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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, 1998
[ ] 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, Incorporated
(Exact name of registrant as specified in its charter)
Florida 65-0050176
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1550 S.W. 57th Avenue, Miami, Florida 33144
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (305) 267-1200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.08 par value per share
(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
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 registrants'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 February 28, 1999, 3,682,662 shares of the voting stock were issued and
outstanding, of which 3,159,755 shares with an aggregate market value of
$66,354,855, 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, 1998 are
incorporated by reference into Part I and Part II.
2. Certain portions of the Company's Proxy Statement for the 1999 Annual
Meeting of Shareholders to be held on April 15, 1999 are incorporated
by reference into Part III.
Table of Contents
Description Page No.
Part I
Item 1. Business.....................................................1
Item 2. Properties...................................................8
Item 3. Legal Proceedings............................................8
Item 4. Submission of Matters to a Vote of Security Holders..........8
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters...............................................8
Item 6. Selected Financial Data......................................8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation................................8
Item 7A. Quantitative and Qualitative Disclosures About Market Risk..8
Item 8. Financial Statements and Supplementary Data..................9
Item 9. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure...........................9
Part III
Item 10. Directors and Executive Officers of the Registrant..........9
Item 11. Executive Compensation......................................9
Item 12. Security Ownership of Certain Beneficial Owners
and Management...................................................9
Item 13. Certain Relationships and Related Transactions..............9
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K......................................................10
Signatures...........................................................12
PART I
Item 1. Description of 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 acquisi-
tion 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 business-
es 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 busi-
nesses 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 services 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 opera-
tions are materially and significantly influenced by general economic condi-
tions 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, 1998, the Company and the Bank together employed 182
employees, of whom 8 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 posi-
tioned 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, insur-
ance 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 deter-
mines 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 substan-
tially 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 conve-
nience 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 control-
ling 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-concentra-
tion 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 deposi-
tors 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 determi-
nation 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 instru-
ments, (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,
1998 and 1997, the Company's total risk-based capital ratios were 17.68% and
19.18%, 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 acquisi-
tions 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, 1998 and 1997, the Company's leverage
ratios were 9.52% and 9.69%, 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 legisla-
tion.
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 institu-
tion is considered by its supervising agency to be financially sound or to
have supervisory concerns.
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 undercapital-
ized", 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, 1998, 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 manage-
ment 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 undercapital-
ized" 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 undercapital-
ized" institutions are subject to the appointment of a receiver or conserva-
tor.
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 account-
ing 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 documen-
tation 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 institu-
tions 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 27 in the 1998 Annual Report
and is incorporated herein by reference. The condition of all properties is
considered good. In the opinion of management, owned properties are adequate-
ly 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 Stockholders
Matters.
Information required to be reported under this item is set forth on
pages 13 and 14 of the 1998 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 1998 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 1998 Annual Report to Shareholders and is incorpo-
rated 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 1998 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 1998 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 incorpor-
ated 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.
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.
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.
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 Options
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's Stock Option Plan, dated January 15, 1999.
10.14 Commercial Bankshares, Inc., Amendment to 1994 Performance
Stock Option Plan dated January 15, 1999.
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 1998 Annual Report to Shareholders
and is incorporated herein by reference.
13.1 1998 Annual Report to Shareholders of Commercial
Bankshares, Inc. *
21.1 Subsidiaries of the Company. Information required to be
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.
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, INCORPORATED
(Registrant)
By:/s/ Jack J. Partagas
Jack J. Partagas
President and Chief Operating Officer
March 26, 1999
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 26, 1999
Joseph W. Armaly of Directors and
Chief Executive Officer
(Principal Executive Officer)
By:/s/ Jack J. Partagas President, March 26, 1999
Jack J. Partagas Chief Operating Officer,
and Director
By:/s/ Cromwell A. Anderson Director March 26, 1999
Cromwell A. Anderson
By:/s/ Martin Yelen Director March 26, 1999
Martin Yelen
By:/s/ Robert Namoff Director March 26, 1999
Robert Namoff
By:/s/ Barbara E. Reed Senior Vice President March 26, 1999
Barbara E. Reed and Chief Financial
Officer
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 15, 1999 appearing on page 17 of the Annual Report to
Shareholders which is incorporated in this Annual Report on Form 10-K.
PricewaterhouseCoopers LLP
Miami, Florida
March 26, 1999