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
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to ___________.
Commission File Number: 000-23299
A. Full Title of the plan and the address of the plan, if different from that
of the issuer named below:
BAY BANCSHARES, INC.
EMPLOYEE SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
BAY BANCSHARES, INC.
1001 HIGHWAY 146 SOUTH
LA PORTE, TEXAS 77571
<PAGE>
FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
BAY BANCSHARES, INC. EMPLOYEE SAVINGS PLAN
DECEMBER 31, 1999 AND 1998
<PAGE>
TABLE OF CONTENTS
PAGE
----
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.....................3
FINANCIAL STATEMENTS
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS..............5
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR
PLAN BENEFITS...................................................6
NOTES TO FINANCIAL STATEMENTS.....................................7
SUPPLEMENTAL INFORMATION
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT
PURPOSES ON DECEMBER 31, 1999..................................13
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS -
(TRANSACTIONS IN EXCESS OF FIVE PERCENT OF FAIR
VALUE OF PLAN ASSETS AT THE BEGINNING OF THE YEAR),
FOR THE YEAR ENDED DECEMBER 31, 1999...........................14
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Plan Committee
Bay Bancshares, Inc. Employee Savings Plan
We have audited the accompanying statements of net assets available for
plan benefits of Bay Bancshares, Inc. Employee Savings Plan as of December 31,
1999 and 1998, and the related statement of changes in net assets available for
plan benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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 the 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 plan benefits of the Plan
as of December 31, 1999 and 1998, and the changes in its net assets available
for plan benefits for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.
<PAGE>
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
are presented to comply with the Department of Labor Rules and Regulations for
Reporting and Disclosure Under the Employee Retirement Income Security Act of
1974 and are not a required part of the basic financial statements. The
supplemental schedules have been subjected to the auditing procedures applied in
our audit of the basic financial statements and, in our opinion, are fairly
stated, in all material respects, in relation to the basic financial statements
taken as a whole.
/S/ GRANT THORNTON LLP
Houston, Texas
June 6, 2000
4
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BAY BANCSHARES, INC. EMPLOYEE SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31,
ASSETS 1999 1998
---------- ----------
Cash and cash equivalents ..... $ 14,249 $ 12,366
Investments, at fair value:
Money market funds ......... 117,042 209,123
Mutual funds ............... 1,849,721 1,161,362
Stocks ..................... 173,119 83,912
Participant loans .......... 53,203 52,768
---------- ----------
2,193,085 1,507,165
Interest receivable ........... 602 865
---------- ----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS ....... $2,207,936 $1,520,396
========== ==========
The accompanying notes are an integral part of these statements.
5
<PAGE>
BAY BANCSHARES, INC. EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEAR ENDED DECEMBER 31,
1999 1998
---------- ----------
Additions to net assets attributed to:
Investment income
Net appreciation in fair
value of investments ............. $ 314,748 $ 112,242
Interest and dividends ............. 58,037 3,543
---------- ----------
372,785 115,785
Contributions:
Employer's ......................... 94,725 79,054
Employees' ......................... 292,193 232,409
Rollovers .......................... 11,499 29,428
---------- ----------
398,417 340,891
---------- ----------
Total additions .................... 771,202 456,676
Deductions from net assets attributed to:
Benefits paid to employees ........... 83,662 129,834
---------- ----------
Net increase ..................... 687,540 326,842
Net assets available for plan benefits:
Beginning of year .................... 1,520,396 1,193,554
---------- ----------
End of year .......................... $2,207,936 $1,520,396
========== ==========
The accompanying notes are an integral part of these statements.
6
<PAGE>
BAY BANCSHARES, INC. EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE A - DESCRIPTION OF PLAN
The following description of Bay Bancshares, Inc. Employee Savings Plan (the
Plan) is provided for general information purposes only. Participants should
refer to the Plan agreement for a more complete description of the Plan's
provisions.
1. GENERAL
The Bay Bancshares, Inc. Employee Savings Plan was established January 1,
1988 in recognition of the contribution made to its successful operation by
its employees and for the exclusive benefit of its eligible employees.
The Plan is a defined contribution plan covering all full-time employees of
the Company who have completed one year of service and have attained age 21.
The Plan's entry dates are January 1, April 1, July 1 and October 1.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
2. PARTICIPANT CONTRIBUTIONS
Participants may make pre-tax contributions ranging from 1% to 15% of their
earnings subject to certain maximums set by the Internal Revenue Service.
Participants may also contribute amounts representing distributions from
other qualified defined benefit or contribution plans. Participants'
contributions are nonforfeitable and are 100% vested.
3. EMPLOYER CONTRIBUTIONS
The Employer contributes 50 percent of the first 6 percent of base
compensation that a participant contributes to the plan. Additional
discretionary contributions as determined by the Employer may also be made.
Employer contributions vest in accordance with the following schedule:
VESTED INTEREST
YEARS OF SERVICE IN ACCOUNT
---------------- -------------------
Less than 3 0%
3 20%
4 40%
5 60%
6 80%
7 or more 100%
7
<PAGE>
BAY BANCSHARES, INC. EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE A - DESCRIPTION OF PLAN - CONTINUED
In the event the Plan is determined to be "top heavy," pursuant to the
Internal Revenue Code, participants should refer to the top heavy vesting
schedule contained in the Plan.
4. TRUSTEE
American Industries Trust Company is the appointed Trustee of the Plan.
5. PARTICIPANTS ACCOUNTS
Each participant's account is credited with the participant's contribution
and allocation of the Employer's contribution and Plan earnings. Allocations
are based on participant earnings or account balances, as defined. The
benefit to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
6. LOANS TO PARTICIPANTS
Participants may borrow from their fund accounts a minimum of $1,000 up to a
maximum of $50,000 or 50 percent of their vested account balance. Loan terms
range from 1-5 years. However, if the loan is used to acquire a primary
residence, repayment may exceed five years. Loans are secured by the vested
balance in the participant's account and bear interest at a rate commensurate
with local prevailing rates. Principal and interest is paid ratably through
payroll deductions.
7. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to terminate the Plan subject to the provisions of ERISA. Upon
termination of the Plan, all amounts allocated to participant's accounts will
become fully vested.
8. INCOME TAX STATUS
The Plan received a favorable determination letter dated May 20, 1998,
stating that the Plan and related trust are designed in accordance with
applicable section of the Internal Revenue Code (IRC). The Plan has been
amended since receiving the determination letter. However, the Plan
Administrator believes the Plan is currently designed and operated in
compliance with the applicable requirements of the IRC.
8
<PAGE>
BAY BANCSHARES, INC. EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1999 AND 1998
NOTE A - DESCRIPTION OF PLAN - CONTINUED
9. PAYMENTS OF BENEFITS
On termination of service due to reasons other than death, a participant may
elect to receive either a lump-sum amount equal to the value of his vested
account, authorize a direct rollover to an Individual Retirement Account
(IRA) or other employer plan, or if the vested balance is greater than $3,500
the participant may delay payment until further notice or until a specified
date. On termination of service due to death, the participants beneficiary is
entitled to a single lump-sum distribution of 100% of the account balance
upon participant's death or the beneficiary may elect to have minimum
distributions paid over a period of time not to extend beyond their life
expectancy.
10. FORFEITED ACCOUNTS
Forfeitures are created when participants terminate employment before
becoming entitled to their full benefits under the Plan. Forfeitures will be
allocated among remaining eligible participants.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Bay Bancshares, Inc. Employee Savings Plan
have been prepared in conformity with generally accepted accounting
principles as applied to profit-sharing plans and in accordance with the
terms of the Plan agreement.
A summary of the significant accounting policies applied in the preparation
of the accompanying financial statements follows.
1. BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual method of
accounting.
2. USE OF ESTIMATES
In preparing the financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the reporting period.
Actual results could differ from those estimates.
9
<PAGE>
BAY BANCSHARES, INC. EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1999 AND 1998
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
3. VALUATION OF INVESTMENTS
Money market accounts and mutual fund investments are stated at their fair
market value, as determined by quoted market price. Realized and unrealized
gains and losses in fair values of investments are included in the statement
of changes in net assets available for plan benefits. The Company stock is
valued at its quoted market price. Participant loans are valued at cost which
approximates fair value.
4. BENEFITS TO MEMBERS
Members' benefits are included in distributions during the period payment is
made.
NOTE C - RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual money market funds managed by
American Industries Trust Company. American Industries Trust Company is the
trustee as defined by the Plan and, therefore, these transactions qualify as
party-in-interest.
NOTE D - INVESTMENTS
The following presents investments that represent 5 percent or more of the
Plan's net assets.
1999 1998
-------- --------
American Industries Trust Short-Term Income Fund* $117,042 $209,123
Founders Balanced Fund 148,590 122,361
Sound Shore Fund 197,913 175,984
Fidelity Spartan U.S. Equity Index 445,047 272,951
Janus Worldwide Fund 677,575 268,509
Bay Bancshares, Inc. Stock* 173,119 83,912
Baron Asset Fund 317,130 275,674
*Party in interest.
10
<PAGE>
BAY BANCSHARES, INC. EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1999 AND 1998
NOTE D - INVESTMENTS - CONTINUED
During 1999, the Plan's investments (including realized and unrealized gains
and losses) appreciated in value by $314,748 as follows:
Mutual Funds $288,491
Stocks 26,257
--------
$314,748
========
11
<PAGE>
SUPPLEMENTAL INFORMATION
12
<PAGE>
BAY BANCSHARES, INC. EMPLOYEE SAVINGS PLAN
PLAN #001; EIN #76-0046244
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER FAIR VALUE
OF DECEMBER 31,
DESCRIPTION SHARES COST 1999
------------------------------------ ------- ---------- -----------
<S> <C> <C> <C>
American Industries Trust Short-Term Income
Fund* ................................... 117,042 $ 117,042 $ 117,042
Baron Asset Fund .......................... 5,396 243,085 317,130
Dreyfus Short-Intermediate Government Fund 6,126 65,228 63,466
Fidelity Spartan U.S. Equity Index ........ 8,544 336,611 445,047
Founders Balanced Fund .................... 14,192 165,083 148,590
Janus Worldwide Fund ...................... 8,865 431,969 677,575
Sound Shore Fund .......................... 6,716 184,094 197,913
Bay Bancshares, Inc. Stock* ............... 9,685 136,234 173,119
Participant loans ......................... -- 53,203 53,203
---------- ----------
$1,732,549 $2,193,085
========== ==========
</TABLE>
*Party in interest
13
<PAGE>
BAY BANCSHARES, INC. EMPLOYEE SAVINGS PLAN
Plan #001; EIN #76-0046244
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS - (TRANSACTIONS IN EXCESS OF
FIVE PERCENT OF FAIR VALUE OF PLAN ASSETS AT THE BEGINNING
OF THE YEAR)
Year ended December 31, 1999
<TABLE>
<CAPTION>
CURRENT
PURCHASE OR VALUE ON
NUMBER OF SELLING COST OF TRANSACTION NET GAIN
DESCRIPTION TRANSACTIONS PRICE ASSETS DATE OR (LOSS)
------------------------ ------------ ------- -------- ------ --------
<S> <C> <C> <C> <C> <C>
American Industries Trust
Short-Term Income Fund*
Purchases .............. 156 $322,155 $322,155 $322,155 $ --
Sales .................. 62 414,236 414,236 414,236 --
Fidelity Spartan U.S.
Equity Index
Purchases .............. 77 172,971 172,971 172,971 --
Sales .................. 30 62,077 48,789 62,077 13,288
Janus Worldwide Fund
Purchases .............. 77 260,268 260,268 260,268 --
Sales .................. 21 67,076 54,227 67,076 12,849
Sound Shore Fund
Purchases .............. 68 97,506 97,506 97,506 --
Sales .................. 24 72,292 67,640 72,292 4,652
Baron Asset Fund
Bond Fund
Purchases .............. 67 91,669 91,669 91,669 --
Sales .................. 25 89,895 73,976 89,895 15,919
Fidelity Money Market Fund
Purchases .............. 50 85,910 85,910 85,910 --
Sales .................. 35 85,910 85,910 85,910 --
Founders Balanced Fund
Purchases .............. 68 105,482 105,482 105,482 --
Sales .................. 23 56,511 56,917 56,511 (406)
Bay Bancshares, Inc. Stock*
Purchases .............. 23 73,578 73,578 73,578 --
Sales .................. 9 10,501 8,665 10,501 1,836
</TABLE>
*Party in interest
14
<PAGE>
EXHIBIT
NUMBER
23.1 Consent of Grant Thornton LLP
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this report to be signed in its behalf by the undersigned hereunto
duly authorized.
July 10, 2000 Bay Bancshares, Inc. Employee
Savings Plan
Bay Bancshares, Inc. as Plan Administrator
/s/ L.D. WRIGHT
L.D. Wright
President
