Commercial Bankshares, Inc. - 2005 Form 10K
United
States
Securities
and Exchange Commission
Washington,
D.C. 20549
Form
10-K
(Mark
One)
[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF
1934
For
the
fiscal year ended December 31, 2005
OR
[
]
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 33-67254
|
Commercial
Bankshares, Inc.
|
|
(Exact name of registrant as specified in its
charter)
|
|
Florida
|
|
65-0050176
|
|
(State
or other jurisdiction of incorporation or
organization)
|
|
(I.R.S.
Employer Identification No.)
|
|
1550
S.W. 57th Avenue, Miami, Florida
|
|
33144
|
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
|
(305)
267-1200
|
|
(Registrant's
telephone number, including area
code)
|
Securities
registered pursuant to Section 12(b) of the Act:
|
Title
of Each Class
|
|
Name
of Each Exchange on Which Registered
|
|
None
|
|
None
|
Securities
registered pursuant to Section 12(g) of the Act:
|
Common
Stock, par value $.08 per share
|
|
(Title
of class)
|
Indicate
by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.
Yes
__ No X .
Indicate
by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
__ No X .
Indicate
by check mark whether the registrant (1) has filed all reports required to
be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 __.
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not 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-K or any amendment to
this
Form 10-K [ ].
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange
Act. (Check one):
| Large accelerated filer Large
accelerated filer [ ] |
Accelerated
filer
[X]
|
Non-accelerated
filer [
]
|
Indicate
by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Act). [ ]
Yes [X] No
The
aggregate market value of Company's outstanding common equity held by
non-affiliates on June 30, 2005 (the last business day of the Company's most
recently completed second fiscal quarter) was $196 million.
As
of February 28, 2006, there were 6,034,369 shares
outstanding.
Documents
Incorporated by Reference
1. Certain
portions of the Annual Report to Shareholders of Commercial
Bankshares, Inc., for fiscal year ended December 31, 2005 are incorporated
by reference into Part I and Part II.
2.
Certain portions of the Company's Proxy Statement for the Annual Meeting of
Shareholders to be held on April 20, 2006 are incorporated by reference into
Part III.
|
Description
|
|
Page
No.
|
| |
|
|
|
|
|
|
|
Item 1.
|
|
1
|
| Item
1A. |
Risk
Factors |
7
|
| Item
1B. |
Unresolved
Staff Comments |
10
|
|
Item 2.
|
|
10
|
|
Item 3.
|
|
10
|
|
Item 4.
|
|
10
|
| |
|
|
|
|
|
|
|
Item 5.
|
|
11
|
|
Item 6.
|
|
11
|
|
Item 7.
|
|
11
|
|
Item 7A.
|
|
11
|
|
Item 8.
|
|
11
|
|
Item 9.
|
|
11
|
|
Item 9A.
|
|
12
|
|
Item 9B.
|
|
12
|
| |
|
|
|
|
|
|
|
Item 10.
|
|
12
|
|
Item 11.
|
|
12
|
|
Item 12.
|
|
13
|
|
Item 13.
|
|
13
|
|
Item 14.
|
|
13
|
| |
|
|
|
|
|
|
|
Item 15.
|
|
13
|
| |
|
|
|
|
|
16
|
| |
|
|
| Exhibit
10.17 |
Agreement
to Provide Software and Services |
|
| |
|
|
| Exhibit
10.18 |
Agreement
for Item Processing Services |
|
| |
|
|
|
|
Commercial
Bankshares, Inc. 2005 Annual Report
|
|
| |
|
|
|
|
Subsidiaries
of Commercial Bankshares, Inc
|
|
| |
|
|
|
|
Consent
of Independent Registered Public Accountants
|
|
| |
|
|
|
|
Consent
of Independent Registered Certified Public Accountants |
|
| |
|
|
|
|
Certification
of Chief Executive Officer Pursuant to Rule 15A-14(A) or 15D-14(A)
of the
Securities Exchange Act of 1934, As Adopted Pursuant To Section
302 of the
Sarbanes-Oxley Act of 2002
|
|
| |
|
|
|
|
Certification
of Chief Financial Officer Pursuant to Rule 15A-14(A) or 15D-14(A)
of the
Securities Exchange Act of 1934, As Adopted Pursuant To Section
302 of the
Sarbanes-Oxley Act of 2002
|
|
| |
|
|
|
|
Certification
of Chief Executive Officer Pursuant to Rule 13a-14(b) or Rule
15d-14(b)
and 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906
of the
Sarbanes-Oxley Act of 2002
|
|
| |
|
|
|
|
Certification
of Chief Financial Officer Pursuant to Rule 13a-14(b) or Rule
15d-14(b)
and 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906
of the
Sarbanes-Oxley Act of 2002
|
|
| |
|
|
|
|
Report
of Independent Registered Certified Public Accounting Firm, 2004 |
|
Commercial
Bankshares, Inc.
Commercial
Bankshares, Inc. (the "Company"), a Florida corporation organized in 1988,
is a
bank holding company registered under the Bank Holding Company Act of 1956
("BHCA"), as amended, whose wholly-owned subsidiary and principal asset is
the
Commercial Bank of Florida, (the "Bank"). The Company, through its ownership
of
the Bank, is engaged in a commercial banking business, and its primary source
of
earnings is derived from income generated by its ownership and operation of
the
Bank. Unless the context otherwise requires, references herein to the Company
include the Company and its wholly-owned subsidiary, the Bank, on a consolidated
basis.
The
Company is a legal entity separate and distinct from the Bank, and there are
various legal limitations on the ability of the Bank to finance or otherwise
supply funds to the Company. In particular, under federal banking law, the
Bank
may not declare a dividend that exceeds undivided profits. In addition, the
approval of the Federal Reserve Bank of Atlanta ("Atlanta FRB") and the Florida
Department of Banking and Finance is required if the total amount of all
dividends declared in any calendar year exceeds the Bank's net profits, as
defined, for that year combined with its retained net profits for the preceding
two years. The Atlanta FRB also has the authority to limit further the payment
of dividends by the Bank under certain circumstances. In addition, federal
banking laws prohibit or restrict the Bank from extending credit to the Company
under certain circumstances.
Commercial
Bank of Florida
The
Bank
is a Florida chartered banking corporation originally chartered in February,
1979. It operated as Sunset Commercial Bank until its acquisition by the Company
in 1988, at which time its name was changed to Commercial Bank of Florida.
The
Bank engages in commercial banking and related businesses from its fourteen
banking facilities: its main office and nine other offices located in Miami-Dade
County, Florida, and four offices in Broward County, Florida.
The
Bank
is operated as a network of community bank branches. The Bank primarily focuses
on providing personalized banking services to small businesses and individuals
within the market areas where its banking offices are located. Management
believes that this local market strategy, accompanied by the strategic placement
of Bank personnel within market areas where they have served customers for
many
years, enables the Bank to attract and retain low cost core deposits, which
provide substantially all of the Bank's funding requirements.
Deposit
products include certificates of deposit, individual retirement accounts
("IRAs") and other time deposits, checking and other demand deposit accounts,
NOW accounts, savings accounts, and money market accounts. The transaction
accounts and time certificates are tailored to the principal market areas at
rates competitive to those in the area. All deposit accounts are insured by
the
Federal Deposit Insurance Corporation ("FDIC") up to the maximum limits
permitted by law. The Bank solicits these accounts from small businesses,
professional firms, and households located throughout its primary market
area.
The
Bank
also offers ATM cards with access to local, state, and national networks,
internet banking, safe deposit boxes, wire transfers, direct deposit of payroll
and social security payments, and automatic drafts for various accounts. The
Bank presently does not provide fiduciary or appraisal services.
The
Bank
conducts commercial and consumer banking business, which primarily consists
of
attracting deposits from the areas served by its banking offices and using
those
deposits, together with funds derived from other sources, to originate a variety
of commercial, consumer, and real estate loans (including commercial loans
collateralized by real estate).
The Company
considers the general business of retail banking to be its only operating
segment.
As
is the
case with banking institutions generally, the Bank's operations are materially
and significantly influenced by general economic conditions and by related
monetary and fiscal policies of financial institution regulatory agencies,
including the Federal Reserve Board ("FRB"), the FDIC, and the State of Florida.
Deposit flows and the cost of funds are influenced by interest rates on
competing investments and general market rates of interest. Lending activities
are affected by the demand for financing of real estate and other types of
loans, which in turn is affected by the interest rates at which such financing
may be offered and other factors affecting local demand and availability
of
funds. The Bank faces strong competition in the attraction of deposits (its
primary source of lendable funds) and in the origination of real estate
loans.
Employees
At
December 31, 2005, the Company and the Bank together employed 192 employees,
of
whom five are part-time. None of these employees is covered by a collective
bargaining agreement. The Company believes that its employee relations are
good.
Market
Information
The Bank's
fourteen banking offices are located in Miami-Dade and Broward counties, which
comprise the Bank's primary market area. Management believes that the Bank's
principal markets are: (i) the established and expanding commercial market
within the primary market area, and (ii) the moderate and the affluent
residential market within the primary market area. Management also believes
that
the most profitable banking relationships are characterized by high deposit
balances with a low frequency of transactions. Moreover, management believes
that a community bank with local management is well positioned to establish
these relationships with the smaller commercial customers and households.
Management believes that the Bank is well positioned to take advantage of its
market segment.
Competition
Competition
in the banking and financial services industry is intense. In its primary market
areas, the Bank competes with other commercial banks, savings institutions,
credit unions, finance companies, mutual funds, insurance companies, and
brokerage and investment banking firms operating locally and elsewhere. Most
of
these competitors have substantially greater resources and lending limits than
the Bank and may offer certain services, such as trust services, that the Bank
does not provide at this time. In addition many of the Company's non-bank
competitors are not subject to the same extensive federal regulations that
govern the Bank and the Company. The profitability of the Company depends upon
the Bank's ability to compete in its market areas.
Available
Information
A
copy of
the Company’s Annual Report on Form 10-K along with copies of the Company’s
other periodic reports required to be filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended, are
available free of charge (absent exhibits) from the Company upon written request
to Barbara E. Reed, Chief Financial Officer, Commercial Bankshares, Inc. 1550
S.W. 57th Avenue Miami, Florida 33144. Copies of such reports are
also available electronically at the SEC’s internet website www.sec.gov,
or via the Company’s website at www.commercialbankfl.com. Reference to the
Company’s website in this Annual Report on 10K does not in any way incorporate
information contained in such website into this report.
Supervision
and Regulation
Bank
holding companies and banks are extensively regulated under both federal and
state law. These laws and regulations are intended to protect depositors, not
stockholders. To the extent that the following information describes statutory
and regulatory provisions, it is qualified in its entirety by reference to
the
particular statutory and regulatory provisions. Any change in the applicable
law
or regulation may have a material effect on the business and prospects of the
Company and the Bank.
Bank
Holding Company Regulation
As
a bank
holding company registered under the BHCA, the Company is subject to the
regulation and supervision of the FRB. The Company is required to file with
the
FRB annual reports and other information regarding its business operations
and
those of its subsidiaries. Under the BHCA, the Company's activities and those
of
its subsidiaries are limited to banking, managing or controlling banks,
furnishing services to or performing services for its subsidiaries, or engaging
in any other activity which the FRB determines to be so closely related to
banking or managing or controlling banks as to be properly incident
thereto.
The
BHCA
requires, among other things, the prior approval of the FRB in any case where
a
bank holding company proposes to (i) acquire all or substantially all of the
assets of any other bank, (ii) acquire direct or indirect ownership or control
of more than 5% of the outstanding voting stock of any bank (unless it owns
a
majority of such bank's voting shares), or (iii) merge or consolidate with
any
other bank holding company. The FRB will not approve any acquisition, merger,
or
consolidation that would have a substantially anti-competitive effect, unless
the anti-competitive impact of the proposed transaction is clearly outweighed
by
a greater public interest in meeting the convenience and needs of the community
to be served. The FRB also considers capital adequacy and other financial and
managerial resources and future prospects of the companies and the banks
concerned, together with the convenience and needs of the community to be
served, when reviewing acquisitions or mergers.
Additionally,
the BHCA prohibits a bank holding company, with certain limited exceptions,
from
(i) acquiring or retaining direct or indirect ownership or control of more
than
5% of the outstanding voting stock of any company which is not a bank or bank
holding company, or (ii) engaging directly or indirectly in activities other
than those of banking, managing, or controlling banks, or performing services
for its subsidiaries, unless such non-banking business is determined by the
FRB
to be so closely related to banking or managing or controlling banks as to
be
properly incident thereto. In making such determinations, the FRB is required
to
weigh the expected benefits to the public, such as greater convenience,
increased competition, or gains in efficiency, against the possible adverse
effects, such as under-concentration of resources, decreased or unfair
competition, conflicts of interest, or unsound banking practices.
There
are
a number of obligations and restrictions imposed on bank holding companies
and
their depository institution subsidiaries by law and regulatory policy that
are
designed to minimize potential loss to the depositors of such depository
institutions and the FDIC insurance funds in the event the depository
institution becomes in danger of default or in default. Under a policy of the
FRB with respect to bank holding company operations, a bank holding company
is
required to serve as a source of financial strength to its subsidiary depository
institutions and to commit resources to support such institutions in
circumstances where it might not do so absent such policy. The FRB also has
the
authority under the BHCA to require a bank holding company to terminate any
activity or to relinquish control of a nonbank subsidiary (other than a nonbank
subsidiary of a bank) upon the FRB's determination that such activity or control
constitutes a serious risk to the financial soundness and stability of any
bank
subsidiary of the bank holding company.
Capital
Adequacy Guidelines for Bank Holding Companies
The
Company is subject to certain FRB risk-based capital guidelines for bank holding
companies. The risk-based capital guidelines are designed to make regulatory
capital requirements more sensitive to differences in risk profiles among banks
and bank holding companies, to account for off-balance sheet exposure, and
to
minimize disincentives for holding liquid assets. Under these guidelines, assets
and off-balance sheet items are assigned to broad risk categories, each with
appropriate weights. The resulting capital ratios represent capital as a
percentage of total risk-weighted assets and off-balance sheet
items.
The
minimum ratio of total capital to risk-weighted assets (including certain
off-balance sheet activities, such as standby letters of credit) is 8%. At
least
4% of the total capital is required to be "Tier I Capital," which consists
of
common stockholders' equity, noncumulative perpetual preferred stock, and
a
limited amount of cumulative perpetual preferred stock, less certain goodwill
items and the unrealized holding gain/loss on available for sale securities.
The
remainder ("Tier II Capital") may consist of (i) the allowance for loan losses
of up to 1.25% of risk-weighted risk assets, (ii) 45% of unrealized holding
gain
on available for sale equity securities, (iii) excess of qualifying perpetual
preferred stock, (iv) hybrid capital instruments, (v) perpetual debt, (vi)
mandatory convertible securities, and (vii) subordinated debt and
intermediate-term preferred stock up to 50% of Tier I capital. Total capital
is
the sum of Tier I and Tier II capital less reciprocal holdings of other banking
organizations' capital instruments, investments in unconsolidated subsidiaries,
and any other deductions as determined by the FRB (determined on a case by
case
basis or as a matter of policy after formal rule-making).
Bank
holding company assets are given risk-weights of 0%, 20%, 50% and 100%. In
addition, certain off-balance sheet items are given similar credit conversion
factors to convert them to asset-equivalent amounts to which an appropriate
risk-weight will apply. These computations result in the total risk-weighted
assets.
The
Company's management believes that the risk-weighting of assets under current
FRB guidelines does not and will not have a material impact on the Company's
operations or on the operations of the Bank. As of December 31, 2005 and 2004,
the Company's total risk-based capital ratios were 14.11% and 14.08%,
respectively. In addition to the risk-based capital guidelines, the FRB has
adopted a minimum Tier I capital (leverage) ratio, under which a bank holding
company must maintain a minimum level of Tier I capital to total consolidated
assets of at least 3% in the case of a bank holding company that has the highest
regulatory examination rating and is not contemplating significant growth or
expansion. All other bank holding companies are expected to maintain a leverage
ratio of at least 100 to 200 basis points above the stated minimum. Federal
Reserve Board requirements also provide that bank holding companies experiencing
internal growth or making acquisitions will be expected to maintain strong
capital positions substantially above regulatory minimums without significant
reliance on intangible assets. The Federal Reserve Board may continue to
consider a "tangible Tier 1 leverage ratio" (deducting all intangibles) in
evaluating proposals for expansion or new activities. As of December 31, 2005
and 2004, the Company's leverage ratios were 7.62% and 7.87%,
respectively.
Bank
Regulation
The
Bank
is a state-chartered banking corporation and is subject to the supervision
of
and regular examination by the FRB and the Florida Department of Banking and
Finance, as well as to the supervision of the FDIC.
The
operations of the Bank are subject to state and federal statutes applicable
to
banks which are members of the Federal Reserve System and to the regulations
of
the FRB, the FDIC, and the State of Florida. Such statutes and regulations
relate to required reserves against deposits, investments, loans, mergers and
consolidations, issuance of securities, payment of dividends, establishment
of
branches, and other aspects of the Bank's operations. Various consumer laws
and
regulations also affect the operations of the Bank, including state usury laws,
laws relating to fiduciaries, consumer credit and equal credit, and fair credit
reporting. Under the provisions of the Federal Reserve Act, the Bank is subject
to certain restrictions on any extensions of credit to the Company or, with
certain exceptions, to other affiliates, on investments in the stock or other
securities of national banks, and on the taking of such stock or securities
as
collateral. These regulations and restrictions may limit the Company's ability
to obtain funds from the Bank for its cash needs, including funds for
acquisitions and the payment of dividends, interest, and operating
expenses.
The
FDIC
insures the deposits of the Bank to the current maximum allowed by law. As
an
institution whose deposits are insured by the Bank Insurance Fund ("BIF") and
Savings Association Insurance Fund ("SAIF") of the FDIC, the Bank also is
subject to insurance assessments imposed and set by the FDIC from time to time.
The FDIC is further authorized to impose one or more special assessments in
any
amount deemed necessary to enable repayment of amounts borrowed by the FDIC
from
the Treasury Department. The actual assessments to be paid into the BIF and
the
SAIF are based on the institution's assessment risk classification, which is
whether the institution is considered "well capitalized", "adequately
capitalized", or "under-capitalized", as those terms have been defined in
applicable federal regulations, and whether the institution is considered by
its
supervising agency to be financially sound or to have supervisory
concerns.
Sarbanes-Oxley
Act of 2002
On
July
30, 2002, the President of the United States signed into law the Sarbanes-Oxley
Act of 2002 (the “Act”) which mandated a variety of reforms intended to address
corporate and accounting fraud. The Company believes that it has complied with
all provision of the Act. The Act provides for the establishment of a new Public
Company Accounting Oversight Board (“PCAOB”) which enforces auditing, quality
control and independence standards for firms that audit SEC-reporting companies
and is funded by fees from all SEC-reporting companies. The Act imposes higher
standards for auditor independence and restricts performance of consulting
services by auditing firms to companies they audit. Any non-audit services
being
provided to an audit client requires preapproval by the Company’s audit
committee members. In addition, certain audit partners must be rotated
periodically. The Act requires chief executive officers and chief financial
officers, or their equivalent, to certify to the accuracy of periodic reports
filed with the SEC, subject to civil and criminal penalties if they knowingly
or
willfully violate this certification requirement. In addition, under the Act,
the Company’s counsel is required to report evidence of a material violation of
the securities laws or a break of fiduciary duty by a company to its chief
executive officer or its chief legal officer, and if such officer does not
appropriately respond, to report such evidence to the audit committee or other
similar committee of the board of directors or the board itself.
The
Act
also increases the oversight and authority of audit committees of publicly
traded companies. Audit committee members must be independent, pursuant to
Rule
10A-3 of the Exchange and are barred from accepting consulting, advisory or
other compensatory fees from the issuer. In addition all SEC reporting companies
must disclose whether at least one member of the committee is a “financial
expert” (as such term is defined by the SEC rules) and if not, why not. Audit
committees of publicly traded companies have authority to retain their own
counsel and other advisors funded by the company. Audit committees must
establish procedures for the receipt, retention and treatment of complaints
regarding accounting and auditing matters and procedures for confidential,
anonymous submission of employee concerns regarding questionable accounting
or
auditing matters.
It
is
unlawful for any person that is not a registered public accounting firm (“RPAF”)
with the PCAOB to audit an SEC-reporting company. Under the Act, a RPAF is
prohibited from performing statutorily mandated audit services for a company
if
such company’s chief executive officer, chief financial officer, comptroller,
chief accounting officer or any person serving in equivalent positions has
been
employed by such firm and participated in the audit of such company during
the
one-year period preceding the audit initiation date. The Act also prohibits
any
officer or director of a company or any other person acting under their
direction from taking any action to fraudulently influence, coerce, manipulate
or mislead any independent public or certified accountant engaged in the audit
of the Company’s financial statements for the purpose of rendering the financial
statement’s materially misleading. The Act also requires the SEC to prescribe
rules requiring inclusion of an internal control report and assessment by
management in the annual report to shareholders. The Act requires the RPAF
that
issues the audit report to attest to management’s assessment of and report on
the Company’s internal controls. In addition, the Act requires that each
financial report required to be prepared in accordance with generally accepted
accounting principles and filed with the SEC reflect all material correcting
adjustments that are identified by a RPAF in accordance with generally accepted
accounting principles and the rules and regulations of the SEC.
The
USA Patriot Act
On
October 26, 2001, President Bush signed into law The USA Patriot Act of 2001
(the “Act”). The Act substantially broadens existing anti-money laundering
legislation and the extraterritorial jurisdiction of the United States; imposes
new compliance and due diligence obligations; creates new crimes and penalties;
compels the production of documents located both inside and outside the United
States, including those of non-U.S. institutions that have a correspondent
relationship in the United States; and clarifies the safe harbor from civil
liability to customers. The Act mandates the U.S. Treasury Department to issue
a
number of regulations to further clarify the Act’s requirements or provide more
specific guidance on their application.
The
Act
requires all “financial institutions,” as defined, to establish certain
anti-money laundering compliance and due diligence programs. The Act requires
financial institutions that maintain correspondent accounts for non-U.S.
institutions or persons that are involved in private banking for “non-United
States persons” or their representatives, to establish “appropriate, specific
and, where necessary, enhanced due diligence policies, procedures, and controls
that that are reasonably designed to detect and report instances of money
laundering through those accounts.”
The
Gramm-Leach-Bliley Act (the "Act") was signed into law in November 1999 to
remove depression-era barriers that separate banking, securities and insurance
functions. The Act allows full affiliation between banks and securities firms
by
permitting the creation of financial holding companies designed to engage in
a
range of financial activities, including securities underwriting and merchant
banking. The Act also repeals the SAIF special reserve; modernizes the Federal
Home Loan Bank System; provides for less frequent Community Reinvestment Act
("CRA") compliance examinations for community banks with $250 million or less
in
assets, and gives customers the right to prevent banks from sharing information
with third parties, such as telemarketers. The Act prohibits unitary savings
and
loan holding companies formed after May 4, 1999 from engaging in nonfinancial
activities, and also prohibits purchase of unitary thrift holding companies
by
commercial firms. The Act contains requirements for the protection of consumer’s
financial privacy (“Regulation P”). The Bank has identified obligations,
developed a privacy policy and provided disclosure of the policy to customers.
The Bank is in full compliance with Regulation P.
Federal
Deposit Insurance Corporation Improvement Act of 1991
("FDICIA")
Among
other things, the FDICIA provides the federal bank regulatory agencies with
broad powers to take prompt corrective action to resolve problems of insured
depository institutions. The extent of those powers depends upon whether the
institution in question is "well capitalized", "adequately capitalized",
"undercapitalized", "significantly undercapitalized", or "critically
undercapitalized." A depository institution's capital tier will depend upon
where its capital levels compare to various established capital measures and
certain other factors, as established by regulation. As of December 31, 2005,
the Bank met the definition of a "well capitalized" institution.
The
FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) or paying any management fee
to
its holding company if the depository institution would thereafter be
"undercapitalized". "Undercapitalized" depository institutions are subject
to
growth limitations and are required to submit a capital restoration plan. If
a
depository institution fails to submit an acceptable plan, it is treated as
if
it is "significantly undercapitalized". "Significantly undercapitalized"
depository institutions may be subject to a number of requirements and
restrictions, including orders to sell sufficient voting stock to become
"adequately capitalized", requirements to reduce total assets, and cessation
of
receipt of deposits from correspondent banks. "Critically undercapitalized"
institutions are subject to the appointment of a receiver or
conservator.
The
FDICIA further requires an increase in the frequency of "full-scope, on-site"
examinations and expands audit requirements. In addition, federal bank
regulatory agencies are required to review and prescribe uniform accounting
standards that are at least as stringent as Generally Accepted Accounting
Principles.
The
FDICIA also contains the Truth in Savings Act. The purpose of the Truth in
Savings Act is to require the clear and uniform disclosure of the rates of
interest which are payable on deposit accounts by depository institutions and
the fees that are assessable against deposit accounts, so that consumers can
make a meaningful comparison between the competing claims of financial
institutions with regard to deposit accounts and products.
The
Bank
became subject to the provisions of FDICIA relating to internal controls
effective January 1, 2001, when provisions required that banks over
$500 million in assets document and test their internal control structure
and report on it on an annual basis. During 2005, the threshhold for FDICIA
was
raised from $500 million to $1 billion in assets as of January 1, 2005.
The Bank, therefore, was not subject to the provisions of FDICIA for 2005,
but
will once again become subject to its provision for 2006.
Payment
of Dividends
The
Bank
is subject to legal limitations on the frequency and amount of dividends paid
to
the Company. The FRB or the FDIC may restrict the ability of a bank to pay
dividends if such payments would constitute an unsafe or unsound banking
practice. These regulations and restrictions may limit the Company's ability
to
obtain funds from the Bank for its cash needs, including funds for acquisitions
and the payment of dividends, interest, and operating expenses.
In
addition, Florida law places certain restrictions on the declaration of
dividends from state-chartered banks to their holding companies. Pursuant
to
Section 658.37 of the Florida Banking Code, the Board of Directors of a
state-chartered bank, after charging off bad debts, depreciation, and other
worthless assets, if any, and making provisions for reasonably anticipated
future losses on loans and other assets, may quarterly, semi-annually, or
annually declare a dividend of up to the aggregate of net profits of that
period, combined with the bank's retained net profits for the preceding two
years and, with the approval of the Florida Department of Banking and Finance,
declare a dividend from retained net profits which accrued prior to the
preceding two years. Before declaring such dividends, 20% of the net profits
for
the preceding period as is covered by the dividend must be transferred to
the
surplus fund of the bank until this fund becomes equal to the amount of the
bank's common stock then issued and outstanding. A state-chartered bank may
not
declare any dividend if (i) its net income from the current year combined
with
the retained net income for the preceding two years is a loss, or (ii) the
payment of such dividend would cause the capital account of the bank to fall
below the minimum amount required by law, regulation, order, or any written
agreement with the Florida Department of Banking and Finance or a federal
regulatory agency.
Depositor
Preference Statute
Legislation
has been enacted providing that deposits and certain claims for administrative
expenses and employee compensation against an insured depository institution
would be afforded a priority over other general unsecured claims against such
an
institution, including federal funds and letters of credit, in the "liquidation
or other resolution" of such an institution by any receiver.
Monetary
Policy And Economic Control
The
commercial banking business in which the Bank engages is affected not only
by
general economic conditions but also by the monetary policies of the FRB.
Changes in the discount rate on member bank borrowing, availability of borrowing
at the "discount window," open market operations, the imposition of changes
in
reserve requirements against member banks' deposits and assets of foreign
branches, and the imposition of and changes in reserve requirements against
certain borrowings by banks and their affiliates are some of the instruments
of
monetary policy available to the FRB. These monetary policies are used in
varying combinations to influence overall growth and distributions of bank
loans, investments, and deposits, and this use may affect interest rates charged
on loans or paid on deposits. The monetary policies of the FRB have had a
significant effect on the operating results of commercial banks and are expected
to do so in the future. The monetary policies of these agencies are influenced
by various factors, including inflation, unemployment, and short-term and
long-term changes in the international trade balance and in the fiscal policies
of the United States Government. Future monetary policies and the effect of
such
policies on the future business and earnings of the Company and the Bank cannot
be predicted.
An
investment in the shares of common stock the Company may involve a material
degree of risk. Accordingly, shareholders should carefully consider the
following risk factors, in addition to the other information concerning
the
Company and its business contained elsewhere in this Annual Report.
Financial
conditions and governments regulations restrict our ability to pay dividends
on
shares of common stock.
There
can
be no assurance that the Company will declare or pay cash dividends on
its
common stock at any particular time. The determination of whether to pay
dividends will depend on factors deemed appropriate by the Boards of Directors
of the Bank and the Company including the availability of funds for such
a
distribution. We conduct our business through our bank subsidiary from
which we
receive our dividends. Dividends payable by the Company are subject to
the
financial condition of the Bank and the Company.
In
addition, banking regulations limit the amount of dividends that may be
paid by
the Bank to the Company without prior regulatory approval. The payment
of
dividends by the Bank to the Company is regulated by various state and
federal
laws and by regulations promulgated by the Federal Reserve Bank, which
restrict
the payment of dividends under certain circumstances. In addition, such
regulations also impose certain minimum capital requirements which affect
the
amount of cash available for the payment of dividends by a regulated banking
institution such as the Bank. Even if the Bank is able to generate sufficient
earnings to pay dividends, there is no assurance that the Board of Directors
might not decide or be required to retain a greater portion of the Bank’s
earnings in order to maintain or achieve the capital necessary because
of any:
(i) increase in the capital requirements established by the Federal Reserve
Bank; (ii) significant increase in the total of risk-weighted assets held
by the
Bank; (iii) significant decreases in the Bank’s income; (iv) significant
deterioration of the quality of the Bank’s loan portfolio; or (v) new federal or
state regulations. The occurrence of any of these events would decrease
the
amount of funds potentially available for the payment of dividends by the
Bank
to the Company. In addition, in some cases, the Federal Reserve Bank could
take
the position that it has the power to prohibit the Bank from paying dividends,
if, in its view, such payments would constitute unsafe or unsound banking
practices.
In
the
event the Company decides to issue dividends on the shares of common stock,
there may be securities issued in the future, such as preferred stock,
which may
receive equal or greater dividend preference than the common stock.
Some
of our loans may not be repaid and we may not have made sufficient allowances
for these losses.
There
is
substantial likelihood that some of our loans will not be repaid in part
or in
full due to, among other things, general economic conditions, the type
of loan
being made, the creditworthiness of the borrower over the term of the loan
and
in the case of a collateralized loan, the quality of the collateral for
the
loan. We maintain an allowance for loan losses based on, among other things,
an
evaluation of economic conditions, and regular reviews of delinquencies,
loan
portfolio quality, the mix of the loan portfolio, loan grades, concentration
of
risk and current delinquency trends. Based upon such factors, we make various
assumptions and judgments about the ultimate collectability of the loan
portfolio and provide an allowance for potential loan losses based upon
a
percentage of the outstanding balances and for each category at loan grade.
Loans specifically identified as high risk may be evaluated individually
rather
than by loan grade.
We
actively manage our non-performing loans in an effort to minimize credit
losses
and monitor its asset quality to maintain an adequate loan loss allowance.
Although we believe that our allowance for loan losses is adequate, there
can be
no assurance that the allowance will prove sufficient to cover future loan
losses. Further, although we use the best information available to make
determinations with respect to the allowance for loan losses, future adjustments
may be necessary if economic conditions differ substantially from the
assumptions used or adverse developments arise with respect to our
non-performing or performing loans. Material additions to our allowance
for loan
losses would result in a decrease of our net income and, possibly our capital,
and could result in the inability to pay dividends, among other adverse
consequences.
State
and federal regulations and agencies restrict how we conduct our business
and
our ability to respond to changing economic and financial
conditions.
Bank
holding companies and banks operate in a highly regulated environment and
are
subject to the supervision and examination by several federal and state
regulatory agencies. The Company is subject to the Bank Holding Company
Act of
1956, as amended and to regulation and supervision by the Federal Reserve
Bank.
The Bank is also subject to the regulation and supervision of the FDIC
and the
Florida Department of Banking and Finance. Federal and state laws and
regulations govern matters ranging from the regulation of certain debt
obligations, changes in the control of the bank holding companies, and
the
maintenance of adequate capital for the general business operations and
financial condition of the Bank, including permissible types, amounts and
terms
of loans and investments, the amount of reserves against deposits, restrictions
on dividends, establishment of branch offices, and the maximum rate of
interest
that may be charged by law. The Federal Reserve Bank also possesses cease
and
desist powers over bank holding companies to prevent or remedy unsafe or
unsound
practices or violations of law. These and other restrictions limit the
manner by
which the Company and the Bank may conduct their business and obtain
financing.
We
are subject to the monetary policies of the Federal Reserve and other federal
instrumentalities.
A
primary
instrument of monetary policy employed by the Federal Reserve is the restriction
of expansion of the money supply through open market operations and changes
in
reserve requirements and the discount rate. These operations sometimes
cause
wide fluctuations in interest rates and can have direct, adverse effects
on our
operating results. Changes to the discount rate by the Federal Reserve
Board
usually lead to corresponding interest rate changes, which affect our interest
income, interest expense and the value of our investment portfolio. Also,
governmental policies, such as the creation of a tax deduction for individual
retirement accounts, can alter the rate of savings and affect the costs
of
funds. The nature, timing and effect on us and our results of operations
of any
future changes in federal monetary and fiscal policies are not predictable.
Such
changes could materially adversely affect our business, future prospects,
financial condition or results of operation.
Our
results of operations are directly affected by levels of, and fluctuations
in,
interest rates.
Changes
in interest rates could reduce our net interest income, reduce gains from
loan
sales, result in higher loan losses and reduce loan originations and
corresponding loan servicing income. A substantial and/or sustained increase
in
interest rates could prevent us from originating or selling loans with
returns
consistent with past practices. It could also prevent borrowers with variable
rate loans from meeting scheduled debt service requirements. A rapid increase
or
decrease in interest rates could materially adversely affect our net interest
margin, future prospects, financial condition or results of operations
because
of imbalances in the maturities of our assets and liabilities and the mix
of our
adjustable and fixed rate loans.
Asset/Liability
Management
The
operations and profitability of the Bank are largely impacted by changes
in
interest rates and management’s ability to control interest rate sensitivity of
the Bank’s assets and liabilities. The Bank has generally experienced a negative
gap position which suggests that the Banks’ net yield on interest earning assets
may increase during periods of declining interest rates. Correspondingly,
the
Bank could be expected to suffer a decline of net yield on interest earning
assets during a rise in interest rates. Management believes that its current
asset/liability strategy reduces the Bank’s risk exposure to significant net
yield impact during periods of interest rate fluctuation. However, there
can be
no assurance that the Bank’s asset/liability strategy will be
successful.
Increased
competition with other financial institutions with greater reserves and
product
offerings may negatively affect our profitability.
The
Bank
competes with other commercial banks, savings and loan associations, credit
unions, finance companies, mutual funds, insurance companies, and brokerage
and
investment banking firms operating locally and elsewhere. Furthermore,
due to
recent changes in the law that has increased competition among financial
institutions, out-of-sate financial institutions have entered the Florida
market. Many of these competitors have substantially greater resources
and
lending limits than the Bank and may offer certain services, such as trust
services that the Bank does not provide at this time. The profitability
of the
Company depends upon the Bank’s ability to remain competitive given this
increased competition.
Incorporating
on-going technological advances into our business may increase costs while
failure to incorporate technology may subject us to a competitive
disadvantage.
Our
ability to use technology to provide products and services that will satisfy
customer demands for convenience, as well as to enhance efficiencies in
our
operations, may influence our success. While we seek to improve our capacity
to
use technological innovations, our strategy is based on the belief that
customer
demand for personal contact and strategically placed branch offices will
continue for the foreseeable future. To the extent we fail to incorporate
technological advances into our business may result in the loss of customers
to
our competitors who have incorporated such technology.
An
economic downturn adversely affecting Southeast Florida or a material decline
in
the value of real estate in our core Southeast Florida market will likely
have
an adverse affect on the Company.
The
success of the Company and the Bank is dependent to a large extent upon
the
general economic conditions of the geographic markets served by the Bank
which
focuses on Miami-Dade County and Broward County, Florida and the immediate
surrounding areas. Although the Bank expects economic conditions will continue
to improve in these market areas, there is no assurance that favorable
economic
development will occur or that the Bank’s expectation of corresponding growth
will be achieved. Adverse changes in it geographic markets would likely
impair
the Bank’s ability to collect loans and could otherwise have a negative effect
on the financial condition of the Company.
In
addition to the financial strength and cash flow characteristics of the
borrower
in each case, the Company often secures its loans with real estate collateral.
At December 31, 2005, approximately 89.5% of the Company’s loans have real
estate as a primary or secondary component of collateral. The real estate
collateral in each case provides an alternate source of repayment in the
event
of default by the borrower and may deteriorate in value during the time
the
credit is extended. If we are required to liquidate the collateral securing
a
loan to satisfy the debt during a period of reduced real estate values,
our
earnings and capital could be adversely affected.
The
Company’s results are solely dependent upon the results of the
Bank.
The
sole
business activity of the Company consists of its ownership of the capital
stock
of the Bank. As a result, the Company lacks diversification as to business
activities and market area, and any event affecting the Bank will have
a direct
impact on the Company.
We
are dependent upon the service of our management
team.
Our
future success and profitability is substantially dependent upon the management
and banking abilities of our senior executives. We believe that our future
results will also depend in part upon our attracting and retaining highly
skilled and qualified management and sales and marketing personnel. Competition
for such personnel is intense, and we cannot assure you that the Company
will be
successful in retaining such personnel. We also cannot guarantee that members
of
our executive management team will remain with us. Changes in key personnel
and
their responsibilities may be disruptive to the Company’s business and could
have a material adverse effect on our business, financial condition and
results
of operations.
Our
common stock may fluctuate due to our performance and factors beyond our
control
and the trading market in our stock has less liquidity than the average
trading
market for stock quoted on the Nasdaq Global Market.
Our
common stock is publicly traded and the market price of our stock has fluctuated
and continues to fluctuate depending upon or performance and factors beyond
our
control. If interest rates and monetary policy change or if the amount
of
deposits change, among other factors, our performance will be altered and
the
market price of our stock may fluctuate in response to these and other
factors.
Additionally,
our common stock is thinly traded. The average trading volume of our shares
on
the Nasdaq Global Market during 2005 was approximately 8,650 shares. Thinly
traded stock can be more volatile than stock trading in an active public
market.
In recent years, the stock market has experienced a high level of price
and
volume volatility, and market prices for the stock of many companies have
experienced wide price fluctuations that have not necessarily been related
to
their operating performance. Therefore, our shareholders may not be able
to sell
their shares at the volumes, prices or times that they
desire.
The
Company owns and occupies offices in a building located at 1550 S.W. 57th
Avenue, Miami, Florida. This building serves as the Bank's main office. The
Bank's and the Company's offices occupy the entire building. Management believes
that this location provides sufficient parking for its customers as well as
visibility from S.W. 57th Avenue, a major thoroughfare.
The
Bank
owns ten of its fourteen full-service branches and leases the remaining four
offices, all of which branches are located in Miami-Dade County or Broward
County, Florida. Additional information relating to the Company's lease
commitments is set forth in Note 4 on page 31 in the Company’s 2005 Annual
Report and is incorporated herein by reference. The condition of all properties
is considered good. In the opinion of management, owned properties are
adequately covered by insurance.
The
Company and the Bank are periodically parties to or otherwise involved in legal
proceedings arising in the normal course of business, such as claims to enforce
liens, claims involving the making and servicing of real property loans, and
other issues incident to the Bank's business. Management does not believe that
there is any pending or threatened proceeding against the Company or the Bank
which, if determined adversely, would have a material effect on the business,
results of operations, or financial position of the Company or the
Bank.
Not
applicable.
Information
required to be reported under this item is set forth on pages 13 and 14 of
the
Company’s 2005 Annual Report and on page 7 of the Company’s 2006 Proxy Statement
and is incorporated herein by reference.
Information
required to be reported under this item is set forth on pages 2 and 3 of the
Company’s 2005 Annual Report and is incorporated herein by
reference.
Information
required to be reported under this item is set forth on pages 4 through 17
of
the Company’s 2005 Annual Report and is incorporated herein by
reference.
Information
required to be reported under this item is set forth on pages 15 and 16 of
the
Company’s 2005 Annual Report under the section entitled "Asset/Liability
Management and Interest Rate Risk", and is incorporated herein by reference.
The
information required to be reported under this item is set forth on pages 18
through 39 of the Company’s 2005 Annual Report and is incorporated herein by
reference.
On
March
17, 2005, PricewaterhouseCoopers, LLP (“PWC”) was advised that the firm's
services as auditors of the Company were terminated. The Company further engaged
Crowe Chizek and Company LLC ("Crowe Chizek") to serve as its principal
independent accountant in auditing the Company's financial statements and
performing review of interim filings, subject only to the finalization of Crowe
Chizek's routine due diligence procedures. The decision to replace auditors
was
approved by the Audit Committee of the Board of Directors.
In
connection with the audits of the Company's consolidated financial statements
for the years ended December 31, 2004 and 2003, and through the date of
this Form 10-K, there were no disagreements with PWC on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope and procedures which, if not resolved to the satisfaction of PWC, would
have caused PWC to make reference to the matter in their report.
In
addition, the Company did not engage Crowe Chizek during either of the years
ended December 31, 2004 or 2003, or any subsequent interim period prior to
engaging Crowe Chizek, regarding the application of accounting principles to
a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company’s financial
statements.
a)
Evaluation
of Disclosure Controls and Procedures
Within
the 75-day period prior to the filing of this report, an evaluation was carried
out under the supervision and with the participation of the Company’s
management, including its Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of its disclosure controls
and
procedures. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the design and operation of these disclosure
controls and procedures were effective.
b)
Management's Annual Report on Internal Control Over Financial
Reporting
Refer
to page 18 of the Company’s 2005 Annual Report for “Management’s Report on
Internal Control Over Financial Reporting”, with respect to management’s
assessment of internal control over financial reporting. There was no change
in
the Company’s internal control over financial reporting (as defined in Rule
13a-15(f) under the Securities Exchange Act of 1934) that occurred during
the
fourth quarter of 2005 that has materially affected, or is reasonably likely
to
materially affect, the Company’s internal control over financial
reporting.
c)
Audit Report of the Registered Public Accounting Firm
Refer
to page 19 of the Company's 2005 Annual Report for the "Report of the Company's
Independent Registered Public Accounting Firm".
Not
applicable.
The
Company has adopted a Code of Ethics that applies to the Company's Chairman
and
Chief Executive Officer, the Chief Financial Officer and Controller. The Code
of
Ethics is available on the Company's website at www.commercialbankfl.com.
Reference to the Company’s website in this Annual Report on 10K does not in any
way incorporate information contained in such website into this
report.
Additional
information required to be reported under this item is set forth on
pages 3, 5 and 13 of the Company’s 2006 Proxy Statement and is incorporated
herein by reference.
Information
required to be reported under this item is set forth on pages 5 through 13
of
the Company’s 2006 Proxy Statement and is incorporated herein by
reference.
Information
required to be reported under this item is set forth on pages 7, 12 and 13
of
the Company’s 2006 Proxy Statement and is incorporated herein by
reference.
Information
required to be reported under this item is set forth on page 15 of the Company’s
2006 Proxy Statement and is incorporated herein by reference.
Information
required to be submitted under this item is set forth on page 14 of the
Company's 2006 Proxy Statement and is incorporated herein by
reference.
|
(a)
|
|
The following documents are filed as part of this report: |
| |
|
|
|
1.
|
|
Financial
Statements: |
| |
|
|
| |
|
Reference
is made to Item 8 of Part II to this Annual Report on Form 10-K which
incorporates by reference the Company's financial statements contained
in
the Company's 2005 Annual Report attached as Exhibit 13.1 to this
report. |
| |
|
|
|
2.
|
|
Financial
Statement Schedules:
|
| |
|
|
| |
|
All
schedules are omitted because they are not applicable or the required
information is contained in the Company's financial statements
or the
notes thereto.
|
| |
|
|
|
3.
|
|
Exhibits
|
| |
|
|
|
3.1
|
|
Articles
of Incorporation, as amended, of the Company. Incorporated by reference
to
Exhibit 3.1 of the Company's Registration Statement on Form SB-2
as filed
with the Securities and Exchange Commission, No. 33-67254, effective
October 5, 1993 ("Registration Statement").
|
| |
|
|
|
3.2
|
|
By-Laws,
as amended, of the Company. Incorporated by reference to Exhibit
3.2 of
the Registration Statement.
|
| |
|
|
|
10.1
|
|
Standard
Office Building Lease between Swire Brickell One, Inc., d/b/a "Courvoisier
Center" (Landlord) and Commercial Bank of Florida (Tenant), dated
December
21, 1990. Incorporated by reference to Exhibit 10.2 of the Registration
Statement.
|
| |
|
|
|
10.2
|
|
Form
of Indemnification Agreement. Incorporated by reference to Exhibit
10.4 of
the Registration Statement.
|
| |
|
|
|
10.3*
|
|
Employment
Agreement between Commercial Bankshares, Inc., Commercial Bank
of Florida,
and Joseph W. Armaly, dated March 18, 1994 and amended and restated
on
December 18, 1998. Incorporated by reference to Exhibit 10.3 that
accompanies the 1998 Annual Report on Form
10-K.
|
| |
|
|
|
10.4*
|
|
Employment
Agreement between Commercial Bankshares, Inc., Commercial Bank
of Florida,
and Jack J. Partagas, dated March 18, 1994 and amended and restated
on
December 18, 1998. Incorporated by reference to Exhibit 10.4 that
accompanies the 1998 Annual Report on Form
10-K.
|
| |
|
|
|
10.5*
|
|
Employment
Agreement between Commercial Bank of Florida and Barbara Reed,
dated
February 5, 1997. Incorporated by reference to Exhibit 10.5 that
accompanies the 1996 Annual Report on Form 10-K.
|
| |
|
|
|
10.6*
|
|
Employment
Agreement between Commercial Bank of Florida and Bruce Steinberger,
dated
December 18, 1998. Incorporated by reference to Exhibit 10.6 that
accompanies the 1998 Annual Report on Form 10-K.
|
| |
|
|
|
10.7*
|
|
Commercial
Bankshares, Inc., 1994 Outside Director Stock Option Plan, effective
as of
March 18, 1994. Incorporated by reference to Exhibit 10.7 that
accompanies
the 1993 Annual Report on Form 10-KSB.
|
| |
|
|
|
10.8*
|
|
Commercial
Bankshares, Inc., 1994 Performance Stock Option Plan, adopted March
18,
1994, effective April 1, 1994. Incorporated by reference to Exhibit
10.8
that accompanies the 1993 Annual Report on Form
10-KSB.
|
| |
|
|
|
10.9
|
|
Standard
Office Building Lease, dated December 10, 1996, between Promenade of
Coral Springs, Inc. (Landlord) and Commercial Bank of Florida (Tenant).
Incorporated by reference to Exhibit 10.12 that accompanies the
1997
Annual Report on Form 10-K.
|
| |
|
|
|
10.10*
|
|
Commercial
Bankshares, Inc., Amendment to 1994 Outside Director Stock Option
Plan,
dated January 15, 1999. Incorporated by reference to Exhibit 10.13
that accompanies the 1998 Annual Report on Form 10-K.
|
| |
|
|
|
10.11*
|
|
Commercial
Bankshares, Inc., Amendment to 1994 Performance Stock Option Plan
dated January 15, 1999. Incorporated by reference to Exhibit 10.14
that accompanies the 1998 Annual Report on Form
10-K.
|
| |
|
|
|
10.12
|
|
Commercial
Bankshares, Inc., Amendment to Standard Office Building Lease between
Swire Brickell One, Inc., d/b/a “Courvoisier Center” (Landlord) and
Commercial Bank of Florida (Tenant), dated December 21, 2000. Incorporated
by reference to Exhibit 10.14 that accompanies the 2000 Annual
Report on
Form 10-K.
|
| |
|
|
|
10.13
|
|
Commercial
Bankshares, Inc., Standard Office Building Lease between Hallandale
Place,
Ltd., c/o Investment Management Associates, Inc. (Landlord) and
Commercial
Bank of Florida (Tenant), dated January 25, 2002. Incorporated
by
reference to Exhibit 10.15 that accompanies the 2001 Annual Report
on Form
10-K.
|
| |
|
|
|
10.14
|
|
Commercial
Bankshares, Inc., Standard Office Building Lease between HFJ, LLC,
as
beneficiary of the KLS
|
| |
|
Flamingo
Land Trust (Landlord) and Commercial Bank of Florida (Tenant),
dated
10/30/2002. Incorporated by
|
| |
|
reference
to Exhibit 10.16 that
accompanies the 2002 Annual Report on Form 10-K.
|
| |
|
|
|
10.15
|
|
Commercial
Bankshares, Inc., 2004 Outside Director Stock Option Plan, approved
by
stockholders on
|
| |
|
April
20, 2004. Incorporated by reference to Appendix I of the Company’s
2004, Definitive Proxy Statement.
|
| |
|
|
|
10.16
|
|
Commercial
Bankshares, Inc., 2004 Employee Stock Option Plan, approved by
stockholders on April 20,
|
| |
|
2004.
Incorporated by reference to Appendix II of the Company’s
2004, Definitive Proxy Statement.
|
| |
|
|
|
10.17
|
|
Agreement
to provide Software and Services between Aurum Technology Inc, d/b/a
Fidelity Integrated Financial Solutions and Commercial Bank of Florida,
dated January 20, 2005. |
| |
|
|
|
10.18
|
|
Agreement
for Item Processing Services between Fiserv Solutions, Inc. and Commercial
Bank of Florida, dated June 20, 2005. |
| |
|
|
|
11.1
|
|
Computation
of Earnings per Common and Common Equivalent Share. Information
required to be reported
|
| |
|
under
this exhibit is set forth on page 35 of the 2005 Annual
Report and is incorporated herein by
reference.
|
| |
|
|
|
13.1**
|
|
2005
Annual Report to Shareholders of Commercial Bankshares,
Inc.
|
| |
|
|
|
21.1
|
|
Subsidiaries
of the Company (filed herewith).
|
| |
|
|
|
23.1
|
|
Consent
of Crowe Chizek and Company LLC (filed herewith).
|
| |
|
|
|
23.2
|
|
Consent
of PricewaterhouseCoopers LLP (filed herewith).
|
| |
|
|
|
31.1
|
|
Certification
of the Chief Executive Officer pursuant to Rule 15A-14(A) or 15D-14(A)
of
the Securities Exchange
|
| |
|
Act
of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of
2002 (attached herewith)
|
| |
|
.
|
|
31.2
|
|
Certification
of the Chief Financial Officer pursuant to Rule 15A-14(A) or 15D-14(A)
of
the Securities Exchange
|
| |
|
Act
of 1934, as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 (attached
herewith).
|
| |
|
|
|
32.1
|
|
Certification
of the Chief Executive Officer pursuant to Rule 13a-14(b) or Rule
15d-14(b) and Section 1350
|
| |
|
of
Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350),
as
adopted pursuant to Section 906 of
|
| |
|
the
Sarbanes-Oxley Act
of 2002 (attached herewith).
|
| |
|
|
|
32.2
|
|
Certification
of the Chief Financial Officer pursuant to Rule 13a-14(b) or Rule
15d-14(b) and Section 1350
|
| |
|
of
Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350),
as
adopted pursuant to Section 906 of
|
| |
|
the
Sarbanes-Oxley Act of
2002 (attached herewith).
|
| |
|
|
|
99.1
|
|
Report
of Independent Registered Certified Public Accounting Firm,
2004 |
_______________________
*
Management contracts and compensatory plans and arrangements required to be
filed as
exhibits pursuant to Item 15(c) of this report.
**
Except
for those portions of the Annual Report which are expressly
incorporated by
reference in this Form 10-K, the Annual
Report is furnished for the information
of the Securities and Exchange Commission only and is not to be deemed
"filed" as part of such Form 10-K (attached herewith).
(b)
Exhibits
See
Item
15(a)3 above.
(c)
Financial Statement Schedules
See
Item
15(a)2 above.
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by
the undersigned, thereunto duly authorized.
COMMERCIAL
BANKSHARES, INC.
By:/s/
Joseph W. Armaly
Joseph
W. Armaly
Chairman
of the Board and Chief Executive Officer
March
15,
2006
By:/s/
Barbara E. Reed
Barbara
E. Reed
Senior
Vice President and Chief Financial Officer
March
15,
2006
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
| Signature |
|
Title |
|
Date |
| |
|
|
|
|
|
By:/s/
Joseph W. Armaly
Joseph W. Armaly
|
|
Chairman
of the Board and Chief Executive Officer
(Principal
Executive Officer)
|
|
March
15, 2006 |
| |
|
|
|
|
| By:/s/
Jack J. Partagas |
|
President,
Chief Operating Officer, and Director |
|
March
15, 2006 |
| Jack J. Partagas |
|
|
|
|
| |
|
|
|
|
| By:/s/
Barbara E. Reed |
|
Senior
Vice President and Chief Financial Officer |
|
March
15, 2006 |
| Barbara E. Reed |
|
|
|
|
| |
|
|
|
|
| By:/s/
Cromwell A. Anderson |
|
Director
|
|
March
15, 2006 |
| Cromwell A. Anderson |
|
|
|
|
| |
|
|
|
|
| By:/s/
Robert Namoff |
|
Director
|
|
March
15, 2006 |
| Robert Namoff |
|
|
|
|
| |
|
|
|
|
| By:/s/
Sherman Simon |
|
Director
|
|
March
15, 2006 |
| Sherman Simon |
|
|
|
|
| |
|
|
|
|
| By:/s/
Michael W. Sontag |
|
Director
|
|
March
15, 2006 |
| Michael W. Sontag |
|
|
|
|
| |
|
|
|
|
| By:/s/
Martin Yelen |
|
Director
|
|
March
15, 2006 |
| Martin Yelen |
|
|
|
|