permitted by law. The corporate existence of the Association will continue unaffected and unimpaired by the
Reorganization, except that all of the outstanding shares of Association Common Stock wil l be owned by the Company.
The existing stockholders of the Association will, in turn, own all of the outstanding shares of Company Common Stock,
having received that stock in exchange for their shares of Association Common Stock as part of the Reorganization.
The Board of Directors of the Association approved the Agreement on May 18, 1993, subject to the re ceipt of
stockholder approval and all requisite regulatory approvals, and recommends that stockholders of t he Association approve
such Agreement.
Reasons for the Reorganization
The Board of Directors of the Association believes that a holding company structure will provide greater flexibility
for meeting the future financial needs of the Association than is currently enjoyed by t he Association. Present federal laws
and regulations limit the type of businesses in which the Association and its subsidiaries may engage and the amount that
the Association can invest in its subsidiaries. The establishment of a holding company wi ll permit diversification of
operations free of these restrictions. Moreover, the establishment of a holding company will perm it acquisition or
formation of companies engaged in bank and thrift-related activities, subject to restri ctions contained in applicable laws
and regulations. Management believes that acquisition or formation of such enterprises ma y provide a beneficial
stabilizing effect on operations and may permit the Association to increase further its profit margins.
The Association’s management recognizes that some increased costs will be incurred i n the operations of the
Company and that securities of the Company, unlike those of the Association, must be regist ered with the Commission
and may not be legal investments for institutions as fiduciaries in some jurisdict ions. Nevertheless, for the reasons stated
above, the Board of Directors believes that the holding company formation is in the best interests of the Association and
its stockholders. Accordingly, the Board of Directors recommends that the stockholders of the Associa tion approve the
§7.210 PROXY STATEMENTS: STRATEGY & FORMS
© 1997 Jefren Publishing Company, Inc. 7-356B
Agreement.
CORPORATE RESTRUCTURING§7.210
February 1997 7-356C
Proposed Debt Offering by the Company
The Company currently anticipates that, subject to market and economic condi tions, following the Reorganization it
will issue up to $20,000,000 of debt securities (excluding the effect of any underwriters’ overallotment option),
approximately $12,000,000 of the net proceeds of which it intends to contribute to the Associati on. Subject to regulatory
approval, the Company intends to use part of the net proceeds of the debt offering to be ret ained by the Company to
purchase certain real estate held by the Association, thereby further increasing the Association’s earnings capacity, as well
as to originate residential loans that meet the Association’s underwriting crite ria, but not the criteria for sale to federal
agencies in the secondary market. There can be no assurances, however, that the proposed debt financing will occur and
the Reorganization proposal is unrelated to any plans for such financing. If approved by the stoc kholders at the
Association’s Annual Meeting, the Reorganization will be effected regardless whether the debt offering proceeds.
Description of the Reorganization
The Association incorporated the Company as a wholly owned subsidiary under the laws of the Sta te of Washington
in May 1993 for purposes of becoming the parent holding company of the Association upon consummation of t he
Reorganization, and the Association and the Company will organize Interim solely for purposes of facilitating such
Reorganization. Pursuant to this Agreement, Interim will merge with and into the Associa tion, with the Association as the
surviving institution. In connection with such merger, (1) each share of the Association Common Stoc k will be converted
into one share of Company Common Stock, (2) each share of capital stock of Interim held by t he Company will be
automatically converted on a one-for-one basis into a share of Association Common Stock, and (3) shares of Company
Common Stock held by the Association prior thereto will be canceled. The result of the merger of Interim with and into
the Association will be that the Company will become the owner of all of the outst anding shares of Association Common
Stock and each stockholder of the Association will become the owner of one share of Company Com mon Stock for each
share of Association Common Stock held by him or her immediately prior thereto.
The merger of Interim with and into the Association and the resultant holding company forma tion will become
effective on the date specified in the endorsement of the Articles of Combination re lating to the merger by the Secretary
of the OTS pursuant to 12 C.F.R. § 552.13(k) (“Effective Date”).
Upon consummation of the Reorganization, the outstanding stock certificates that prior the reto represented shares of
Association Common Stock will thereafter for all purposes represent an equal number of share s of Company Common
Stock. After the Reorganization, shareholders of the Company will be entitled to exchange their present stock certificates
representing Association Common Stock for new certificates evidencing shares of Company Comm on Stock, although
shareholders will not need to make such an exchange in order to have all of the rights of shareholders of the Company. An
agent appointed by the Company and the Association will notify shareholders of record by mail promptly after
consummation of the Reorganization of the procedures to be followed in order to surrender their c ertificates evidencing
shares of Association Common Stock to the transfer agent for the Company and the Association in exchange for
certificates evidencing an identical number of shares of Company Common Stock. Until so e xchanged, certificates
evidencing shares of Association Common Stock will for all purposes represent the same number of shares of Company
Common Stock, and the holders of those certificates will have all the rights of shareholde rs of the Company. Trans
Securities International, the transfer agent and registrar for the Association Common Stock wi ll act in the same capacity
for the Company Common Stock.
Because the Company and Interim were organized at the direction of the Association and because all members of
the managements of the Company and Interim prior to the Reorganization also currentl y serve as directors or officers of
the Association, the Agreement cannot be considered the result of arm’s-length negotiations.
Capital Resources
The Association has capitalized the Company by the purchase of 100 shares of Company Common Stock for $1.00
per share or $100 in the aggregate. In addition, the Association intends to make a capit al distribution to the Company
upon consummation of the Reorganization in the amount of $200,000. The Company
§7.210 PROXY STATEMENTS: STRATEGY & FORMS
© 1997 Jefren Publishing Company, Inc. 7-356D
currently anticipates that, subject to market and economic conditions, following the Reorganization it will issue up to
$20,000,000 of debt securities (excluding the effect of any underwriters’ overallotment option) approxim ately
$12,000,000 of the net proceeds of which it intends to contribute to the Association. See “--Proposed Debt Offering by the
Company.” Additional financial resources may be available to the Company in the fut ure through dividends paid to the
Company by the Association, acquired entities or new businesses, borrowings or debt or equity financings.
OTS regulations impose uniform limitations on the ability of savings associations to engage in various distributions
of capital such as dividends, stock repurchases and cash-out mergers. The regulation utilize s a tiered approach that permits
various levels of distributions based primarily upon a savings association’s capital level.
In the first tier, a savings association that has capital in excess of its fully phased-in capital requirement (both before
a
