<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
BYL Bancorp
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
Dear Shareholder :
You are cordially invited to attend the 2000 Annual Meeting of Shareholders
(the "Meeting") of BYL Bancorp ("Company"), to be held at 9:00 a.m. on September
27, 2000 at the Yorba Linda Community Center, Club Room, 4501 Casa Loma Ave,
Yorba Linda, California 92886.
Enclosed are the Secretary's Notice of Annual Meeting, Proxy Statement and
form of Proxy. As described more fully in the Proxy Statement, at the Meeting,
you will be asked to elect four (4) directors to serve for a two-year period
until the 2002 Annual Meeting.
The enclosed Proxy Statement contains important information concerning the
matters to be voted on at the Meeting. I urge you to consider carefully these
important matters which are described in the accompanying Proxy Statement. We
hope that you will take the time to study it carefully. Your vote is very
important, regardless of how many shares you own. Even if you currently plan to
attend our Meeting, please complete, sign, date and return the enclosed Proxy
card promptly in accompanying self-addressed envelope. A prompt response will be
appreciated. If you do join us at the Meeting, and wish to vote in person, you
may revoke your proxy at that time.
The other members of the Board of Directors and I look forward to seeing
you at the Meeting.
Sincerely,
/s/ Robert Ucciferri
President and
Chief Executive Officer
August 18, 2000
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY CARD WHETHER OR
NOT YOU INTEND TO BE PRESENT AT THE MEETING.
<PAGE>
[LOGO]
1875 NORTH TUSTIN STREET
ORANGE, CALIFORNIA 92865
-----------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 27, 2000
9:00 A.M.
-----------------------------------------------------
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting (the
"Meeting") of Shareholders of BYL Bancorp, a California corporation (the
"Company"), has been called by the Board of Directors of the Company and will be
held at the Yorba Linda Community Center, Club Room, 4501 Casa Loma Avenue,
Yorba Linda, California at 9:00 a.m. local time on September 27, 2000 for the
following purposes:
1. ELECTION OF DIRECTORS. To elect the following four (4)
directors to the Board of Directors to serve until the 2002 Annual Meeting of
Shareholders and until their successors are elected and have qualified. The
Board of Directors' nominees are the following persons:
Eddie R. Fischer John F. Myers
Barry Moore Brent Wahlberg
2. OTHER BUSINESS. To consider and act upon such other
business as may properly come before the Meeting or any adjournment or
postponement thereof.
The Bylaws of BYL Bancorp provide for the nomination of
directors in the following manner:
"Nominations for election of members of the board of directors
may be made by the board of directors or by any shareholder of any outstanding
class of capital stock of the corporation entitled to vote for the election of
directors. Notice of intention to make any nominations (other than for persons
named in the notice of the meeting at which such nomination is to be made) shall
be made in writing and shall be delivered or mailed to the president of the
corporation by the later of the close of business 21 days prior to any meeting
of shareholders called for the election of directors or 10 days after the date
of mailing of notice of the meeting to shareholders. Such notification shall
contain the following information to the extent known to the notifying
shareholder: (a) the name and address of each proposed nominee; (b) the
principal occupation of each proposed nominee; (c) the number of shares of
capital stock of the corporation owned by each proposed nominee; (d) the name
and residence address of the notifying shareholders; (e) the number of shares of
capital stock of the corporation owned by the notifying shareholder; (f) with
the written consent of the proposed nominee, a copy of which shall be furnished
with the notification, whether the proposed nominee has ever been convicted of
or pleaded nolo contendere to any criminal offense involving dishonesty or
breach of trust, filed a petition in bankruptcy, or been adjudged bankrupt. The
notice shall be signed by the nominating shareholder and by the nominee.
Nominations not made in accordance herewith shall be disregarded by the chairman
of the meeting, and, upon his instructions, the inspectors of election shall
disregard all votes cast for each such nominee. The restrictions set forth in
this paragraph shall not apply to nomination of a person to replace a proposed
nominee who has died or otherwise become incapacitated to serve as a director
between the last day for giving notice hereunder and the date of election of
directors if the procedure called for in this paragraph was followed with
respect to the nomination of the proposed nominee."
Only holders of Common Stock of the Company of record at the
close of business on August 11, 2000 will be entitled to notice of, and to vote
at, the Meeting or any adjournments or postponements thereof.
By Order of the Board of Directors,
H. Rhoads Martin, Jr.
Chairman of the Board
Orange, California
August 18, 2000
PLEASE MARK, SIGN AND RETURN YOUR PROXY PROMPTLY, WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING. YOUR PROXY WILL BE REVOCABLE, EITHER IN
WRITING OR BY VOTING IN PERSON AT THE MEETING, AT ANY TIME PRIOR TO ITS EXERCISE
BY FOLLOWING THE PROCEDURES DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT.
PLEASE INDICATE ON THE PROXY WHETHER YOU EXPECT TO ATTEND THE MEETING SO THAT WE
MAY ARRANGE FOR ADEQUATE ACCOMMODATIONS.
1
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OF
[LOGO]
To Be Held September 27, 2000
This proxy statement is furnished in connection with the
solicitation of proxies to be used by the Board of Directors of BYL Bancorp (the
"Company") at the 2000 Annual Meeting of Shareholders of the Company currently
scheduled to be held at the Yorba Linda Community Center, Club Room, 4501 Casa
Loma Avenue, Yorba Linda, California on September 27, 2000 at 9:00 a.m., and at
any adjournments thereof (the "Meeting").
The matters to be considered and voted upon at the Meeting
will include:
1. ELECTION OF DIRECTORS. To elect the following four (4)
directors of the Company to serve as directors of the Company until the 2002
Annual Meeting of Shareholders and until their respective successors shall be
elected and qualified:
Eddie Fischer John F. Myers
Barry Moore Brent Wahlberg
2. OTHER BUSINESS. To consider and transact such other
business as may properly come before the meeting and any adjournment or
adjournments thereof.
This Proxy Statement, the accompanying form of proxy and the
Annual Report to Shareholders for the fiscal year ended December 31, 1999 are
being mailed on approximately August 25, 2000 to all persons who were
shareholders as of August 11, 2000.
REVOCABILITY OF PROXIES
A form of proxy for voting your shares at the Meeting is
enclosed. Any shareholder who executes and delivers a proxy has the right to
revoke it at any time before it is voted by filing with the Secretary of the
Company an instrument revoking it or a duly executed proxy bearing a later date.
In addition, the powers of the proxyholders will be revoked if the person
executing the proxy is present at the Meeting and advises the Chairman of his
election to vote in person. Shares represented by a properly executed proxy
received prior to the Meeting will be voted in accordance with the shareholder's
specifications, as noted on the proxy, or if not otherwise specified, and unless
revoked, such shares will be voted in favor of election of the nominees
specified herein and in favor of the other proposals specified herein.
The proxy also confers discretionary authority to vote the
shares represented thereby on any matter that was not known at the time this
Proxy Statement was mailed which may properly be presented for action at the
Meeting and may include: approval of minutes of the prior annual meeting, which
will not constitute ratification of the actions taken at such meeting; action
with respect to procedural matters pertaining to the conduct of the Meeting; and
election of any person to any office for which a bona fide nominee is named
herein if such nominee is unable to serve or for good cause will not serve.
1
<PAGE>
PERSONS MAKING THE SOLICITATION
The Company's Board of Directors is soliciting the enclosed
proxy. The principal solicitation of proxies is being made by mail, although
additional solicitation may be made by telephone, telegraph or personal visits
by directors, officers and employees of the Company. The Company may, at its
discretion, engage the services of a proxy solicitation firm to assist in the
solicitation of proxies. The total expense of this solicitation will be borne by
the Company and will include reimbursement paid to brokerage firms and others
for their expenses in forwarding soliciting material and such expenses as may be
paid to any proxy soliciting firm engaged by the Company.
VOTING SECURITIES
OUTSTANDING SHARES AND RECORD DATE
Shareholders of record as of the close of business on August
11, 2000 ("Record Date") will be entitled to notice of and to vote at the
Meeting. As of such date, the Company had outstanding 2,538,435 shares of common
stock, no par value ("Common Stock").
VOTING RIGHTS
For each matter submitted to the vote of the shareholders,
each holder of Common Stock will be entitled to one vote, in person or by proxy,
for each share of Common Stock he or she held of record on the books of the
Company as of the Record Date. At the 1997 Special Meeting of Shareholders, when
the Company was approved to become a bank holding company for Bank of Yorba
Linda, now known as BYL Bank Group, the Company's Proxy Statement contained a
description of the Company's Articles of Incorporation, as amended, that
eliminated cumulative voting in connection with the Election of Directors.
The presence, in person or by proxy, of a majority of the
shares entitled to vote will constitute a quorum for the Meeting. Votes cast by
proxy or in person at the Meeting will be counted by appointed inspectors of
election. The inspectors of election will treat shares represented by proxies
that reflect abstentions as shares that are present and entitled to vote, for
purposes of determining the presence of a quorum and for purposes of determining
the outcome of any matter submitted to the shareholders for a vote. Abstentions,
however, do not constitute a vote "for" or "against" any matter and thus will be
disregarded in the calculation of a plurality or of "votes cast." The election
inspectors will treat shares referred to as "broker non-votes" (i.e., shares
held by brokers or nominees as to which instructions have not been received from
the beneficial owners or persons entitled to vote or that the broker or nominee
does not have discretionary power to vote on a particular matter) as shares that
are present and entitled to vote for purposes of determining the presence of a
quorum. However, for purposes of determining the outcome of any matter as to
which the broker has physically indicated on the proxy that it does not have
discretionary authority to vote, those shares will be treated as not present and
not entitled to vote with respect to that matter even though those shares are
considered entitled to vote for quorum purposes and may be entitled to vote on
other matters.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of August 11,
2000 pertaining to beneficial ownership of the Company's common stock by persons
known to the Company to own five percent (5%) or more of such stock, current
directors and Executive Officer of the Company, and all directors and Executive
Officers(1) of the Company as a group. The information contained herein has been
obtained from the Company's records and from information furnished directly by
the individual or entity to the Company. All shares are held with shared voting
and investment power except as otherwise indicated. All addresses of Directors
and Executive Officers are in care of the Company at 1875 North Tustin Street,
Orange, California.
The table should be read with the understanding that more than
one (l) person may be the beneficial owner or possess certain attributes of
beneficial ownership with respect to the same securities. In addition, shares of
Common Stock issuable pursuant to options which may be exercised within sixty
(60) days of August 11, 2000 are deemed to be issued and outstanding and have
been treated as outstanding in calculating the percentage ownership of those
individuals possessing such interest.
<TABLE>
<CAPTION>
Beneficial Ownership(2)
of Common Stock on
August 11, 2000
Name Title Shares Percent
---- ----- ------ -------
<S> <C> <C> <C>
Henry E. Cox II(3) Director 117,388 (4) 4.62%
Eddie R. Fischer(5) Director 78,417 (6) 3.09%
Neil F. Hatcher(7) Director 108,876 (8) 4.29%
H. Rhoads Martin Director 15,749 (9) 0.62%
Barry Moore Senior Executive Vice President 29,834(10) 1.18%
and Chief Operating Officer of
the Bank; Executive Vice President
and Chief Financial Officer of the
Company
Michael H. Mullarky Executive Vice President 29,834(11) 1.18%
and Chief Credit Officer of
the Bank
John F. Myers Director, Secretary 16,066(12) 0.63%
Gary Strachn(13) Senior Vice President and 2,000(14) 0.08%
Chief Financial Officer of the
Bank
Robert Ucciferri President, Chief Executive 75,378(15) 2.97%
Officer and Director
Gloria J. Van Kampen (16) Executive Vice President/ 48,071(17) 1.89%
Chief Administrative Officer
of the Bank
Brent W. Wahlberg Director 17,471(18) 0.69%
All Directors and Executive 553,451(19) 21.80%
Officers as a Group (11 in number)
</TABLE>
----------
(1) As used throughout this Proxy Statement, the term "officer" or
"executive officer" refers to the President and Chief
Executive Officer, the Senior Executive Vice President/Chief
Operating Officer, the Executive Vice President/Chief Credit
Officer, the Executive Vice President/Chief Administrative
Officer, and the Senior Vice President /Chief Financial
Officer.
(2) Beneficial owner of a security includes any person who,
directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise has or shares: (a)
voting power which includes the power to vote, or to direct
the voting of such security; and/or the investment power,
which includes the power to dispose, or to direct the
disposition, of such security. Beneficial owner also includes
any person who has the right to acquire beneficial ownership
of such security as defined above within sixty (60) days of
August 11, 2000.
(3) Mr. Cox was appointed to the Board of Directors of the Company
and its wholly-owned subsidiary upon the merger of DNB
Financial with the Company on May 29, 1998.
(4) Includes 300 shares of common stock which may be acquired by
Mr. Cox upon exercise of stock options.
(5) Mr. Fischer was appointed to the Board of Directors of the
Company and its wholly-owned subsidiary upon the merger of DNB
Financial with the Company on May 29, 1998.
(6) Includes 300 shares of common stock which may be acquired by
Mr. Fischer upon exercise of stock options.
(7) Mr. Hatcher was appointed to the Board of Directors of the
Company and its wholly-owned subsidiary upon the merger of DNB
Financial with the Company on May 29, 1998.
(8) Includes 300 shares of common stock which may be acquired by
Mr. Hatcher upon exercise of stock options.
(9) Includes 8,200 shares of Common Stock which may be acquired by
Mr. Martin upon exercise of stock options.
(10) Includes 43,701 shares of Common Stock which may be acquired
by Mr. Moore upon exercise of stock options.
(11) Includes 4,167 shares held in the Joseph W. Mullarky
Testamentary Trust dated January 5, 1987, and Mr. Michael
Mullarky acts as sole trustee. Includes 14,835 shares of
Common Stock which may be acquired by Mr. Mullarky upon
exercise of stock options.
(12) Includes 8,867 shares of Common Stock which may be acquired by
Mr. Myers upon exercise of stock options.
(13) Mr. Strachn is not on the Board of the Company or its
wholly-owned subsidiary, but was appointed an Senior Vice
President/Chief Financial Officer of its wholly-owned
subsidiary on September 22, 1999.
(14) Includes 0 shares of Common Stock which may be acquired by Mr.
Strachn upon exercise of stock options.
(15) Includes 38,066 shares of Common Stock which may be acquired
by Mr. Ucciferri upon exercise of stock options.
(16) Ms. Van Kampen is not on the Board of the Company or its
wholly-owned subsidiary, but was appointed an Executive Vice
President/Chief Administrative Officer of its wholly-owned
subsidiary upon the merger of DNB Financial with the Company
on May 29, 1998.
(17) Includes 1,600 shares of common stock which may be acquired by
Ms. Van Kampen upon exercise of stock options.
(18) Includes 6,600 shares of Common Stock which may be acquired by
Mr. Wahlberg upon exercise of stock options.
(19) Includes 108,626 shares of Common Stock which may be acquired
upon exercise of stock options.
3
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
NUMBER OF DIRECTORS AND DIVISION OF DIRECTORS INTO CLASSES
The Articles of Incorporation and Bylaws of the Company
provide that the number of directors of the Company may be no less than six (6)
and no more than eleven (11), with the exact number to be fixed by a resolution
of the Board of Directors or the shareholders. The Board of Directors has fixed
the number of directors at eight (8).
At the 1997 Special Meeting of Shareholders of the Bank, the
shareholders approved the formation of the Company as a bank holding company for
Bank of Yorba Linda, now known as BYL Bank Group. The Company's Articles of
Incorporation provides that as a "listed corporation," i.e., a corporation with
outstanding securities designated as qualified for trading as a national market
system security on NASDAQ, the directors are divided into two classes, Class I
and Class II, with the directors to be divided between the classes as equally as
possible. The Articles of Incorporation also provides that the directors
selected for Class I would be elected at the 1998 Annual Meeting of Shareholders
for a two (2) year term, and the directors selected for Class II would be
elected at the 1999 Annual Meeting of Shareholders for a two (2) year term. As a
result, the directors selected for Class I will be elected for a two (2) year
term at the 2000 Annual Meeting of Shareholders.
NOMINEES FOR ELECTION AS DIRECTORS
The Board of Directors has selected Messrs. Fischer, Moore,
Myers, and Wahlberg as the directors of Class I, who if elected at the 2000
Annual Meeting of Shareholders, will hold office until the 2002 Annual Meeting
of Shareholders. The Board of Directors has also selected Messrs. Cox, Hatcher,
Martin and Ucciferri as the directors of Class II, who were elected at the 1999
Annual Meeting of Shareholders and will hold office until the 2001 Annual
Meeting of Shareholders. Mr. Myers, originally selected as part of Class II, has
been moved to Class I as a result of the resignation of Mr. Leonard Lindborg, in
order to comply with the requirement contained in the Company's bylaws that each
class of directors be as equal as possible.
If any nominee should become unable or unwilling to serve as a
director, the proxies will be voted for such substitute nominee as shall be
designated by the Board of Directors. The Board of Directors presently has no
knowledge that any of the nominees will be unable or unwilling to serve.
4
<PAGE>
Additional nominations can be made only by complying with the notice provisions
included in the Notice of Meeting. This Bylaw provision is designed to give the
Board of Directors advance notice of competing nominations, if any, and the
qualifications of nominees, and may have the effect of precluding third-party
nominations if not followed. The five (5) nominees receiving the highest number
of Common Stock votes at the Meeting shall be elected.
The following table provides certain information as of the
Record Date with respect to each person nominated and recommended to be elected
by the current Board of Directors of the Company, as well as all other
Directors. Reference is made to the section entitled "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" for information pertaining to stock
ownership of the nominees.
<TABLE>
<CAPTION>
Year First
Name of Director Appointed
and Offices Held Business Experience or Elected
(Other than Director) Age (1) During Past 5 Years Director
--------------------- --- ------------------- --------
<S> <C> <C> <C>
Henry E. Cox II 61 President and CEO, Jurupa Western 1998
Eddie R. Fischer 64 CEO, Vista Paints 1998
Neil F. Hatcher 62 Retired, former President and CEO 1998
of DANB
H. Rhoads Martin, Jr. 53 President, Martin Companies, a real 1990
estate investment and property
management firm
John F. Myers, 63 Retired Pharmacist, former owner, 1990
Secretary B&B Pharmacy
Barry J. Moore, 51 Banker (2) 1996
Executive Vice President
Robert C. Ucciferri, 63 Banker (3) 1990
President
Brent W. Wahlberg 79 Retired (formerly Vice President of 1979
Eadington Fruit Company)
</TABLE>
There are no family relationships between any of the directors
or executive officers of the Company.
THE BOARD OF DIRECTORS INTENDS TO VOTE ALL PROXIES HELD BY IT
IN FAVOR OF ELECTION OF EACH OF THE NOMINEES. YOU ARE URGED TO VOTE FOR PROPOSAL
1: TO ELECT THE FOUR (4) NOMINEES SET FORTH HEREIN TO SERVE UNTIL THE 2002
ANNUAL MEETING OF SHAREHOLDERS AND UNTIL THEIR RESPECTIVE SUCCESSORS SHALL BE
ELECTED AND QUALIFIED: EDDIE R. FISCHER, BARRY MOORE, JOHN F. MYERS AND BRENT
WAHLBERG.
----------
(1) Ages are as of August 11, 2000
(2) Mr. Moore was first employed by the Bank in 1980 as Vice
President Branch Manager/Commercial Lender. He left shortly
thereafter to relocate to San Diego (Torrey Pines Bank). He
returned to the Bank in 1986 as Executive Vice
President/Credit Administrator. Mr. Moore was appointed Chief
Financial Officer in 1991 and has served as a Director since
January 1996.
(3) Prior to joining the Company, Mr. Ucciferri served in various
positions with Citizens Bank of Costa Mesa and El Camino Bank,
both owned by the same holding company. His positions included
President of both Companies (at different times) and Executive
Vice President of Citizens Bank.
5
<PAGE>
THE BOARD OF DIRECTORS AND COMMITTEES
During 1999, the Board of Directors of the Company held TWELVE
(12) regular meetings and NO special meetings. In addition, during 1999, the
Board of Directors of the Bank held TWELVE (12) regular meetings and TWO (2)
special meetings. In addition to meeting as a group to review the Company's
business, certain members of the Board of Directors of the Company also devoted
their time and talents to the following standing committees:
The Bank's Asset & Liability Management Committee is currently
composed of Directors Moore (Chairman) and Ucciferri and Executive Officers Mike
Mullarky, Gary Strachn and Gloria Van Kampen. This Committee, which met TWELVE
(12) times in 1999, is charged with managing the Bank's assets and liabilities,
including the management of interest and repricing opportunities and maturity
elements.
The Bank's Audit Committee, currently composed of Directors
Hatcher (Chairman), Fischer, Martin, Myers, and Wahlberg , met SIX (6) times in
1999. The purpose of this Committee is to direct the audits and credit review
activities and to make certain that these functions are performed with the
necessary freedom and independence to insure the examination of all records, and
to recommend to the Board of Directors the appointment of an outside accounting
firm and to meet with and review the reports of the accounting firm.
The Bank's Compensation Committee, currently composed of
Directors Cox (Chairman), Martin, Myers, and Ucciferri, met FIVE (5) times in
1999. This Committee makes recommendations to the Board of Directors regarding
compensation matters, some of which may be delegated to this Committee.
The Bank's Facilities Committee, currently composed of
Directors Fischer [Chairman) and Moore and officers Gary Strachn and Gloria Van
Kampen, met FOUR (4) times in 1999. This Committee reviews the Bank's leases and
mortgages and makes recommendations to the Board of Directors regarding
renegotiating leases, refinancing mortgages, selling real property housing
branches or divisions of the Bank, and relocations of said branches/divisions.
The Bank's Investment Committee is composed of Directors
Wahlberg (Chairman), Moore and Ucciferri and Executive Officer Gary Strachn.
This committee, which did not meet in 1999, is charged with managing the Bank's
investment portfolio.
The Company's Mergers & Acquisitions Committee, currently
composed of Directors Cox (Chairman), Martin, Moore and Ucciferri, met FOUR (4)
times in 1999. This Committee makes recommendations to the Board of Directors
regarding possible mergers, acquisitions and sales with or by other financial
institutions.
The Company's Stockholders Committee is currently composed of
Director Myers (Chairman). This Committee monitors BYL Bancorp stock purchases
and sales by directors and executive officers and makes recommendations to the
Board of Directors regarding how to enhance stockholders' value.
It met TEN (10) times in 1999.
The Company's Stock Option Committee is currently composed of
Directors Wahlberg (Chairman), Hatcher, Martin and Ucciferri. The Committee,
which has the responsibility of recommending stock repurchases, increasing the
number of stock options and changes to the Company's Stock Option Plan, met TWO
(2) times in 1999.
6
<PAGE>
The Bank's Technology Steering Committee, currently composed
of Directors Moore (Chairman), Myers and Ucciferri and key bank executives, met
FIVE (5) times in 1999. This Committee oversees the implementation of technology
throughout the Bank and approves policies and procedures related to the use and
purchase of technology.
The Company does not have a standing Nominating Committee, but
the full Board of Directors acts as a Nominating Committee.
None of the incumbent Directors attended less than
seventy-five percent (75%) of all Board and committee meetings held during the
period for which he has been a Director.
EXECUTIVE OFFICERS
The following table sets forth as to each of the persons who
currently serves as an executive officer of the Company, such person's age,
principal, occupation, current position with the Company and/or the Bank, and
the period during which the person has served in such position.
<TABLE>
<CAPTION>
Bank Company
Business Experience Executive Executive
Name and Position Age During Past Five Years Officer Since Officer Since
----------------- --- ---------------------- ------------- -------------
<S> <C> <C> <C> <C>
Robert Ucciferri 63 President and Chief Executive Officer 1990 1997
Barry J. Moore 51 Senior Executive Vice President, 1986 1997
Chief Operating Officer of the Bank;
and Executive Vice President and
Chief Financial Officer of the Company
Michael H. Mullarky (1) 53 Executive Vice President and Chief 1990 Not Applicable
Credit Officer of the Bank
Gary R. Strachn (2) 56 Senior Vice President and 1998 Not Applicable
Chief Financial Officer
of the Bank
Gloria Van Kampen (3) 53 Executive Vice President and 1998 Not Applicable
Chief Administrative Officer
of the Bank
</TABLE>
----------
(1) Executive Vice President and Chief Credit Officer Michael
Mullarky joined the Bank in 1991. Mr. Mullarky has a total of
27 years of banking experience, primarily in lending and
credit administration. He served at Citizens Bank of Costa
Mesa for 9 years as part of senior management and was the
S.V.P./Loan Administrator at the time he left to join the
Bank.
(2) Senior Vice President and Chief Financial Officer Gary R.
Strachn joined the Company's wholly-owned subsidiary on
October 29, 1998. Mr. Strachn has a total of 21 years
experience in Banking in California, serving as Chief
Financial Officer of various organizations over the last 19
years. Mr. Strachn also has 7 years experience with local and
national CPA.
(3) Executive Vice President and Chief Administrative Officer
Gloria Van Kampen joined the Company's wholly-owned subsidiary
on May 29, 1998 as a result of the acquisition of DNB
Financial by the Company. Ms. Van Kampen previously served as
Executive Vice President of DNB Financial ("DNBF") and its
wholly-owned subsidiary, De Anza National Bank ("DANB"), since
June 1994. Prior to that time, Ms. Van Kampen served as Senior
Vice President of DANB and DNBF from June 1988 until June
1994, and as Assistant Vice President of DANB from June 1982
until June 1984, and as Vice President from July 1984 until
1988. Ms. Van Kampen served as Chief Financial Officer of DANB
since June 1984 and of DNBF since June 1988.
7
<PAGE>
DIRECTOR COMPENSATION
During 1999, the paid compensation equal to $2,000 per month
for each director minus the amount of medical insurance premium payments paid on
behalf of each director if a director elects to be covered under the Company's
medical insurance plan, except that Messrs. Ucciferri and Moore receive $500 per
month.
EXECUTIVE COMPENSATION
Executive officers receive no compensation for their services
on behalf of the Company. The following summary compensation table sets forth,
for the last three (3) completed fiscal years, the cash and certain other
compensation paid by the Bank to the Bank's President and Chief Executive
Officer and the other Executive Officers of the Bank whose total annual salary
and bonus for the fiscal year ended December 31, 1999 exceeded $100,000.
<TABLE>
<CAPTION>
Long-Term All Other
Annual Compensation Compensation Compensation
------------------- ------------- ------------
(A) (B) (C)(1) (D)(2) (E)(3)
Awards
Stock
Other Annual Options
Name and Principal Position Fiscal Year Salary ($) Bonus ($) Compensation (#) $
--------------------------- ----------- ---------- --------- ------------ --- -
<S> <C> <C> <C> <C> <C> <C>
Robert Ucciferri 1999 $216,666 $-0- $-0- -0- $56,330 (4)
1998 $200,000 $366,405 $-0- 7,000 $55,673 (5)
1997 $149,000 $441,100 $-0- 13,333 $54,338 (6)
Barry J. Moore 1999 $175,000 $-0- $-0- -0- $27,264 (7)
1998 $159,000 $182,115 $-0- 8,500 $25,081 (8)
1997 $110,000 $221,100 $-0- 25,334 $24,420 (9)
Mike Mullarky 1999 $103,000 $-0- $-0- -0- $23,496 (10)
1998 $103,700 $121,893 $-0- 7,500 $18,200 (11)
1997 $ 85,000 $170,900 $-0- 3,334 $10,150 (12)
Gary R. Strachn 1999 $ 77,583 $-0- $-0- -0- $12,118 (13)
Gloria Van Kampen 1999 $130,000 $-0- $-0- -0- $12,688 (14)
1998 $112,000 $ 76,885 $-0- 8,000 $ 2,346 (15)
</TABLE>
----------
(1) Total base salary paid for fiscal years 1999, 1998 and 1997
for the Bank.
(2) The chart reflects the following bonuses earned in 1996 and
paid in 1997: Mr. Ucciferri ($95,785), Mr. Moore ($43,825) and
Mr. Mullarky ($40,715). The chart also reflects the following
bonuses earned in 1997 and paid in 1998: Mr. Ucciferri
($441,100), Mr. Moore ($221,100), and Mr. Mullarky ($170,900).
The chart also reflects the following bonuses earned in 1998
and paid in 1999; Mr. Ucciferri ($366,405), Mr. Moore
($182,115), Mr. Mullarky ($121,893) and Ms. Van Kampen
($76,885).
(3) Represents the dollar value of other annual compensation not
properly categorized as salary or bonus; including (i)
perquisites and other personal benefits, securities or
property unless the aggregate amount of such compensation is
the lesser of either $50,000 or 10% of the total annual salary
and bonus reported for the named executive officer in columns
(C) and (D); (ii) above-market or preferential earnings on
restricted stock, options, stock appreciation rights ("SARs")
or deferred compensation paid during the fiscal year or
payable during that period but deferred at the election/ of
the named executive officer; (iii) earnings on long-term
incentive plan ("LTIP") compensation paid during the fiscal
year or payable during that period but deferred at the
election of the named executive officer; (iv) amounts
reimbursed during the fiscal year for the payment of taxes;
and (v) the dollar value of the difference between the price
paid by a named executive officer for any security of the Bank
purchased from the Bank (through deferral of salary or
bonus, or otherwise), and the fair market value of such
security at the date of purchase, unless that discount is
available generally, either to all security holders or to all
salaried employees of the registrant. None of the named
officers had other annual compensation in excess of 10% of
the total annual salary and bonus reported for any of the last
three fiscal years.
(4) Includes $6,000 received from the Bank as director's fees,
$39,661 Salary Continuation Agreement accruals paid, and
$9,889 in health and life insurance premiums.
(5) Includes $6,000 received from the Bank as director's fees,
$39,661 Salary Continuation Agreement accruals, and $10,012 in
health and life insurance premiums.
(6) Includes $2,400 received from the Bank as director's fees,
$8,668 Salary Continuation Agreement accruals, and $8,008 in
health and life insurance premiums.
(7) Includes $6,000 received from the Bank as director's Fees,
$8,668 Salary Continuation Agreement accruals, and $11,816 in
health and life insurance premiums.
(8) Includes $6,000 received from the Bank as director's Fees,
$8,668 Salary Continuation Agreement accruals, and $10,413 in
health and life insurance premiums.
(9) Includes $2400 received from the Bank as director's fees,
$8,668 Salary Continuation Agreement accruals, and $9,752 in
health and life insurance premiums.
(10) Includes $11,976 in health and life insurance premiums and
$10,740 Salary Continuation Agreement accruals.
(11) Includes $11,040 in health and life insurance premiums and
$7,160 Salary Continuation Agreement accruals.
(12) Includes $ 10,150 in health and life insurance premiums.
(13) Includes $1,318 in health and life insurance premiums and an
auto allowance of $10,800.
(14) Includes $2,346 in health and life insurance premiums.
(15) Includes $6,768 in health and life insurance premiums and
$5,920 Salary Continuation Agreement accruals.
8
<PAGE>
EMPLOYMENT AGREEMENTS
On November 28, 1995, the Bank and Mr. Ucciferri executed a
five (5) year employment agreement commencing January 1, 1996 at a base salary
of $120,000 per annum, which will be reviewed annually by the Board. Mr.
Ucciferri's base salary for 1999 was $225,000. Mr. Ucciferri is also entitled to
the use of a car, and Mr. Ucciferri may also participate in any bonus, pension
or profit sharing plan or other employee benefit plan that is or may be adopted
by the Bank. Mr. Ucciferri is also entitled to five (5) weeks vacation per year
and appropriate medical and dental insurance. If Mr. Ucciferri is terminated
without cause, he will be entitled to twelve (12) months severance pay, and if
Mr. Ucciferri is terminated within nine (9) months of a merger, or change of
control of more than 25% of the issued and outstanding stock of the Bank, Mr.
Ucciferri
9
<PAGE>
will be entitled to twenty-four (24) months severance pay. The agreement also
contains provisions regarding disability and dispute resolution procedures.
On November 28, 1995, the Bank and Mr. Moore executed a five
(5) year employment agreement commencing January 1, 1996 at a base salary of
$85,000 per annum, which will be reviewed annually by the Board. Mr. Moore's
base salary for 1999 was $175,000. Mr. Moore is also entitled to the use of a
car, and Mr. Moore may also participate in any bonus, pension or profit sharing
plan or other employee benefit plan that is or may be adopted by The Bank. Mr.
Moore is also entitled to five (5) weeks vacation per year and appropriate
medical and dental insurance. If Mr. Moore is terminated without cause, he will
be entitled to twelve (12) months severance pay, and if Mr. Moore is terminated
within nine (9) months of a merger, or change of control of more than 25% of the
issued and outstanding stock of the Bank, Mr. Moore will be entitled to
twenty-four (24) months severance pay. The agreement also contains provisions
regarding disability and dispute resolution procedures.
On November 28, 1995, the Bank and Mr. Mullarky executed a
five (5) year employment agreement commencing January 1, 1996 at a base salary
of $85,000 per annum, which will be reviewed annually by the Board. Mr.
Mullarky's base salary for 1999 was $103,000. Mr. Mullarky is also entitled to
the use of a car, and Mr. Mullarky may also participate in any bonus, pension or
profit sharing plan or other employee benefit plan that is or may be adopted by
the Bank. Mr. Mullarky is also entitled to five (5) weeks vacation per year and
appropriate medical and dental insurance. If Mr. Mullarky is terminated without
cause, he will be entitled to twelve (12) months severance pay, and if Mr.
Mullarky is terminated within nine (9) months of a merger, or change of control
of more than 25% of the issued and outstanding stock of the Bank, Mr. Mullarky
will be entitled to twenty-four (24) months severance pay. The agreement also
contains provisions regarding disability and dispute resolution procedures.
On May 29, 1998, the Bank and Ms. Van Kampen executed a three
(3) year employment agreement commencing May 29, 1998 at a base salary of
$112,000 per annum, which shall be reviewed annually by the Board. Ms. Van
Kampen's base salary for 1999 is $130,000. Ms. Van Kampen is also entitled to
the use of a car, and Ms. Van Kampen may also participate in any bonus, pension
or profit sharing plan or other employee benefit plan that is or may be adopted
by the Bank. Ms. Van Kampen is also entitled to five (5) weeks vacation per year
and appropriate medical and dental insurance. If Ms. Van Kampen is terminated
without cause, she will be entitled to twelve (12) months severance pay, and if
Ms. Van Kampen is terminated within nine (9) months of a merger, or change of
control of more than 25% of the issued and outstanding stock of the Bank, Ms.
Van Kampen will be entitled to twenty four (24) months severance pay. The
agreement also contains provisions regarding disability and dispute resolution
procedures.
On December 22, 1999, the Bank and Mr. Strachn executed a one
(1) year employment agreement commencing December 22, 1999 at a base salary of
$85,000 per annum, which shall be reviewed annually by the Board. Mr. Strachn's
base salary for 1999 is $85,000. Mr. Strachn is also entitled to the use of a
car, and Mr. Strachn, pension or profit sharing plan or other employee benefit
plan that is or may be adopted by the Bank. Mr. Strachn is also entitled to five
(5) weeks vacation per year and appropriate medical and dental insurance. If Mr.
Strachn is terminated without cause, he will be entitled to nine (9) months
severance pay, and if Mr. Strachn is terminated within nine (9) months of a
merger, or change of control of more than 25% of the issued and outstanding
stock of the Bank, Mr. Strachn will be entitled to eighteen (18) months
severance pay. The agreement also contains provisions regarding disability and
dispute resolution procedures.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Bank's Compensation Committee is comprised of directors
Cox (Chairman), Martin, Myers, and Ucciferri. Mr. Ucciferri served as an
executive officer of the Bank during 1999. All of the above directors have had
loans outstanding from the Bank during 1999, except for Mr. Ucciferri.
Mr. Ucciferri did not participate in the discussion of his
respective compensation or performance when such matter was addressed by the
committee.
COMPENSATION COMMITTEE REPORT
The compensation committee meets annually to review the
salaries and bonuses of all executive and senior officers of the Bank. Upon
their recommendation, the Bank's full board then approves salary modifications
and bonuses, if any, for all Bank executive officers. While all officers are
reviewed, particular emphasis is placed upon the salaries paid to executive
officers.
10
<PAGE>
The goal of the compensation program is to align compensation
with business objective and performance, and to enable the Bank to attract and
reward executive officers whose contributions are critical to the long-term
success of the Bank. The Bank is committed to maintaining a pay program that
helps attract and retain the best people in the industry. To ensure that pay is
competitive, the Bank regularly compares its pay practices with those of other
leading independent banks and sets its pay parameters based upon this review.
Executive officers are rewarded based upon corporate
performance and individual contribution. Bank performance is evaluated by
reviewing the extent to which strategic and business plan goals have been met.
Individual contribution is evaluated by reviewing the progress of the Bank
against set objectives in the individuals area of responsibility.
CEO COMPENSATION
Robert Ucciferri has been President and Chief Executive
Officer ("CEO") of the Bank since 1990, and President and CEO of the Company
since it was formed in 1997. In setting Mr. Ucciferri's compensation, the
Compensation Committee made an overall assessment of Mr. Ucciferri's leadership
in achieving the Company's long-term strategic and business goals. During 1999,
particular emphasis was placed on enhancing shareholders' value. The Committee
paid specific attention to variation in budget projections as well as executive
compensation surveys from the California Banking Association, Department of
Financial Institutions and banks headquartered in the Company's local market
area. Mr. Ucciferri's salary reflects a consideration of both competitive forces
and the Company's performance.
COMPENSATION COMMITTEE
Henry C. Cox II
H. Rhoads Martin
John F. Myers
Robert Ucciferri
PERFORMANCE GRAPH
The chart shown below compares the Company's cumulative total
shareholder return from June 11, 1996 with both the NASDAQ Composite Index and
an index developed by SNL Securities LC that represents Western Banks.
Comparison from June 11, 1996 Cumulative Total Return
Among the Company, NASDAQ Index and SNL Western Bank Index
11
<PAGE>
<TABLE>
<CAPTION>
PERIOD ENDING
-------------------------------------------------------------------------------
INDEX 6/11/96 6/30/96 12/31/96 12/31/97 12/31/98 12/31/99
-------------------------------------------------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BYL Bancorp 100.00 102.20 125.55 233.95 103.03 105.54
NASDAQ- Total U.S.* 100.00 96.39 104.76 128.36 180.98 336.44
SNL Western Bank Index 100.00 99.22 122.35 180.36 184.81 190.99
</TABLE>
*SOURCE:_ CRSP, CENTER FOR RESEARCH IN SECURITY PRICES, GRADUATE SCHOOL OF
BUSINESS, THE UNIVERSITY OF CHICAGO 1999._
USED WITH PERMISSION._ ALL RIGHTS RESERVED._ CRSP.COM.
SALARY CONTINUATION AGREEMENTS
On November 28, 1995, the Bank approved a Salary Continuation
Agreement for Mr. Ucciferri effective January 1, 1996 that would provide an
annual sum of $64,700 in equal monthly installments over a ten (10) year period
upon his retirement at age 67. The Bank has purchased single premium life
insurance to cover the retirement benefits. The Bank must accrue increasing
amounts every year in order to fund various provisions of the Agreement,
including provisions regarding death after retirement, death prior to
retirement, and disability prior to retirement provisions. In 1999, the Bank
accrued $39,661 for Mr. Ucciferri's benefit, and the Bank has accrued a total of
$158,644 through December 31, 1999 for Mr. Ucciferri's benefit. If Mr. Ucciferri
voluntarily terminates his employment, he will receive the accrued amount under
the Agreement within two (2) years of the termination. If Mr. Ucciferri is
terminated without cause, Mr. Ucciferri will begin receiving the amount accrued
in the year of termination at age sixty-seven (67) in equal monthly installments
spread over ten (10) years. Mr. Ucciferri will receive no benefits under the
Agreement if Mr. Ucciferri's employment is terminated for cause.
On November 28, 1995, the Bank approved a Salary Continuation
Agreement for Mr. Moore effective January 1, 1996 that would provide an annual
sum of $64,800 in equal monthly installments over a ten (10) year period upon
his retirement at age sixty-five (65). The Bank has purchased single premium
life insurance to cover the retirement benefits. The Bank must accrue increasing
amounts every year in order to fund various provisions of the Agreement,
including provisions regarding death after retirement, death prior to
retirement, and disability prior to retirement provisions. In 1999, the Bank
accrued $8,668 for Mr. Moore's benefit, and the Bank has accrued a total of
$34,672 through December 31, 1999 for Mr. Moore's benefit. If Mr. Moore
voluntarily terminates his employment, he will receive the accrued amount under
the Agreement within two (2) years of the termination. If Mr. Moore is
terminated without cause, Mr. Moore will begin receiving the amount accrued in
the year of termination at age sixty-five (65) in equal monthly installments
spread over ten (10) years. Mr. Moore will receive no benefits under the
Agreement if Mr. Moore's employment is terminated for cause.
Effective July 21, 1998, the Bank entered into a Salary
Continuation Agreement for Mr. Mullarky that would provide an annual sum of
$60,100 in equal monthly installments over a ten (10) year period upon his
retirement at age sixty-five (65). The Bank has purchased single premium life
insurance to cover the retirement benefits. The Bank must accrue increasing
amounts every year in order to fund various provisions of the Agreement,
including provisions regarding death after retirement, death prior to
retirement, and disability prior to retirement provisions. In 1999, the Bank
accrued $10,740 for Mr. Mullarky's benefit, and the Bank has accrued a total of
$17,900 through December 31, 1999 for Mr. Mullarky's benefit. If Mr. Mullarky
voluntarily terminates his employment, he will receive the accrued amount under
the Agreement within two (2) years of the termination. If Mr. Mullarky is
terminated without cause, Mr. Mullarky will begin receiving the amount accrued
in the year of termination at age sixty-five (65) in equal monthly installments
spread over ten (10) years. Mr. Mullarky will receive no benefits under the
Agreement if Mr. Mullarky's employment is terminated for cause.
12
<PAGE>
On August 25, 1999, the Bank approved a Salary Continuation
Agreement for Ms. Van Kampen effective August 27, 1999 that would provide an
annual sum of $60,000 in equal monthly installments over a ten (10) year period
upon his retirement at age sixty-five (65). The Bank has purchased single
premium life insurance to cover the retirement benefits. The Bank must accrue
increasing amounts every year in order to fund various provisions of the
Agreement, including provisions regarding death after retirement, death prior to
retirement, and disability prior to retirement provisions. In 1999, the Bank
accrued $5,920 for Ms. Van Kampen's benefit, and the Bank has accrued a total of
$5,920 through December 31, 1999 for Ms. Van Kampen's benefit. If Ms. Van Kampen
voluntarily terminates his employment, he will receive the accrued amount under
the Agreement within two (2) years of the termination. If Ms. Van Kampen is
terminated without cause, Ms. Van Kampen will begin receiving the amount accrued
in the year of termination at age sixty-five (65) in equal monthly installments
spread over ten (10) years. Ms. Van Kampen will receive no benefits under the
Agreement if Ms. Van Kampen's employment is terminated for cause.
BANK BONUS POOL
In December 1991, the Board of Directors established a Bonus
Pool which takes effect only if certain threshold tests are met. The Bonus Pool
is calculated based on the Banks return on equity, loan losses and income after
taxes. In 1994, the 1991 Bonus Pool called for payment of $170,982 although
actual payment was only $28,020 of which $20,000 was paid to the three Executive
Officers and $8,020 was distributed among 42 staff members. The $142,962
difference between the calculated and actual bonus was not accepted by executive
management in order to maintain an adequate Tier 1 capital ratio. In 1995, the
1991 Bonus Pool accrued a total of $448,092; $177,370 was paid in 1995 and the
balance of $270,722 was paid in February 1996. Of the $448,092 total, $412,032
was paid to the three Executive Officers and $36,090 was distributed among 42
employees.
In April 1996, the Board of Directors adopted the 1996
Executive Incentive Plan for the top executive officers of the Bank. The
performance criteria includes return on average shareholders equity and average
loan. In order to be eligible for incentive payout, the Bank must be
satisfactorily rated by its regulatory agencies. In 1998, the 1996 Executive
Incentive Plan accrued a total of $715,000. The sum of $747,298 was paid March
18, 1999 to the top four executive officers of the Bank. In 1999, the 1996
Executive Incentive Plan did not accrue any funds for incentive payout. No
payment has been dispersed in 2000 to the top four executive officers of the
Bank.
401(k) PLAN
Effective February 1, 1992, the Bank adopted a 401(k) Plan
that allows eligible employees to contribute, as deferred compensation, between
one percent (1%) and fifteen percent (15%) of their salary to a trust
established pursuant to the 401(k) Plan. The Bank may match contributions up to
a given percentage of each participant's compensation. In addition, the Bank may
make additional contributions on a discretionary basis as a profit sharing
contribution. Contributions by the Bank vest over a five year period. In 1999,
the Bank matched dollar for dollar contributed up to a maximum of 4% of an
individual's salary or $4,000 dollars, whichever was less.
13
<PAGE>
COMPANY 1997 STOCK OPTION PLAN
Shareholders of the Bank, as prospective shareholders of the
Company, approved in October 1997 the Company's 1997 Stock Option Plan (the
"Plan"), which was adopted by the Board of Directors of the Company on April 23,
1997, subsequently amended on July 23, 1997 and February 18, 1998. The purpose
of the Plan is to strengthen the Company by providing an additional means of
attracting and retaining competent managerial personnel and by providing to
participating officers, key employees, directors and consultants added
incentive for high levels of performance and for unusual efforts to increase the
earnings of the Company and the Bank. The Plan seeks to accomplish these
purposes and achieve these results by providing a means whereby such officers,
key employees, directors and consultants may purchase shares of Company Common
Stock pursuant to options granted in accordance with the Plan.
460,519 unissued shares of the Company, or approximately 30%
of the then issued and outstanding shares of the Company, were originally
reserved for issuance to directors, officers, employees, and consultants
("Eligible Participants"). Options granted pursuant to the Plan may be
non-qualified options or incentive stock options within the meaning of Section
422A of the Internal Revenue Code.
The Plan is administered by the Board of Directors of the
Company or by a committee appointed from time to time by the Board. The Board of
Directors or the committee will determine with respect to the Eligible
Participants in the Plan and the extent of their participation.
The purchase price of stock subject to each option shall be
not less than one hundred (100%) of the fair market value of such stock at the
time such option is granted. An Eligible Participant owning more than ten
percent (10%) of the total combined voting power of all classes of Company stock
may only be granted an option with an exercise price at least 110% of the fair
value of Common Stock at the date of grant. The purchase price of any shares
exercised shall be paid in full in cash or, with the prior written approval of
the committee, in shares of the Company or on a deferred basis evidenced by a
promissory note. In addition, the optionee shall have the right upon exercise of
an option to surrender for cancellation a portion of the option for the number
of shares exercised. Options may be granted pursuant to the Plan for a term of
up to ten (10) years. Each option shall be exercisable according to the
determination of the Board or committee, except that options granted to
employees that are not directors or officers shall be exercisable at a minimum
of 20% per year over a five year period.
Options granted under the Plan shall not be transferable by
the optionee during the optionee's lifetime. In the event of termination of
employment as a result of the optionee's disability or in the event of an
employee's death during the exercise period, to the extent the option is
exercisable on the date employment terminates or the date the employee dies, the
option shall remain exercisable for up to one (1) year (but not beyond the end
of the original option term) by the disabled optionee or, in the event of death
of the optionee, a non-qualified option shall be exercisable by the person or
persons to whom rights under the option shall have passed by will or the laws of
descent and distribution.
If an optionee's employment is terminated, unless termination
was by reason of disability or death, the optionee shall have the right, for a
14
<PAGE>
3-month period after termination, to exercise that portion of the option which
was exercisable immediately prior to such termination. If an optionee's
employment is terminated for cause, except for options granted to consultants
and business advisors, the optionee shall have the right for a 30 day period
after termination, to exercise that portion of the option which was exercisable
immediately prior to such termination. In no event may the option be exercised
after the end of the original option term.
In the event of certain changes in the outstanding Company
Common Stock without receipt of consideration by the Company, such as stock
dividends, stock splits, recapitalization, reclassification, reorganization,
merger, stock consolidation, or otherwise, appropriate and proportionate
adjustments shall be made in the number, kind and exercise price of shares
covered by any unexercised or partially unexercised options which were already
granted. Optionees will receive prior notice of any pending dissolution or
liquidation of the Company, or reorganization, merger or dissolution or
liquidations of the Company, or reorganization, merger or consolidation where
the Company is not the surviving corporation or sale of substantially all the
assets of the Company or other form of corporate reorganization in which the
Company is not a surviving entity, or the acquisition of stock representing more
than 50% of the voting power of the stock of the Company then outstanding
("Terminating Event"). Optionees have thirty (30) days from the date of mailing
of such notices to exercise any option in full. After such thirty (30) days, any
option not exercised shall terminate and upon the occurrence of the Terminating
Event, the Plan shall terminate, unless some other provision is made in
connection with the Terminating Event.
The Board reserves the right to suspend, amend, or terminate
the Plan, and, with the consent of the optionee, make such modifications, of the
terms and conditions of his or her option as it deems advisable, such as
changing the number of shares or the period such shares are vested, except that
the Board may not, without further approval of a majority of the shares,
increase the maximum number of shares covered by the Plan, change the minimum
option price, increase the maximum term of options under the Plan or permit
options to be granted to any one other than an officer, employee, director, or
consultant of the Company.
Unless previously terminated by the Board of Directors, the
Plan shall terminate ten years from the date the Plan was originally adopted by
the Board of Directors of the Company, or April 23, 2007.
The Company has received a permit from the California
Commissioner of Corporations and has registered the Common Stock reserved for
issuance under the Plan with the SEC.
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
At FY-End (#) At FY-End (#)
Shares Acquired Value Exercisable/ Exercisable/
Name On Exercise (#) Realized ($) Unexercisable Unexercisable(1)
---- --------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Robert Ucciferri 10,000 N/A 38,066/5,600 $323,561/47,600
Barry J. Moore -0- N/A 43,701/6,800 $371,459/57,800
Michael H. Mullarky 6,666 N/A 14,835/6,000 $126,098/51,000
Gloria Van Kampen -0- N/A 1,600/8,000 $ 36,000/54,400
</TABLE>
As of December 31, 1999, there were options outstanding to
purchase a total of 404,102 shares of the Company's Common Stock.
15
<PAGE>
CERTAIN TRANSACTIONS
During the previous three (3) years, the Company has had, and
expects to have in the future, banking transactions in the ordinary course of
its business with directors, officers and their associates. These transactions
have been (and those in the future are intended to be) on substantially the same
terms, including interest rates, collateral and repayment terms on extensions of
credit, as those prevailing at the same time for comparable transactions with
others and did not involve more than the normal risk of collectability or
present other unfavorable features. During the period from January 1, 1999
through December 31, 1999, the maximum aggregate extensions of credit to
directors, executive officers and persons with which they are financially or
otherwise closely associated was approximately $2,813,549 or 9.9% of the
Company's equity capital.
Loans to directors, officers and employees or their related
interests are permitted, but must be made in compliance with all applicable laws
and regulations including Regulation O, Section 215.4(b) of the Financial
Institutions Regulatory and Interest Rate Control Act of 1978, and Section 3372
of the California Financial Code. These laws require that all director and
director related loan requests are granted with interest rates and terms based
on the same criteria as comparable credit risks within the Company. All loans to
executive officers and directors must be approved by the Senior Loan Committee
prior to submission to the Board of Directors. All loans made to any member of
the Board of Directors or the Executive Officers of the Company on behalf of
himself or any related entity, or immediate family member requires prior
approval of the majority of the full Board of Directors. At December 31, 1999,
the Company had $2,810,317 in loan commitments to directors and executive
officers with an aggregate outstanding balance of $2,803,317.
The Bank leases its Riverside branch office from a
partnership, two of whose partners are directors of the Company and the Bank.
This branch was acquired in the 1998 acquisition of DNB Financial and DeAnza
National Bank. The initial term of the lease commenced in 1982, and the lease
expires in 2002, with two ten-year renewal options. Monthly rental expense is
currently $14,166, and it is adjusted for cost of living increases every three
years. The Bank also pays its pro-rata share of taxes and common operating
expenses.
----------
(1) As a result of trades on December 31, 1999 at $8.50 per share.
The Board of Directors recommends a vote "FOR" the Election of Directors
16
<PAGE>
ADMINISTRATIVE ACTIONS
During late 1999 the FDIC completed an examination of the
books and records of the Bank. In connection with this exam the FDIC notified
the Bank that it had incorrectly calculated the risk-weighted capital
requirements of the assets retained in the Bank's 1998 and 1999 securitizations.
The FDIC also challenged the assumptions and financial model used by the Bank in
valuing these residual assets. Based on the assumptions deemed acceptable by the
FDIC, the FDIC believed the Bank's residual assets were overstated by $2.6
million. Although the Bank disagrees with the assumptions recommended by the
FDIC, it has agreed to reflect this adjustment in its Quarterly Call Reports,
primarily for regulatory capital purposes and also to engage an independent
third-party to review the assumptions used by the Bank as well as design a
financial model to more accurately measure the value of residual assets in
future reporting periods.
Primarily due to these items, the Bank has been classified as
undercapitalized. As a result, the Bank filed a capital restoration plan with
the FDIC, which provided that the Bank expects to be adequately capitalized by
March 31, 2000. As of March 31, 2000, the Bank was adequately capitalized. The
capital restoration plan also provides for increasing levels of capital every
quarter until the Bank is well capitalized in 2001. The Bank has eliminated
asset securitizations from its business plan. The Bank will continue operations
of all traditional retail banking activities through the Bank's existing branch
system. As of June 30, 2000, Bank management believes the Bank is adequately
capitalized, as the Bank's Tier 1 Capital Ratio was 7.94% and the Total Risk
Based Capital Ratio was 8.93% as of June 30, 2000.
The Bank has now amended its call reports in order to reflect
the proper computation of risk-weighted capital for residual assets and for the
$2.6 million adjustment to these residual assets pursuant to the Bank's
agreement with the FDIC. All call reports from December 31, 1998 through March
31, 2000 have been restated, also pursuant to the agreement with the FDIC.
In addition, following the recent FDIC examination, for the
purpose of cooperating with the FDIC and without admitting or denying any
allegations, effective July 10, 2000, the Bank stipulated to an administrative
order with the FDIC that requires the Bank, among other items, to retain
qualified management; have and maintain certain Tier 1 capital and total risk
based capital ratios; eliminate from its books certain assets classified loss;
revise policies concerning the Bank's asset securitization activities; obtain a
model to more adequately value its retained interests related to securitized
assets; refrain from declaring dividends without the prior written approval of
the FDIC; and adopt and implement certain other policies relating to
profitability, liquidity and funds management, sensitivity to interest rate
risk; revise certain reports to the FDIC; and correct all alleged violations of
law. The order became effective July 10, 2000.
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In order to comply with the FDIC Order, the Bank has engaged
PricewaterhouseCoopers ("PWC") to assist the Bank in determining the assumptions
used in the valuation of these assets as well as design a new valuation model
for ongoing measurement of the changes in valuation of these assets. The Bank
has now received the cash flow model from PWC for the 1999-1 Securitization and
is in the process of running the model under various assumptions. The Company
and the Bank will account for any adjustments generated utilizing these new
assumptions as a change in estimates and adjust its financial statements in
accordance with the results obtained from the model for both securitizations. As
a result of the new model and assumptions the assets for the 1999-1
securitization were written down $800,000 as a permanent decline in value during
the quarter ended June 30, 2000. Management does not anticipate a significant
write down of the 1998-1 securitization.
Further, as a result of a recent FRB examination of the
Company, the Company has executed a Memorandum of Understanding with the FRB.
The FRB MOU requires that the Company, among other items, refrain from declaring
dividends without the prior written approval of the FRB, develop and submit a
written capital plan, submission to the FRB of a statement concerning the steps
the Board proposes to take to improve the condition of the Bank and the
consolidated organization, refrain from increasing debt or renewing existing
debt without prior approval of the FRB, and submit written progress reports to
the FRB.
FORMATION OF SUBSIDIARY AND PROPOSED TRANSACTION
As a result of the recent FDIC examination, the Company has
determined that it would be in the best interests of the Company and the Bank to
transfer the retained assets, including the strips, residuals, servicing rights
and other retained interests in the 1999 securitization, as well as most of the
personnel of the SBA Department, to a minority-owned subsidiary of the Company.
The Company and the Bank executed a definitive agreement dated
July 12, 2000, that describes the terms of a proposed joint venture for a
Delaware limited liability company to be called CNL Commercial Finance, LLC.
However, the Company and its joint venture partner, CNL Commercial Funding, LP
("CFL") have decided to change the corporate structure of the subsidiary to a C
Corporation to be called CNL Commercial Finance, Inc. ("CCF"). The purpose of
the joint venture is to originate, service and securitize commercial loans, some
of which are to be guaranteed by the Small Business Administration, which are
detailed below. The subsidiary, CCF, would have a total of $10 million in equity
capital. The Company would have a 25% equity and voting interest in the
subsidiary. The Company would execute a note for its $2.5 million contribution,
and CFL would hold a 75% ownership interest in the subsidiary.
Under the amended definitive agreement, the cash price will be
at least equal to the Bank's book value of the strips, residuals, servicing
rights and other retained interests that are being transferred from the 1999-1
securitization, as well as other assets, but will not include one certificate
that is rated investment grade Baa.
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POSSIBLE BUYOUT OF THE COMPANY'S INTEREST
CFL has the option to purchase all of the Company's interest
in the subsidiary if any banking, credit law, regulation or regulatory decision
arising directly from the Company's ownership interest in the subsidiary should
significantly impair the subsidiary's profitability. In addition, the CCF
Stockholder's Agreement with CCF also describes a buyout that could occur as a
result of the Company's unwillingness or inability to meet a capital call for
additional funds because of expansion or because of insufficient earnings or
inadequate credit performance. The Stockholders' Agreement also describes a
buyout that could occur if the Company does not agree with major decisions of
CCF, CCF decided to enter into a new activity not previously approved by the
Federal Reserve Bank, or if the Company is subject to criticism, which will have
negative economic consequences for the Company.
BUSINESS OF THE SUBSIDIARY
The subsidiary's business will include the following:
- originating, purchasing, warehousing, selling and
securitizing SBA loans under various SBA programs;
- originating, purchasing, warehousing, and
securitizing SBL loans or loan pools;
- servicing loan pools, including the servicing of the
Bank's 1999 securitized SBL loans though either (1)
the assignment of BYL Bank's servicing rights with
the approval of 51% of the certificate holders in the
securitization and the appropriate rating agencies,
or (2) the execution of a sub-servicing agreement by
and between BYL Bank and the subsidiary; and
- providing lending-related services to SBA and SBL
borrowers.
MANAGEMENT
The current managers of the SBA Division of the Bank will
manage the subsidiary. In addition, the policies and procedures currently in
effect in the SBA and SBL Departments of the Bank are intended to become the
policies and procedures at the subsidiary. The Company is currently seeking
approval from the FRB pursuant to Section 4(c)(8) of the Federal Reserve Act
with this application in order to make its proposed investment in the
subsidiary. The subsidiary is in the process of obtaining a Finance Lenders Law
License from the California Department of Corporations in order to conduct the
activities described herein. The Company is also discussing the type of
applications that may be necessary with the SBA.
SUBSIDIARY WILL ACT AS SUB-SERVICER FOR BANK
The only relationship between the Bank and the subsidiary
would be a sub-servicer relationship in which the subsidiary would service the
loans serviced by the Bank under the 1999-1 securitization. The Bank will be
retaining a sufficient number of employees from the SBA Department in order to
perform the Bank's requirements under the 1998 Securitization.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's
officers and directors, and persons who own more than ten percent (10%) of a
registered
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class of the Company's equity securities, to file with the Securities and
Exchange Commission reports of ownership of common stock and other equity
securities of the Company. Because of the complexity of the reporting rules, the
Company has assumed responsibility for preparing and filing all reports required
to be filed under Section 16(a) by the directors and executive officers. The
Company believes that during the last fiscal year, all Section 16(a) filing
requirements applicable to its directors and executive officers were complied
with.
ACCOUNTANTS
The financial statements of the Company for the years ended
December 31, 1999 and 1998, to the extent and for the periods indicated in their
report included herein, have been examined by Vavrinek, Trine, Day & Co.,
independent certified public accountants. Such financial statements, to the
extent described in the preceding sentence, have been included herein in
reliance upon the report of such firm. It is anticipated that such firm will be
retained in the same capacity in 2000. It is anticipated that a representative
of such firm will be in attendance at the Meeting and available to respond to
questions regarding the Company's financial statements at that time.
PROPOSALS BY SHAREHOLDERS AT 2001 ANNUAL MEETING
In order to be eligible for inclusion in the Company's proxy
statement and proxy card for the next Annual Meeting of Shareholders pursuant to
Rule 14a-8 under the Exchange Act, shareholder proposals must be received by the
Secretary of the Company at its principal executive offices no later than
December 31, 2000. However, in order for such shareholder proposals to be
eligible to be brought before the shareholders at the next annual meeting, the
shareholder submitting such proposals must also comply with the procedures,
including the deadlines, required by Article II of the Company's Bylaws.
Shareholder nominations of Directors are not shareholder proposals within the
meaning of Rule 14a-8 and are not eligible for inclusion in the Company's proxy
statement.
OTHER BUSINESS
Management does not know of any matters to be presented to the
Meeting other than those set forth above. However, if other matters properly
come before the Meeting, it is the intention of the persons named in the
accompanying proxy to vote said proxy in accordance with the recommendation of
management and authority to do so is included in the proxy.
BYL BANCORP
Barry J. Moore
Assistant Secretary
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August 18, 2000
The Board of Directors recommends a vote "FOR" the Election of Directors
Please promptly vote, date, sign and return the enclosed proxy, whether or not
you expect to attend the meeting. A return self-addressed envelope is enclosed
for your convenience. No postage is required if mailed within the United States.
A prompt response is helpful and your cooperation will be appreciated. At any
time before a vote at the annual meeting you may revoke your proxy by (1) a
later dated proxy or a written notice of revocation delivered to the inspector
of elections or the secretary of the Company or (2) advising the inspector of
elections or the secretary of the Company at the meeting that you elect to vote
in person. Attendance at the meeting will not in and of itself revoke a proxy.
The annual meeting is on September 27, 2000. Please return your proxy in time.
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[LOGO]
PROXY PROXY
ANNUAL MEETING OF SHAREHOLDERS
JUNE 29, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder acknowledges receipt of the Notice of Annual Meeting
of Shareholders of BYL Bancorp (the "Company") and the accompanying Proxy
Statement dated August 18, 2000, and revoking any proxy heretofore given, hereby
appoints Robert Ucciferri, John F. Myers, and Neil F. Hatcher, or any one of
them, with full power to act alone, my true and lawful attorney(s), agent(s) and
proxy, with full power of substitution, for me and in my name, place and stead
to vote and act with respect to all shares of common stock of the Company which
the undersigned would be entitled to vote at the Annual Meeting of Shareholders
to be held on September 27, 2000, at 9:00 a.m., at the Yorba Linda Community
Center, Club Room, 4501 Casa Loma Avenue, Yorba Linda, California and at any and
all adjournment or adjournments thereof, with all the powers that the
undersigned would possess if personally present, as follows:
1. ELECTION OF DIRECTORS.
To elect for a two (2) year term as directors the
nominees set forth below:
/ / FOR all nominees listed below (except as indicated to
the contrary below).
/ / WITHHOLD AUTHORITY to vote for all nominees listed
below.
Eddie Fischer John F. Myers
Barry Moore Brent Wahlberg
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(Instruction: To withhold authority to vote for any
individual nominee(s), write the nominee(s) name in the
space below:)
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OTHER BUSINESS.
To transact such other business as may properly come before
the meeting.
Execution of this proxy confers authority to vote "FOR" each proposal listed
above unless the shareholder directs otherwise. If any other business is
presented at said meeting, this proxy shall be voted in accordance with the
recommendations of the Board of Directors. When signing as attorney, executor,
administrator, trustee or guardian, please give full title. If more than one
trustee, all should sign. All joint owners SHOULD sign.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED
PRIOR TO ITS EXERCISE.
I/WE DO / / or I/WE DO NOT / / expect to attend the meeting.
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<S><C>
Dated: ___________, 2000 ____________
----------------------------------------------------------------------- (Number of Shares)
If no label is affixed here, please complete:
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Signature of Shareholder(s)
Please print your name exactly as it appears on your stock certificate.
-----------------------------------------------------
Signature of Shareholder(s)
Please print your name exactly as it appears on your stock certificate.
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