U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 FORM 10-KSB/A
(Mark One)
[] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Fiscal Year Ended December 31, 1998
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________ to _____________
Commission File Number: 0-12231
BAY COMMERCIAL SERVICES
(Name of small business issuer in its charter)
California 94-2760444
(State or other jurisdiction of incorporation (IRS Employer
or organization Identification No.)
1495 East 14th Street, San Leandro, California 94577
(Address of principal executive offices) (Zip code)
Issuer's telephone number (510) 357-2265
Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act: Common Stock, No
Par Value
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. YES[X] NO[ ]
Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $11,141,000
State the aggregate market value of the voting stock held by nonaffiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of April 28, 1999: $15,631,715.
State the number of shares of Common Stock outstanding as of April 28,
1999: 1,322,110
Documents Incorporated by Reference: Part of Form 10-KSB
1998 Annual Report to Shareholders for fiscal year Part II, Items 5, 6,
ended December 31, 1998. 7 and 8
Transitional Small Business Disclosure Format (Check one): Yes[ ] No[X]
<PAGE>
PART III
ITEM 9- DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The following table sets forth certain information as of April 28,
1999 with respect to the directors of the Company, as well as all directors and
officers of the Company as a group. All of the shares shown in the following
table are owned both of record and beneficially and the person named possesses
sole voting power, except as otherwise indicated in the notes to the table.
<TABLE>
<CAPTION>
Shares Beneficially Owned as of
April 28, 1999
-------------------------------
Directors and Nominees Age Positions and Offices Director Amount Percent of Class
Held With the Company Since
- -------------------------- --- --------------------- -------- --------- ----------------
<S> <C> <C> <C> <C>
Joshua Fong, O.D 75 Chairman of the Board 1983 67,164(1) 5.08%
and Director
William R. Henson 74 Director 1983 20,000 1.51%
Richard M. Kahler 63 President, Chief 1983 148,029(2) 11.20%
Executive Officer and
Director
Dimitri V. Koroslev 53 Director 1985 39,646(3) 2.99%
William E. Peluso 85 Director 1986 99,044(4) 7.49%
Oswald (Ozzie) A. Rugaard 68 Director 1987 24,207 1.83%
Mark A. Wilton 52 Director 1998 8,949 0.68%
All directors and officers of the Company as a group (8 in number). 463,633(5) 34.97%
</TABLE>
- ----------------------
(1) Includes 4,005 shares in an Individual Retirement Account.
(2) Includes 2,292 shares held in Individual Retirement Accounts
belonging to Mr. Kahler, 1,079 shares held in an Individual Retirement
Account belonging to Mr. Kahler's wife and 26,343 shares allocated as
of December 31, 1998 to Mr. Kahler's account pursuant to the Bay
Commercial Services Employee Stock Ownership Plan (the "ESOP").
(3) Includes 13,485 shares held in an Individual Retirement Account
belonging to Mr. Koroslev, 3,235 shares held in an Individual
Retirement Account belonging to Denise N. Koroslev, 223 shares held by
Denise Koroslev, 80 shares held by Dimitri V. and Denise N. Koroslev
as custodians for Heather J. and Vasily D. Koroslev, and 2,400 shares
subject to exercisable options under the 1994 Stock Option Plan.
(4) Includes 42,997 shares held in an Individual Retirement Account
belonging to Mr. Peluso's wife.
(5) Includes 46,737 shares allocated as of December 31, 1998 pursuant
to the ESOP.
The following table sets forth certain information with respect to the
executive officers(1) of the Company:
<TABLE>
<CAPTION>
Positions Held With Officer of the
Name Age the Company and the Bank Company Since
- ---------------------- --- -------------------------------------
<S> <C> <C> <C>
Richard M. Kahler 63 President and Chief Executive Officer 1983
of the Company and the Bank
Randall D. Greenfield 50 Vice President, Chief Financial 1983
Officer and Secretary of the Company;
Senior Vice President, Chief Administrative
Officer and Secretary of the Bank
Robert A. Perantoni 65 Senior Vice President and Senior 1993
Loan Officer of the Bank
</TABLE>
- ------------------------
(1) As used throughout this 10KSB/A, the term "executive officer"
means the president, any senior vice president in charge of a
principal business unit or function, any other officer or person who
performs a policy making function for the Company, and any executive
officer of the Company's subsidiaries who performs policy making
functions for the Company.
Each executive officer serves on an annual basis and must be selected by
the Board of Directors annually pursuant to the Bylaws of the Company or the
Bank.
The following information with respect to the principal occupation and
employment of each director and executive officer, the principal business of the
corporation or other organization in which such occupation and employment is
carried on, and in regard to other affiliations and business experience during
the past five (5) years, has been furnished to the Company by the respective
directors and executive officers. Except for the Bank, none of the corporations
or organizations discussed below is an affiliate of the Company.
JOSHUA FONG, O.D. is the Chairman of the Board of Directors of the Company
and a retired optometrist. Dr. Fong is a member of the Personnel Relations Board
of the City of San Leandro. He was a partner in the Castro Valley Optometry
Group from 1989 to 1998. Dr. Fong has been a Director of the San Leandro Chamber
of Commerce, a trustee of Humana Hospital of San Leandro and of the Oakland
Chinese Presbyterian Church. Dr. Fong has been the President of the San Leandro
Breakfast Club, Kiwanis Club of East Oakland and the Wa-Sung Service Club. Dr.
Fong is one of the founders of the New Life Christian Fellowship American
Baptist Church in Castro Valley.
RANDALL D. GREENFIELD is Vice President, Chief Financial Officer and
Secretary of the Company and Senior Vice President, Chief Administrative Officer
and Secretary of the Bank. Prior to joining the Bank in 1981, he served as
Cashier-Treasurer of Centennial Bank in Hayward, California after joining that
Bank as Controller in 1977. Mr. Greenfield worked with the First State Bank of
Northern California in San Leandro in 1974 and 1975 in Bank Operations and as
the Assistant Auditor. Mr. Greenfield is a graduate of the University of
Washington in Seattle. He is a past Director and Treasurer of the San Leandro
Boys and Girls Club and past President of the Golden Gate Chapter of the Bank
Administration Institute.
WILLIAM R. HENSON is and has been since 1963 the President of Superior Home
Loans, a California loan brokerage firm, and of Superior Financial Services, a
personal property brokerage firm. Mr. Henson is a former Director and past
President of the Southern Alameda County Board of Realtors, a past Director of
the California Association of Realtors and a past President of the California
Independent Mortgage Brokers Association.
RICHARD M. KAHLER is the President and Chief Executive Officer of the
Company and the Bank. Previously, Mr. Kahler served as President and Chief
Executive Officer of Centennial Bank from 1976 to 1979, when he left to organize
Bay Bank of Commerce. Prior to 1976, Mr. Kahler was a Regional Vice President of
Camino California Bank in San Francisco, and a Vice President in Lloyds
Bank-Commercial Division, in charge of Southern Alameda County. He is a member
of the San Leandro Chamber of Commerce and has served as President of the Pinole
Chamber and as a Director of the Hayward and Castro Valley Chambers. He has also
been a Vice President of the Fruitvale and Pinole Lions Clubs.
DIMITRI V. KOROSLEV is Chairman of the Board of Directors of the Bank. He
has engaged in asset based lending since 1971. Mr. Koroslev is President and
director of Bay Business Credit, an asset based lender in Walnut Creek. From
1982 until 1988 Mr. Koroslev served as Senior Vice President/Manager of
Commonwealth Financial Corporation, an asset based lender in Walnut Creek,
California. From 1980 to 1982, he was Vice President/Manager of Foothill Capital
Corp., an asset based lender.
WILLIAM E. PELUSO is an East Bay restaurant consultant who has owned
numerous establishments since 1946. In 1965 he developed the Blue Dolphin
restaurant at the San Leandro Marina, as part of the San Leandro Shoreline
redevelopment project. The Blue Dolphin and the San Leandro Marina became a
focal point of community activity. The Blue Dolphin closed in 1998. Mr. Peluso
is past President of the Shoreline Business Association (1965-73) and the
Southern Alameda County Restaurant Association (1975-83). He is a Director of
the San Leandro Boys Club and has served as a Director of the San Leandro
Chamber of Commerce. Mr. Peluso currently serves on the Oakland Coliseum Task
Force. He is a member of the Elks and the Native Sons of California.
ROBERT A. PERANTONI is the Senior Vice President and Senior Lending Officer
of the Bank. Previously, Mr. Perantoni was a Vice President at Sanwa Bank, from
1963 to 1993.
OSWALD (OZZIE) A. RUGAARD is an independent sales consultant since 1995 and
serves in such capacity for Bay Airgas. He also serves on the Welding Advisory
Board of Chabot College, Las Positas College, and Hayward Area Eden ROP. He was
a Sales Manager for Middleton Bay Airgas in 1994 and was the President and Sales
Manager of Middleton Welder's Supply Company in San Leandro from 1948 to 1993.
He was President of the San Leandro Chamber of Commerce in 1984, President of
San Leandro Manufacturer's Association in 1970 and 1976, past Director of San
Leandro Rotary Club, a trustee of Humana Hospital of San Leandro and past
President of the Independent Welder's Association.
MARK A. WILTON is the owner of MarWil Investments. He has been involved in
HUD negotiations and the building of HUD properties since 1976. He was the
president of Marlind Inc. from 1979 to 1986. Marlind Inc. is a builder of homes
and condominiums.
No director or executive officer of the Company has any family relationship
with any other director or executive officer of the Company.
No director of the Company is a director of any other company with a class
of securities registered pursuant to section 12 or subject to the requirements
of section 15(d) of the Securities Exchange Act of 1934, as amended, or of any
company registered as an investment company under the Investment Company Act of
1940, as amended.
Committees of the Board of Directors
- ------------------------------------
The Board of Directors of the Company has established a standing Audit
Committee, with Dimitri V. Koroslev as Chairman, Joshua Fong, Oswald Rugaard,
William R. Henson and William E. Peluso as members.
The Audit Committee met once during 1998. The functions of the Audit
Committee are: (1) to recommend the appointment of and to oversee a firm of
independent certified public accountants whose duty is to audit the books and
records of the Company and the Bank for the fiscal year for which they are
appointed; (2) to monitor and recommend accounting policies to the Boards of
Directors; (3) to monitor and analyze the results of internal and regulatory
examinations; (4) to monitor the Company's and the Bank's financial and
accounting procedures and financial reporting; and (5) to assure compliance with
applicable legal and regulatory requirements with respect to audit committee
functions, internal controls, management and auditor reporting.
The Company does not have a nominating or compensation committee. The Board
of Directors of the Company performs the functions of these committees.
The Board of Directors of the Company met eighteen (18) times during 1998.
All directors of the Company attended at least 75% of the meetings of the Board
of Directors and the meetings of committees on which each director served.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file. To the best knowledge of the Company, there are no greater than
ten-percent holders of the Company's Common Stock other than Richard M. Kahler,
President and Chief Executive Officer of the Company and the Company's Employee
Stock Ownership Plan.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, for fiscal year 1998, the
officers and directors of the Company complied with all applicable filing
requirements, except that executive officer Randall D. Greenfield and director
Dimitri Koroslev each failed to file on a timely basis one Report of Changes in
Beneficial Ownership on Form 4 to report one transaction in securities. These
transactions were subsequently reported during 1998.
ITEM 10- EXECUTIVE COMPENSATION
Summary of Compensation
- -----------------------
The following table sets forth a summary of the compensation paid during
the Company's past three fiscal years for services rendered in all capacities to
Richard M. Kahler, President and Chief Executive Officer of the Company, Randall
D. Greenfield, Vice President and Chief Financial Officer of the Company and
Robert A. Perantoni, Senior Vice President and Senior Lending Officer of the
Bank, the only executive officers of the Company whose annual base compensation
and bonus exceeded $100,000 during the Company's 1998 fiscal year.
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
- ---------------------------------------------------------------------------------------------------------------------
Annual compensation
--------------------------------
Name and principal position ... Year Salary($) Bonus($) Other annual Long term All other
compensation compensation compensation
($)(1) Awards/Securities ($)
Underlying
Options (#)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard M. Kahler, 1998 $167,045 $ 71,462 $2,232 0 $39,146(2)
President and CEO 1997 $167,045 $ 62,425 $2,270 0 $46,663
1996 $152,295 $ 63,915 $1,141 0 $40,915
Randall D. Greenfield, 1998 $109,600 $ 35,731 $7,768 0 $10,825(3)
Vice President and CFO 1997 $104,600 $ 31,212 $7,421 0 $16,085
1996 $ 95,430 $ 31,958 $6,600 0 $17,425
Robert A. Perantoni, 1998 $110,250 $ 35,731 $7,086 0 $ 8,949(4)
Senior Vice President and 1997 $105,000 $ 31,212 $7,256 0 $11,960
Senior Lending Officer 1996 $ 99,250 $ 31,958 $5,480 0 $ 8,178
</TABLE>
- --------------------------------
(1) Consisting of the dollar value of the use of a Company
automobile or paid auto allowance.
(2) Includes (for 1998) the cash value of shares allocated to Mr.
Kahler's account in the ESOP ($9,347), $5,000 contributed by the
Company to Mr. Kahler's account in the Company's 401(k) Plan,
$21,200 in directors' fees paid by the Bank and the Company and
$3,599 in term life insurance payments made by the Company on
behalf of Mr. Kahler.
(3) Includes (for 1998) the cash value of shares allocated to Mr.
Greenfield's account in the ESOP ($6,929), $3,520 contributed by
the Company to Mr. Greenfield's account in the Company's 401(k)
Plan and $376 in life insurance premium payments made by the
Company on behalf of Mr. Greenfield.
(4) Includes (for 1998) the cash value of shares allocated to Mr.
Perantoni's account in the ESOP ($3,783), $3,537 contributed by
the Company to Mr. Perantoni's account in the Company's 401(k)
Plan and $1,629 in life insurance premium payments made by the
Company on behalf of Mr. Perantoni.
Option Grants and Exercises
- ---------------------------
Stock Option Grants
-------------------
The Company has established the 1994 Stock Option Plan, which was approved
by the Company's shareholders at the 1994 Annual Meeting of Shareholders. No
grants of options were made to the executive officers or the employees of the
Company and the Bank during fiscal year 1998.
Stock Option Exercises
----------------------
No stock options outstanding under the 1982 Stock Option Plan or the 1994
Stock Option Plan were exercised by any executive officer of the Company during
the Company's 1998 fiscal year. On January 14, 1999, Mr. Perantoni exercised an
option to purchase 15,000 shares of Common Stock. On April 28, 1999, Mr. Kahler
exercised an option to purchase 94,500 shares and Mr. Greenfield exercised an
option to purchase 18,675 shares of the Common Stock.
The following table shows the value at December 31, 1998 of unexercised
options held by the named executive officers of the Company under the 1982 Stock
Option Plan and the 1994 Stock Option Plan:
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
- ----------------------------------------------------------------------------------------------------------------
Number of
securities Value of
underlying unexercised in-the-
unexercised options money options at
at fiscal year-end fiscal year-end
(#) ($)
Name Shares acquired on Value Realized Exercisable/ Exercisable/
exercise (#) ($) unexercisable unexercisable(1)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard M. Kahler -0- -0- 94,500/0(2) $720,563/$0
Randall D. Greenfield -0- -0- 19,735/265(2) $151,672/$2,319
Robert A. Perantoni -0- -0- 15,000/0(2) $131,250/$0
</TABLE>
- ------------------------------
(1) Based on a bid price per share at December 31, 1998 of
$13.00.
(2) On January 14, 1999, Mr. Perantoni exercised his option to
purchase 15,000 shares of Common Stock. On April 28, 1999, Mr.
Kahler exercised his option to purchase 94,500 shares and Mr.
Greenfield exercised his option to purchase 18,675 shares of
the Common Stock.
Director Compensation
- ---------------------
During the 1998 fiscal year, directors of the Bank were paid an annual
retainer of $20,000, while directors of the Company were paid an annual retainer
of $1,200 for service as a director. Dr. Fong also received a community liaison
fee of $275 per month. Accordingly, aggregate directors' fees in the amount of
$10,000 and $135,700 were paid by the Company and the Bank, respectively, during
1998.
ITEM 11- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Shareholders
- ----------------------
As of the April 28, 1999, no person or group known to the Company owned
beneficially more than five percent (5%) of the outstanding shares of its Common
Stock except as described below.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percentage of Outstanding
Beneficial Owner Beneficial Ownership Shares Beneficially Owned
- -----------------------------------------------------------------------------
<S> <C> <C>
Joshua Fong, O.D. 67,164(1) 5.62%(1)
1495 E. 14th Street
San Leandro, CA 94577
Patrick Hopper 81,000(2) 6.78%
350 East Desert Inn Road
Las Vegas, NV 89109
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percentage of Outstanding
Beneficial Owner Beneficial Ownership Shares Beneficially Owned
- -----------------------------------------------------------------------------
<S> <C> <C>
Richard M. Kahler 148,029(3) 12.39%(3)
1495 East 14th Street
San Leandro, CA 94577
William E. Peluso 99,044(4) 8.29%(4)
1495 E. 14th Street
San Leandro, CA 94577
Bay Commercial Services 155,096(5) 12.98%(5)
Employee Stock Ownership Plan
</TABLE>
---------------------------
(1) See note (1) to beneficial ownership of management table
at Item 9, above.
(2) Based on information available to the Company and not
independently confirmed by the shareholder.
(3) See note (3) to beneficial ownership of management table
at Item 9, above.
(4) See note (5) to beneficial ownership of management table
at Item 9, above.
(5) Shares allocated to a participant's account in the ESOP
are voted by the participant. The ESOP Administrative
Committee is authorized pursuant to the ESOP to vote any
unallocated shares of Company Common Stock held by the ESOP.
The ESOP Administrative Committee is composed of Mr. Kahler,
President and Chief Executive Officer of the Bank, Dimitri
V. Koroslev, Chairman of the Board of the Bank, and a
non-officer employee of the Bank. As of December 31, 1998,
there were no unallocated shares of Company Common Stock
held by the ESOP.
Ownership of Management
- -----------------------
Information concerning ownership of the Bank's Common Stock by directors
and officers of the Bank is set forth in Item 9.
ITEM 12- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Relationships and Related Transactions
There have been no material transactions since January 1, 1998, nor are
there any currently proposed transactions, to which the Company or any of its
subsidiaries was or is to be a party, in which the amount involved exceeds
$60,000 and in which any director, executive officer, five-percent shareholder
or any member of the immediate family of any of the foregoing persons had, or
will have, a direct or indirect material interest.
Indebtedness of Management
- --------------------------
Some of the directors and executive officers of the Company and members of
their immediate families and the companies with which they have been associated
have been customers of, and have had banking transactions with, the Bank in the
ordinary course of the Bank's business since January 1, 1998, and the Bank
expects to have such banking transactions in the future. All loans and
commitments to lend included in such transactions were made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons and, in the opinion of the
Bank, did not involve more than the normal risk of collectability or present
other unfavorable features.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: April 29, 1999 BAY COMMERCIAL SERVICES
By:/s/ R. M. Kahler
Richard M. Kahler,
President and Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ R. M. Kahler DATE: April 29, 1999
----------------------------------------------
Richard M. Kahler,
President and Chief Executive Officer
(Principal Executive Officer) and Director
/s/ R. D. Greenfield DATE: April 29, 1999
----------------------------------------------
Randall D. Greenfield,
Chief Financial Officer (Principal Financial
Officer and Principal Accounting Officer)
and Secretary
Joshua Fong, O.D.* DATE: April 29, 1999
----------------------------------------------
Joshua Fong, O.D.,
Chairman of the Board of Directors and Director
William R. Henson* DATE: April 29, 1999
----------------------------------------------
William R. Henson, Director
Dimitri V. Koroslev* DATE: April 29, 1999
----------------------------------------------
Dimitri V. Koroslev, Director
William E. Peluso* DATE: April 29, 1999
----------------------------------------------
William E. Peluso, Director
Oswald A. Rugaard* DATE: April 29, 1999
----------------------------------------------
Oswald A. Rugaard, Director
Mark A. Wilton* DATE: April 29, 1999
----------------------------------------------
Mark A. Wilton, Director
*By /s/ R. M. Kahler DATE: April 29, 1999
--------------------------------------------------
(Richard M. Kahler, as Attorney-in-Fact)
</TABLE>
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
23 Independent Auditors' Consent
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements Nos.
2-97378, 33-24302 and 33-75330 on Form S-8 of Bay Commercial Services of our
report dated January 29, 1999, appearing in the Annual Report on Form 10-KSB and
incorporated by reference in this form 10KSB/A of Bay Commercial Services for
the year ended December 31, 1998.
/s/ Deloitte & Touche, LLP
Deloitte & Touche LLP
San Francisco, California
April 28, 1999
