U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the quarterly period ended September 30, 1999
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 0-23235
Success Bancshares, Inc.
(Exact name of registrant as specified in its charter)
Delaware 36-34976644
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Marriott Drive, Lincolnshire, IL 60069
(Address of Principal Executive Offices) (Zip Code)
(847) 279-9000
(Registrant's telephone number, including area code)
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 of 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 No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock: 2,804,284 shares $0.001 par value, outstanding as of November 3,
1999.
Table of Contents
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets 1
Consolidated Statements of Income 2
Consolidated Statements of Cash Flow 3
Footnotes to Unaudited Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5 - 11
Item 3. Quantitative and Qualitative Disclosures about
Market Risk Not Applicable 12
Part II. OTHER INFORMATION
Item 6. (a) Exhibits 13 - 15
(b) Reports of Form 8-K
None
Form 10-Q Signature Page 16
Success Bancshares, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, 1999 and December 31, 1998
September 30, December 31
1999 1998
----------- ----------
(Unaudited)
ASSETS (In thousands)
Cash and cash equivalents $ 24,882 $ 38,824
Securities available-for-sale 37,180 41,037
Real estate loans held-for-sale 86 1,006
Loans, less allowance for loan losses
of $3,492 at September 30, 1999,
and $3,824 at December 31, 1998 387,769 371,263
Premises and equipment, net 10,849 11,362
Interest receivable 2,945 2,699
Other real estate owned - 435
Other assets 4,997 3,852
--------- ---------
$468,708 $470,478
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Non-interest bearing deposits $ 57,178 $ 53,557
Interest bearing deposits 339,019 345,178
--------- ---------
Total deposits 396,197 398,735
Federal Home Loan Bank advances 13,309 15,491
Securities sold under repurchase agreements 6,486 5,136
Demand notes payable to U.S. Government 3,139 886
Trust preferred securities 15,000 15,000
Interest payable and other liabilities 3,133 2,906
-------- -------
Total liabilities 437,264 438,154
Shareholders' equity
Preferred stock, $0.001 par value, 1,000,000
shares authorized, none issued 0 0
Common stock, $0.001 par value, 7,500,000
shares authorized, At September 30, 1999: 3,074,326
shares issued and 2,820,700 shares outstanding
At December 31, 1998: 2,959,236 shares issued
and outstanding, 3 3
Additional paid-in capital 25,346 24,528
Retained earnings 8,856 7,556
Treasury Stock (2,626) -
Loan to Employee Stock Ownership Plan (113) (113)
Unearned compensation (53) (92)
Accumulated other comprehensive income 31 442
-------- ---------
Total shareholders' equity 31,444 32,324
-------- --------
Total liabilities and
shareholders' equity $468,708 $470,478
========= ========
See accompanying notes to Unaudited Consolidated Financial Statements
Success Bancshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30
1999 1998 1999 1998
--------- --------- -------- --------
(In thousands, except share data)
Interest income:
Loans (including fee income) $ 7,902 $ 7,528 $23,110 $20,997
Investment securities:
Taxable 374 653 1,139 1,936
Exempt from federal income tax 151 103 463 384
Other interest income 320 111 490 441
-------- -------- ------- -------
8,747 8,395 25,202 23,758
Interest expense:
Deposits 3,700 3,959 10,978 11,334
Trust preferred securities 336 336 1,007 492
Other borrowings 264 257 842 806
-------- -------- ------- --------
4,300 4,552 12,827 12,632
-------- -------- ------- -------
Net interest income 4,447 3,843 12,375 11,126
Provision for loan losses 150 1,141 450 1,618
-------- -------- ------- ------
Net interest income after provision
for loan losses 4,297 2,702 11,925 9,508
Other operating income:
Service charges on deposit accounts 567 502 1,577 1,538
Gain on sale of loans 34 - 182 17
Gain on sale of other assets 9 - 14 16
Credit card processing income (expense) (13) (7) (28) 12
Other noninterest income 215 1,079 616 1,199
-------- -------- -------- -------
812 1,574 2,361 2,782
Other operating expenses:
Salaries and employee benefits 2,324 2,412 6,722 6,274
Occupancy and equipment expense 816 737 2,456 1,909
Data processing 199 173 603 542
Other noninterest expenses 931 1,288 2,660 2,996
-------- -------- ------- -------
4,270 4,610 12,441 11,721
-------- -------- ------- -------
Income before income taxes 839 (334) 1,845 569
Income tax expense 273 (578) 546 (378)
-------- -------- ------- -------
Net income $ 566 $ 244 $ 1,299 $ 947
======== ======== ======= ======
Basic earnings per share $0.20 $0.08 $0.45 $0.32
Diluted earnings per share $0.20 $0.08 $0.45 $0.31
See accompanying notes to Unaudited Consolidated Financial Statements
Success Bancshares, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1999 and 1998
(Unaudited)
1999 1998
(In thousands)
Net cash provided by operating activities $ 2,274 $ 4,270
Cash flows from investing activities:
Proceeds from maturities of available-for-sale
securities 9,602 10,561
Purchase of available-for-sale securities (6,381) (8,464)
Proceeds from maturities of held-to-maturity
securities - 4,594
Purchase of held-to-maturity securities - (3,000)
Purchase of other real estate owned - (1,269)
Proceeds from sale of other real estate owned 440 369
Net decrease (increase) in loans (16,036) (71,222)
Premises and equipment expenditures (627) (2,681)
-------- --------
Net cash (used in) investing activities (13,002) (71,112)
-------- --------
Cash flows from financing activities:
Increase in non-interest
bearing deposits 3,621 3,057
Increase (decrease) in interest
bearing deposits (6,159) 53,084
Increase in demand notes payable to U.S.
Government 2,253 (244)
Increase in securities sold under
agreements to repurchase 1,350 9
Net increase (decrease) in Federal Home
Loan Bank advances (2,182) (171)
Repayments of convertible subordinated
debentures - (200)
Issuance of Trust Preferred Securities - 15,000
Issuance of common stock 586 251
Purchase of common stock for treasury (2,683) -
Principal payment on ESOP loan - 20
-------- -------
Net cash provided by (used in)
financing activities (3,214) 70,806
-------- -------
Increase (decrease) in cash and cash equivalents (13,942) 3,964
Cash and cash equivalents at beginning of period 38,824 23,901
-------- --------
Cash and cash equivalents at end of period $24,882 $27,865
======= =======
See accompanying notes to the Unaudited Consolidated Financial Statements.
NOTE 1: Basis of Presentation
The financial information of Success Bancshares, Inc. and subsidiaries (the
Company) included herein is unaudited; however, such information reflects all
adjustments (consisting of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair statement of results for the
interim periods. The interim financial statements should be read in
conjunction with the Company's Annual Report and Form 10-K for the period
ending December 31, 1998. The results of the interim period ended September
30, 1999 are not necessarily indicative of the results expected for the year
ended December 31, 1999.
NOTE 2: Recent Accounting Developments
In June 1999, The Financial Accounting Standards Board issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities _ Deferral of the
Effective Date of FASB Statement No. 133_ which delays the effective date for
all fiscal quarters of all fiscal years to periods beginning after June 15,
2000. Management does not believe that the adoption of SFAS No. 133 will have
a material impact on the Company's consolidated financial condition or results
of operation.
NOTE 3: Earnings Per Share
Basic earnings per share are computed by dividing net income, after deducting
any dividends on preferred stock, by the weighted average number of common
shares outstanding. Diluted earnings per share assumes the exercise of any
dilutive instruments, including stock options and convertible subordinated
debt.
The following tables summarize the computation of earnings per share for the
periods indicated:
For the Three Months Ended September 30,
1999 1998
Income Share Per-Share Income Share Per-Share
Numerator Denominator Amt Numerator Denominator Amt
- ------------------------------------------------------------------------------
(In thousands, except per share amounts)
Net income $566 $244
Less: Preferred stock
dividends - -
------ -----
Basic EPS
Income available to common
stockholders 566 2,847 $0.20 244 2,951 $0.08
Effect of Dilutive Securities
Options - 2 - 136
------ ------ ------ ------
Diluted EPS
Income available to common
stockholders + assumed
conversions $566 $2,849 $0.20 $244 $3,087 $0.08
====== ====== ====== ====== ====== ======
For the Nine Months Ended September 30,
1999 1998
Income Share Per-Share Income Share Per-Share
Numerator Denominator Amt Numerator Denominator Amt
- ------------------------------------------------------------------------------
(In thousands, except per share amounts)
Net income $1,299 $947
Less: Preferred stock
dividends - -
------ -----
Basic EPS
Income available to common
stockholders 1,299 2,908 $0.45 947 2,934 $0.32
Effect of Dilutive Securities
Options - 1 - 134
Convertible subordinated
debt - - 4 13
------ ------ ------ ------
Diluted EPS
Income available to common
stockholders + assumed
conversions $1,299 $2,909 $0.45 $951 $3,081 $0.31
====== ====== ====== ====== ====== ======
NOTE 4: Comprehensive Income
For the three and nine month periods ended September 30, 1999 accumulated other
comprehensive income decreased $114,000 and $411,000, respectively. For the
comparable periods in 1998, accumulated other comprehensive income increased
$12,000 and $90,000, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
General
The Company's principal business is conducted by its wholly owned subsidiary,
Success National Bank (the "Bank") and consists of full service community
banking. The Bank is headquartered in Lincolnshire, Illinois located
approximately 35 miles north of downtown Chicago, and, in addition to its
headquarters, has eleven branch offices. These banking facilities are located
in Deerfield (2), Libertyville (2), Lincolnwood (2), Chicago (2) (Lincoln Park
and downtown), Arlington Heights, Skokie and Northbrook.
The profitability of the Company's operations depends primarily on its net
interest income, provision for loan losses, other operating income, and other
operating expenses. Net interest income is the difference between the income
the Company receives on its loan and investment portfolios and its cost of
funds, which consists of interest paid on deposits and borrowings. The
provision for loan losses reflects the cost associated with the level of credit
risk in the Company's loan portfolio. Other operating income consists of
service charges on deposit accounts, securities gains, gains on sale of loans,
net credit card processing income and other fees and commissions. Other
operating expenses include salaries and employee benefits, occupancy and
equipment expenses, data processing and other non-interest expenses.
Net interest income is dependent on the amounts and yields of interest earning
assets as compared to the amounts of and rates on interest bearing liabilities.
Net interest income is sensitive to changes in market rates of interest and the
Company's asset/liability management procedures in coping with such changes.
The provision for loan losses is dependent on increases in the loan portfolio,
management's assessment of the collectibility of loans in the portfolio, as
well as economic and market factors. Other operating expenses are heavily
influenced by the growth of operations, with additional employees necessary to
staff and open new branch facilities and marketing expenses necessary to
promote such facilities. Growth in the number of account relationships
directly affects such expenses as data processing costs, supplies, postage and
other miscellaneous expenses.
Results of Operations
For the three months ended September 30, 1999, net income was $566,000 or $0.20
per share on a diluted basis, an increase of 132.0% from the net income of
$244,000 or $0.08 per diluted share for the same period in 1998. For the first
nine months of 1999, net income was $1.3 million or $0.45 per diluted share, an
increase of 37.2% from the net income of $947,000 or $0.25 per diluted share
for the comparable period in 1998.
Net Interest Income
The major source of earnings for the Company is net interest income. The
related net interest margin represents the net interest income expressed as a
percentage of average interest earning assets during the period. The following
table sets forth information relating to the Company's consolidated average
balance sheets and reflects the average yield on assets and cost of liabilities
for the nine month periods ended September 30, 1999 and 1998. The yields and
costs include adjustments for accretion and amortization of deferred fees and
costs.
Nine Months Ended September 30,
1999 1998
Average Average Average Average
Assets Balance Interest Rate Balance Interest Rate
- ------------------------------------------------------------------------------
(Dollars in thousands)
Loans (1)(2) $372,793$23,129 8.27%$318,222$20,997 8.80%
Taxable investment securities 26,343 1,139 5.76 42,141 1,936 6.13
Investment securities exempt from
Federal income tax (1) 13,010 701 7.18 12,565 692 7.34
Interest bearing deposits with
financial institutions 4,512 164 4.85 5,493 223 5.41
Other interest earning assets 8,587 326 5.06 5,301 218 5.48
--------------- ------ ------ ------ ------
Total interest earning assets $425,245$25,459 7.98 $383,722$24,066 8.36
Non-interest earning assets 36,191 33,054
------ ------
Total Assets $461,436 $416,776
======= =======
Liabilities & Shareholders' Equity
Deposits:
NOW & money market accounts $166,431 $4,936 3.95%$125,789$3,697 3.92%
Savings deposits 22,986 353 2.05 20,868 500 3.19
Time deposits 143,920 5,689 5.27 163,075 7,137 5.84
Other borrowings 37,690 1,849 6.54 26,489 1,298 6.53
------ ------ ------ ------ ------ ------
Total interest bearing
liabilities 317,027 12,827 4.61 336,221 12,632 5.01
Demand deposits - non-interest
bearing 55,583 46,514
Other non-interest bearing
liabilities 2,907 2,674
Minority interest in
subsidiary bank - 535
Shareholders' equity 31,919 30,832
------ ------
Total liabilities & shareholders'
equity $461,436 $416,776
======= =======
Net Interest Income $12,632 $11,434
======= =======
Net Yield on Interest Earning Assets 3.96% 3.97%
====== ======
(1) Tax exempt income as reflected on a fully tax equivalent basis utilizing a
34% rate for all years presented.
(2) Non-accrual loans are included in average loans.
The Company's annualized net interest margin for the nine months ended
September 30, 1999 was 3.96% as compared to 3.97% for the same period in 1998.
For the quarter ended September 30, 1999 the Company's annualized net interest
margin was 4.14% as compared 3.92% for the quarter ended September 30, 1998.
Management attributes the increase in part to the conversion of non-interest
earnings assets into interest earning assets as evidenced by an increase in the
ratio of interest earning assets to total assets from 91.4% at December 31,
1998 to 93.5% at September 30, 1999. In addition, the Company experienced
strong commercial and commercial real estate loan demand during the quarter
which provided a significant improvement in rate over the rates received for
overnight federal fund sales.
The following table represents a reconciliation of fully tax equivalent net
interest income.
(In thousands)
Fully tax equivalent net interest income for the
nine months ended September 30, 1998 $11,434
Change due to average balance fluctuations 1,858
Change due to interest rate fluctuations (660)
------
Fully tax equivalent net interest income for the
nine months ended September 30, 1999 $12,632
======
Other Operating Income
Other operating income was $812,000 and $2.4 million for the quarterly and nine
month periods ended September 30, 1999, respectively, as compared to $1.6
million and $2.8 million for the comparable periods in 1998. During the
quarter ended September 30, 1998, the Company recorded $1.0 million of income
from life insurance proceeds related to the death of the Company's former
president and CEO. During the quarter ended September 30, 1999, gain on sale
of loans was $34,000 versus $-0- for the comparable quarter in 1998. For the
nine month period ended September 30, 1999, gain on sale of loans was $182,000
as compared to $17,000 for the same period in 1998. Until late in 1998,
residential loans were originated and held in the Company's loan portfolio.
For the nine month period ended September 30, 1999, excluding the impact of the
life insurance proceeds recorded in 1998, other non-interest income increased
$417,000, or 209.5%, to $616,000 over the comparable period in 1998. The
increase was primarily the result of the Company having received a lawsuit
settlement of $70,000 and having settled monthly billing claims and conversion
related charges with its service provider resulting in the reduction of
previously accrued expenses by $94,000.
Other Operating Expenses
Other operating expenses were $4.3 million and $12.4 million for the three and
nine-month periods ended September 30, 1999, respectively, as compared with
$4.6 million and $11.7 million for the comparable periods, respectively, in
1998. For the quarter ended September 30, 1998 the Company recorded final
contractual compensation expense of $350 thousand related to the death of the
Company's former president and CEO. Excluding the compensation expense
reflected in 1998, other operating expense for the quarter and year ended
September 30, 1999 increased 0.2% and 9.4% over the comparable periods in 1998.
Salaries and benefits expense, excluding the final contractual compensation
expense recorded in the quarter ended September 30, 1998, increased $262
thousand, or 12.7%, to $2.3 million for the current quarter as compared to the
same period in 1998. For the current year, salary and benefits expense,
excluding the final contractual compensation expense recorded in the quarter
ended September 30, 1998, increased $798 thousand, or 13.5% over the comparable
period in 1998. Occupancy expense increased $79 thousand, or 10.7%, to $816
thousand for the quarter ended September 30, 1999 versus the comparable period
in 1998. For the nine-month period ended September 30, 1999, occupancy expense
increased $547 thousand, or 28.7%, to $2.5 million over the same period in
1998. The higher level of salary and benefits expense and occupancy expense
generally reflects the expenditures made to support the Company's branch
expansion. Since the Company opened two new branches in 1998 and one in 1999,
the expenses associated with these branches were not fully reflected in 1998.
Other non-interest expense was $931 thousand and $2.7 million for the quarter
and year ended September 30, 1999, respectively, as compared to $1.3 million
and $3.0 million for the comparable periods in 1998.
Financial Condition
Loans
The loan portfolio is the largest category of the Company's interest earning
assets. At September 30, 1999 total loans were $391.3 million, an increase of
$16.2 million, or 4.3% from the $375.1 million at December 31, 1998. As the
table below indicates, the growth in the loan portfolio is primarily attributed
to the commercial and real estate mortgage categories which increased $3.3
million and $17.7 million, respectively. Home equity loans outstanding
decreased $4.5 million.
The following table sets forth the composition of the loan portfolio:
September 30, 1999 December 31, 1998
Percent of Percent of
Amount Portfolio Amount Portfolio
--------- --------- --------- --------
(Dollars in thousands)
Commercial $105,886 27.06% $102,592 27.34%
Real estate - construction 16,547 4.23 15,517 4.14
Real estate - mortgage 186,486 47.66 168,833 45.00
Home equity 73,927 18.89 78,384 20.89
Installment 8,123 2.08 9,471 2.52
Credit cards 330 .08 418 .11
------- ------- -------- -------
Total gross loans 391,299 100.00% 375,215 100.00%
======= ========
Net deferred loan fees 152 135
Unaccreted discount resulting
from loss on transfer of loans
held-for-sale to portfolio (190) (263)
------- --------
Loans net of unaccreted discount
and net deferred loan fees 391,261 375,087
Allowance for loan losses (3,492) (3,824)
-------- -------
Net loans $387,769 $371,263
======= =======
Allowance to gross loans 0.89% 1.02%
Non-Performing Loans
The following table presents a summary of book value of non-performing assets
which includes (a) non-performing loans and (b) other real estate owned.
Non-performing loans include: (1) loans accounted for on a non-accrual basis;
(2) accruing loans contractually past due 90 days or more as to interest or
principal payment; and (3) loans whose terms have been renegotiated to provide
a reduction or deferral of interest or principal because of a deterioration in
the financial position of the borrower. The Company has a reporting and
control system to monitor non-performing loans.
Loans with principal or interest payments contractually due but not yet paid
are reviewed by senior management on a weekly basis and are placed on
non-accrual status when scheduled payments remain unpaid for 90 days or more,
unless the loan is both well-secured and in the process of collection.
Interest income on non-accrual loans is recorded when actually received in
contrast to the accrual basis, which records income over the period in which it
is earned, regardless of when it is received.
September 30, December 31,
1999 1998
(Dollars in thousands)
Non-performing loans:
Non-accrual $1.710 $ 268
90 days or more past due, still accruing 127 81
Restructured - -
------ -------
Total non-performing loans 1,837 349
Other real estate owned - 435
------ -------
$1,837 $ 784
====== ======
Non-performing loans to total loans,
net of unearned discount and net deferred loan fees 0.47% 0.09%
Non-performing loans to allowance for loan losses 52.61% 9.13%
The increase in non-performing loans of $1.5 million from December 31, 1998 to
September 30, 1999 is primarily the result of the deterioration of two loans in
the amounts of $1.2 million and $870,000 to one customer and related interests.
As of September 30, 1999, $650,000 of the combined $2.1 million was
charged-off. In addition, in early October 1999 the Company received payment
in full, including all interest, late charges and costs associated with the
$1.2 million loan. Since the other affected loan involves a forgery, a claim
has been initiated with the Company's bond carrier. The current book balance
of the $870,000 loan is $220,000. The remaining non-accrual loan balance of
$309,000 is comprised of five individual loans.
Potential Problem Loans
In addition to those loans disclosed under "Non-performing Loans," there are
certain loans in the portfolio which management has identified through its
problem loan identification system which exhibit a higher than normal credit
risk. However, these loans do not represent non-performing loans to the
Company. Management's review of the total loan portfolio to identify loans
where there is concern that the borrower will not be able to continue to
satisfy present loan repayment terms includes factors such as review of
individual loans, recent loss experience and current economic conditions.
Loans in this category include those with characteristics such as those that
have recent adverse operating cash flow or balance sheet trends, or have
general risk characteristics that the loan officer believes might jeopardize
the future timely collection of principal and interest payments. The principal
amount of loans in this category as of September 30, 1999 and December 31, 1998
were approximately $1.3 million and $812,000, respectively. At September 30,
1999, there were no significant loans which were classified by any bank
regulatory agency that are not included above as non-performing or as a
potential problem loan.
Allowance for Loan Losses
The allowance for loan losses is maintained at a level considered adequate to
provide for potential future losses in the Company's loan portfolio. The level
of the allowance is based upon management's periodic and comprehensive
evaluation of the loan portfolio. Reports of Examination furnished by Federal
banking authorities are also considered by management in this regard. The
evaluations by management in assessing the adequacy of the allowance include
consideration of past loan loss experience, changes in the composition of the
loan portfolio, the volume and condition of loans outstanding and current
market and economic conditions.
Loans are charged to the allowance for loan losses when deemed uncollectible by
management, unless sufficient collateral exists to repay the loan.
The following table summarizes transactions in the allowance for loan losses
for the periods indicated:
Nine Months Ended
September 30,
1999 1998
(Dollars in thousands)
Allowance at beginning of period $3,824 $2,079
Provision for loan losses 450 477
Recoveries on loans previously charged off 6 6
Loans charged-off (788) (18)
----- ------
Balance at end of year $3,492 $2,544
====== ======
Allowance as a % of total loans, net of
unearned discount and net deferred loan fees 0.89% 0.77%
Ratio of net charge-offs to average loans
outstanding (annualized) 0.28% 0.01%
Control of the Company's loan quality is continually monitored by management
and is reviewed by the Board of Directors and loan committee of the Bank on a
monthly basis, subject to oversight by the Company's Board of Directors through
its members who serve on the loan committee. Independent external review of
the loan portfolio is provided by the examinations conducted by regulatory
authorities and through the Company's independent public accountants in
conjunction with the Company's annual audit. The amount of additions to the
allowance for possible loan losses, which is charged to earnings through the
provision for loan losses, is determined based on a variety of factors,
including actual charge-offs during the year, historical loss experience and
delinquent loans. Although management believes the allowance for possible loan
losses is adequate to cover any potential losses, there can be no assurance
that the allowance will prove sufficient to cover actual loan losses in the
future.
Deposits
The following table sets forth deposits at the periods indicated:
September 30, Percent December 31,Percent
1999 or Deposits 1998 of Deposits
(Dollars in thousands)
NOW and money market accounts $169,078 42.68% $166,421 41.74%
Savings deposits 22,683 5.73 22,686 5.69
Time deposits 147,258 37.17 156,071 39.14
Demand deposits 57,178 14.43 53,557 13.43
-------- -------- ------- -------
Total $396,197 100.00% $398,735 100.00%
======= ======== ======= =======
Liquidity and Capital Resources
Shareholders' Equity and Capital Standards
The Company and the Bank are subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory, and possibly additional
discretionary, actions by regulators that, if undertaken, could have a direct
material effect on the Company's growth and financial condition. The
regulations require the Company and the Bank to meet specific capital adequacy
guidelines that involve quantitative measures of assets, liabilities, and
certain off-balance-sheet items as calculated under regulatory accounting
principles. The capital classifications are also subject to qualitative
judgments by the regulators about risk weightings and other factors.
Quantitative measures established by Federal regulations to ensure capital
adequacy require the Company and the Bank to maintain minimum ratios (set forth
in the table below) of Tier I capital (as defined in the regulations) to total
average assets (as defined in the regulations). As of September 30, 1999, the
Company's actual total capital to risk-weighted assets ratio was 14.42%. As of
September 30, 1999, the ratio of the Bank's total capital to risk-weighted
assets was 11.65% indicating that the Bank is considered "well capitalized."
The required ratios and the Company's and Bank's actual ratios at September 30,
1999, are presented below:
To Be Well Capitalized
For Capital Under Prompt Corrective
Actual Adequacy Purposes Action Provisions
Actual Ratio Actual Ratio Actual Ratio
(Dollars in thousands)
As of September 30, 1999
Total Capital (to Risk
Weighted Assets):
Consolidated $49,905 14.42% $27.692 8.0% Not Applicable
Bank 40,019 11.65 27,491 8.0 $34,364 10.0%
Tier 1 Capital (to Risk
Weighted Assets):
Consolidated 41,884 12.10 13,846 4.0 Not Applicable
Bank 36,527 10.63 13,746 4.0 20,619 6.0
Tier 1 Capital (To
Total Average Assets):
Consolidated 41,884 9.08 18,457 4.0 Not Applicable
Bank $36,527 7.94% $18,391 4.0% $22,989 5.0%
Operating Investing and Financing Activities
Liquidity management at the Bank involves planning to meet anticipated funding
needs at a reasonable cost. Liquidity management is guided by policies
formulated and monitored by the Company's senior management and the Bank's
asset/liability committee, which take into account the marketability of assets,
the sources and stability of funding and the level of unfunded commitments.
The Bank's principal sources of funds are deposits, short-term borrowings and
capital contributions by the Company. Borrowings by the Bank from the Federal
Reserve Bank of Chicago and Federal Home Loan Bank of Chicago provide
additional available sources of liquidity.
The Bank's core deposits, the most stable source of liquidity for community
banks due to the nature of long-term relationships generally established with
depositors and the security of deposit insurance provided by the FDIC, are
available to provide long-term liquidity. At September 30, 1999 and December
31, 1998, 39.58% and 38.96%, respectively, of the Company's total assets were
funded by NOW accounts and demand deposits.
Liquid assets refer to money market assets such as cash and due from banks,
federal funds sold and interest bearing time deposits with financial
institutions, as well as securities available for sale and securities
held-to-maturity with a remaining maturity less than one year. Net liquid
assets represent the sum of the liquid asset categories less the amount of
assets pledged to secure public funds. As of September 30, 1999 and December
31, 1998, net liquid assets totaled approximately $29.7 million and $52.7
million, respectively.
The Company's cash flows are composed of three classifications: cash flows
from operating activities, cash flows from investing activities, and cash flows
from financing activities. Net cash provided by operating activities consists
primarily of earnings. Net cash used in investing activities, consisting
primarily of loan and investment funding, was $13.0 million at September 30,
1999 as compared to cash used of $71.1 million for the same period in 1998.
The decreased usage is primarily attributed to a decline in loan volume in
1999. Net cash used in financing activities, consisting primarily of deposit
activities, was $3.2 million at September 30, 1999 as compared to cash provided
of $70.8 million at September 30, 1998. The decrease in cash provided is
primarily the result of a decline in deposit balances during the first nine
months of 1999 and the purchase of common stock for treasury.
Year 2000 Issue
The year 2000 will be the first century date change ever for an automated
society. For years, information systems were designed using a two-digit date
field. This practice has created an environment in which older generation
software programs may not be able to discern the difference between the year
2000 and the year 1900. This problem could result in the failure of computers
and/or information systems to accurately calculate the date-related accruals of
interest on the Company's loan and deposit portfolios. Due to its reliance on
both computers and information systems, in early 1998, the Company began the
process of identifying and assessing the degree to which its hardware and
software would be impacted by the date change.
A committee, comprised of representatives from all major operating areas, was
created in early 1998 to assess whether or not the Company's internal and
external systems, particularly those that are mission-critical, are year 2000
compliant. The committee has developed and adopted an action plan that
addresses the Company's year 2000 renovation, testing, contingency planning and
management review process. In addition the Company has developed a due
diligence process to monitor and evaluate the efforts of external third party
suppliers to achieve year 2000 readiness. The committee has developed and
implemented a written testing plan for both internal and external
mission-critical systems and finalized substantially all testing of internal
mission-critical systems by December 31, 1998. A business resumption
contingency plan that defines scenarios for mission-critical systems failing to
achieve year 2000 readiness and evaluates the Company's options has been
completed and will be updated as necessary.
The Company is committed to year 2000 compliance and, as such, has taken steps
to educate its customers in identifying potential year 2000 problems. A year
2000 risk assessment of borrowers with loans in excess of $100,000 has been
completed. The Company is satisfied that these borrowers represent a low year
2000 risk; however, the Company has instituted a program to assist in the
management of underwriting risk.
As of September 30, 1999, year 2000 compliance costs incurred are estimated to
be $120,000 to $125,000. It is estimated that the Company will spend $150,000
to $175,000 in total. The only remaining material expenditure the Company
expects to make relates to the replacement of the current voice response unit
estimated at $45,000. Year 2000 compliance is a complex issue and no
assurances can be given that compliance will be achieved without any unplanned
outlays that would affect future financial results.
Forward Looking Statements
Statements made about the Company's future economic performance, strategic
plans or objectives, revenues or earnings projections, or other financial items
and similar statements are not guarantees of future performance, but are
forward looking statements. By their nature, these statements are subject to
numerous uncertainties that could cause actual results to differ materially
from those in the statements. Important factors that might cause the Company's
actual results to differ materially include, but are not limited to, the
following:
. Federal and state legislative and regulatory developments;
. The impact of continued loan and deposit promotions on the Company's net
interest margin;
. The impact of opening, staffing and operating new branch facilities;
. Changes in management's estimate of the adequacy of the allowance for loan
losses;
. Changes in the level and direction of loan delinquencies and write-offs;
. Interest rate movements and their impact on customer behavior and the
Company's net interest margin;
. The impact of repricing and competitors' pricing initiatives on loan and
deposit products;
. The Company's ability to adapt successfully to technological changes to
meet customers' needs and developments in the marketplace;
. The Company's ability to access cost effective funding;
. Changes in financial markets and general economic conditions; and
. The Company's ability to achieve year 2000 compliance without incurring
material unplanned expenditures.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company's net income is dependent on its net interest income. Net interest
income is susceptible to interest rate risk to the degree that interest bearing
liabilities mature or reprice on a different basis than interest earning
assets. When interest bearing liabilities mature or reprice more quickly than
interest earning assets in a given period, a significant increase in market
rates of interest could adversely affect net interest income. Similarly, when
interest earning assets mature or reprice more quickly than interest bearing
liabilities, falling interest rates could result in a decrease in net income.
In order to evaluate its asset/liability sensitivity, management employs a
measurement tool which determines exposure to changes in interest rates by
measuring the percentage change in net interest income due to changes in rates
over a one-year time horizon. Management measures such percentage change
assuming an instantaneous permanent parallel shift in the yield curve of 100
and 200 basis points, both upward and downward. The model uses an option-based
pricing approach to estimate the sensitivity of mortgage loans. The most
significant embedded option in these types of assets is the prepayment option
of the borrowers. The model uses various prepayment assumptions depending upon
the type of mortgage instrument (residential mortgages, commercial mortgages,
mortgage-backed securities, etc.). Prepayment rates for mortgage instruments
ranged form 5 to 45 CPR (Constant Prepayment Rate) as of September 30, 1999 and
December 31, 1998. For administered rate core deposits (e.g. NOW and savings
accounts), the model utilizes interest rate floors equal to 100 basis points
below their current levels.
Utilizing this measurement concept, the interest rate risk of the Company,
expressed as a percentage change in net interest income over a one-year time
horizon due to changes in interest rates, at September 30, 1999 and December
31, 1998, was as follows:
Basis Point Change
+200 +100 -100 -200
At September 30, 1999 (3.0%) (1.5%) 1.9% (1.4)%
At December 31, 1998 (9.5%) (4.8%) 3.9% 5.6%
The Company does not currently engage in trading activities or use derivative
instruments to control interest rate risk. Although such activities may be
permitted with the approval of the Board of Directors of the Bank, the Company
does not intend to engage in such activities in the immediate future.
Interest rate risk is the most significant market risk affecting the Company.
Other types of market risk, such as foreign currency exchange rate risk and
commodity price risk, do not arise in the normal course of the Company's
business activities.
PART II: OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Exhibit Title
3.1 Second Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 of the Company's Form S-1
Registration Statement (No. 333-32561) filed with the Securities and
Exchange Commission (the "Commission") on July 31, 1997).
3.1.1 Certificates of Designations of Series B Junior Participating
Preferred Stock
3.2 By-laws of the Company (incorporated by reference to Exhibit 3.2 of
The Company's Form S-1 Registration Statement (No. 333-32561) filed
with the Commission on July 31, 1997).
3.2.1 Amendment No. 1 to By-laws
4.1 Form of Subordinated Indenture relating to the Junior Subordinated
Debentures (incorporated by reference to Exhibit 4.1 of the Form S-1
Registration Statement of the Company and Success Capital Trust I
("Success Capital") (No. 333-51271 and No. 333-51271-01) filed with
the Commission on April 28, 1998).
4.2 Form of Junior Subordinated Debenture Certificate (included as an
exhibit to Exhibit 4.1).
4.3 Certificate of Trust of Success Capital (incorporated by reference to
Exhibit 4.3 of the Form S-1 Registration Statement of the Company and
Success Capital (No. 333-51271 and 333-51271-01) filed with the
Commission on April 28, 1998).
4.4 Form of Amended and Restated Trust Agreement of Success Capital
(incorporated by reference to Exhibit 4.4 of the Form S-1
Registration Statement of the Company and Success Capital (No.
333-51271 and 333-51271-01) filed with the Commission on April 28,
1998).
4.5 Form of Trust Preferred Security Certificate of Success Capital
(included as an exhibit to Exhibit 4.4).
4.6 Form of Common Security Certificate of Success Capital (included as
an exhibit to Exhibit 4.4).
4.7 Form of Guarantee Agreement of the Company relating to the Trust
Preferred Securities (incorporated by reference to Exhibit 4.7 of the
Form S-1 Registration Statement of the Company and Success Capital
(No. 333-51271 and 333-51271-01) filed with the Commission on April
28, 1998).
4.8 Form of Rights Agreement, dated as of August 1, 1998, between the
Company and Harris Trust and Savings Bank, which includes as Exhibit
B thereto the Form of Right Certificate (incorporated by reference to
Exhibit 1 of the Company's Form 8-A Registration Statement (File No.
001-14381) filed with the Commission on August 6, 1998).
10.1 $10 Million Business Loan Agreement, dated January 13, 1997, between
the Company and Cole Taylor Bank (incorporated by reference to
Exhibit 10.1 of the Company's 1997 Annual Report on Form 10-K filed
with the Commission on March 31, 1998).
10.2 Success Bancshares, Inc. 1995 Employee Stock Option Plan
(incorporated by reference to Exhibit 10.2 of the Company's Form S-1
Registration Statement (No. 333-32561) filed with the Commission on
July 31, 1997).
10.3 Employment Agreement dated as of April 15, 1999 between the Bank and
Laurie K. Breitenstein.
10.4 Success Bancshares, Inc. 1999 Stock Option Plan (incorporated by
reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K
filed with the Commission on March 30, 1999).
10.5 Lease with respect to Lincolnwood branch banking facility (October,
1991) (incorporated by reference to Exhibit 10.5 of the Company's
Form S-1 Registration Statement (No. 333-32561) filed with the
Securities and Exchange Commission on July 31, 1997).
10.6 Lease with respect to Lincoln Park branch banking facility (April,
1993) (incorporated by reference to Exhibit 10.6 of the Company's
Form S-1 Registration Statement (No. 333-32561) filed with the
Commission on July 31, 1997).
10.7 Lease with respect to Northbrook branch banking facility (December,
1994) (incorporated by reference to Exhibit 10.7 of the Company's
Form S-1 Registration Statement (No. 333-32561) filed with the
Commission on July 31, 1997).
10.8 Lease with respect to Deerfield/Riverwoods branch banking facility
(September, 1995) (incorporated by reference to Exhibit 10.8 of the
Company's Form S-1 Registration Statement (No. 333-32561) filed with
the Commission on July 31, 1997).
10.9 Employment Agreement between the Bank and Christa N. Calabrese dated
as of August 1, 1998, as amended (incorporated by reference to
Exhibit 10.9 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.10 Employment Agreement between the Bank and Kurt C. Felde dated as of
August 1, 1998, as amended (incorporated by reference to Exhibit
10.10 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.11 Employment Agreement between the Bank and Ronald W. Tragasz dated as
of August 1,1 998, as amended (incorporated by reference to Exhibit
10.11 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.12 Employment Agreement between the Bank and Marlene Sachs dated as of
August 1, 1998 (incorporated by reference to Exhibit 10.12 of the
Company's Form 10-Q filed with the Commission on November 13, 1998).
10.13 Stock Option Agreement dated as of September 23, 1998 between the
Company and Christa N. Calabrese (incorporated by reference to
Exhibit 10.13 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.14 Stock Option Agreement dated as of June 25, 1998 between the Company
and Kurt C. Felde (incorporated by reference to Exhibit 10.14 of the
Company's Form 10-Q filed with the Commission on November 13, 1998).
10.15 Stock Option Agreement dated as of September 23, 1998 between the
Company and Ronald W. Tragasz (incorporated by reference to Exhibit
10.15 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.16 Stock Option Agreement dated as of September 23, 1998 between the
Company and Marlene Sachs (incorporated by reference to Exhibit 10.16
of the Company's Form 10-Q filed with the Commission on November 13,
1998).
10.17 Stock Option Agreement dated as of August 26, 1998 between the
Company and Sherwin Koopmans (incorporated by reference to Exhibit
10.17 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.18 Stock Option Agreement dated as of August 26, 1998 between the
Company and George M. Ohlhausen (incorporated by reference to Exhibit
10.18 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.19 Stock Option Agreement dated as of August 26, 1998 between the
Company and Charles G. Freund (incorporated by reference to Exhibit
10.19 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.20 Stock Option Agreement dated as of August 26, 1998 between the
Company and Norman D. Rich (incorporated by reference to Exhibit
10.20 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.21 Amendment No. 1 to Employment Agreement dated as of August 1, 1998
between the Bank and Marlene Sachs (incorporated by reference to
Exhibit 10.21 of the Company's Annual Report on Form 10-K filed with
the Commission on March 30, 1999).
10.22 Stock Option Agreement dated as of August 26, 1998 between the
Company and Avrom H. Goldfeder (incorporated by reference to Exhibit
10.22 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.23 Stock Option Agreement dated as of August 26, 1998 between the
Company and Glen Wherfel (incorporated by reference to Exhibit 10.23
of the Company's Form 10-Q filed with the Commission on November 13,
1998).
10.24 Employment Agreement dated as of December 16, 1998 between the Bank
and Wilbur G. Meinen (incorporated by reference to Exhibit 10.24 of
the Company's Annual Report on Form 10-K filed with the Commission on
March 30, 1999).
10.25 Stock Option Agreement dated as of December 16, 1998 between the
Company and Kurt C. Felde (incorporated by reference to Exhibit 10.25
of the Company's Annual Report on Form 10-K filed with the Commission
on March 30, 1999).
10.26 Stock Option Agreement dated as of December 16, 1998 between the
Company and Wilbur G. Meinen (incorporated by reference to Exhibit
10.26 of the Company's Annual Report on Form 10-K filed with the
Commission on March 30, 1999).
10.27 Stock Option Agreement dated as of January 27, 1999 between the
Company and Wilbur G. Meinen (incorporated by reference to Exhibit
10.27 of the Company's Annual Report on Form 10-K filed with the
Commission on March 30, 1999).
10.28 Success Bancshares, Inc. 1998 Employee Stock Purchase Plan
(incorporated by reference to Exhibit 10.28 of the Company's Annual
Report on Form 10-K filed with the Commission on March 30, 1999).
10.29 Amendment No. 1 to 1995 Stock Option Plan (incorporated by reference
to Exhibit 10.29 of the Company's Annual Report on Form 10-K filed
with the Commission on March 30, 1999).
10.30 Restricted Stock Agreement dated as of December 16, 1998 between the
Company and Wilbur G. Meinen (incorporated by reference to Exhibit
10.30 of the Company's Annual Report on Form 10-K filed with the
Commission on March 30, 1999).
10.31 Lease with respect to Chicago downtown branch banking facility (May,
1998) (incorporated by reference to Exhibit 10.31 of the Company's
Annual Report on Form 10-K filed with the Commission on March 30,
1999).
10.32 Amendment No. 2 to Employment Agreement dated as of December 16, 1998
between the Bank and Christa N. Calabrese (incorporated by reference
to Exhibit 10.32 of the Company's Form 10-Q filed with the Commission
on May 13, 1999).
10.33 Agreement dated April 28, 1999 between the Company and Ronald W.
Tragasz (incorporated by reference to Exhibit 10.34 of the Company's
Form 10-Q filed with the Commission on August 15, 1999).
10.34 Stock Option Agreement dated April 28, 1999 between the Company and
Ronald W. Tragasz (incorporated by reference to Exhibit 10.34 of the
Company's Form 10-Q filed with the Commission on August 15, 1999).
10.35 Sublease with respect to Corporate Center (April, 1999) (incorporated
by reference to Exhibit 10.34 of the Company's Form 10-Q filed with
the Commission on August 15, 1999).
(1)10.36 Stock Option Agreement dated August 25, 1999 between the Company and
Sherwin Koopmans.
(1)10.37 Stock Option Agreement dated August 25, 1999 between the Company and
Glen Wherfel.
(1)10.38 Stock Option Agreement dated August 25, 1999 between the Company and
George M. Ohlhausen.
(1)10.39 Stock Option Agreement dated August 25, 1999 between the Company and
Avrom Goldfeder.
(1)10.40 Stock Option Agreement dated August 25, 1999 between the Company and
Charles Freund.
(1)10.41 Stock Option Agreement dated August 25, 1999 between the Company and
Norman Rich.
(1)27.1 Financial Data Schedule.
(1) Filed herewith
(b) Reports on Form 8K
None
Signatures
Pursuant to the requirements 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.
Success Bancshares, Inc.
(Registrant)
November 10, 1999 /s/
- ----------------------- ----------------------------
Date Wilbur G. Meinen
President & Chief Executive Officer
November 10, 1999 /s/
- ------------------------- --------------------------------
Date Kurt C. Felde
Executive Vice President
& Chief Financial Officer
EXHIBIT INDEX
Exhibit
Number Exhibit Title
3.1 Second Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 of the Company's Form S-1
Registration Statement (No. 333-32561) filed with the Securities and
Exchange Commission the ("Commission") on July 31, 1997).
3.1.1 Certificates of Designations of Series B Junior Participating
Preferred Stock
3.2 By-laws of the Company (incorporated by reference to Exhibit 3.2 of
The Company's Form S-1 Registration Statement (No. 333-32561) filed
with the Commission on July 31, 1997).
3.2.1 Amendment No. 1 to By-laws
4.1 Form of Subordinated Indenture relating to the Junior Subordinated
Debentures (incorporated by reference to Exhibit 4.1 of the Form S-1
Registration Statement of the Company and Success Capital Trust I
("Success Capital") (No. 333-51271 and No. 333-51271-01) filed with
the Commission on April 28, 1998).
4.2 Form of Junior Subordinated Debenture Certificate (included as an
exhibit to Exhibit 4.1).
4.3 Certificate of Trust of Success Capital (incorporated by reference to
Exhibit 4.3 of the Form S-1 Registration Statement of the Company and
Success Capital (No. 333-51271 and 333-51271-01) filed with the
Commission on April 28, 1998).
4.4 Form of Amended and Restated Trust Agreement of Success Capital
(incorporated by reference to Exhibit 4.4 of the Form S-1
Registration Statement of the Company and Success Capital (No.
333-51271 and 333-51271-01) filed with the Commission on April 28,
1998).
4.5 Form of Trust Preferred Security Certificate of Success Capital
(included as an exhibit to Exhibit 4.4).
4.6 Form of Common Security Certificate of Success Capital (included as
an exhibit to Exhibit 4.4).
4.7 Form of Guarantee Agreement of the Company relating to the Trust
Preferred Securities (incorporated by reference to Exhibit 4.7 of the
Form S-1 Registration Statement of the Company and Success Capital
(No. 333-51271 and 333-51271-01) filed with the Commission on April
28, 1998).
4.8 Form of Rights Agreement, dated as of August 1, 1998, between the
Company and Harris Trust and Savings Bank, which includes as Exhibit
B thereto the Form of Right Certificate (incorporated by reference to
Exhibit 1 of the Company's Form 8-A Registration Statement (File No.
001-14381) filed with the Commission on August 6, 1998).
10.1 $10 Million Business Loan Agreement, dated January 13, 1997, between
the Company and Cole Taylor Bank (incorporated by reference to
Exhibit 10.1 of the Company's 1997 Annual Report on Form 10-K filed
with the Commission on March 31, 1998).
10.2 Success Bancshares, Inc. 1995 Employee Stock Option Plan
(incorporated by reference to Exhibit 10.2 of the Company's Form S-1
Registration Statement (No. 333-32561) filed with the Commission on
July 31, 1997).
10.3 Employment Agreement dated as of April 15, 1999 between the Bank and
Laurie K. Breitenstein.
10.4 Success Bancshares, Inc. 1999 Stock Option Plan (incorporated by
reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K
filed with the Commission on March 30, 1999).
10.5 Lease with respect to Lincolnwood branch banking facility (October,
1991) (incorporated by reference to Exhibit 10.5 of the Company's
Form S-1 Registration Statement (No. 333-32561) filed with the
Securities and Exchange Commission on July 31, 1997).
10.6 Lease with respect to Lincoln Park branch banking facility (April,
1993) (incorporated by reference to Exhibit 10.6 of the Company's
Form S-1 Registration Statement (No. 333-32561) filed with the
Commission on July 31, 1997).
10.7 Lease with respect to Northbrook branch banking facility (December,
1994) (incorporated by reference to Exhibit 10.7 of the Company's
Form S-1 Registration Statement (No. 333-32561) filed with the
Commission on July 31, 1997).
10.8 Lease with respect to Deerfield/Riverwoods branch banking facility
(September, 1995) (incorporated by reference to Exhibit 10.8 of the
Company's Form S-1 Registration Statement (No. 333-32561) filed with
the Commission on July 31, 1997).
10.9 Employment Agreement between the Bank and Christa N. Calabrese dated
as of August 1, 1998, as amended (incorporated by reference to
Exhibit 10.9 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.10 Employment Agreement between the Bank and Kurt C. Felde dated as of
August 1, 1998, as amended (incorporated by reference to Exhibit
10.10 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.11 Employment Agreement between the Bank and Ronald W. Tragasz dated as
of August 1,1 998, as amended (incorporated by reference to Exhibit
10.11 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.12 Employment Agreement between the Bank and Marlene Sachs dated as of
August 1, 1998 (incorporated by reference to Exhibit 10.12 of the
Company's Form 10-Q filed with the Commission on November 13, 1998).
10.13 Stock Option Agreement dated as of September 23, 1998 between the
Company and Christa N. Calabrese (incorporated by reference to
Exhibit 10.13 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.14 Stock Option Agreement dated as of June 25, 1998 between the Company
and Kurt C. Felde (incorporated by reference to Exhibit 10.14 of the
Company's Form 10-Q filed with the Commission on November 13, 1998).
10.15 Stock Option Agreement dated as of September 23, 1998 between the
Company and Ronald W. Tragasz (incorporated by reference to Exhibit
10.15 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.16 Stock Option Agreement dated as of September 23, 1998 between the
Company and Marlene Sachs (incorporated by reference to Exhibit 10.16
of the Company's Form 10-Q filed with the Commission on November 13,
1998).
10.17 Stock Option Agreement dated as of August 26, 1998 between the
Company and Sherwin Koopmans (incorporated by reference to Exhibit
10.17 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.18 Stock Option Agreement dated as of August 26, 1998 between the
Company and George M. Ohlhausen (incorporated by reference to Exhibit
10.18 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.19 Stock Option Agreement dated as of August 26, 1998 between the
Company and Charles G. Freund (incorporated by reference to Exhibit
10.19 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.20 Stock Option Agreement dated as of August 26, 1998 between the
Company and Norman D. Rich (incorporated by reference to Exhibit
10.20 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.21 Amendment No. 1 to Employment Agreement dated as of August 1, 1998
between the Bank and Marlene Sachs (incorporated by reference to
Exhibit 10.21 of the Company's Annual Report on Form 10-K filed with
the Commission on March 30, 1999).
10.22 Stock Option Agreement dated as of August 26, 1998 between the
Company and Avrom H. Goldfeder (incorporated by reference to Exhibit
10.22 of the Company's Form 10-Q filed with the Commission on
November 13, 1998).
10.23 Stock Option Agreement dated as of August 26, 1998 between the
Company and Glen Wherfel (incorporated by reference to Exhibit 10.23
of the Company's Form 10-Q filed with the Commission on November 13,
1998).
10.24 Employment Agreement dated as of December 16, 1998 between the Bank
and Wilbur G. Meinen (incorporated by reference to Exhibit 10.24 of
the Company's Annual Report on Form 10-K filed with the Commission on
March 30, 1999).
10.25 Stock Option Agreement dated as of December 16, 1998 between the
Company and Kurt C. Felde (incorporated by reference to Exhibit 10.25
of the Company's Annual Report on Form 10-K filed with the Commission
on March 30, 1999).
10.26 Stock Option Agreement dated as of December 16, 1998 between the
Company and Wilbur G. Meinen (incorporated by reference to Exhibit
10.26 of the Company's Annual Report on Form 10-K filed with the
Commission on March 30, 1999).
10.27 Stock Option Agreement dated as of January 27, 1999 between the
Company and Wilbur G. Meinen (incorporated by reference to Exhibit
10.27 of the Company's Annual Report on Form 10-K filed with the
Commission on March 30, 1999).
10.28 Success Bancshares, Inc. 1998 Employee Stock Purchase Plan
(incorporated by reference to Exhibit 10.28 of the Company's Annual
Report on Form 10-K filed with the Commission on March 30, 1999).
10.29 Amendment No. 1 to 1995 Stock Option Plan (incorporated by reference
to Exhibit 10.29 of the Company's Annual Report on Form 10-K filed
with the Commission on March 30, 1999).
10.30 Restricted Stock Agreement dated as of December 16, 1998 between the
Company and Wilbur G. Meinen (incorporated by reference to Exhibit
10.30 of the Company's Annual Report on Form 10-K filed with the
Commission on March 30, 1999).
10.31 Lease with respect to Chicago downtown branch banking facility (May,
1998) (incorporated by reference to Exhibit 10.31 of the Company's
Annual Report on Form 10-K filed with the Commission on March 30,
1999).
10.32 Amendment No. 2 to Employment Agreement dated as of December 16,
1998 between the Bank and Christa N. Calabrese (incorporated by
reference to Exhibit 10.32 of the Company's Form 10-Q filed with the
Commission on May 13, 1999).
10.33 Agreement dated April 28, 1999 between the Company and Ronald W.
Tragasz.
10.34 Stock Option Agreement dated April 28, 1999 between the Company and
Ronald W. Tragasz.
10.35 Sublease with respect to Corporate Center (April, 1999).
(1)10.36 Stock Option Agreement dated August 25, 1999 between the Company and
Sherwin Koopmans.
(1)10.37 Stock Option Agreement dated August 25, 1999 between the Company and
Glen Wherfel.
(1)10.38 Stock Option Agreement dated August 25, 1999 between the Company and
George M. Ohlhausen.
(1)10.39 Stock Option Agreement dated August 25, 1999 between the Company and
Avrom Goldfeder.
(1)10.40 Stock Option Agreement dated August 25, 1999 between the Company and
Charles Freund.
(1)10.41 Stock Option Agreement dated August 25, 1999 between the Company and
Norman Rich.
(1)27.1 Financial Data Schedule.
(1) Filed herewith
SUCCESS BANCSHARES, INC.
STOCK OPTION AGREEMENT
(NON-TRANSFERABLE)
Success Bancshares, Inc., a Delaware corporation (the "Company"), hereby
grants to Charles Freund (the "Optionee") an option to purchase a total of
3,000 shares of Common Stock (the "Shares") of the Company, at the price set
forth herein, and in all respects subject to the terms and provisions of the
Company's 1999 Stock Option Plan (the "Plan") applicable to stock options which
terms and provisions are hereby incorporated by reference herein. Unless
otherwise defined or the context herein otherwise requires, the capitalized
terms used herein shall have the same meanings ascribed to them in the Plan.
1 DATE OF GRANT; TERM OF OPTION. This Option is granted as of August
25, 1999, and it may not be exercised later than August 25, 2009.
2. OPTION EXERCISE PRICE. The Option exercise price is $10.75 per Share,
which price is not less than the Fair Market Value (as defined in the Plan)
thereof on the date this Option was granted.
3. EXERCISE OF OPTION. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) RIGHT TO EXERCISE. The total number of Shares subject to this
Option is 3,000. Subject to the foregoing and the limitations contained herein
and in the Plan, this Option shall vest and be exercisable in full on August
25, 2000; provided, however, that, upon any Corporate Transaction (as defined
in the Plan), this Option shall become immediately exercisable as to all shares
remaining subject to this Option and all restrictions on vesting shall
terminate.
(b) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company hereunder or pursuant
to the provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the exercise price. The
exercise price may be paid: (i) in cash; (ii) by check; (iii) tendering (either
actually or, if and so long as the Common Stock is registered under Section
12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), by attestation) Common Stock already owned by the Optionee for
at least six months (or any shorter period necessary to avoid a charge to the
Company's earnings for financial reporting purposes) having a Fair Market Value
on the day prior to the exercise date equal to the aggregate Option exercise
price or by transferring shares of Common Stock having a Fair Market Value on
the day prior to the exercise date equal to the aggregate Option exercise price
to the Company's transfer agent for delivery to the Company provided that the
written notice of exercise is accompanied by a written acknowledgment by the
Optionee that the Optionee has instructed his broker dealer to transfer such
shares and such transfer is confirmed by a letter from a broker dealer
acknowledging that the Optionee has directed such broker dealer to transfer
such shares; or (iv) if and so long as the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, delivery of a properly executed
exercise notice, together with irrevocable instructions, to (A) a brokerage
firm designated by the Company to deliver promptly to the Company the aggregate
amount of sale or loan proceeds to pay the Option exercise price and any
withholding tax obligations that may arise in connection with the exercise and
(B) the Company to deliver the certificates for such purchased shares directly
to such brokerage firm, all in accordance with the regulations of the Federal
Reserve Board. In addition, the exercise price for shares purchased under this
Option may be paid, either singly or in combination with one or more of the
alternative forms of payment authorized by this Section 3(b), by such other
consideration as the Board may permit. Upon receipt of payment, the Company
shall deliver to Optionee or the person exercising this Option for Optionee, an
appropriate certificate or certificates for fully paid nonassessable Shares.
For purposes of clause (iii), should any Optionee fail to have the number of
shares required to pay the exercise price delivered to the Company's transfer
agent within 90 days, this Option, with respect to the number of shares stated
in the written notice, will terminate and be deemed to be forfeited by the
Optionee. The certificate or certificates for the Shares as to which the Option
shall be exercised shall be registered in the name of the Optionee and shall be
legended as set forth in the Plan and/or as required under applicable law. This
Option may not be exercised for a fraction of a share.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Option, the Company may require the
Optionee to make such representations and warranties to the Company as may be
required by any applicable law or regulation.
(d) NO SHAREHOLDER RIGHTS BEFORE EXERCISE AND ISSUANCE. No rights as
a shareholder shall exist with respect to the Shares subject to the Option as a
result of the grant of the Option. Such rights shall exist only after issuance
of a stock certificate following the exercise of the Option as provided in this
Agreement and the Plan.
(e) TERMINATION OF EMPLOYMENT. In the event that the Optionee
ceases to be a non-employee Director of the Company or its Subsidiary (as
defined in the Plan), the exercisability of the Option is subject to the
provisions of Section 7.6 of the Plan.
4. INVESTMENT REPRESENTATIONS. In connection with the acquisition of
this Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, he will be acquiring the Shares, for investment for his own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and
by reason of his business or financial experience, has, and could be reasonably
assumed to have, the capacity to evaluate the merits and risks of purchasing
Common Stock of the Company and to make an informed investment decision with
respect thereto and to protect Optionee's interests in connection with the
acquisition of this Option and the Shares.
5. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee, any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of this Option
or the sale or other disposition of the Shares issued upon exercise of this
Option; and, if such compensation or consideration is insufficient, the Company
may require Optionee to pay to the Company an amount sufficient to cover such
withholding tax liability.
6. NONTRANSFERABILITY OF OPTION. This Option may not be assigned,
pledged or transferred by the Optionee other than by will or by the applicable
laws of descent and distribution, and, during the Optionee's lifetime, this
Option may be exercised only by the Optionee or a permitted assignee or
transferee of the Optionee (as provided below). Notwithstanding the foregoing,
and to the extent permitted by Section 422 of the Internal Revenue Code of
1986, as amended, the Board, in its sole discretion, may permit such
assignment, transfer and exercisability and may permit the Optionee to
designate a beneficiary who may exercise this Option after the Optionee's
death; provided, however, that in such event this Option if so assigned or
transferred shall be subject to all the same terms and conditions contained in
this Stock Option Agreement.
7. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this Option shall
(a) confer upon the Optionee any right whatsoever to continue to serve as a
non-employee Director of the Company or any Subsidiary or (b) limit or restrict
in any respect the rights of the Company, which rights are hereby expressly
reserved, to terminate the Optionee's service as a non-employee Director and
any compensation being paid to Optionee at any time for any reason whatsoever,
with or without cause, in the Company's sole discretion and with or without
notice.
8. THE PLAN. This Option is subject to, and the Company and the
Optionee agree to be bound by, all the terms and conditions of the Company's
Plan as such Plan may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive the Optionee, without
his consent, of this Option or any rights hereunder. Pursuant to the Plan, the
Board is authorized to adopt rules and regulations not inconsistent with the
Plan as it shall deem appropriate and proper. A copy of the Plan in its present
form is available for inspection at the Company's principal office during
business hours by the Optionee or the persons entitled to exercise this Option.
9. ENTIRE AGREEMENT. The terms of this Agreement and the Plan
constitute the entire agreement between the Company and the Optionee with
respect to the subject matter hereof and supersede any and all previous
agreements between the Company and the Optionee.
SUCCESS BANCSHARES, INC., a Delaware
corporation
Dated as of: August 25, 1999 By: /s/ Wilbur G. Meinen
------------------------------------
Name: Wilbur G. Meinen
Title: President and Chief Executive Officer
The Optionee hereby acknowledges receipt of a copy of the Plan, a copy of which
is attached hereto, and represents that he has read and is familiar with the
terms and provisions thereof and of this Agreement, and hereby accepts this
Option subject to all of the terms and provisions thereof and of this
Agreement. Optionee hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Board upon any questions arising under
the Plan.
Dated as of: August 25, 1999 /s/ Charles Freund
------------------------------
Signature of Optionee
30 Plymouth Ct.
-------------------------------
Address
Lincolnshire, IL 60069
-------------------------------
City State Zip Code
THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXECUTION OF
THIS OPTION ARE SUBJECT TO THE RESTRICTIONS ON TRANSFERABILITY SET FORTH IN
RULE 144 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, TO THE
EXTENT THAT THEY ARE HELD BY AFFILIATES OF THE COMPANY.
SUCCESS BANCSHARES, INC.
STOCK OPTION AGREEMENT
(NON-TRANSFERABLE)
Success Bancshares, Inc., a Delaware corporation (the "Company"), hereby
grants to Avrom Goldfeder (the "Optionee") an option to purchase a total of
3,000 shares of Common Stock (the "Shares") of the Company, at the price set
forth herein, and in all respects subject to the terms and provisions of the
Company's 1999 Stock Option Plan (the "Plan") applicable to stock options which
terms and provisions are hereby incorporated by reference herein. Unless
otherwise defined or the context herein otherwise requires, the capitalized
terms used herein shall have the same meanings ascribed to them in the Plan.
1 DATE OF GRANT; TERM OF OPTION. This Option is granted as of August
25, 1999, and it may not be exercised later than August 25, 2009.
2. OPTION EXERCISE PRICE. The Option exercise price is $10.75 per Share,
which price is not less than the Fair Market Value (as defined in the Plan)
thereof on the date this Option was granted.
3. EXERCISE OF OPTION. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) RIGHT TO EXERCISE. The total number of Shares subject to this
Option is 3,000. Subject to the foregoing and the limitations contained herein
and in the Plan, this Option shall vest and be exercisable in full on August
25, 2000; provided, however, that, upon any Corporate Transaction (as defined
in the Plan), this Option shall become immediately exercisable as to all shares
remaining subject to this Option and all restrictions on vesting shall
terminate.
(b) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company hereunder or pursuant
to the provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the exercise price. The
exercise price may be paid: (i) in cash; (ii) by check; (iii) tendering (either
actually or, if and so long as the Common Stock is registered under Section
12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), by attestation) Common Stock already owned by the Optionee for
at least six months (or any shorter period necessary to avoid a charge to the
Company's earnings for financial reporting purposes) having a Fair Market Value
on the day prior to the exercise date equal to the aggregate Option exercise
price or by transferring shares of Common Stock having a Fair Market Value on
the day prior to the exercise date equal to the aggregate Option exercise price
to the Company's transfer agent for delivery to the Company provided that the
written notice of exercise is accompanied by a written acknowledgment by the
Optionee that the Optionee has instructed his broker dealer to transfer such
shares and such transfer is confirmed by a letter from a broker dealer
acknowledging that the Optionee has directed such broker dealer to transfer
such shares; or (iv) if and so long as the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, delivery of a properly executed
exercise notice, together with irrevocable instructions, to (A) a brokerage
firm designated by the Company to deliver promptly to the Company the aggregate
amount of sale or loan proceeds to pay the Option exercise price and any
withholding tax obligations that may arise in connection with the exercise and
(B) the Company to deliver the certificates for such purchased shares directly
to such brokerage firm, all in accordance with the regulations of the Federal
Reserve Board. In addition, the exercise price for shares purchased under this
Option may be paid, either singly or in combination with one or more of the
alternative forms of payment authorized by this Section 3(b), by such other
consideration as the Board may permit. Upon receipt of payment, the Company
shall deliver to Optionee or the person exercising this Option for Optionee, an
appropriate certificate or certificates for fully paid nonassessable Shares.
For purposes of clause (iii), should any Optionee fail to have the number of
shares required to pay the exercise price delivered to the Company's transfer
agent within 90 days, this Option, with respect to the number of shares stated
in the written notice, will terminate and be deemed to be forfeited by the
Optionee. The certificate or certificates for the Shares as to which the Option
shall be exercised shall be registered in the name of the Optionee and shall be
legended as set forth in the Plan and/or as required under applicable law. This
Option may not be exercised for a fraction of a share.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Option, the Company may require the
Optionee to make such representations and warranties to the Company as may be
required by any applicable law or regulation.
(d) NO SHAREHOLDER RIGHTS BEFORE EXERCISE AND ISSUANCE. No rights as
a shareholder shall exist with respect to the Shares subject to the Option as a
result of the grant of the Option. Such rights shall exist only after issuance
of a stock certificate following the exercise of the Option as provided in this
Agreement and the Plan.
(e) TERMINATION OF EMPLOYMENT. In the event that the Optionee
ceases to be a non-employee Director of the Company or its Subsidiary (as
defined in the Plan), the exercisability of the Option is subject to the
provisions of Section 7.6 of the Plan.
4. INVESTMENT REPRESENTATIONS. In connection with the acquisition of
this Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, he will be acquiring the Shares, for investment for his own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and
by reason of his business or financial experience, has, and could be reasonably
assumed to have, the capacity to evaluate the merits and risks of purchasing
Common Stock of the Company and to make an informed investment decision with
respect thereto and to protect Optionee's interests in connection with the
acquisition of this Option and the Shares.
5. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee, any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of this Option
or the sale or other disposition of the Shares issued upon exercise of this
Option; and, if such compensation or consideration is insufficient, the Company
may require Optionee to pay to the Company an amount sufficient to cover such
withholding tax liability.
6. NONTRANSFERABILITY OF OPTION. This Option may not be assigned,
pledged or transferred by the Optionee other than by will or by the applicable
laws of descent and distribution, and, during the Optionee's lifetime, this
Option may be exercised only by the Optionee or a permitted assignee or
transferee of the Optionee (as provided below). Notwithstanding the foregoing,
and to the extent permitted by Section 422 of the Internal Revenue Code of
1986, as amended, the Board, in its sole discretion, may permit such
assignment, transfer and exercisability and may permit the Optionee to
designate a beneficiary who may exercise this Option after the Optionee's
death; provided, however, that in such event this Option if so assigned or
transferred shall be subject to all the same terms and conditions contained in
this Stock Option Agreement.
7. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this Option shall
(a) confer upon the Optionee any right whatsoever to continue to serve as a
non-employee Director of the Company or any Subsidiary or (b) limit or restrict
in any respect the rights of the Company, which rights are hereby expressly
reserved, to terminate the Optionee's service as a non-employee Director and
any compensation being paid to Optionee at any time for any reason whatsoever,
with or without cause, in the Company's sole discretion and with or without
notice.
8. THE PLAN. This Option is subject to, and the Company and the
Optionee agree to be bound by, all the terms and conditions of the Company's
Plan as such Plan may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive the Optionee, without
his consent, of this Option or any rights hereunder. Pursuant to the Plan, the
Board is authorized to adopt rules and regulations not inconsistent with the
Plan as it shall deem appropriate and proper. A copy of the Plan in its present
form is available for inspection at the Company's principal office during
business hours by the Optionee or the persons entitled to exercise this Option.
9. ENTIRE AGREEMENT. The terms of this Agreement and the Plan
constitute the entire agreement between the Company and the Optionee with
respect to the subject matter hereof and supersede any and all previous
agreements between the Company and the Optionee.
SUCCESS BANCSHARES, INC., a Delaware
corporation
Dated as of: August 25, 1999 By: /s/ Wilbur G. Meinen
----------------------------------
Name: Wilbur G. Meinen
Title: President and Chief Executive Officer
The Optionee hereby acknowledges receipt of a copy of the Plan, a copy of which
is attached hereto, and represents that he has read and is familiar with the
terms and provisions thereof and of this Agreement, and hereby accepts this
Option subject to all of the terms and provisions thereof and of this
Agreement. Optionee hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Board upon any questions arising under
the Plan.
Dated as of: August 25, 1999
/s/ Avrom Goldfeder
------------------------
Signature of Optionee
6030 N. Bernard
------------------------
Address
Chicago IL 60659
------------------------
City State Zip Code
THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXECUTION OF
THIS OPTION ARE SUBJECT TO THE RESTRICTIONS ON TRANSFERABILITY SET FORTH IN
RULE 144 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, TO THE
EXTENT THAT THEY ARE HELD BY AFFILIATES OF THE COMPANY.
SUCCESS BANCSHARES, INC.
STOCK OPTION AGREEMENT
(NON-TRANSFERABLE)
Success Bancshares, Inc., a Delaware corporation (the "Company"), hereby
grants to Sherwin Koopmans (the "Optionee") an option to purchase a total of
3,000 shares of Common Stock (the "Shares") of the Company, at the price set
forth herein, and in all respects subject to the terms and provisions of the
Company's 1999 Stock Option Plan (the "Plan") applicable to stock options which
terms and provisions are hereby incorporated by reference herein. Unless
otherwise defined or the context herein otherwise requires, the capitalized
terms used herein shall have the same meanings ascribed to them in the Plan.
1 DATE OF GRANT; TERM OF OPTION. This Option is granted as of August
25, 1999, and it may not be exercised later than August 25, 2009.
2. OPTION EXERCISE PRICE. The Option exercise price is $10.75 per Share,
which price is not less than the Fair Market Value (as defined in the Plan)
thereof on the date this Option was granted.
3. EXERCISE OF OPTION. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) RIGHT TO EXERCISE. The total number of Shares subject to this
Option is 3,000. Subject to the foregoing and the limitations contained herein
and in the Plan, this Option shall vest and be exercisable in full on August
25, 2000; provided, however, that, upon any Corporate Transaction (as defined
in the Plan), this Option shall become immediately exercisable as to all shares
remaining subject to this Option and all restrictions on vesting shall
terminate.
(b) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company hereunder or pursuant
to the provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the exercise price. The
exercise price may be paid: (i) in cash; (ii) by check; (iii) tendering (either
actually or, if and so long as the Common Stock is registered under Section
12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), by attestation) Common Stock already owned by the Optionee for
at least six months (or any shorter period necessary to avoid a charge to the
Company's earnings for financial reporting purposes) having a Fair Market Value
on the day prior to the exercise date equal to the aggregate Option exercise
price or by transferring shares of Common Stock having a Fair Market Value on
the day prior to the exercise date equal to the aggregate Option exercise price
to the Company's transfer agent for delivery to the Company provided that the
written notice of exercise is accompanied by a written acknowledgment by the
Optionee that the Optionee has instructed his broker dealer to transfer such
shares and such transfer is confirmed by a letter from a broker dealer
acknowledging that the Optionee has directed such broker dealer to transfer
such shares; or (iv) if and so long as the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, delivery of a properly executed
exercise notice, together with irrevocable instructions, to (A) a brokerage
firm designated by the Company to deliver promptly to the Company the aggregate
amount of sale or loan proceeds to pay the Option exercise price and any
withholding tax obligations that may arise in connection with the exercise and
(B) the Company to deliver the certificates for such purchased shares directly
to such brokerage firm, all in accordance with the regulations of the Federal
Reserve Board. In addition, the exercise price for shares purchased under this
Option may be paid, either singly or in combination with one or more of the
alternative forms of payment authorized by this Section 3(b), by such other
consideration as the Board may permit. Upon receipt of payment, the Company
shall deliver to Optionee or the person exercising this Option for Optionee, an
appropriate certificate or certificates for fully paid nonassessable Shares.
For purposes of clause (iii), should any Optionee fail to have the number of
shares required to pay the exercise price delivered to the Company's transfer
agent within 90 days, this Option, with respect to the number of shares stated
in the written notice, will terminate and be deemed to be forfeited by the
Optionee. The certificate or certificates for the Shares as to which the Option
shall be exercised shall be registered in the name of the Optionee and shall be
legended as set forth in the Plan and/or as required under applicable law. This
Option may not be exercised for a fraction of a share.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Option, the Company may require the
Optionee to make such representations and warranties to the Company as may be
required by any applicable law or regulation.
(d) NO SHAREHOLDER RIGHTS BEFORE EXERCISE AND ISSUANCE. No rights as
a shareholder shall exist with respect to the Shares subject to the Option as a
result of the grant of the Option. Such rights shall exist only after issuance
of a stock certificate following the exercise of the Option as provided in this
Agreement and the Plan.
(e) TERMINATION OF EMPLOYMENT. In the event that the Optionee
ceases to be a non-employee Director of the Company or its Subsidiary (as
defined in the Plan), the exercisability of the Option is subject to the
provisions of Section 7.6 of the Plan.
4. INVESTMENT REPRESENTATIONS. In connection with the acquisition of
this Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, he will be acquiring the Shares, for investment for his own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and
by reason of his business or financial experience, has, and could be reasonably
assumed to have, the capacity to evaluate the merits and risks of purchasing
Common Stock of the Company and to make an informed investment decision with
respect thereto and to protect Optionee's interests in connection with the
acquisition of this Option and the Shares.
5. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee, any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of this Option
or the sale or other disposition of the Shares issued upon exercise of this
Option; and, if such compensation or consideration is insufficient, the Company
may require Optionee to pay to the Company an amount sufficient to cover such
withholding tax liability.
6. NONTRANSFERABILITY OF OPTION. This Option may not be assigned,
pledged or transferred by the Optionee other than by will or by the applicable
laws of descent and distribution, and, during the Optionee's lifetime, this
Option may be exercised only by the Optionee or a permitted assignee or
transferee of the Optionee (as provided below). Notwithstanding the foregoing,
and to the extent permitted by Section 422 of the Internal Revenue Code of
1986, as amended, the Board, in its sole discretion, may permit such
assignment, transfer and exercisability and may permit the Optionee to
designate a beneficiary who may exercise this Option after the Optionee's
death; provided, however, that in such event this Option if so assigned or
transferred shall be subject to all the same terms and conditions contained in
this Stock Option Agreement.
7. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this Option shall
(a) confer upon the Optionee any right whatsoever to continue to serve as a
non-employee Director of the Company or any Subsidiary or (b) limit or restrict
in any respect the rights of the Company, which rights are hereby expressly
reserved, to terminate the Optionee's service as a non-employee Director and
any compensation being paid to Optionee at any time for any reason whatsoever,
with or without cause, in the Company's sole discretion and with or without
notice.
8. THE PLAN. This Option is subject to, and the Company and the
Optionee agree to be bound by, all the terms and conditions of the Company's
Plan as such Plan may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive the Optionee, without
his consent, of this Option or any rights hereunder. Pursuant to the Plan, the
Board is authorized to adopt rules and regulations not inconsistent with the
Plan as it shall deem appropriate and proper. A copy of the Plan in its present
form is available for inspection at the Company's principal office during
business hours by the Optionee or the persons entitled to exercise this Option.
9. ENTIRE AGREEMENT. The terms of this Agreement and the Plan
constitute the entire agreement between the Company and the Optionee with
respect to the subject matter hereof and supersede any and all previous
agreements between the Company and the Optionee.
SUCCESS BANCSHARES, INC., a Delaware
corporation
Dated as of: August 25, 1999 By: /s/ Wilbur G. Meinen
--------------------------------
Name: Wilbur G. Meinen
Title: President and Chief Executive Officer
The Optionee hereby acknowledges receipt of a copy of the Plan, a copy of which
is attached hereto, and represents that he has read and is familiar with the
terms and provisions thereof and of this Agreement, and hereby accepts this
Option subject to all of the terms and provisions thereof and of this
Agreement. Optionee hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Board upon any questions arising under
the Plan.
Dated as of: August 25, 1999 /s/ Sherwin R. Koopmans
------------------------------
Signature of Optionee
N9053 Koopmans Drive
-------------------------------
Address
Cambria WI 53923
-------------------------------
City State Zip Code
THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXECUTION OF THIS
OPTION ARE SUBJECT TO THE RESTRICTIONS ON TRANSFERABILITY SET FORTH IN RULE 144
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, TO THE EXTENT THAT
THEY ARE HELD BY AFFILIATES OF THE COMPANY.
SUCCESS BANCSHARES, INC.
STOCK OPTION AGREEMENT
(NON-TRANSFERABLE)
Success Bancshares, Inc., a Delaware corporation (the "Company"), hereby
grants to George M. Ohlhausen (the "Optionee") an option to purchase a total of
3,000 shares of Common Stock (the "Shares") of the Company, at the price set
forth herein, and in all respects subject to the terms and provisions of the
Company's 1999 Stock Option Plan (the "Plan") applicable to stock options which
terms and provisions are hereby incorporated by reference herein. Unless
otherwise defined or the context herein otherwise requires, the capitalized
terms used herein shall have the same meanings ascribed to them in the Plan.
1 DATE OF GRANT; TERM OF OPTION. This Option is granted as of August
25, 1999, and it may not be exercised later than August 25, 2009.
2. OPTION EXERCISE PRICE. The Option exercise price is $10.75 per Share,
which price is not less than the Fair Market Value (as defined in the Plan)
thereof on the date this Option was granted.
3. EXERCISE OF OPTION. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) RIGHT TO EXERCISE. The total number of Shares subject to this
Option is 3,000. Subject to the foregoing and the limitations contained herein
and in the Plan, this Option shall vest and be exercisable in full on August
25, 2000; provided, however, that, upon any Corporate Transaction (as defined
in the Plan), this Option shall become immediately exercisable as to all shares
remaining subject to this Option and all restrictions on vesting shall
terminate.
(b) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company hereunder or pursuant
to the provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the exercise price. The
exercise price may be paid: (i) in cash; (ii) by check; (iii) tendering (either
actually or, if and so long as the Common Stock is registered under Section
12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), by attestation) Common Stock already owned by the Optionee for
at least six months (or any shorter period necessary to avoid a charge to the
Company's earnings for financial reporting purposes) having a Fair Market Value
on the day prior to the exercise date equal to the aggregate Option exercise
price or by transferring shares of Common Stock having a Fair Market Value on
the day prior to the exercise date equal to the aggregate Option exercise price
to the Company's transfer agent for delivery to the Company provided that the
written notice of exercise is accompanied by a written acknowledgment by the
Optionee that the Optionee has instructed his broker dealer to transfer such
shares and such transfer is confirmed by a letter from a broker dealer
acknowledging that the Optionee has directed such broker dealer to transfer
such shares; or (iv) if and so long as the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, delivery of a properly executed
exercise notice, together with irrevocable instructions, to (A) a brokerage
firm designated by the Company to deliver promptly to the Company the aggregate
amount of sale or loan proceeds to pay the Option exercise price and any
withholding tax obligations that may arise in connection with the exercise and
(B) the Company to deliver the certificates for such purchased shares directly
to such brokerage firm, all in accordance with the regulations of the Federal
Reserve Board. In addition, the exercise price for shares purchased under this
Option may be paid, either singly or in combination with one or more of the
alternative forms of payment authorized by this Section 3(b), by such other
consideration as the Board may permit. Upon receipt of payment, the Company
shall deliver to Optionee or the person exercising this Option for Optionee, an
appropriate certificate or certificates for fully paid nonassessable Shares.
For purposes of clause (iii), should any Optionee fail to have the number of
shares required to pay the exercise price delivered to the Company's transfer
agent within 90 days, this Option, with respect to the number of shares stated
in the written notice, will terminate and be deemed to be forfeited by the
Optionee. The certificate or certificates for the Shares as to which the Option
shall be exercised shall be registered in the name of the Optionee and shall be
legended as set forth in the Plan and/or as required under applicable law. This
Option may not be exercised for a fraction of a share.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Option, the Company may require the
Optionee to make such representations and warranties to the Company as may be
required by any applicable law or regulation.
(d) NO SHAREHOLDER RIGHTS BEFORE EXERCISE AND ISSUANCE. No rights as
a shareholder shall exist with respect to the Shares subject to the Option as a
result of the grant of the Option. Such rights shall exist only after issuance
of a stock certificate following the exercise of the Option as provided in this
Agreement and the Plan.
(e) TERMINATION OF EMPLOYMENT. In the event that the Optionee
ceases to be a non-employee Director of the Company or its Subsidiary (as
defined in the Plan), the exercisability of the Option is subject to the
provisions of Section 7.6 of the Plan.
4. INVESTMENT REPRESENTATIONS. In connection with the acquisition of
this Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, he will be acquiring the Shares, for investment for his own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and
by reason of his business or financial experience, has, and could be reasonably
assumed to have, the capacity to evaluate the merits and risks of purchasing
Common Stock of the Company and to make an informed investment decision with
respect thereto and to protect Optionee's interests in connection with the
acquisition of this Option and the Shares.
5. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee, any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of this Option
or the sale or other disposition of the Shares issued upon exercise of this
Option; and, if such compensation or consideration is insufficient, the Company
may require Optionee to pay to the Company an amount sufficient to cover such
withholding tax liability.
6. NONTRANSFERABILITY OF OPTION. This Option may not be assigned,
pledged or transferred by the Optionee other than by will or by the applicable
laws of descent and distribution, and, during the Optionee's lifetime, this
Option may be exercised only by the Optionee or a permitted assignee or
transferee of the Optionee (as provided below). Notwithstanding the foregoing,
and to the extent permitted by Section 422 of the Internal Revenue Code of
1986, as amended, the Board, in its sole discretion, may permit such
assignment, transfer and exercisability and may permit the Optionee to
designate a beneficiary who may exercise this Option after the Optionee's
death; provided, however, that in such event this Option if so assigned or
transferred shall be subject to all the same terms and conditions contained in
this Stock Option Agreement.
7. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this Option shall
(a) confer upon the Optionee any right whatsoever to continue to serve as a
non-employee Director of the Company or any Subsidiary or (b) limit or restrict
in any respect the rights of the Company, which rights are hereby expressly
reserved, to terminate the Optionee's service as a non-employee Director and
any compensation being paid to Optionee at any time for any reason whatsoever,
with or without cause, in the Company's sole discretion and with or without
notice.
8. THE PLAN. This Option is subject to, and the Company and the
Optionee agree to be bound by, all the terms and conditions of the Company's
Plan as such Plan may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive the Optionee, without
his consent, of this Option or any rights hereunder. Pursuant to the Plan, the
Board is authorized to adopt rules and regulations not inconsistent with the
Plan as it shall deem appropriate and proper. A copy of the Plan in its present
form is available for inspection at the Company's principal office during
business hours by the Optionee or the persons entitled to exercise this Option.
9. ENTIRE AGREEMENT. The terms of this Agreement and the Plan
constitute the entire agreement between the Company and the Optionee with
respect to the subject matter hereof and supersede any and all previous
agreements between the Company and the Optionee.
SUCCESS BANCSHARES, INC., a Delaware
corporation
Dated as of: August 25, 1999 By: /s/ Wilbur G. Meinen
--------------------------------
Name: Wilbur G. Meinen
Title: President and Chief Executive Officer
The Optionee hereby acknowledges receipt of a copy of the Plan, a copy of which
is attached hereto, and represents that he has read and is familiar with the
terms and provisions thereof and of this Agreement, and hereby accepts this
Option subject to all of the terms and provisions thereof and of this
Agreement. Optionee hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Board upon any questions arising under
the Plan.
Dated as of: August 25, 1999
/s/ George M. Ohlhausen
-------------------------
Signature of Optionee
9801 Gross Point Rd.
--------------------------
Address
Skokie IL 60076
--------------------------
City State Zip Code
THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXECUTION OF
THIS OPTION ARE SUBJECT TO THE RESTRICTIONS ON TRANSFERABILITY SET FORTH IN
RULE 144 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, TO THE
EXTENT THAT THEY ARE HELD BY AFFILIATES OF THE COMPANY.
SUCCESS BANCSHARES, INC.
STOCK OPTION AGREEMENT
(NON-TRANSFERABLE)
Success Bancshares, Inc., a Delaware corporation (the "Company"), hereby
grants to Glen Wherfel (the "Optionee") an option to purchase a total of 3,000
shares of Common Stock (the "Shares") of the Company, at the price set forth
herein, and in all respects subject to the terms and provisions of the
Company's 1999 Stock Option Plan (the "Plan") applicable to stock options which
terms and provisions are hereby incorporated by reference herein. Unless
otherwise defined or the context herein otherwise requires, the capitalized
terms used herein shall have the same meanings ascribed to them in the Plan.
1 DATE OF GRANT; TERM OF OPTION. This Option is granted as of August
25, 1999, and it may not be exercised later than August 25, 2009.
2. OPTION EXERCISE PRICE. The Option exercise price is $10.75 per Share,
which price is not less than the Fair Market Value (as defined in the Plan)
thereof on the date this Option was granted.
3. EXERCISE OF OPTION. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) RIGHT TO EXERCISE. The total number of Shares subject to this
Option is 3,000. Subject to the foregoing and the limitations contained herein
and in the Plan, this Option shall vest and be exercisable in full on August
25, 2000; provided, however, that, upon any Corporate Transaction (as defined
in the Plan), this Option shall become immediately exercisable as to all shares
remaining subject to this Option and all restrictions on vesting shall
terminate.
(b) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company hereunder or pursuant
to the provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the exercise price. The
exercise price may be paid: (i) in cash; (ii) by check; (iii) tendering (either
actually or, if and so long as the Common Stock is registered under Section
12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), by attestation) Common Stock already owned by the Optionee for
at least six months (or any shorter period necessary to avoid a charge to the
Company's earnings for financial reporting purposes) having a Fair Market Value
on the day prior to the exercise date equal to the aggregate Option exercise
price or by transferring shares of Common Stock having a Fair Market Value on
the day prior to the exercise date equal to the aggregate Option exercise price
to the Company's transfer agent for delivery to the Company provided that the
written notice of exercise is accompanied by a written acknowledgment by the
Optionee that the Optionee has instructed his broker dealer to transfer such
shares and such transfer is confirmed by a letter from a broker dealer
acknowledging that the Optionee has directed such broker dealer to transfer
such shares; or (iv) if and so long as the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, delivery of a properly executed
exercise notice, together with irrevocable instructions, to (A) a brokerage
firm designated by the Company to deliver promptly to the Company the aggregate
amount of sale or loan proceeds to pay the Option exercise price and any
withholding tax obligations that may arise in connection with the exercise and
(B) the Company to deliver the certificates for such purchased shares directly
to such brokerage firm, all in accordance with the regulations of the Federal
Reserve Board. In addition, the exercise price for shares purchased under this
Option may be paid, either singly or in combination with one or more of the
alternative forms of payment authorized by this Section 3(b), by such other
consideration as the Board may permit. Upon receipt of payment, the Company
shall deliver to Optionee or the person exercising this Option for Optionee, an
appropriate certificate or certificates for fully paid nonassessable Shares.
For purposes of clause (iii), should any Optionee fail to have the number of
shares required to pay the exercise price delivered to the Company's transfer
agent within 90 days, this Option, with respect to the number of shares stated
in the written notice, will terminate and be deemed to be forfeited by the
Optionee. The certificate or certificates for the Shares as to which the Option
shall be exercised shall be registered in the name of the Optionee and shall be
legended as set forth in the Plan and/or as required under applicable law. This
Option may not be exercised for a fraction of a share.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Option, the Company may require the
Optionee to make such representations and warranties to the Company as may be
required by any applicable law or regulation.
(d) NO SHAREHOLDER RIGHTS BEFORE EXERCISE AND ISSUANCE. No rights as
a shareholder shall exist with respect to the Shares subject to the Option as a
result of the grant of the Option. Such rights shall exist only after issuance
of a stock certificate following the exercise of the Option as provided in this
Agreement and the Plan.
(e) TERMINATION OF EMPLOYMENT. In the event that the Optionee
ceases to be a non-employee Director of the Company or its Subsidiary (as
defined in the Plan), the exercisability of the Option is subject to the
provisions of Section 7.6 of the Plan.
4. INVESTMENT REPRESENTATIONS. In connection with the acquisition of
this Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, he will be acquiring the Shares, for investment for his own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and
by reason of his business or financial experience, has, and could be reasonably
assumed to have, the capacity to evaluate the merits and risks of purchasing
Common Stock of the Company and to make an informed investment decision with
respect thereto and to protect Optionee's interests in connection with the
acquisition of this Option and the Shares.
5. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee, any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of this Option
or the sale or other disposition of the Shares issued upon exercise of this
Option; and, if such compensation or consideration is insufficient, the Company
may require Optionee to pay to the Company an amount sufficient to cover such
withholding tax liability.
6. NONTRANSFERABILITY OF OPTION. This Option may not be assigned,
pledged or transferred by the Optionee other than by will or by the applicable
laws of descent and distribution, and, during the Optionee's lifetime, this
Option may be exercised only by the Optionee or a permitted assignee or
transferee of the Optionee (as provided below). Notwithstanding the foregoing,
and to the extent permitted by Section 422 of the Internal Revenue Code of
1986, as amended, the Board, in its sole discretion, may permit such
assignment, transfer and exercisability and may permit the Optionee to
designate a beneficiary who may exercise this Option after the Optionee's
death; provided, however, that in such event this Option if so assigned or
transferred shall be subject to all the same terms and conditions contained in
this Stock Option Agreement.
7. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this Option shall
(a) confer upon the Optionee any right whatsoever to continue to serve as a
non-employee Director of the Company or any Subsidiary or (b) limit or restrict
in any respect the rights of the Company, which rights are hereby expressly
reserved, to terminate the Optionee's service as a non-employee Director and
any compensation being paid to Optionee at any time for any reason whatsoever,
with or without cause, in the Company's sole discretion and with or without
notice.
8. THE PLAN. This Option is subject to, and the Company and the
Optionee agree to be bound by, all the terms and conditions of the Company's
Plan as such Plan may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive the Optionee, without
his consent, of this Option or any rights hereunder. Pursuant to the Plan, the
Board is authorized to adopt rules and regulations not inconsistent with the
Plan as it shall deem appropriate and proper. A copy of the Plan in its present
form is available for inspection at the Company's principal office during
business hours by the Optionee or the persons entitled to exercise this Option.
9. ENTIRE AGREEMENT. The terms of this Agreement and the Plan
constitute the entire agreement between the Company and the Optionee with
respect to the subject matter hereof and supersede any and all previous
agreements between the Company and the Optionee.
SUCCESS BANCSHARES, INC., a Delaware
corporation
Dated as of: August 25, 1999
By: /s/ Wilbur G. Meinen
-------------------------------------------
Name: Wilbur G. Meinen
Title: President and Chief Executive Officer
The Optionee hereby acknowledges receipt of a copy of the Plan, a copy of which
is attached hereto, and represents that he has read and is familiar with the
terms and provisions thereof and of this Agreement, and hereby accepts this
Option subject to all of the terms and provisions thereof and of this
Agreement. Optionee hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Board upon any questions arising under
the Plan.
Dated as of: August 25, 1999
/s/ Glen R. Wherfel
------------------------
Signature of Optionee
6631 Nokomis
------------------------
Address
Lincolnwood IL 60712
------------------------
City State Zip Code
THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXECUTION OF THIS
OPTION ARE SUBJECT TO THE RESTRICTIONS ON TRANSFERABILITY SET FORTH IN RULE 144
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, TO THE EXTENT THAT
THEY ARE HELD BY AFFILIATES OF THE COMPANY.
SUCCESS BANCSHARES, INC.
STOCK OPTION AGREEMENT
(NON-TRANSFERABLE)
Success Bancshares, Inc., a Delaware corporation (the "Company"), hereby
grants to Norman Rich (the "Optionee") an option to purchase a total of 3,000
shares of Common Stock (the "Shares") of the Company, at the price set forth
herein, and in all respects subject to the terms and provisions of the
Company's 1999 Stock Option Plan (the "Plan") applicable to stock options which
terms and provisions are hereby incorporated by reference herein. Unless
otherwise defined or the context herein otherwise requires, the capitalized
terms used herein shall have the same meanings ascribed to them in the Plan.
1 DATE OF GRANT; TERM OF OPTION. This Option is granted as of August
25, 1999, and it may not be exercised later than August 25, 2009.
2. OPTION EXERCISE PRICE. The Option exercise price is $10.75 per Share,
which price is not less than the Fair Market Value (as defined in the Plan)
thereof on the date this Option was granted.
3. EXERCISE OF OPTION. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) RIGHT TO EXERCISE. The total number of Shares subject to this
Option is 3,000. Subject to the foregoing and the limitations contained herein
and in the Plan, this Option shall vest and be exercisable in full on August
25, 2000; provided, however, that, upon any Corporate Transaction (as defined
in the Plan), this Option shall become immediately exercisable as to all shares
remaining subject to this Option and all restrictions on vesting shall
terminate.
(b) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company hereunder or pursuant
to the provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the exercise price. The
exercise price may be paid: (i) in cash; (ii) by check; (iii) tendering (either
actually or, if and so long as the Common Stock is registered under Section
12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), by attestation) Common Stock already owned by the Optionee for
at least six months (or any shorter period necessary to avoid a charge to the
Company's earnings for financial reporting purposes) having a Fair Market Value
on the day prior to the exercise date equal to the aggregate Option exercise
price or by transferring shares of Common Stock having a Fair Market Value on
the day prior to the exercise date equal to the aggregate Option exercise price
to the Company's transfer agent for delivery to the Company provided that the
written notice of exercise is accompanied by a written acknowledgment by the
Optionee that the Optionee has instructed his broker dealer to transfer such
shares and such transfer is confirmed by a letter from a broker dealer
acknowledging that the Optionee has directed such broker dealer to transfer
such shares; or (iv) if and so long as the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, delivery of a properly executed
exercise notice, together with irrevocable instructions, to (A) a brokerage
firm designated by the Company to deliver promptly to the Company the aggregate
amount of sale or loan proceeds to pay the Option exercise price and any
withholding tax obligations that may arise in connection with the exercise and
(B) the Company to deliver the certificates for such purchased shares directly
to such brokerage firm, all in accordance with the regulations of the Federal
Reserve Board. In addition, the exercise price for shares purchased under this
Option may be paid, either singly or in combination with one or more of the
alternative forms of payment authorized by this Section 3(b), by such other
consideration as the Board may permit. Upon receipt of payment, the Company
shall deliver to Optionee or the person exercising this Option for Optionee, an
appropriate certificate or certificates for fully paid nonassessable Shares.
For purposes of clause (iii), should any Optionee fail to have the number of
shares required to pay the exercise price delivered to the Company's transfer
agent within 90 days, this Option, with respect to the number of shares stated
in the written notice, will terminate and be deemed to be forfeited by the
Optionee. The certificate or certificates for the Shares as to which the Option
shall be exercised shall be registered in the name of the Optionee and shall be
legended as set forth in the Plan and/or as required under applicable law. This
Option may not be exercised for a fraction of a share.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Option, the Company may require the
Optionee to make such representations and warranties to the Company as may be
required by any applicable law or regulation.
(d) NO SHAREHOLDER RIGHTS BEFORE EXERCISE AND ISSUANCE. No rights as
a shareholder shall exist with respect to the Shares subject to the Option as a
result of the grant of the Option. Such rights shall exist only after issuance
of a stock certificate following the exercise of the Option as provided in this
Agreement and the Plan.
(e) TERMINATION OF EMPLOYMENT. In the event that the Optionee
ceases to be a non-employee Director of the Company or its Subsidiary (as
defined in the Plan), the exercisability of the Option is subject to the
provisions of Section 7.6 of the Plan.
4. INVESTMENT REPRESENTATIONS. In connection with the acquisition of
this Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, he will be acquiring the Shares, for investment for his own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and
by reason of his business or financial experience, has, and could be reasonably
assumed to have, the capacity to evaluate the merits and risks of purchasing
Common Stock of the Company and to make an informed investment decision with
respect thereto and to protect Optionee's interests in connection with the
acquisition of this Option and the Shares.
5. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee, any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of this Option
or the sale or other disposition of the Shares issued upon exercise of this
Option; and, if such compensation or consideration is insufficient, the Company
may require Optionee to pay to the Company an amount sufficient to cover such
withholding tax liability.
6. NONTRANSFERABILITY OF OPTION. This Option may not be assigned,
pledged or transferred by the Optionee other than by will or by the applicable
laws of descent and distribution, and, during the Optionee's lifetime, this
Option may be exercised only by the Optionee or a permitted assignee or
transferee of the Optionee (as provided below). Notwithstanding the foregoing,
and to the extent permitted by Section 422 of the Internal Revenue Code of
1986, as amended, the Board, in its sole discretion, may permit such
assignment, transfer and exercisability and may permit the Optionee to
designate a beneficiary who may exercise this Option after the Optionee's
death; provided, however, that in such event this Option if so assigned or
transferred shall be subject to all the same terms and conditions contained in
this Stock Option Agreement.
7. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this Option shall
(a) confer upon the Optionee any right whatsoever to continue to serve as a
non-employee Director of the Company or any Subsidiary or (b) limit or restrict
in any respect the rights of the Company, which rights are hereby expressly
reserved, to terminate the Optionee's service as a non-employee Director and
any compensation being paid to Optionee at any time for any reason whatsoever,
with or without cause, in the Company's sole discretion and with or without
notice.
8. THE PLAN. This Option is subject to, and the Company and the
Optionee agree to be bound by, all the terms and conditions of the Company's
Plan as such Plan may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive the Optionee, without
his consent, of this Option or any rights hereunder. Pursuant to the Plan, the
Board is authorized to adopt rules and regulations not inconsistent with the
Plan as it shall deem appropriate and proper. A copy of the Plan in its present
form is available for inspection at the Company's principal office during
business hours by the Optionee or the persons entitled to exercise this Option.
9. ENTIRE AGREEMENT. The terms of this Agreement and the Plan
constitute the entire agreement between the Company and the Optionee with
respect to the subject matter hereof and supersede any and all previous
agreements between the Company and the Optionee.
SUCCESS BANCSHARES, INC., a Delaware
corporation
Dated as of: August 25, 1999
By: /s/ Wilbur G. Meinen
-------------------------------------------
Name: Wilbur G. Meinen
Title: President and Chief Executive Officer
The Optionee hereby acknowledges receipt of a copy of the Plan, a copy of which
is attached hereto, and represents that he has read and is familiar with the
terms and provisions thereof and of this Agreement, and hereby accepts this
Option subject to all of the terms and provisions thereof and of this
Agreement. Optionee hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Board upon any questions arising under
the Plan.
Dated as of: August 25, 1999
/s/ Norman D. Rich
----------------------------
Signature of Optionee
6787 Indian Creek Rd.
----------------------------
Address
Long Grove, IL 60047
----------------------------
City State Zip Code
THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXECUTION OF
THIS OPTION ARE SUBJECT TO THE RESTRICTIONS ON TRANSFERABILITY SET FORTH IN
RULE 144 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, TO THE
EXTENT THAT THEY ARE HELD BY AFFILIATES OF THE COMPANY.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
quarterly unaudited financial statements of Success Bancshares, Inc. for the
nine months ended September 30, 1999, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0001009569
<NAME> SUCCESS BANCSHARES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 14,866
<INT-BEARING-DEPOSITS> 2,216
<FED-FUNDS-SOLD> 7,800
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 38,180
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 391,261
<ALLOWANCE> 3,492
<TOTAL-ASSETS> 468,708
<DEPOSITS> 396,197
<SHORT-TERM> 9,625
<LIABILITIES-OTHER> 3,133
<LONG-TERM> 28,309
0
0
<COMMON> 3
<OTHER-SE> 31,441
<TOTAL-LIABILITIES-AND-EQUITY> 468,708
<INTEREST-LOAN> 23,110
<INTEREST-INVEST> 1,602
<INTEREST-OTHER> 490
<INTEREST-TOTAL> 25,202
<INTEREST-DEPOSIT> 10,978
<INTEREST-EXPENSE> 12,827
<INTEREST-INCOME-NET> 12,375
<LOAN-LOSSES> 450
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 12,441
<INCOME-PRETAX> 1,845
<INCOME-PRE-EXTRAORDINARY> 1,299
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,299
<EPS-BASIC> .45
<EPS-DILUTED> .45
<YIELD-ACTUAL> 3.96
<LOANS-NON> 1,710
<LOANS-PAST> 127
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,252
<ALLOWANCE-OPEN> 3,824
<CHARGE-OFFS> 788
<RECOVERIES> 6
<ALLOWANCE-CLOSE> 3,492
<ALLOWANCE-DOMESTIC> 2,908
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 584
</TABLE>
