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U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-K
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 33-67254
Commercial Bankshares, Inc.
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(Exact name of registrant as specified in its charter)
Florida 65-0050176
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1550 S.W. 57th Avenue, Miami, Florida 33144
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (305) 267-1200
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.08 par value per share
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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 past 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 (229.405 of this chapter) is not contained herein,
and will not be contained, to the best of 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 [ ].
As of March 27, 2000, 3,730,702 shares of the common voting stock were
issued and outstanding, of which 3,170,507 shares with an aggregate market
value of $70.9 million (estimate), based on the closing price on the NASDAQ
market, were held by non-affiliates of the registrant.
Documents Incorporated by Reference
1. Certain portions of the Annual Report to Shareholders of Commercial
Bankshares, Inc., for fiscal year ended December 31, 1999 are
incorporated by reference into Part I and Part II.
2. Certain portions of the Company's Proxy Statement for the 2000 Annual
Meeting of Shareholders to be held on April 20, 2000 are incorporated
by reference into Part III.
Table of Contents
Description Page No.
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Part I
Item 1. Business..................................................... 1
Item 2. Properties................................................... 10
Item 3. Legal Proceedings............................................ 10
Item 4. Submission of Matters to a Vote of Security Holders.......... 10
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.......................................... 11
Item 6. Selected Financial Data...................................... 11
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 11
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.. 11
Item 8. Financial Statements and Supplementary Data.................. 11
Item 9. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure....................... 11
Part III
Item 10. Directors and Executive Officers of the Registrant.......... 12
Item 11. Executive Compensation...................................... 12
Item 12. Security Ownership of Certain Beneficial Owners
and Management.............................................. 12
Item 13. Certain Relationships and Related Transactions.............. 12
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K................................................. 12
Signatures........................................................... 15
PART I
Item 1. Business.
Commercial Bankshares, Inc.
Commercial Bankshares, Inc., (the "Company"), a Florida corporation
organized in 1988, is a bank holding company registered under the Bank
Holding Company Act of 1956 ("BHCA"), as amended, whose wholly owned
subsidiary and principal asset is the Commercial Bank of Florida, (the
"Bank"). The Company, through its ownership of the Bank, is engaged in a
commercial banking business, and its primary source of earnings is derived
from income generated by its ownership and operation of the Bank. Unless
the context otherwise requires, references herein to the Company include
the Company and its wholly owned subsidiary, the Bank, on a consolidated
basis.
The Company is a legal entity separate and distinct from the Bank, and
there are various legal limitations on the ability of the Bank to finance or
otherwise supply funds to the Company. In particular, under federal banking
law, the Bank may not declare a dividend that exceeds undivided profits. In
addition, the approval of the Federal Reserve Bank of Atlanta ("Atlanta FRB")
and the Florida Department of Banking and Finance is required if the total
amount of all dividends declared in any calendar year exceeds the Bank's net
profits, as defined, for that year combined with its retained net profits for
the preceding two years. The Atlanta FRB also has the authority to limit
further the payment of dividends by the Bank under certain circumstances.
In addition, federal banking laws prohibit or restrict the Bank from
extending credit to the Company under certain circumstances.
In 1993, the Company filed a Registration Statement on Form SB-2 with the
Securities and Exchange Commission covering an initial public offering and
issued the maximum of 977,500 shares of common stock thereunder. Net
proceeds of approximately $10 million from this offering were invested in
short-term securities pending utilization for future acquisition of other
financial institutions or branches, working capital, general corporate
purposes, and investment in the wholly owned banking subsidiary.
Commercial Bank of Florida
The Bank is a Florida chartered banking corporation originally chartered
in February, 1979. It operated as Sunset Commercial Bank until its
acquisition by the Company in 1988, at which time its name was changed to
Commercial Bank of Florida. The Bank engages in commercial banking and
related businesses from its fourteen banking facilities: its main office and
nine other offices located in Miami-Dade County, Florida, and four offices
in Broward County, Florida.
The Bank is operated as a network of community bank branches. The Bank
primarily focuses on providing personalized banking services to small
businesses and individuals within the market areas where its banking offices
are located. Management believes that this local market strategy,
accompanied by the strategic placement of Bank personnel within market areas
where they have served customers for many years, enables the Bank to attract
and retain low cost core deposits, which provide substantially all of the
Bank's funding requirements.
Deposit products include certificates of deposit, individual retirement
accounts ("IRAs") and other time deposits, checking and other demand deposit
accounts, NOW accounts, savings accounts, and money market accounts. The
transaction accounts and time certificates are tailored to the principal
market areas at rates competitive to those in the area. All deposit accounts
are insured by the Federal Deposit Insurance Corporation ("FDIC") up to the
maximum limits permitted by law. The Bank solicits these accounts from small
businesses, professional firms, and households located throughout its primary
market area.
The Bank also offers ATM cards with access to local, state, and national
networks, safe deposit boxes, wire transfers, direct deposit of payroll and
social security payments, and automatic drafts for various accounts. The
Bank presently does not provide fiduciary or appraisal services.
The Bank conducts commercial and consumer banking business, which
primarily consists of attracting deposits from the areas served by its
banking offices and using those deposits, together with funds derived from
other sources, to originate a variety of commercial, consumer, and real
estate loans (including commercial loans collateralized by real estate).
The Company considers the general business of retail banking to be its
only operating segment.
As is the case with banking institutions generally, the Bank's operations
are materially and significantly influenced by general economic conditions and
by related monetary and fiscal policies of financial institution regulatory
agencies, including the Federal Reserve Board ("FRB"), the FDIC, and the State
of Florida. Deposit flows and the cost of funds are influenced by interest
rates on competing investments and general market rates of interest. Lending
activities are affected by the demand for financing of real estate and other
types of loans, which in turn is affected by the interest rates at which such
financing may be offered and other factors affecting local demand and
availability of funds. The Bank faces strong competition in the attraction of
deposits (its primary source of lendable funds) and in the origination of real
estate loans.
Employees
At December 31, 1999, the Company and the Bank together employed 185
employees, of whom 4 are part-time. None of these employees is covered by a
collective bargaining agreement. The Company believes that its employee
relations are good.
Market Information
The Bank's fourteen banking offices are located in Miami-Dade and Broward
Counties, which comprise the Bank's primary market area. Management believes
that the Bank's principal markets are: (i) the established and expanding
commercial market within the primary market area; and (ii) the moderate and
the affluent residential market within the primary market area. Management
also believes that the most profitable banking relationships are characterized
by high deposit balances with a low frequency of transactions. Moreover,
management believes that a community bank with local management is well
positioned to establish these relationships with the smaller commercial
customers and households. Management believes that the Bank is well positioned
to take advantage of its market segment.
Competition
Competition in the banking and financial services industry is intense.
In its primary market areas, the Bank competes with other commercial banks,
savings institutions, credit unions, finance companies, mutual funds,
insurance companies, and brokerage and investment banking firms operating
locally and elsewhere. Most of these competitors have substantially greater
resources and lending limits than the Bank and may offer certain services,
such as trust services, that the Bank does not provide at this time. In
addition many of the Company's non-bank competitors are not subject to the
same extensive federal regulations that govern the Bank and the Company. The
profitability of the Company depends upon the Bank's ability to compete in
its market areas.
SUPERVISION AND REGULATION
Bank holding companies and banks are extensively regulated under both
federal and state law. These laws and regulations are intended to protect
depositors, not stockholders. To the extent that the following information
describes statutory and regulatory provisions, it is qualified in its entirety
by reference to the particular statutory and regulatory provisions. Any change
in the applicable law or regulation may have a material effect on the business
and prospects of the Company and the Bank.
Bank Holding Company Regulation
As a bank holding company registered under the BHCA, the Company is
subject to the regulation and supervision of the FRB. The Company is required
to file with the FRB annual reports and other information regarding its
business operations and those of its subsidiaries. Under the BHCA, the
Company's activities and those of its subsidiaries are limited to banking,
managing or controlling banks, furnishing services to or performing services
for its subsidiaries, or engaging in any other activity which the FRB determines
to be so closely related to banking or managing or controlling banks as to be
properly incident thereto.
The BHCA requires, among other things, the prior approval of the FRB in
any case where a bank holding company proposes to (i) acquire all or
substantially all of the assets of any other bank, (ii) acquire direct or
indirect ownership or control of more than 5% of the outstanding voting stock
of any bank (unless it owns a majority of such bank's voting shares), or (iii)
merge or consolidate with any other bank holding company. The FRB will not
approve any acquisition, merger, or consolidation that would have a
substantially anti-competitive effect, unless the anti-competitive impact of
the proposed transaction is clearly outweighed by a greater public interest
in meeting the convenience and needs of the community to be served. The FRB
also considers capital adequacy and other financial and managerial resources
and future prospects of the companies and the banks concerned, together with
the convenience and needs of the community to be served, when reviewing
acquisitions or mergers.
Additionally, the BHCA prohibits a bank holding company, with certain
limited exceptions, from (i) acquiring or retaining direct or indirect
ownership or control of more than 5% of the outstanding voting stock of any
company which is not a bank or bank holding company, or (ii) engaging directly
or indirectly in activities other than those of banking, managing, or
controlling banks, or performing services for its subsidiaries, unless such
non-banking business is determined by the FRB to be so closely related to
banking or managing or controlling banks as to be properly incident thereto.
In making such determinations, the FRB is required to weigh the expected
benefits to the public, such as greater convenience, increased competition,
or gains in efficiency, against the possible adverse effects, such as
under-concentration of resources, decreased or unfair competition, conflicts
of interest, or unsound banking practices.
There are a number of obligations and restrictions imposed on bank
holding companies and their depository institution subsidiaries by law and
regulatory policy that are designed to minimize potential loss to the
depositors of such depository institutions and the FDIC insurance funds in
the event the depository institution becomes in danger of default or in default.
Under a policy of the FRB with respect to bank holding company operations, a
bank holding company is required to serve as a source of financial strength
to its subsidiary depository institutions and to commit resources to support
such institutions in circumstances where it might not do so absent such policy.
The FRB also has the authority under the BHCA to require a bank holding company
to terminate any activity or to relinquish control of a nonbank subsidiary
(other than a nonbank subsidiary of a bank) upon the FRB's determination that
such activity or control constitutes a serious risk to the financial soundness
and stability of any bank subsidiary of the bank holding company.
Capital Adequacy Guidelines for Bank Holding Companies
The Company is subject to certain FRB risk-based capital guidelines for
bank holding companies. The risk-based capital guidelines are designed to make
regulatory capital requirements more sensitive to differences in risk profile
among banks and bank holding companies, to account for off-balance sheet
exposure, and to minimize disincentives for holding liquid assets. Under
these guidelines, assets and off-balance sheet items are assigned to broad
risk categories, each with appropriate weights. The resulting capital ratios
represent capital as a percentage of total risk-weighted assets and off-balance
sheet items.
The minimum ratio of total capital to risk-weighted assets (including
certain off-balance sheet activities, such as standby letters of credit) is
8%. At least 4% of the total capital is required to be "Tier I Capital,"
which consists of common stockholders' equity, noncumulative perpetual
preferred stock, and a limited amount of cumulative perpetual preferred stock,
less certain goodwill items and the unrealized holding gain/loss on available
for sale securities. The remainder ("Tier II Capital") may consist of (i)
the allowance for loan losses of up to 1.25% of risk-weighted risk assets,
(ii) 45% of unrealized holding gain on available for sale equity securities,
(iii) excess of qualifying perpetual preferred stock, (iv) hybrid capital
instruments, (v) perpetual debt, (vi) mandatory convertible securities, and
(vii) subordinated debt and intermediate-term preferred stock up to 50% of
Tier I capital. Total capital is the sum of Tier I and Tier II capital less
reciprocal holdings of other banking organizations' capital instruments,
investments in unconsolidated subsidiaries, and any other deductions as
determined by the FRB (determined on a case by case basis or as a matter
of policy after formal rule-making).
Bank holding company assets are given risk-weights of 0%, 20%, 50% and
100%. In addition, certain off-balance sheet items are given similar credit
conversion factors to convert them to asset-equivalent amounts to which an
appropriate risk-weight will apply. These computations result in the total
risk-weighted assets.
The Company's management believes that the risk-weighting of assets under
current FRB guidelines does not and will not have a material impact on the
Company's operations or on the operations of the Bank. As of December 31,
1999 and 1998, the Company's total risk-based capital ratios were 16.34% and
17.70%, respectively. In addition to the risk-based capital guidelines, the
FRB has adopted a minimum Tier I capital (leverage) ratio, under which a bank
holding company must maintain a minimum level of Tier I capital to total
consolidated assets of at least 3% in the case of a bank holding company that
has the highest regulatory examination rating and is not contemplating
significant growth or expansion. All other bank holding companies are expected
to maintain a leverage ratio of at least 100 to 200 basis points above the
stated minimum. Federal Reserve Board requirements also provide that bank
holding companies experiencing internal growth or making acquisitions will be
expected to maintain strong capital positions substantially above regulatory
minimums without significant reliance on intangible assets. The Federal Reserve
Board may continue to consider a "tangible Tier 1 leverage ratio" (deducting
all intangibles) in evaluating proposals for expansion or new activities. As
of December 31, 1999 and 1998, the Company's leverage ratios were 9.23% and
9.52%, respectively.
Interstate Banking and Branching Legislation
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
("IBBEA") authorizes interstate acquisitions of banks and bank holding
companies without geographic limitation. In addition, beginning June 1, 1997,
the IBBEA authorizes a bank to merge with a bank in another state as long as
neither of the states has opted out of interstate branching between the date of
enactment of the IBBEA and May 31, 1997. The IBBEA further provides that
states may enact laws permitting interstate bank merger transactions prior to
June 1, 1997. Florida law permits bank holding companies, regardless of what
region they are located in, to acquire Florida banking organizations, provided
that the home state of the acquiring company has enacted reciprocal legislation.
Under IBBEA, a bank may establish and operate a de novo branch in a state
in which the bank does not maintain a branch if that state expressly permits
de novo branching. Once a bank has established branches in a state through
an interstate merger transaction, the bank may establish and acquire additional
branches at any location in the state where any bank involved in the interstate
merger transaction could have established or acquired branches under applicable
federal or state law. A bank that has established a branch in a state through
de novo branching may establish and acquire additional branches in such state
in the same manner and to the same extent as a bank having a branch in such
state as a result of an interstate merger. If a state opts out of interstate
branching within the specified time period (Florida has not), no bank in any
other state may establish a branch in the opting-out state, either through an
acquisition or de novo.
Bank Regulation
The Bank is a state-chartered banking corporation and is subject to the
supervision of and regular examination by the FRB and the Florida Department
of Banking and Finance, as well as to the supervision of the FDIC.
The operations of the Bank are subject to state and federal statutes
applicable to banks which are members of the Federal Reserve System and to
the regulations of the FRB, the FDIC, and the State of Florida. Such
statutes and regulations relate to required reserves against deposits,
investments, loans, mergers and consolidations, issuance of securities,
payment of dividends, establishment of branches, and other aspects of the
Bank's operations. Various consumer laws and regulations also affect the
operations of the Bank, including state usury laws, laws relating to
fiduciaries, consumer credit and equal credit, and fair credit reporting.
Under the provisions of the Federal Reserve Act, the Bank is subject to
certain restrictions on any extensions of credit to the Company or, with
certain exceptions, to other affiliates, on investments in the stock or other
securities of national banks, and on the taking of such stock or securities
as collateral. These regulations and restrictions may limit the Company's
ability to obtain funds from the Bank for its cash needs, including funds for
acquisitions and the payment of dividends, interest, and operating expenses.
The FDIC insures the deposits of the Bank to the current maximum allowed
by law. As an institution whose deposits are insured by the Bank Insurance
Fund ("BIF") and Savings Association Insurance Fund ("SAIF") of the FDIC, the
Bank also is subject to insurance assessments imposed and set by the FDIC from
time to time. The FDIC is further authorized to impose one or more special
assessments in any amount deemed necessary to enable repayment of amounts
borrowed by the FDIC from the Treasury Department. The actual assessments to
be paid into the BIF and the SAIF are based on the institution's assessment
risk classification, which is whether the institution is considered "well
capitalized", "adequately capitalized", or "under-capitalized", as those terms
have been defined in applicable federal regulations, and whether the institution
is considered by its supervising agency to be financially sound or to have
supervisory concerns.
The Gramm-Leach-Bliley Act (the "Act") was signed into law in November
1999 to remove depression-era barriers that separate banking, securities and
insurance functions. The Act allows full affiliation between banks and
securities firms by permitting the creation of financial holding companies
designed to engage in a range of financial activities, including securities
underwriting and merchant banking. The Act also repeals the SAIF special
reserve; modernizes the Federal Home Loan Bank System; provides for less
frequent Community Reinvestment Act ("CRA") compliance examinations for
community banks with $250 million or less in assets, and gives customers the
right to prevent banks from sharing information with third parties, such as
telemarketers. The Act prohibits unitary savings and loan holding companies
formed after May 4, 1999 from engaging in nonfinancial activities, and also
prohibits purchase of unitary thrift holding companies by commercial firms.
Certain provisions of the Act were effective immediately upon signing; other
provisions generally take effect between 120 days and 18 months following
enactment.
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
Among other things, the FDICIA provides the federal bank regulatory
agencies with broad powers to take prompt corrective action to resolve
problems of insured depository institutions. The extent of those powers
depends upon whether the institution in question is "well capitalized",
"adequately capitalized", "undercapitalized", "significantly undercapitalized",
or "critically undercapitalized." A depository institution's capital tier will
depend upon where its capital levels compare to various established capital
measures and certain other factors, as established by regulation. As of
December 31, 1999, the Bank met the definition of a "well capitalized"
institution.
The FDICIA generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any management
fee to its holding company if the depository institution would thereafter be
"undercapitalized". "Undercapitalized" depository institutions are subject to
growth limitations and are required to submit a capital restoration plan. If a
depository institution fails to submit an acceptable plan, it is treated as if
it is "significantly undercapitalized". "Significantly undercapitalized"
depository institutions may be subject to a number of requirements and
restrictions, including orders to sell sufficient voting stock to become
"adequately capitalized", requirements to reduce total assets, and cessation
of receipt of deposits from correspondent banks. "Critically undercapitalized"
institutions are subject to the appointment of a receiver or conservator.
The FDICIA further requires an increase in the frequency of "full-scope,
on-site" examinations and expands audit requirements. In addition, federal
bank regulatory agencies are required to review and prescribe uniform
accounting standards that are at least as stringent as Generally Accepted
Accounting Principles.
Pursuant to the FDICIA, the FRB and the other federal bank regulatory
agencies adopted real estate lending guidelines pursuant to which each insured
depository institution is required to adopt and maintain written real estate
lending policies in conformity with the prescribed guidelines. Under these
guidelines, each institution is expected to set loan-to-value ratios not
exceeding the supervisory limits set forth in the guidelines. A loan-to-value
ratio is generally defined as the total loan amount divided by the appraised
value of the property at the time the loan is originated. The guidelines also
require that the institution's real estate policy require proper loan
documentation and that it establish prudent underwriting standards.
The FDICIA also contains the Truth in Savings Act. The purpose of the
Truth in Savings Act is to require the clear and uniform disclosure of the
rates of interest which are payable on deposit accounts by depository
institutions and the fees that are assessable against deposit accounts, so
that consumers can make a meaningful comparison between the competing claims
of financial institutions with regard to deposit accounts and products.
The FDICIA also amended the prior law with respect to the acceptance of
brokered deposits by insured depository institutions to permit only a "well
capitalized" depository institution to accept brokered deposits without prior
regulatory approval. Under implementing regulations, "well capitalized" banks
may accept brokered deposits with a waiver from the FDIC (subject to certain
restrictions on payments of rates), while "undercapitalized" banks may not
accept brokered deposits. The regulations contemplate that the definitions
of "well capitalized", "adequately capitalized", and "undercapitalized" will
be the same as the definitions adopted by the agencies to implement the prompt
corrective action provisions of the FDICIA (as described above).
Payment of Dividends
The Bank is subject to legal limitations on the frequency and amount of
dividends paid to the Company. The FRB or the FDIC may restrict the ability
of a bank to pay dividends if such payments would constitute an unsafe or
unsound banking practice. These regulations and restrictions may limit the
Company's ability to obtain funds from the Bank for its cash needs, including
funds for acquisitions and the payment of dividends, interest, and operating
expenses.
In addition, Florida law places certain restrictions on the declaration of
dividends from state-chartered banks to their holding companies. Pursuant to
Section 658.37 of the Florida Banking Code, the Board of Directors of a
state-chartered bank, after charging off bad debts, depreciation, and other
worthless assets, if any, and making provisions for reasonably anticipated
future losses on loans and other assets, may quarterly, semi-annually, or
annually declare a dividend of up to the aggregate of net profits of that
period, combined with the bank's retained net profits for the preceding two
years and, with the approval of the Florida Department of Banking and Finance,
declare a dividend from retained net profits which accrued prior to the
preceding two years. Before declaring such dividends, 20% of the net profits
for the preceding period as is covered by the dividend must be transferred to
the surplus fund of the bank until this fund becomes equal to the amount of the
bank's common stock then issued and outstanding. A state-chartered bank may not
declare any dividend if (i) its net income from the current year combined with
the retained net income for the preceding two years is a loss, or (ii) the
payment of such dividend would cause the capital account of the bank to fall
below the minimum amount required by law, regulation, order, or any written
agreement with the Florida Department of Banking and Finance or a federal
regulatory agency.
Depositor Preference Statute
Legislation has been enacted providing that deposits and certain claims for
administrative expenses and employee compensation against an insured depository
institution would be afforded a priority over other general unsecured claims
against such an institution, including federal funds and letters of credit, in
the "liquidation or other resolution" of such an institution by any receiver.
Monetary Policy And Economic Control
The commercial banking business in which the Bank engages is affected not
only by general economic conditions but also by the monetary policies of the
FRB. Changes in the discount rate on member bank borrowing, availability of
borrowing at the "discount window," open market operations, the imposition of
changes in reserve requirements against member banks' deposits and assets of
foreign branches, and the imposition of and changes in reserve requirements
against certain borrowings by banks and their affiliates are some of the
instruments of monetary policy available to the FRB. These monetary policies
are used in varying combinations to influence overall growth and distributions
of bank loans, investments, and deposits, and this use may affect interest
rates charged on loans or paid on deposits. The monetary policies of the FRB
have had a significant effect on the operating results of commercial banks and
are expected to do so in the future. The monetary policies of these agencies
are influenced by various factors, including inflation, unemployment, and
short-term and long-term changes in the international trade balance and in
the fiscal policies of the United States Government. Future monetary policies
and the effect of such policies on the future business and earnings of the
Company and the Bank cannot be predicted.
Item 2. Properties.
The Company occupies offices in a building located at 1550 S.W. 57th
Avenue, Miami, Florida. This building also serves as the Bank's main office.
Both the building and the 81,400 square foot parcel of commercial property on
which it is situated are owned by the Bank. The Bank's and the Company's
offices occupy the entire 24,228 square foot building. Management believes
that this location provides sufficient parking for its customers as well as
visibility from S.W. 57th Avenue, a major thoroughfare.
The Bank owns ten of its fourteen full-service branches and leases the
remaining four offices. Additional information relating to the Company's
lease commitments is set forth in Note 4 on page 26 in the 1999 Annual Report
and is incorporated herein by reference. The condition of all properties is
considered good. In the opinion of management, owned properties are
adequately covered by insurance.
Item 3. Legal Proceedings.
The Company and the Bank are periodically parties to or otherwise involved
in legal proceedings arising in the normal course of business, such as claims
to enforce liens, claims involving the making and servicing of real property
loans, and other issues incident to the Bank's business. Management does not
believe that there is any pending or threatened proceeding against the Company
or the Bank which, if determined adversely, would have a material effect on
the business, results of operations, or financial position of the Company or
the Bank.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
Information required to be reported under this item is set forth on pages
13 and 14 of the 1999 Annual Report to Shareholders and is incorporated herein
by reference.
Item 6. Selected Financial Data.
Information required to be reported under this item is set forth on pages
2 and 3 of the 1999 Annual Report to Shareholders and is incorporated herein
by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Information required to be reported under this item is set forth on pages
4 through 16 of the 1999 Annual Report to Shareholders and is incorporated
herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Information required to be reported under this item is set forth on pages
14 through 15 of the 1999 Annual Report to Shareholders under the section
entitled "Asset/Liability Management and Interest Rate Risk", and is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
The information required to be reported under this item is set forth on
pages 17 through 35 of the 1999 Annual Report to Shareholders and is
incorporated herein by reference.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Information required to be reported under this item is set forth on
pages 2 through 3 of the Commercial Bankshares, Inc. Proxy Statement and is
incorporated herein by reference.
Item 11. Executive Compensation.
Information required to be reported under this item is set forth on
pages 6 and 7 of the Commercial Bankshares, Inc. Proxy Statement and is
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Information required to be reported under this item is set forth on
pages 4 through 5 of the Commercial Bankshares, Inc. Proxy Statement and is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
Information required to be reported under this item is set forth on
pages 3 through 4 of the Commercial Bankshares, Inc. Proxy Statement and is
incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)Exhibits
3.1 Articles of Incorporation, as amended, of the Company. Incorporated by
reference to Exhibit 3.1 of the Company's Registration Statement on Form
SB-2 as filed with the Securities and Exchange Commission, No. 33-67254,
effective October 5, 1993 ("Registration Statement").
3.2 By-Laws, as amended, of the Company. Incorporated by reference to
Exhibit 3.2 of the Registration Statement.
10.1 Standard Office Building Lease between Swire Brickell One, Inc., d/b/a
"Courvoisier Center" (Landlord) and Commercial Bank of Florida (Tenant),
dated December 21, 1990. Incorporated by reference to Exhibit 10.2 of
the Registration Statement.
10.2 Form of Indemnification Agreement. Incorporated by reference to Exhibit
10.4 of the Registration Statement.
10.3 Employment Agreement between Commercial Bankshares, Inc., Commercial
Bank of Florida, and Joseph W. Armaly, dated March 18, 1994 and amended
and restated on December 18, 1998. Incorporated by reference to Exhibit
10.3 that accompanies the 1998 Annual Report on Form 10-K.
10.4 Employment Agreement between Commercial Bankshares, Inc., Commercial Bank
of Florida, and Jack J. Partagas, dated March 18, 1994 and amended and
restated on December 18, 1998. Incorporated by reference to Exhibit 10.4
that accompanies the 1998 Annual Report on Form 10-K.
10.5 Employment Agreement between Commercial Bank of Florida and Barbara Reed,
dated February 5, 1997. Incorporated by reference to Exhibit 10.5 that
accompanies the 1996 Annual Report on Form 10-K.
10.6 Employment Agreement between Commercial Bank of Florida and Bruce
Steinberger, dated December 18, 1998. Incorporated by reference to
Exhibit 10.6 that accompanies the 1998 Annual Report on Form 10-K.
10.7 Commercial Bankshares, Inc., 1994 Outside Director Stock Option Plan,
effective as of March 18, 1994. Incorporated by reference to Exhibit
10.7 that accompanies the 1993 Annual Report on Form 10-KSB.
10.8 Commercial Bankshares, Inc., 1994 Performance Stock Option Plan,
adopted March 18, 1994, effective April 1, 1994. Incorporated by
reference to Exhibit 10.8 that accompanies the 1993 Annual Report on
Form 10-KSB.
10.9 Agreement to provide data processing and back office services between
Electronic Data Systems and Commercial Bank of Florida, dated November
14, 1994. Incorporated by reference to Exhibit 10.8 that accompanies
the 1994 Annual Report on Form 10-KSB.
10.10 Shopping Center Lease dated July 31, 1992, between Pembroke Associates,
as Landlord, and Carteret Savings Bank, F.A., as Tenant ("Lease"). The
Lease was assigned to Commercial Bank of Florida by the Resolution Trust
Corporation as Receiver of Carteret Federal Savings Bank of Florida
(successor to Carteret Federal Savings Bank and Carteret Savings and
Loan Association, F.A.), pursuant to Lease Assignment and Assumption
Agreement dated December 5, 1994. Incorporated by reference to Exhibit
10.9 that accompanies the 1994 Annual Report on Form 10-KSB.
10.11 Lease dated January 1, 1992, between Julius Mufson, Trustee, and Alan
J. Goldstein, Trustee, d/b/a Hallandale Place Joint Venture (as Landlord)
and Carteret Savings Bank, as Tenant ("Lease"). The Lease was assigned
to Commercial Bank of Florida by the Resolution Trust Corporation, as
Receiver of Carteret Federal Savings Bank of Florida (successor to
Carteret Federal Savings Bank and Carteret Savings and Loan Association,
F.A.) pursuant to Lease Assignment and Assumption Agreement dated
December 5, 1994. Incorporated by reference to Exhibit 10.10 that
accompanies the 1994 Annual Report on Form 10-KSB.
10.12 Standard Office Building Lease, dated December 10, 1996, between
Promenade of Coral Springs, Inc. (Landlord) and Commercial Bank of
Florida (Tenant), (filed herewith).
10.13 Commercial Bankshares, Inc., Amendment to 1994 Outside Director Stock
Option Plan, dated January 15, 1999. Incorporated by reference to
Exhibit 10.13 that accompanies the 1998 Annual Report on Form 10-K.
10.14 Commercial Bankshares, Inc., Amendment to 1994 Performance Stock
Option Plan dated January 15, 1999. Incorporated by reference to
Exhibit 10.14 that accompanies the 1998 Annual Report on Form 10-K.
11.1 Computation of Earnings per Common and Common Equivalent Share.
Information required to be reported under this exhibit is set forth on
page 30 of the 1999 Annual Report to Shareholders and is incorporated
herein by reference.
13.1 1999 Annual Report to Shareholders of Commercial Bankshares, Inc. *
21.1 Subsidiaries of the Company. Information required to be reported
under this exhibit is incorporated by reference to exhibit 21.1 that
accompanies the 1996 Annual Report on Form 10-K.
23.1 Consent of PricewaterhouseCoopers LLP (filed herewith).
All other exhibits are omitted because they are not applicable.
(b) No reports on Form 8-K have been filed during the last quarter
of the period covered by this report.
* Except for those portions of the Annual Report which are expressly
incorporated by reference in this Form 10-K, the Annual Report is
furnished for the information of the Securities and Exchange Commission
only and is not to be deemed "filed" as part of such Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 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.
COMMERCIAL BANKSHARES, INC.
(Registrant)
By:/s/ Jack J. Partagas
---------------------
Jack J. Partagas
President and Chief Operating Officer
March 27, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
By:/s/ Joseph W. Armaly Chairman of the Board March 27, 2000
- ----------------------- of Directors and
Joseph W. Armaly Chief Executive Officer
(Principal Executive Officer)
By:/s/ Jack J. Partagas President, March 27, 2000
- ----------------------- Chief Operating Officer,
Jack J. Partagas and Director
By:/s/ Cromwell A. Anderson Director March 27, 2000
- ---------------------------
Cromwell A. Anderson
By:/s/ Martin Yelen Director March 27, 2000
- -------------------
Martin Yelen
By:/s/ Robert Namoff Director March 27, 2000
- --------------------
Robert Namoff
By:/s/ Barbara E. Reed Senior Vice President March 27, 2000
- ---------------------- and Chief Financial Officer
Barbara E. Reed
Exhibit 23.1
Consent of Independent Certified Public Accountants
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8/S-3 (No. 33-96606) of Commercial Bankshares, Inc. of
our report dated January 20, 2000 relating to the financial statements, which
appears in the Annual Report to Shareholders, which is incorporated in this
Annual Report on Form 10-K.
PricewaterhouseCoopers LLP
Miami, Florida
March 28, 2000