<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____________ to ______________
Commission file number:
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Mid-State Bank Profit Sharing and Salary Deferral 401(k) Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Mid-State Bank
1026 Grand Avenue
Arroyo Grande, California 93420
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
MID-STATE BANK PROFIT SHARING AND SALARY
DEFERRAL 401(k) PLAN
By: /s/ James G. Stathos
-----------------------------------------
James G. Stathos, Member of Retirement
Committee of the MID-STATE BANK PROFIT
SHARING AND SALARY DEFERRAL 401(k) PLAN
Dated: June 27, 2000
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MID-STATE BANK
PROFIT SHARING AND SALARY DEFERRAL 401(k) PLAN
Index to Financial Statements
December 31, 1999 and 1998
Report of Independent Public Accountants
Financial Statements:
Statements of Net Assets Available for Benefits as of December 31, 1999
and 1998
Statement of Changes in Net Assets Available for Benefits for the Year
Ended December 31, 1999
Notes to Financial Statements
Supplemental Schedule:
I. Schedule of Assets Held for Investment Purposes as of
December 31, 1999
Note: Schedules other than the schedule listed above have been omitted
because they are not applicable or are not required by 29 CFR
2520.103-10 of the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security
Act of 1974.
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Retirement Committee of the
Mid-State Bank Profit Sharing and Salary Deferral 401(k) Plan:
We have audited the accompanying statements of net assets available for
benefits of the MID-STATE BANK PROFIT SHARING AND SALARY DEFERRAL 401(k) PLAN
(the Plan) as of December 31, 1999 and 1998 and the related statement of
changes in net assets available for benefits for the year ended December 31,
1999. These financial statements and the supplemental schedule referred to
below are the responsibility of the Plan's management. Our responsibility is
to express an opinion on these financial statements and supplemental schedule
based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as
of December 31, 1999 and 1998 and the changes in its net assets available for
benefits for the year ended December 31, 1999 in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. Supplemental schedule I, listed in the
accompanying Index to Financial Statements, is presented for purposes of
additional analysis and is not a required part of the basic financial
statements but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974.
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- 2 -
The supplemental schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects, in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Los Angeles, California
June 1, 2000
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MID-STATE BANK
PROFIT SHARING AND SALARY DEFERRAL 401(k) PLAN
Statements of Net Assets Available for Benefits
As of December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
Assets:
Investments, at fair value (See Note 3) $ 36,707,642 $ 34,751,339
Interest and dividends receivable - 57,109
------------- -------------
Net Assets Available for Benefits $ 36,707,642 $ 34,808,448
============= =============
</TABLE>
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MID-STATE BANK
PROFIT SHARING AND SALARY DEFERRAL 401(k) PLAN
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1999
<TABLE>
<S> <C>
Net Assets Available for Benefits,
beginning of year $ 34,808,448
Additions:
Investment income:
Net appreciation in fair value of investments (See Note 3) 2,067,819
Interest and dividends 1,140,094
-------------
Total investment income 3,207,913
-------------
Contributions:
Employer contributions 1,750,026
Participant contributions 1,306,981
-------------
Total contributions 3,057,007
-------------
Total additions 6,264,920
-------------
Deductions:
Benefits paid to participants 5,474,388
-------------
Total deductions 5,474,388
-------------
Transfers in from City Commerce Plan 1,108,662
-------------
Net increase 1,899,194
-------------
Net Assets Available for Benefits, end of year $ 36,707,642
=============
</TABLE>
The accompanying notes are an integral part of this financial statement.
<PAGE>
MID-STATE BANK
PROFIT SHARING AND SALARY DEFERRAL 401(k) PLAN
Notes to Financial Statements
December 31, 1999
1. DESCRIPTION OF THE PLAN
The following description of the Mid-State Bank Profit Sharing and Salary
Deferral 401(k) Plan (the Plan) provides only general information. Participants
should refer to the Plan document for a more complete description of the Plan's
provisions.
GENERAL
The Plan is a defined contribution plan covering substantially all
employees of Mid-State Bank (the Bank) who have completed ninety days
of service. Employees become eligible on the first day of the month
following completion of ninety days of service. The Bank is both the
sponsor and administrator of the Plan. The trustee of the Plan is Cigna
Retirement & Investment Services (Trustee). Prior to November 1, 1999,
the trustee of the Plan was Franklin Templeton Institutional Services.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
Effective November 17, 1999, the Bank entered into an Agreement to
Merge and Plan of Reorganization (the Agreement) with City Commerce
Bank. In connection with this transaction, the assets of City Commerce
Bank 401(k) Thrift Profit Sharing Plan were transferred into the Plan.
The aggregate balance of accounts transferred was $1,108,662. The asset
transfers associated with this merger are reflected in the accompanying
statement of changes in net assets available for benefits as "Transfers
in from City Commerce Plan".
CONTRIBUTIONS
Participants may defer up to 15 percent of their pre-tax compensation
through payroll deductions, subject to certain income related
restrictions. The Bank will make a matching contribution to all
participants who are actively employed on the last day of the Plan
year. In 1999 and 1998, this contribution was equal to 6 percent of
eligible compensation. For the years ended December 31, 1999 and 1998,
the matching contribution was $415,987 and $339,649, respectively. For
each non-highly compensated participant, the Bank may also contribute a
profit sharing allocation to the Plan. This contribution is determined
annually by the Bank's Board of Directors. The Bank's profit sharing
contribution, together with its salary deferral matching contribution
and any additional contributions in each plan year, may not exceed 15
percent of the compensation of all Plan participants. The Board of
Directors of the Bank elected to make a profit sharing allocation to
the Plan of $1,334,039 in 1999 and $1,010,350 in 1998. Contributions
are subject to certain limitations.
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PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's voluntary
contribution and an allocation of (a) the Bank's contributions, (b)
amounts previously forfeited for reinstated employees, (c) investment
income and (d) investment appreciation or depreciation. The Bank's
contribution is allocated annually to each participant's account in the
proportion that each participant's annual compensation bears to the
total compensation for all participants for the plan year.
VESTING
Participants are fully vested in any voluntary contributions and income
thereon. Participants vest in Bank contributions and the related income
earned as follows:
<TABLE>
<CAPTION>
YEAR(S) OF SERVICE PERCENTAGE VESTED
------------------ -----------------
<S> <C>
1 20%
2 40%
3 60%
4 80%
5 100%
</TABLE>
Notwithstanding the above, if a participant (1) attains the age of 59
1/2, (2) dies or (3) terminates employment by reason of disability
while employed, the Bank's contribution and forfeitures allocated to
such participant becomes 100 percent vested without regard to years of
service.
PAYMENT OF BENEFITS
Participants may elect to receive benefits in the form of a single
lump-sum amount equal to the value of the participant's vested interest
in their account or equal installments over a period of not more than
the life expectancy determined at the time of distribution. Payments
are valued as of the last valuation date on or before termination and
are recorded when paid.
PARTICIPANT LOANS
The Plan permits participants to borrow against their vested account
balances. Participants can borrow the lesser of 50 percent of their
vested account balance or $50,000 reduced by the excess, if any, of
their highest outstanding balance of loans from the Plan during the
one-year period prior to the date of the loan over their current
outstanding balance of loans. The interest rate on participant loans is
the prime rate at inception of the loan plus one percent. Loans
outstanding as of December 31, 1999 and 1998 had an interest rate of
5.95 percent to 10.50 percent and 6.0 percent to 9.0 percent,
respectively, and mature between 2000 and 2013 and 1999 and 2008,
respectively.
2
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FORFEITURES
Forfeitures attributable to the Bank's matching contributions are used
to reduce the Bank's contribution for the Plan year in which the
forfeitures occur.
Forfeitures attributable to the Bank's discretionary contributions are
added to the Bank's discretionary contribution for the plan year in
which such forfeitures occur and allocated among the participants'
accounts in the same manner as the Bank's discretionary contributions.
During 1999, employer contributions were reduced by $16,392.
Unallocated forfeitures at December 31, 1999 and 1998 totaled
$41,889 and $0, respectively.
ADMINISTRATIVE EXPENSES
All expenses incurred in the administration of the Plan, including
legal and accounting fees are paid directly by the Bank. During the
1999 Plan year, the administrative expenses paid by the Bank were not
significant.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements of the Plan are presented in accordance with
accounting principles generally accepted in the United States (GAAP)
and thus are based on the accrual method of accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, and changes therein, and
disclosure of contingent assets and liabilities. Actual results could
differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. The majority of
investments are based on quoted market prices, which represents the net
asset value of shares held by the Plan at year-end. One of the Plan's
investments is a non-benefit-reponsive investment contract valued at
fair value (Note 4). It is management's belief that fair value
approximates contract value. Participant loans are valued at cost,
which approximates fair value.
Purchases and sales of securites are recorded on a trade-date basis.
Dividends are recorded on the ex-dividend date. Investment income and
appreciation or depreciation is allocated daily to each participant's
account in proportion to the ratio of the account balance to all
account balances.
3
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3. INVESTMENTS
The following presents investments that represent five percent or more of the
Plan's net assets as of December 31,
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CIGNA Charter Guaranteed Income Fund (Note 4) $ 9,418,076 $ -
CIGNA Charter Balance Fund I 4,968,102 -
Fidelity Advisor Equity Income Account 4,186,383 -
Invesco Dynamics Account 5,021,632 -
CIGNA Charter Small Company Stock - Value I Fund 4,103,838 -
CIGNA Charter Foreign Stock II Fund 2,254,648 -
Mid-State Bancshares 2,231,231 1,483,538
Participant Loans 2,126,845 2,268,321
Franklin Cash Reserves Fund - 6,397,902
Franklin Income Fund - 6,073,717
Mutual Shares Fund - 4,409,418
Franklin Equity Income Fund - 5,045,783
Franklin Balance Sheet Investment Fund - 5,981,287
Templeton Foreign Fund - 2,082,531
</TABLE>
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated in value by
$2,067,819 as follows:
<TABLE>
<S> <C>
Mutual funds $ 1,849,133
Common Stock (Mid-State Bancshares) 218,686
------------
$ 2,067,819
============
</TABLE>
4. INVESTMENT CONTRACT WITH INSURANCE COMPANY
In 1999, the Plan entered into an investment contract with the Trustee. The
contract allows the Plan to offer an investment option, CIGNA Charter Guaranteed
Income Fund (GIF), with a guaranteed rate of return. Once invested in this fund,
the Participant may be limited under certain circumstances to transfer or
withdraw funds from the investment. The GIF was determined not to be fully
benefit-responsive by the plan administrator; accordingly, it is stated at fair
value, which approximates contract value.
There are no reserves against contract value for credit risk of the contract
issuer or otherwise. The average yield and crediting interest rate was
approximately 5.1 percent for 1999. The crediting interest rate is based on a
formula agreed upon with the issuer. Such interest rates are reviewed
semi-annually for resetting.
4
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5. TAX-EXEMPT STATUS
The Internal Revenue Service has determined and informed the Company by a letter
dated February 12, 1996, that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC). The Plan
has been amended since receiving the determination letter. However, the Plan
administrator and the Plan's tax counsel believe that the Plan is designed and
is currently being operated in compliance with the applicable requirements of
the IRC.
6. PARTY-IN-INTEREST TRANSACTIONS
The Trustee and the Bank are parties-in-interest as defined by ERISA. The
Trustee invests Plan assets in its collective investment funds and the Bank's
Common Stock. Such transactions qualify as party-in-interest transactions
permitted by the Department of Labor's Rules and Regulations and are exempt
under Section 408(b)(8) of the IRC.
7. PLAN TERMINATION
Although it has not expressed any intent to do so, the Bank has the right to
amend the Plan, discontinue its contributions completely, or terminate the Plan
subject to the provisions of ERISA. In the event of complete discontinuance of
the Bank's contributions or termination of the Plan, participants will become
100 percent vested in their accounts.
5
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SCHEDULE I
PAGE 1 OF 2
MID-STATE BANK
PROFIT SHARING AND SALARY DEFERRAL 401(k) PLAN
EIN 95-2135438 Plan No. 001
Schedule of Assets Held for Investment Purposes
As of December 31, 1999
<TABLE>
<CAPTION>
Identity of Issue, Borrower,
or Similar Party Description of Investment Current Value
----------------------------------- ------------------------------------------------- ---------------
<S> <C> <C>
CASH EQUIVALENTS
*Connecticut General Life Insurance CIGNA Charter Guaranteed Income Fund $ 9,418,076
COMMON TRUST (POOLED FUNDS)
*Connecticut General Life Insurance CIGNA Charter Balance Fund I 4,968,102
*Connecticut General Life Insurance Fidelity Advisor Equity Income Account 4,186,383
*Connecticut General Life Insurance Fidelity Advisor Growth Opportunities Account 402,829
*Connecticut General Life Insurance CIGNA Charter Small Company Stock - Growth Fund 128,142
*Connecticut General Life Insurance Invesco Dynamics 5,021,632
*Connecticut General Life Insurance CIGNA Charter Large Company Stock - Growth Fund 368,049
*Connecticut General Life Insurance CIGNA Charter Large Company Stock Index Fund 1,324,546
*Connecticut General Life Insurance CIGNA Small Company Stock Value I Fund 4,103,838
*Connecticut General Life Insurance CIGNA Charter Foreign Stock II Fund 2,254,648
*Connecticut General Life Insurance Janus Aspen Series Worldwide Growth Account 173,321
-----------
22,931,490
-----------
COMMON STOCK
*National Financial Services Mid-State Bancshares 2,231,231
-----------
*Represents a party-in-interest
</TABLE>
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SCHEDULE I
PAGE 2 OF 2
MID-STATE BANK
PROFIT SHARING AND SALARY DEFERRAL 401(k) PLAN
EIN 95-2135438 Plan No. 001
Schedule of Assets Held for Investment Purposes
As of December 31, 1999
<TABLE>
<CAPTION>
Identity of Issue, Borrower,
or Similar Party Description of Investment Current Value
----------------------------------- ------------------------------------------------- ---------------
<S> <C> <C>
PARTICIPANT LOANS ALLOCATED TO:
*Participant Loans Interest rates ranging from 5.95 percent to 10.50
percent with maturities from 2000 to 2013. 2,126,845
-----------
Total assets held for investment purposes $36,707,642
===========
</TABLE>
*Represents a party-in-interest
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MID-STATE BANK
PROFIT SHARING AND SALARY DEFERRAL 401(k) PLAN
Exhibit Index
Exhibit
No. Exhibit
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23.1 Consent of Independent Public Accountants
