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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
Commission File Number 000-21267
SUMMIT BANK CORPORATION
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GEORGIA 58-1722476
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
4360 CHAMBLEE-DUNWOODY ROAD, ATLANTA, GEORGIA 30341
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 454-0400
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
None
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock par value $.01
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(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X or No
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, 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 15, 1999, the aggregate market value of the Common Stock
held by persons other than directors and executive officers of the registrant
was $17,198,875 as determined by the most recent trades of registrant's Common
Stock known to the registrant. The exclusion of all directors and executive
officers of the registrant for purposes of this calculation should not be
construed as a determination that any particular director or executive officer
is an affiliate of the registrant.
As of March 15, 1999, there were 1,739,718 shares of the Registrant's
Common Stock outstanding.
Documents Incorporated by Reference
Part III information is incorporated herein by reference, pursuant to
Instruction G to Form 10-K, from Summit's Proxy Statement for its 1999 Annual
Shareholders' Meeting. Certain Part II information required by Form 10-K is
incorporated by reference from the Summit Bank Corporation Annual Report to
Shareholders as indicated below, which is included as an exhibit hereto.
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SUMMIT BANK CORPORATION
FORM 10-K CROSS-REFERENCE INDEX
PAGE
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FORM ANNUAL PROXY
10-K REPORT STATEMENT
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PART I
ITEM 1. Business 3-12
(a) Overview 3
(b) Banking Services 3-4
(c) Locations and Service Areas 4
(d) Asian-American Market 4-5
(e) International Services Market 5
(f) Supervision and Regulation 5-12
(g) Competition 12
(h) Fiscal and Monetary Policy 12
(i) Employees 12
ITEM 2. Properties 13
ITEM 3. Legal Proceedings 14
ITEM 4. Submission of Matters to a Vote of
Security Holders 14
PART II
ITEM 5. Market for Registrant's Common Equity
and Related Stockholder Matters 15
ITEM 6. Selected Financial Data 16
ITEM 7. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9-25
ITEM 8. Financial Statements and Supplementary
Data 26-47
ITEM 9. Not Applicable 17
PART III
ITEM 10. Directors and Executive Officers of the
Registrant 2-7
ITEM 11. Executive Compensation 9-12
ITEM 12. Security Ownership of Certain
Beneficial Owners and Management 7,14-15
ITEM 13. Certain Relationships and Related
Transactions 7
PART IV
ITEM 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K 19-20
SIGNATURES 21-22
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PART 1.
ITEM 1. BUSINESS
OVERVIEW
Summit Bank Corporation ("Summit" or the "Company") was organized as a Georgia
corporation on October 15, 1986, primarily to become a bank holding company by
acquiring all the common stock of The Summit National Bank (the "Bank") upon its
formation. The Bank commenced business on March 10, 1988, and the Company's
primary activity since then has been the ownership and operation of the Bank.
The Bank is a banking association organized under the laws of the United States.
The Bank engages in commercial banking from its main office and five branch
offices, four of which are located in its primary service area of northern
metropolitan Atlanta, Georgia. The fifth branch office was added on June 30,
1998 with the Bank's acquisition of California Security Bank ("CSB") in San
Jose, California. The Bank's fifth office is in an ethnic community of San Jose
that is very similar to part of the Bank's Atlanta primary service area. The
Bank seeks to serve four principal markets: (1) individuals, professionals, and
small to medium-sized businesses in the Bank's primary service areas; (2) ethnic
communities, principally Asian-Americans and Latin Americans, located in the
primary service areas, including businesses operated by members of such
communities; (3) individuals, professionals, and businesses in the primary
service areas requiring the international financial transaction services offered
by the Bank; and (4) foreign corporations and individuals requiring specialized
banking services (international private banking) in the Atlanta and San Jose
metropolitan areas.
Management believes the identified markets continue to provide significant
growth opportunities for the Bank. The Bank offers these markets a variety of
traditional and specialized banking services, and emphasizes personal service,
cultural sensitivity and accessibility of management.
BANKING SERVICES
The Bank offers the full range of deposit services typically offered by most
banks and other financial institutions, including checking accounts, NOW
accounts, savings accounts and other time deposits of various types, ranging
from daily money market accounts to longer-term certificates of deposits.
However, the Bank tailors its transaction accounts and time certificates to the
principal market areas at rates competitive to those offered in the area. In
addition, retirement accounts such as Individual Retirement Accounts ("IRAs")
are available. The Bank solicits these accounts from individuals, businesses,
associations, and government entities. All deposit accounts are insured by the
Federal Deposit Insurance Corporation (the "FDIC") up to the maximum amount
($100,000 per depositor).
There are certain risks in making all loans. A principal economic risk in making
loans is the creditworthiness of the borrower. Other risks in making loans
include the period of time over which loans may be repaid, changes in economic
and industry conditions, in dealing with individual borrowers, and uncertainties
about the future value of any collateral. The Bank's management maintains an
allowance for loan losses based on, among other things, an evaluation of
economic conditions and other lending risks, and its regular reviews of
delinquencies and loan portfolio quality. The Bank's allowance for potential
loan losses is based upon a percentage of the total outstanding loan portfolio
and upon a percentage of the balance of specific loans when their ultimate
collectibility is considered questionable.
The Bank offers a full range of short to medium-term commercial and personal
loans. Commercial loans include both secured and unsecured loans for working
capital (including inventory and receivables), business expansion (including
acquisition of real estate and improvements), and purchase of equipment and
machinery. The Bank offers government guaranteed loans under the Small Business
Administration ("SBA") loan program. After originating a guaranteed loan, the
Bank may sell the guaranteed portion (approximately 75%) resulting in a gain on
the sale of the portion of the loan sold. In addition, the Bank retains the
servicing rights to these loans which generate servicing income on the portion
sold. Personal (or consumer) loans include secured and unsecured loans for
financing automobiles, home improvements,
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education, and personal investments. The Bank also offers residential mortgages,
through a brokering arrangement with Century Mortgage Corporation.
In addition to deposit and loan services, the Bank's other domestic services
include 24-hour multi-lingual telephone banking, cash management services,
investment sweep accounts, safe deposit boxes, travelers checks, direct deposit
of payroll and social security checks, as well as automatic drafts for various
accounts. The Bank is a member of the HONOR, INSTA TELLER and CIRRUS networks of
automated teller machines that may be used by Bank customers in major cities
throughout Georgia and California, and in various other cities in the United
States and worldwide. The automated teller machine located at the Asian Banking
Center branch location also offers multi-lingual screens for Asian patrons. The
Bank also offers both VISA and MasterCard credit cards to its customers through
a third party vendor.
The Bank's international banking services include inbound and outbound
international funds transfers, foreign collections, and import and export
letters of credit. The Bank also issues bankers acceptances. These drafts or
bills of exchange facilitate international trade and are available only after
the Bank completes a diligent credit review process. In addition, the Bank
offers private banking services to qualified foreign individuals and
corporations establishing business operations in Atlanta. These specialized
private banking services include bill paying, statement and mail holding,
currency exchange, international funds transfers and personal lines of credit
(including credit card services).
In addition, the Bank's private banking group assists executives living in the
United States with personal banking services that support international business
objectives. These services include introductions to correspondent financial
services as well as to the Company's general business contacts in international
trade markets.
The Bank does not offer personal or corporate trust services (other than
retirement custodial services for IRAs and similar plans).
LOCATIONS AND SERVICE AREAS
The Bank leases its main office at 4360 Chamblee-Dunwoody Road, Atlanta, Georgia
30341. The main office is in a five-story office building near the intersection
of Interstate 285 and Chamblee-Dunwoody Road, in DeKalb County. The Bank has a
6,000 square foot branch facility in the Company's 18,000 square foot office
building at 3490 Shallowford Road, Chamblee, DeKalb County, Georgia. The Bank
also leases a branch facility at One Paces West, Suite 150, 2727 Paces Ferry
Road in Vinings. In 1996, the Bank purchased a 4,560 square foot building on
approximately 1.2 acres located at 595 Franklin Road, Marietta, Georgia to serve
as its third branch office. A 7,700 square foot building on approximately 1.3
acres at 3280 Holcomb Bridge Road, Norcross, Georgia serves as its fourth branch
office. In 1998, the Bank assumed a lease for the office acquired through the
purchase of CSB. This facility has 8,142 square feet at 1694 Tully Road, San
Jose, California and is the Bank's fifth branch location.
One of the Bank's two primary service areas covers a section of North Atlanta,
Georgia including portions of DeKalb, Fulton, Cobb, and Gwinnett Counties. This
area includes the city of Chamblee, portions of the cities of Doraville and
Norcross, the DeKalb-Peachtree Airport, the Northlake and Perimeter Malls in
DeKalb County, Cumberland and Town Center Malls in Cobb County and the Perimeter
Business Park and the Peachtree Corners area including Technology Park. This
area is crossed by major thoroughfares such as Interstate 285 to the North,
Buford Highway and Peachtree Industrial Boulevard in the South, Clairmont and
Shallowford Roads in the East, and Interstate 75 in the West. A second primary
service area covers the city of San Jose, California. San Jose is located in the
south San Francisco bay area and is crossed by the major thoroughfares of
Highway 101 and Interstates 880, 680, and 280.
ASIAN-AMERICAN MARKETS
One of the Bank's principal target markets is the Atlanta Asian-American
population, including members of the Korean, Chinese, Japanese, Indian, and
Southeast Asian communities. The 1990 United States census indicates that the
Atlanta Asian-American population exceeds 75,000 people, with the majority of
this
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population located in north Atlanta, including parts of DeKalb, Fulton, and Cobb
counties. The San Jose market consists largely of Vietnamese-American and
Latin-American individuals and businesses.
Management believes the locations of Bank's main office and Atlanta branch
offices are convenient to a large number of both Asian- and Latin-Americans. At
year-end 1998, approximately 50% of the Bank's Atlanta customers were
Asian-American. Vietnamese and Latin-American individuals comprise the majority
of the Bank's San Jose branch customer base.
Management believes that the Asian-American community has a high savings rate,
low unemployment, and a commitment to economic advancement through education and
hard work. In addition, a significant percentage of Asian-Americans in the
Bank's market are first generation U.S. immigrants who may be constrained in
their current use of banking services at other financial institutions by
language and other cultural barriers.
The Bank has employed, and will continue to employ, personnel with Asian and
Spanish language skills and first-hand knowledge of the communities to be
served. Management believes that language ability and cultural sensitivity,
combined with accessibility to senior management, enhances the Bank's
competitive position in its market.
INTERNATIONAL SERVICES MARKET
Management believes that a growing number of domestic businesses in the
metropolitan areas served by the Bank (and, in particular, a growing number of
small- to medium-sized businesses) require its international banking services.
While a number of financial institutions operating in the Bank's markets offer
such services, they are typically offered from international banking departments
located in downtown office facilities or from an out-of-state location;
personnel in branch facilities closer to smaller businesses generally are not
trained to address these specialized needs. Management believes that the Bank
has penetrated, and will be able to further penetrate, this market by providing
businesses with convenient access to personnel specially trained to provide
international services.
The Bank does not engage in off-shore buyer financing or cross border lending.
Occasionally, the Bank discounts short-term letters of credit drafts for
selected correspondent banks under approved facilities. Management believes that
the commercial and political risks of these activities are acceptable based on
our assessment of available information on the correspondent banks and the
respective countries. As of December 31, 1998, the total amount outstanding
under such facilities was $1,035,017.
In addition to domestic businesses requiring international banking services,
management believes that a growing number of foreign businesses in Atlanta and
San Jose, along with their executives and employees, frequently require the
international banking services provided by the Bank. Foreign nationals doing
business in the United States are often unfamiliar with our banking practices.
The Bank has personnel with the language and cultural skills suited to serve
this clientele. Management further believes the international banking experience
of management of the Bank, along with the contacts of the directors of the
Company and the Bank in the international and domestic business communities,
enhances the Bank's ability to compete in this target market.
SUPERVISION AND REGULATION
The following discussion sets forth the material elements of the regulatory
framework applicable to banks and bank holding companies and provides certain
specific information about the Company.
GENERAL
The Company is a bank holding company registered with the Board of Governors of
the Federal Reserve System (the "Federal Reserve") under the Bank Holding
Company Act of 1956, as amended (the "BHC Act"). As such, the Company is subject
to the supervision, examination, and reporting requirements of the BHC Act and
the regulations of the Federal Reserve.
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The BHC Act requires every bank holding company to obtain the prior approval of
the Federal Reserve before: (a) it may acquire direct or indirect ownership or
control of any voting shares of any bank if, after such acquisition, the bank
holding company will directly or indirectly own or control more than 5% of the
voting shares of the bank; (b) it or any of its subsidiaries, other than a bank,
may acquire all or substantially all of the assets of any bank; or (c) it may
merge or consolidate with any other bank holding company.
The BHC Act further provides that the Federal Reserve may not approve any
transaction that would result in a monopoly or would be in furtherance of any
combination or conspiracy to monopolize or attempt to monopolize the business of
banking in any section of the United States, or the effect of which may be
substantially to lessen competition or to tend to create a monopoly in any
section of the country, or that in any other manner would be in restraint of
trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served. The Federal Reserve is also required to consider
the financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served. Consideration of financial resources generally focuses on capital
adequacy, which is discussed below.
The BHC Act, as amended by the interstate banking provisions of the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Banking
Act"), which was effective on September 29, 1995, repealed prior statutory
restrictions on interstate acquisitions of banks by bank holding companies.
Therefore, the Company may now acquire a bank in another state, and any bank
holding company located outside Georgia may acquire a Georgia-based bank,
regardless of state law to the contrary, but subject to certain
deposit-percentage, aging, and other restrictions. The Interstate Banking Act
also generally provided that, as of June 1, 1997, national and state-chartered
banks could branch interstate through acquisitions of banks in other states. By
adopting legislation prior to that date, a state had the ability either to "opt
in" and accelerate the date after which interstate branching is permissible or
"opt out" and prohibit interstate branching altogether.
In response to the Interstate Banking Act, the Georgia General Assembly adopted
the Georgia Interstate Banking Act, which was effective on July 1, 1995. The
Georgia Interstate Banking Act provides that (a) interstate acquisitions by
institutions located in Georgia will be permitted in states that also allow
national interstate acquisitions and (b) interstate acquisitions of institutions
located in Georgia will be permitted by institutions in states that allow
national interstate acquisitions.
Additionally, on January 26, 1996, the Georgia General Assembly adopted the
Georgia Interstate Branching Act which permits Georgia-based banks and bank
holding companies owning or acquiring banks outside of Georgia, and all
non-Georgia banks and bank holding companies owning or acquiring banks in
Georgia, to merge any lawfully acquired bank into an interstate branch network.
The Georgia Interstate Branching Act also allows banks to establish de novo
branches on a limited basis as of July 1, 1996. Subsequent to July 1, 1998, the
number of de novo branches that may be established was no longer limited.
The BHC Act generally prohibits the Company from engaging in activities other
than banking or managing or controlling banks or other permissible subsidiaries
and from acquiring or retaining direct or indirect control of any company
engaged in any activities other than those activities determined by the Federal
Reserve to be so closely related to banking or managing or controlling banks as
to be a proper incident thereto. In determining whether a particular activity is
permissible, the Federal Reserve must consider whether the performance of such
an activity reasonably can be expected to produce benefits to the public, such
as greater convenience, increased competition, or gains in efficiency, that
outweigh possible adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interest, or unsound banking
practices. For example, factoring accounts receivable, acquiring or servicing
loans, leasing personal property, conducting discount securities brokerage
activities, performing certain data
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processing services, acting as agent or broker in selling credit life insurance
and certain other types of insurance in connection with credit transactions, and
performing certain insurance underwriting activities all have been determined by
the Federal Reserve to be permissible activities of bank holding companies. The
BHC Act does not place territorial limitations on permissible non-banking
activities of bank holding companies. Despite prior approval, the Federal
Reserve has the power to order a holding company or its subsidiaries to
terminate any activity or to terminate its ownership or control of any
subsidiary when it has reasonable cause to believe that continuation of such
activity or such ownership or control constitutes a serious risk to the
financial safety, soundness, or stability of any bank subsidiary of that bank
holding company.
The Bank is a member of the Federal Deposit Insurance Corporation (the "FDIC"),
and as such, its deposits are insured by the FDIC to the maximum extent provided
by law. The Bank is also subject to numerous state and federal statutes and
regulations that affect its business, activities, and operations, and it is
supervised and examined by one or more state or federal bank regulatory
agencies.
The Office of the Comptroller of the Currency (the "OCC") regularly examines the
Bank's operations and has authority to approve or disapprove any bank mergers,
consolidations, establishment of branches, and similar corporate actions. The
OCC also may prohibit unsafe or unsound banking practices or other violations of
law.
PAYMENT OF DIVIDENDS
The Company is a legal entity separate and distinct from its banking subsidiary.
The Company's principal sources of cash flow, including cash flow to pay
dividends to its shareholders, are dividends by the Bank. There are statutory
and regulatory limitations on the payment of dividends by the Bank to the
Company, as well as the payment of dividends by the Company to its shareholders.
If, in the opinion of the federal banking regulator, a depository institution
under its jurisdiction is engaged in or is about to engage in an unsafe or
unsound practice (which, depending on the financial condition of the depository
institution, could include the payment of dividends), such authority may
require, after notice and hearing, that such institution cease and desist from
such practice. The federal banking agencies have indicated that paying dividends
that deplete a depository institution's capital base to an inadequate level is
an unsafe and unsound banking practice. Under the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), a depository institution may not
pay dividends if payment would cause it to become undercapitalized or if it
already is undercapitalized. See "-- Prompt Corrective Action." Moreover, the
federal agencies have policies that provide that bank holding companies and
insured banks should generally only pay dividends out of current operating
earnings.
At December 31, 1998, under federal and state dividend rules, the Bank, without
obtaining regulatory approvals, could declare aggregate dividends to the Company
of up to approximately $4 million, plus 1999 net earnings of the Bank.
Dividend payments by the Company and the Bank may also be affected or limited by
other factors, such as the regulatory requirements to maintain adequate capital.
CAPITAL ADEQUACY
The Company and the Bank are required to comply with the capital adequacy
standards established by the Federal Reserve and by the appropriate federal
banking regulator in the case of the Bank. The Federal Reserve has two basic
measures of capital adequacy for bank holding companies: a risk-based measure
and a leverage measure.
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The risk-based capital standards 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. 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 guideline for the ratio (the "Total Risk-Based Capital Ratio") of
total capital ("Total Capital") to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8%. At least half
of Total Capital must comprise common stock, minority interests in the equity
accounts of consolidated subsidiaries, noncumulative perpetual preferred stock,
and a limited amount of cumulative perpetual preferred stock, less goodwill and
certain other intangible assets ("Tier 1 Capital"). The remainder may consist of
subordinated debt, other preferred stock, and a limited amount of loan loss
reserves ("Tier 2 Capital"). At December 31, 1998, the Company's consolidated
Total Risk-Based Capital Ratio and its Tier 1 Risk-Based Capital Ratio (i.e.,
the ratio of Tier 1 Capital to risk-weighted assets) were 14.8% and 13.6%,
respectively.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less goodwill
and certain other intangible assets, of 3% for bank holding companies that meet
certain specified criteria, including having the highest regulatory rating. All
other bank holding companies generally are required to maintain a Leverage Ratio
of at least 3%, plus an additional cushion of 100 to 200 basis points. The
Company's Leverage Ratio at December 31, 1998 was 9.8%. The guidelines also
provide that bank holding companies experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels without significant reliance on intangible
assets. Furthermore, the Federal Reserve has indicated that it will consider a
"tangible Tier 1 Capital Leverage Ratio" (deducting all intangibles) and other
indicia of capital strength in evaluating proposals for expansion or new
activities.
The Bank is subject to the risk-based and leverage capital requirements of the
OCC, which are substantially similar to those of the Federal Reserve for bank
holding companies.
The Bank exceeded applicable minimum capital requirements as of December 31,
1998. No federal banking agency has imposed any additional capital requirements
on the Company or the Bank. Failure to meet regulatory capital guidelines could
subject a bank to a variety of enforcement remedies, including issuance of a
capital directive, the termination of deposit insurance by the FDIC, a
prohibition on the taking of brokered deposits, and certain other restrictions
on its business. As described below, substantial additional restrictions can be
imposed upon FDIC-insured depository institutions that fail to meet applicable
capital requirements. See "-- Prompt Corrective Action."
The federal bank regulators continue to indicate their desire to raise capital
requirements applicable to banking organizations beyond their current levels. In
this regard, the Federal Reserve and the FDIC have, pursuant to FDICIA, recently
adopted final regulations, which became mandatory on January 1, 1998, requiring
regulators to consider interest rate risk (when the interest rate sensitivity of
an institution's assets does not match the sensitivity of its liabilities or its
off-balance-sheet position) in the evaluation of a bank's capital adequacy. The
bank regulatory agencies' methodology for evaluating interest rate risk requires
banks with excessive interest rate risk exposure to hold additional amounts of
capital against such exposures. The market risk rules apply to any bank or bank
holding company whose trading activity equals 10% or more of its total assets,
or whose trading activity equals $1 billion or more.
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SUPPORT OF THE BANK
Under Federal Reserve policy, the Company is expected to be a source of
financial strength for, and to commit resources to support the Bank. The Bank
may need this support at times when, absent such Federal Reserve policy, the
Company may not be inclined to provide it. In addition, any capital loans by a
bank holding company to its banking subsidiary are subordinate in right of
payment to deposits and to certain other indebtedness of the Bank. In the event
of a bank holding company's bankruptcy, any commitment by the bank holding
company to a federal bank regulatory agency to maintain the capital of a banking
subsidiary will be assumed by the bankruptcy trustee and entitled to a priority
of payment.
Under the Federal Deposit Insurance Act ("FDIA"), a depository institution
insured by the FDIC may be liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC after August 9, 1989, in connection with
(a) the default of a commonly controlled FDIC-insured depository institution or
(b) any assistance provided by the FDIC to any commonly controlled FDIC-insured
depository institution "in danger of default." "Default" is defined generally as
the appointment of a conservator or receiver, and "in danger of default" is
defined generally as the existence of certain conditions indicating that a
default is likely to occur in the absence of regulatory assistance. The FDIC's
claim for damages is superior to claims of shareholders of the insured
depository institution or its holding company, but is subordinate to claims of
depositors, secured creditors, and holders of subordinated debt (other than
affiliates) of the commonly controlled insured depository institution. The
subsidiary depository institution of the Company is subject to these
cross-guarantee provisions. As a result, any loss suffered by the FDIC in
respect of the subsidiary would likely result in assertion of the
cross-guarantee provisions, the assessment of such estimated losses against the
depository institution's banking affiliates, and a potential loss of the
Company's investment in such other subsidiary depository institutions.
PROMPT CORRECTIVE ACTION
FDICIA establishes a system of prompt corrective action to resolve the problems
of undercapitalized institutions. The Act, which was effective in December 1992,
requires the federal banking regulators to establish five capital categories
(well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized) and to take certain mandatory
supervisory actions, and to consider other discretionary actions, with respect
to institutions in the three undercapitalized categories. The severity of the
regulatory actions depends upon the capital category in which the institution is
placed. Generally, subject to a narrow exception, FDICIA requires a banking
regulator to appoint a receiver or conservator for an institution that is
critically undercapitalized. The federal banking agencies have specified by
regulation the relevant capital level for each category.
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The capital levels established for each of the categories are as follows:
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Total Tier 1 Risk-
Capital Category Tier 1 Capital Risk-Based Capital Based Capital Other
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Well Capitalized 5% or more 10% or more 6% or more Not subject to a
capital directive
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Adequately Capitalized 4% or more 8% or more 4% or more --
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Undercapitalized less than 4% Less than 8% less than 4% --
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Significantly less than 3% Less than 6% less than 3% --
Undercapitalized
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Critically 2% or less -- -- --
Undercapitalized tangible equity
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For purposes of the regulation, the term "tangible equity" includes core capital
elements counted as Tier 1 Capital for purposes of the risk-based capital
standards, plus the amount of outstanding cumulative perpetual preferred stock
(including related surplus), minus all intangible assets with certain
exceptions. A depository institution may be deemed to be in a capitalization
category that is lower than is indicated by its actual capital position if it
receives an unsatisfactory examination rating.
An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency.
Under FDICIA, a bank holding company must guarantee that a subsidiary depository
institution meets its capital restoration plan, subject to certain limitations.
The obligation of a controlling holding company under FDICIA to fund a capital
restoration plan is limited to the lesser of 5% of an undercapitalized
subsidiary's assets or the amount required to meet regulatory capital
requirements. An undercapitalized institution is also generally prohibited from
increasing its average total assets, making acquisitions, establishing any
branches, or engaging in any new line of business, except in accordance with an
accepted capital restoration plan or with the approval of the FDIC. In addition,
the appropriate federal banking agency is given authority with respect to any
undercapitalized depository institution to take any of the actions it is
required to or may take with respect to a significantly undercapitalized
institution as described below if it determines "that those actions are
necessary to carry out the purpose" of FDICIA.
At December 31, 1998, the Bank met each of the capital levels to qualify as a
well capitalized financial institution.
FDIC INSURANCE ASSESSMENTS
Pursuant to FDICIA, the FDIC adopted a risk-based assessment system for insured
depository institutions that takes into account the risks attributable to
different categories and concentrations of assets and liabilities. The system
assigns an institution to one of three capital categories: (a) well capitalized;
(b) adequately capitalized; and (c) undercapitalized. These three categories are
substantially similar to the prompt corrective action categories described
above, with the "undercapitalized" category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective action purposes. An institution is also
assigned by the FDIC to one of three supervisory subgroups within each capital
group. The supervisory subgroup to which an institution is assigned is based
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on a supervisory evaluation provided to the FDIC by the institution's primary
federal regulator and information which the FDIC determines to be relevant to
the institution's financial condition and the risk posed to the deposit
insurance funds (which may include, if applicable, information provided by the
institution's state supervisor). An institution's insurance assessment rate is
then determined based on the capital category and supervisory category to which
it is assigned. Under the risk-based assessment system, there are nine
assessment risk classifications (i.e., combinations of capital groups and
supervisory subgroups) to which different assessment rates are applied.
Assessment rates for members of both the Bank Insurance Fund ("BIF") and the
Savings Association Insurance Fund ("SAIF") for the first half of 1995 ranged
from 23 basis points (0.23% of deposits) for an institution in the highest
category (i.e., "well capitalized" and "healthy") to 31 basis points (0.31% of
deposits) for an institution in the lowest category (i.e., "undercapitalized"
and "substantial supervisory concern"). These rates were established for both
funds to achieve a designated ratio of reserves to insured deposits (i.e.,
1.25%) within a specified period of time.
Once the designated ratio for the BIF was reached in May 1995, the FDIC reduced
the assessment rate applicable to BIF deposits in two stages, so that, beginning
in 1996, the deposit insurance premiums for 92% of all BIF members in the
highest capital and supervisory categories were set at $2,000 per year,
regardless of deposit size. The FDIC elected to retain the existing assessment
rate range of 23 to 31 basis points for SAIF members for the foreseeable future
given the undercapitalized nature of that insurance fund.
Recognizing that the disparity between the SAIF and BIF premium rates had
adverse consequences for SAIF-insured institutions and other banks with SAIF
assessed deposits, including reduced earnings and an impaired ability to raise
funds in capital markets and to attract deposits, the Deposit Insurance Funds
Act of 1996 (the "Funds Act") was enacted by Congress as part of the omnibus
budget legislation and signed into law on September 30, 1996. As directed by the
Funds Act, the FDIC implemented a special one-time assessment of approximately
65.7 basis points (0.657%) on a depository institution's SAIF-insured deposits
held as of March 31, 1995 (or approximately 52.6 basis points on SAIF deposits
acquired by banks in certain qualifying transactions).
In October, 1996, the FDIC revised the SAIF assessment rate schedule to (a)
widen the assessment rate spread among institutions in the different capital and
risk assessment categories, (b) reduce the assessment rate range assessable on
SAIF deposits to 0 to 27 basis points, and (c) set a special interim assessment
rate range for the last quarter of 1996 of from 18 to 27 basis points on
institutions subject to Financing Corporation ("FICO") assessments. Effective
January 1, 1997, assessments to help pay off the $780 million in annual interest
payments on the $8 billion FICO bonds issued in the late 1980s as part of the
government rescue of the thrift industry were imposed on both BIF- and
SAIF-insured deposits in annual amounts presently estimated at 1.22 basis points
and 6.10 basis points, respectively. Beginning in January 2000, BIF- and SAIF-
insured institutions will share the FICO interest costs at equal rates currently
estimated to be 2.43 basis points.
Under the FDIA, the FDIC may terminate insurance of deposits upon a finding that
the institution has engaged in unsafe and unsound practices, is in an unsafe or
unsound condition to continue operations, or has violated any applicable law,
regulation, rule, order, or condition imposed by the FDIC.
Because the Bank's risk classification was, and still is, the lowest allowable,
the Bank was not required to pay an assessment for deposit insurance in 1998,
nor will it be required to pay a deposit insurance assessment in 1999. The Bank
was required to pay the FICO assessments in 1998 and will also be required to
pay these assessments in 1999. Any increase in deposit insurance premiums for
the Bank will increase its cost of funds, and there can be no assurance that
such cost can be passed on to the Bank's customers.
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PROPOSED LEGISLATION AND REGULATORY ACTION
New regulations and statutes are regularly proposed that contain wide-ranging
proposals for altering the structures, regulations and competitive relationships
of the nation's financial institutions. It cannot be predicted whether or what
form any proposed regulation or statute will be adopted or the extent to which
the business of the Company may be affected by such regulation or statute.
COMPETITION
The banking business is highly competitive, particularly in the metropolitan
areas served by the Bank. In one or more aspects of their businesses, the
Company and the Bank compete with commercial banks, savings and loan
associations, credit unions, finance companies, mutual funds, insurance
companies, and brokerage and investment banking companies operating in the
metropolitan Atlanta area, the San Jose area and elsewhere. Many of these
competitors have substantially greater resources and lending limits than the
Bank and may offer services, such as trust services, that the Company and the
Bank do not provide. The Bank has employees fluent in foreign languages
including Mandarin, Cantonese, Korean, Vietnamese, German, French, Spanish and
others which enhances the Bank's ability to compete in target markets.
FISCAL AND MONETARY POLICY
The business of banking depends on interest rate differentials. In general, the
difference between the interest paid by a bank on its deposits and its other
borrowings, and the interest received by a bank on its loans and securities
holdings, accounts for the major portion of a bank's earnings. Thus, the
earnings and growth of the Company and the Bank are subject to economic
conditions generally, both domestic and foreign, and also to the monetary and
fiscal policies of the United States and its agencies, particularly the Federal
Reserve. The Federal Reserve regulates the supply of money through various
means, including open market dealings in United States government securities,
the discount rate at which banks may borrow from the Federal Reserve, and the
reserve requirements on deposits.
The Federal Reserve's monetary policies historically have had a significant
effect on the operating results of commercial banks and will continue to do so
in the future. Management cannot predict the national and international economic
conditions and money markets, changes in policy by monetary and fiscal
authorities, and the effect of such factors on the Company and the Bank.
EMPLOYEES
As of March 15, 1999, the Company and the Bank had 104 full-time equivalent
employees. Management does not anticipate additional hiring in 1999, except to
support normal growth of business. The employees are not part of any collective
bargaining agreement and employee relations with the Company are considered
good.
12
13
ITEM 2. PROPERTIES
The Bank's main office is at 4360 Chamblee-Dunwoody Road, Atlanta, DeKalb
County, Georgia 30341, on the ground floor of a five-story, 100,000 square foot,
office building near the intersection of Interstate 285 and Chamblee-Dunwoody
Road. The Bank has a lease for 19,403 square feet on the main and third floors
of the building. The lease provides base rental at $14.25 per square foot per
annum during the term of the lease and rights to extend its occupancy of the
leased space twice, for one additional year each, at a base rate of $14.50 per
square foot per annum. The initial term of the lease expired in December 1998,
and the lease was extended to December 2000. The main office on the first floor
contains 8,897 square feet of space which includes six teller stations, two
customer service stations, the small business lending department, the loan
operations department, offices for loan officers, and the main conference room.
The Bank has an ATM attached to the building. The third floor of the main office
houses the international department, personnel department, the operations
department, and the executive offices.
The Company owns an office building containing 16,639 square feet of leasable
space located on 2.77 acres of land in Atlanta's Asian-American business
district on Shallowford Road near Buford Highway. The Company leases 6,000
square feet of space to the Bank at a cost of $12.00 per square foot for a
branch office. The Company currently has leased 10,639 square feet to other
tenants which leases provide base rental rates from $12.53 to $14.19 per square
foot per annum. The Company incurred a total cost of $2.2 million for the land
and building including improvements and tenant finishes. In addition, the branch
has approximately $200,000 in furniture, fixtures and equipment at this site.
This branch office has six teller stations, five customer service stations, and
five offices for lending officers and management. In addition, the Bank has
installed a drive-through ATM and drive-through teller window.
The Bank's branch office in the Vinings area of Cobb County is located at One
Paces West, Suite 150, 2727 Paces Ferry Road, N.W., Atlanta, Georgia 30339. The
office building has 246,515 square feet of leasable space near the intersection
of Interstate 285 and Paces Ferry Road. The Vinings branch office contains 5,266
square feet of space which the Bank has leased at a base rate of $17.25 per
square foot per annum. This space consists of four teller stations, two drive-in
windows, four customer service stations, five offices for management and lending
officers and a conference room. The Bank also has a walk-up ATM at this
location. The initial term of the lease expires June 2002.
In January 1996, the Bank acquired a 4,560 square foot building situated on 1.2
acres located at 595 Franklin Road, Marietta, Georgia. This office has six
teller stations, one drive-up window, three drive-in lanes, three offices for
lending officers and management and also has a walk-up ATM. The branch opened in
May 1996.
In August 1996, the Bank acquired a two-story 7,700 square foot building on 1.3
acres at 3280 Holcomb Bridge Road, Norcross, Georgia. This office has eight
teller stations, one drive-up window, three drive-in lanes, six offices for
lending officers and management on the ground floor and a drive-through ATM. The
second floor has additional office space which will be used at a later date. The
branch opened in November 1996.
The Bank's San Jose branch office is in leased office space at 1694 Tully Road.
The branch, as anchor tenant in the building, occupies 8,142 square feet. This
branch has five teller stations, in addition to a merchant booth for large
commercial transactions, and two walk-up ATM machines.
13
14
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings, other than ordinary routine litigation
incidental to their business, pending against or involving assets of the Company
or the Bank.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
No matter was submitted during the fourth quarter of the fiscal year covered by
this report to a vote of security-holders, through the solicitation of proxies
or otherwise.
14
15
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company currently has three market makers for shares of its common stock.
The Company's shares are listed on the Nasdaq National Market under the symbol
"SBGA". All transactions involving the sale and purchase of shares of the Common
Stock known to the Company were facilitated through the three market makers. As
of March 15, 1999, the quoted purchase price for the Company's shares was $15.63
per share. There were approximately 324 holders of record of the Company's
Common Stock at March 15, 1999.
The Company began paying cash dividends in 1995 and paid $.28 per share in that
year. The Company paid $.35 and $.39 per share in cash dividends in 1997 and
1998, respectively. Although the Company currently plans to pay cash dividends
on a quarterly basis, there can be no assurance that Summit's dividend policy
will remain unchanged in the future. The declaration and payment of dividends
will depend upon business conditions, operating results, capital and reserve
requirements, and the Board of Directors' consideration of other relevant
factors. In addition, the ability to pay dividends in the future will depend, in
part, on the earnings of the Bank and its ability to pay dividends to the
Company, as to which there can be no assurance.
For additional information concerning the Company's quarterly stock prices and
quarterly cash dividends see page 10, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's 1998 Annual
Report of Shareholders which is incorporated by reference herein.
The Bank may only pay dividends out of its net profits then on hand, after
deducting expenses, including losses and bad debts. In addition, the Bank is
prohibited from declaring a dividend on its shares of common stock until its
surplus equals its stated capital, unless there has been transferred to surplus
no less than one-tenth of the Bank's net profits of the preceding two
consecutive half-year periods (in the case of an annual dividend). The approval
of the OCC is required if the total of all dividends declared in any calendar
year by the Bank exceeds the Bank's net profits to date, as defined, for that
year combined with its retained net profits for the preceding two years less any
required transfers to surplus. The Bank declared and paid cash dividends of
$690,000 to the Company in 1998. As of December 31, 1998, the Bank had
cumulative net retained profits for 1997 and 1998 of $3,989,000, which is
entirely available for dividends to the Company in 1999, plus the Bank's 1999
net earnings, if any, provided that the necessary transfers of net profits to
surplus were made. The OCC also may to enjoin a national bank from engaging in
an unsafe or unsound practice, which may include the payment of a dividend under
certain circumstances.
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16
ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated financial data presented below as of and for the years
ended December 31, 1998, 1997, 1996, 1995, and 1994 is unaudited and has been
derived from the Consolidated Financial Statements of the Company and its
subsidiaries, and from records of the Company. The information presented below
should be read in conjunction with the Consolidated Financial Statements, the
Notes to Consolidated Financial Statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." Averages are derived
from daily balances.
(Dollars in thousands, except per share data) As of December 31,
Balance Sheet Data 1998 1997 1996 1995 1994
- ------------------ --------------------------------------------------------------
Total assets $263,161 $180,296 154,248 $130,076 $108,146
Investment securities 96,101 62,962 38,584 32,702 19,274
Loans 133,496 98,892 85,808 78,177 73,801
Allowance for loan losses 2,336 1,468 1,931 1,686 1,603
Deposits 218,647 144,795 132,899 109,816 90,639
Federal Home Loan Bank advances 10,000 10,000 1,000 -- --
Other borrowed funds 5,987 2,756 657 -- --
Obligations under capital lease 39 81 118 152 166
Stockholders' equity 24,505 19,778 16,936 15,413 13,273
Year Ended December 31,
Statement of Income Data 1998 1997 1996 1995 1994
- ------------------------ ----------------------------------------------------------------
Interest income $ 17,253 $ 13,475 $ 11,356 $ 10,101 $ 8,155
Interest expense 7,309 5,470 4,520 4,070 2,800
Net interest income 9,944 8,005 6,836 6,031 5,355
Provision for loan losses 455 540 404 397 430
Net interest income after
provision for loan losses 9,489 7,465 6,432 5,634 4,925
Non-interest income 3,575 3,460 3,361 3,311 3,050
Non-interest expenses 8,792 7,156 6,411 5,802 5,209
Income tax expense 1,503 1,319 1,174 1,042 838
Net income $2,769 $2,450 $2,208 $ 2,101 $ 1,928
Per Share Data
Book value per share at year end $13.68 $13.28 $12.03 $ 10.95 $ 9.43
Basic earnings per share 1.56 1.71 1.57 1.49 1.37
Diluted earnings per share 1.53 1.50 1.43 1.49 1.37
Weighted-average shares outstanding - basic 1,773,010 1,436,023 1,407,688 1,407,688 1,407,688
Weighted-average shares outstanding - diluted 1,804,828 1,632,586 1,546,332 1,414,670 1,407,688
Dividends declared $ .39 $ .35 $ .31 $ .28 --
Dividend payout ratio 25.00% 20.47% 19.75% 18.79% --
Ratios
Return on average assets 1.24% 1.47% 1.59% 1.74% 1.78%
Return on average equity 11.89% 13.36% 13.80% 15.09% 15.65%
Average equity/average assets 10.47% 11.03% 11.53% 11.51% 11.37%
Net interest margin 4.90% 5.26% 5.44% 5.50% 5.39%
Non-performing assets/total loans
and other real estate 2.70% 1.80% 1.07% .14% .37%
Allowance for loan losses/total loans 1.75% 1.48% 2.25% 2.16% 2.17%
Non-interest expense/net
interest income and non-interest income 65.03% 62.42% 62.87% 62.11% 61.98%
16
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Incorporated by reference to the 1998 Annual Shareholders' Report -- See Cross
Reference Index on page 2.
The Company has not provided quantitative and qualitative disclosures of market
risk as required by Item 305 of Regulation S-K because it meets the requirements
of a small business issuer.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated by reference to the 1998 Annual Shareholders' Report -- See Cross
Reference Index on page 2.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
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18
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference to the Definitive Proxy Statement for the 1999 Annual
Shareholders' Meeting -- See Cross Reference Index on page 2.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference to the Definitive Proxy Statement for the 1999 Annual
Shareholders' Meeting -- See Cross Reference Index on page 2.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference to the Definitive Proxy Statement for the 1999 Annual
Shareholders' Meeting -- See Cross Reference Index on page 2.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference to the Definitive Proxy Statement for the 1999 Annual
Shareholders' Meeting -- See Cross Reference Index on page 2.
18
19
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:
1. Financial Statements - The consolidated financial statements,
notes to consolidated financial statements, and independent
auditors' report thereon, are incorporated by reference to the
1999 Annual Shareholders' Report -- See Cross Reference Index
on page 2.
2. Financial Statement Schedules - These are omitted as they are
not required or are not applicable.
3. Exhibits (numbered in accordance with Item 601 of Regulation
S-K).
Exhibit
Number Exhibit
2.1 Agreement and Plan of Merger by and between The Summit National Bank
and California Security Bank dated as of March 27, 1998 (incorporated
by reference to Exhibit 2.1 of Summit Bank Corporation's Current Report
on Form 8-K dated March 27, 1998.)
3.1 Amended and Restated Articles of Incorporation of Summit Bank
Corporation (incorporated by reference to Exhibit 3.2 of Summit Bank
Corporation's Registration Statement on Form S-1, Amendment No. 3
(Registration Number 33-16366)).
3.2 Bylaws of Summit Bank Corporation, as amended (incorporated by
reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1987.)
4.1 The rights of security holders are defined in (i) Articles Five, Six,
Nine, Ten, Eleven, Thirteen, Fourteen, and Sixteen of the Amended and
Restated Articles of Incorporation of Summit Bank Corporation and (ii)
Articles Two, Three, Eight, Ten, and Eleven of the amended Bylaws of
Summit Bank Corporation, (incorporated by reference to Exhibits 3.1 and
3.2 respectively, to the Company's Annual Report on Form 10-K for the
year ended December 1994).
10.1* Summit Bank Corporation 1998 Stock Incentive Plan, as of February 23,
1998 (incorporated by reference to Appendix A to the Company's Proxy
Statement filed on March 18, 1998).
10.2 Form of Summit Bank Corporation Organizer's Warrant Agreement
(incorporated by reference to Exhibit 10.4 of Summit Bank Corporation's
Registration Statement on Form S-1 (Registration Number 33-16366)).
10.3 Lease Agreement dated December 3, 1993, between Baker Dennard Co.,
Lessor, and Summit National Bank, Lessee (incorporated by reference to
Exhibit 10.4 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993).
10.4 Lease agreement dated June 16, 1995, between ZML-Paces Limited
Partnership, Lessor and Summit National Bank, Lessee (incorporated by
reference to Exhibit 10.6 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995.)
19
20
10.5* Change in Control Agreement dated August 25, 1995 by and between Pin
Pin Chau, President of the Summit National Bank, and the Summit
National Bank (incorporated by reference to Exhibit 10.7 to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995.)
10.6* Change in Control Agreement dated August 25, 1995 by and between David
Yu, Chairman of the Summit National Bank, and the Summit National Bank
(incorporated by reference to Exhibit 10.8 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995.)
10.7* Change in Control Agreement dated August 25, 1995 by and between Alec
Dudley, Executive Vice President of the Summit National Bank, and the
Summit National Bank (incorporated by reference to Exhibit 10.9 to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995.)
10.8* Change in Control Agreement dated August 25, 1995 by and between Gary
McClung, Executive Vice President of the Summit National Bank, and the
Summit National Bank (incorporated by reference to Exhibit 10.9 to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995.)
10.9 Agreement to purchase real estate dated December 18, 1995 between SBC
Properties, L.L.C. (as agent for the Summit National Bank) and SunTrust
Bank, Atlanta (incorporated by reference to Exhibit 10.10 to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995.)
10.10 Agreement to purchase real estate dated June 20, 1996 between The
Summit National Bank and NationsBank, NA. (incorporated by reference to
Exhibit 10.11 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996.)
11.1 Statement Regarding Computation of Per Share Earnings
13.1 Annual Report to Shareholders
21.1 Subsidiaries of Summit Bank Corporation (incorporated by reference to
Exhibit 21.1 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996).
23.1 Consent of Independent Public Accountants
27.1 Financial Data Schedule (for SEC use only)
* Denotes a management contract, compensatory plan or arrangement.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the last quarter of 1998.
20
21
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.
SUMMIT BANK CORPORATION
By /s/ David Yu
----------------------------------------
David Yu, President, and
Chief Executive Officer
Date March 24, 1999
SIGNATURES
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.
/s/ David Yu Director, President and Chief Dated: March 24, 1999
- ------------------------------------- Executive Officer
David Yu
/s/ Pin Pin Chau Director, Executive Dated: March 24, 1999
- ------------------------------------- Vice President
Pin Pin Chau
/s/ Gary K. McClung Principal Financial Officer Dated: March 24, 1999
- ------------------------------------- and Principal Accounting
Gary K. McClung Officer and Secretary
/s/ Jack N. Halpern Director, Chairman Dated: March 24, 1999
- ------------------------------------- of the Board
Jack N. Halpern
/s/ Gerald L. Allison Director, Dated: March 24, 1999
- ------------------------------------- Vice Chairman
Gerald L. Allison of the Board
/s/ Aaron I. Alembik Director Dated: March 25, 1999
- -------------------------------------
Aaron I. Alembik
Director Dated:
- -------------------------------------
Paul C.Y. Chu
/s/ Peter M. Cohen Director Dated: March 25, 1999
- -------------------------------------
Peter M. Cohen
/s/ Jose I. Gonzalez Director Dated: March 24, 1999
- -------------------------------------
Jose I. Gonzalez
/s/ Donald R. Harkleroad Director Dated: March 25, 1999
- -------------------------------------
Donald R. Harkleroad
/s/ Daniel T. Huang Director Dated: March 24, 1999
- -------------------------------------
Daniel T. Huang
21
22
/s/ Shafik H. Ladha Director Dated: March 25, 1999
- -------------------------------------
Shafik H. Ladha
/s/ James S. Lai Director Dated: March 24, 1999
- -------------------------------------
James S. Lai
/s/ Sion Nyen Lai Director Dated: March 25, 1999
- -------------------------------------
Sion Nyen (Francis) Lai
/s/ Shih Chien Lo Director Dated: March 25, 1999
- -------------------------------------
Shih Chien (Raymond) Lo
/s/ Nack Paek Director Dated: March 24, 1999
- -------------------------------------
Nack Paek
/s/ Carl L. Patrick, Jr. Director Dated: March 24, 1999
- -------------------------------------
Carl L. Patrick, Jr.
- ------------------------------------- Director Dated:
Cecil M. Phillips
/s/ W. Clayton Sparrow, Jr. Director Dated: March 24, 1999
- -------------------------------------
W. Clayton Sparrow, Jr.
- ------------------------------------- Director Dated:
Howard H. L. Tai
/s/ P. Carl Unger Director Dated: March 24, 1999
- -------------------------------------
P. Carl Unger
22
23
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description Pages
2.1 Agreement and Plan of Merger by and between The Summit National
Bank and California Security Bank dated as of March 27, 1998
(incorporated by reference to Exhibit 2.1 of Summit Bank
Corporation's Current Report on Form 8-K dated March 27, 1998.)
3.1 Amended and Restated Articles of Incorporation of Summit Bank
Corporation (incorporated by reference to Exhibit 3.2 of Summit
Bank Corporation's Registration Statement on Form S-1, Amendment
No. 3 (Registration Number 33-16366).
3.2 Bylaws of Summit Bank Corporation, as amended (incorporated by
reference to Exhibit 3.2 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1987.)
4.1 The rights of security holders are defined in (i) Articles Five,
Six, Nine, Ten, Eleven, Thirteen, Fourteen, and Sixteen of the
Amended and Restated Articles of Incorporation of Summit Bank
Corporation and (ii) Articles Two, Three, Eight, Ten, and Eleven
of the amended Bylaws of Summit Bank Corporation, as provided in
Exhibits 3.1 and 3.2 respectively.
10.1 Summit Bank Corporation 1998 Stock Incentive Plan, as of February
23, 1998 (incorporated by reference to Appendix A to the
Company's Proxy Statement filed on March 18, 1998).
10.2 Form of Summit Bank Corporation Organizer's Warrant Agreement
(incorporated by reference to Exhibit 10.4 of Summit Bank
Corporation's Registration Statement on Form S-1 (Registration
Number 33-16366).
10.3 Lease Agreement dated December 3, 1993, between Baker Dennard
Co., Lessor, and Summit National Bank, Lessee (incorporated by
reference to Exhibit 10.4 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993).
10.4 Lease agreement dated June 16, 1995, between ZML-Paces Limited
Partnership, Lessor and Summit National Bank, Lessee
(incorporated by reference to Exhibit 10.6 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1995.)
10.5 Change in Control Agreement dated August 25, 1995 by and between
Pin Pin Chau, President of the Summit National Bank, and the
Summit National Bank (incorporated by reference to Exhibit 10.7
to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995.)
10.6 Change in Control Agreement dated August 25, 1995 by and between
David Yu, Chairman of the Summit National Bank, and the Summit
National Bank (incorporated by reference to Exhibit 10.8 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.)
10.7 Change in Control Agreement dated August 25, 1995 by and between
Alec Dudley, Executive Vice President of the Summit National
Bank, and the Summit National Bank (incorporated by reference to
Exhibit 10.9 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995.)
10.8 Change in Control Agreement dated August 25, 1995 by and between
Gary McClung, Executive Vice President of the Summit National
Bank, and the Summit National Bank (incorporated by reference to
Exhibit 10.9 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995.)
10.9 Agreement to purchase real estate dated December 18, 1995 between
SBC Properties, L.L.C. (as agent for the Summit National Bank)
and SunTrust Bank, Atlanta (incorporated by reference to Exhibit
10.10 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995.)
23
24
10.10 Agreement to purchase real estate dated June 20, 1996 between The
Summit National Bank and NationsBank, NA. (incorporated by
reference to Exhibit 10.11 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996.)
11.1 Statement Regarding Computation of Per Share Earnings 25
13.1 Annual Report to Shareholders 26
21.1 Subsidiaries of Summit Bank Corporation (incorporated by
reference to Exhibit 21.1 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996).
23.1 Consent of Independent Public Accountants 70
27.1 Financial Data Schedule (for SEC use only) 71
24