1
STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
of
BAYLAKE CORP.
This Proxy Statement is being furnished to the shareholders of Baylake
Corp. ("Baylake") in connection with the solicitation of proxies on behalf of
Baylake's Board of Directors to be voted at the Annual Meeting of Shareholders
to be held at 7:00 p.m., local time, on Monday, June 8, 1998, at the Cornerstone
Conference Center, 222 North Third Avenue, Sturgeon Bay, Wisconsin, and at any
adjournment thereof (the "Annual Meeting"). This Proxy Statement and the
enclosed proxy card are being mailed to the shareholders on or about April 30,
1998.
At the Annual Meeting, Baylake shareholders will be asked to elect three
(3) directors to serve as Class I directors, whose terms as directors will
expire in 2001. Presence, in person or by proxy, of the holders of a majority of
the outstanding shares of Baylake Common for any matter constitutes a quorum for
all matters to be considered at the Annual Meeting. Abstentions and broker
non-votes are counted for purposes of determining the presence or absence of a
quorum. The Inspector of Election appointed by the Board of Directors will
determine the shares represented at the Annual Meeting and the validity of
proxies and ballots, and will count all votes and ballots. The voting
requirements and procedures described below are based upon the provisions of the
Wisconsin Business Corporation Law, Baylake's charter documents and any other
requirements applicable to the matters to be voted upon. Each shareholder of
record of Baylake Common at the close of business on April 24, 1998, will be
entitled to one vote for each share of Baylake Common registered in such
shareholder's name. At that date there were 2,437,430 shares of Baylake Common
issued and outstanding, all of which are entitled to vote.
Shares represented at the Annual Meeting by properly executed proxy will be
voted in accordance with the specifications made on the proxy. Unless otherwise
directed, proxies will be voted FOR the election of the named individuals in
Class I. If any of the nominees would decline or be unable to act, which
eventuality is not foreseen, proxies will be voted with discretionary authority
for a substitute nominee to be designated by the Board of Directors.
Directors are elected by a plurality of the votes cast by holders of
Baylake Common entitled to vote in the election at a meeting at which a quorum
is present. "Plurality" means that the individuals who receive the largest
number of votes are elected as directors up to the maximum number of directors
to be chosen at the meeting. Therefore, any shares not voted, whether by
withheld authority, broker non-vote or otherwise, have no effect in the
election of directors except to the extent that the failure to vote for an
individual results in another individual receiving a larger number of votes.
Any shareholder submitting a proxy has the right to revoke the proxy at any
time before it is voted by giving written notice to the secretary of Baylake, by
giving oral notice to the presiding officer during the Annual Meeting that the
shareholder intends to vote in person, or by submitting a subsequently dated
proxy. Attendance by a shareholder at
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the Annual Meeting will not in and of itself constitute revocation of a proxy.
The expense of preparing, printing and mailing this Proxy Statement and the
solicitation of proxies will be borne by Baylake. In addition to solicitation by
mail, directors, officers and employees of Baylake may solicit proxies by
telephone, facsimile transmission or personal contact, but will receive no
additional compensation for such services.
Baylake shareholders of record or beneficially on April 24, 1998 may obtain
a copy (without exhibits) of Baylake's (i) Annual Report on Form 10-K, as
amended, for the year ended December 31, 1997, and (ii) Quarterly Report on Form
10-Q, for the three months ended March 31, 1998, without charge, upon the
written request of such person to: Steven Jennerjohn, Chief Financial Officer,
Baylake Corp., 217 N. Fourth Avenue, P.O. Box 9, Sturgeon Bay, WI 54235.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
THE BOARD OF DIRECTORS OF BAYLAKE UNANIMOUSLY RECOMMENDS:
a vote FOR each of the nominees for Class I director,
AS THE BOARD BELIEVES SUCH ACTION TO BE IN THE BEST INTERESTS OF BAYLAKE
AND ITS SHAREHOLDERS
Election of Directors
The Bylaws of Baylake provide for classification of the Board of Directors into
three classes as nearly equal in number as practicable, each to serve staggered
three-year terms, with the term of one class expiring each year. The Bylaws
also provide that the Board may consist of not less than five (5) nor more than
seventeen (17) directors as shall be determined from year to year by the
shareholders. The Board of Directors currently consists of twelve (12)
directors, including three (1) Class I directors, whose terms expire in 1998,
four (4) Class II directors whose terms expire in 1999, and five (5) Class III
directors whose terms expire in 2000. The Board of Directors has nominated the
three (3) individuals named below for election as directors of Class I, to serve
for terms expiring at the 2001 Annual Meeting of Shareholders and upon the
election of their successors. All of the nominees are currently directors of
Baylake.
The following also sets forth information as to current directors of Baylake who
will serve as directors for the indicated terms. Except as otherwise indicated,
each of the directors has been employed in such director's current occupation
for at least five years. All of the directors of Baylake also serve as directors
of Baylake Bank.
Nominees for Election as Class I Directors for Term Expiring in 2001:
Principal Occupation and
Name and Age Business Experience Director Since
John W. Bunda (63) Owner and manager of Bunda's Hutch 1972
(3) (retail clothing)
L. George Evenson (69) Retired; formerly, dairy farmer 1978
(1)(2)(4) (1949-1993)
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Thomas L. Herlache (55) President, Chief Executive Officer and; 1970
(1)(2)(4) Chairman of Baylake; President, Chief
Ex officio:(3)(5) Executive Officer, Chairman and
Trust Officer of Baylake Bank
Continuing Class II Directors Whose Term Expires in 1999:
Principal Occupation and
Name and Age Business Experience Director Since
John D. Collins (67) Owner of C&S Manufacturing 1979
(2) (metal production)
George Delveaux, Jr. (55)Dairy Farmer 1981
(3)(5)
Glenn Miller (67) Retired; formerly Vice President of 1983
(2)(4) Sturgeon Bay Yacht Harbor and Co-Owner
of Ephraim Yacht Harbor
Joseph Morgan (55) President of Mary Morgan, Inc. 1995
(4)(5) (printing)
Continuing Class III Directors Whose Term Expires in 2000:
Principal Occupation and
Name and Age Business Experience Director Since
Ronald D. Berg (63) Retired; formerly, Senior Vice 1979
(1)(3) President of Baylake Bank
Marie Bertschinger (70) Management of Alpine, Inc. 1979
(2)(3) (resort)
Richard A. Braun (55) Executive Vice President and Vice 1994
(1)(4)(5) Chairman of Baylake; previously
President of Baylake Bank-
Ex officio:(2) Kewaunee and President of
Kewaunee County Banc-Shares, Inc.
Ruth Nelson (63) General Manager of Ephraim Shores 1983
(1)(5) (motel and restaurant)
William C. Parsons (61) President of Palmer Johnson Enterprises 1979
(1)(3)(4) (shipbuilding and marine components)
(1) Member of the Executive Committee, which reviews the financial,
administrative and regulatory, activities of Baylake and Baylake Bank. It is
authorized by the Board of Directors to act on its behalf on any matter
permitted by law. This committee generally meets on a weekly basis (except for
the third Tuesday of each month), and held 36 meetings during 1997.
(2) Member of the Director Loan Committee which reviews certain loan
transactions of Baylake Bank. This committee generally meets on a weekly basis,
and held 51 meetings during 1997.
(3) Member of the Audit and Legal Committee which reviews financial
and
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legal matters of Baylake and held 12 meetings in 1997.
(4) Member of the Personnel and Compensation Committee, which reviews the
personnel policies and annual compensation levels of Baylake Bank. Officers and
employees of Baylake receive no separate compensation, as all compensation is
paid by Baylake Bank. This committee held 1 meeting during 1997.
(5) Member of the Special Services Committee, which reviews the functions and
administration of the trust and financial services departments of Baylake Bank
and Baylake's non-bank subsidiaries. This committee meets on a monthly basis,
and held 12 meetings during 1997.
Each member of the Board of Directors attended at least 75% of the meetings of
the Board of Directors and of all committees on which such directors served
during 1997 except that Richard A. Braun attended 72% of Executive Committee
meetings and William C. Parsons attended 56% of Executive Committee meetings,
and missed the Personnel & Compensation Committee meeting.
Ownership of Baylake Common
The table below sets forth information regarding the beneficial ownership of
Baylake Common as of April 24, 1998 by each director and nominee for director
(including the named executive officer in the Summary Compensation Table below)
and by all executive officers and directors of Baylake and its subsidiaries as a
group. Such information, including addresses, is also given for all persons who
are known to Baylake to beneficially own more than 5% of the outstanding shares
of Baylake Common as of such date. Shares reported do not reflect the 3 for 2
stock split declared by the board of directors which is effective as of May 1,
1998 and payable May 15, 1998.
Name (1) Number of Shares Percent
Thomas L. Herlache 37,682(2) 1.55%
Ronald D. Berg 4,066 *
Marie Bertschinger 52,496 2.15%
Richard A. Braun 25,300 1.04%
John W. Bunda 5,676 *
John D. Collins 21,588 *
George Delveaux, Jr. 489 *
L. George Evenson 3,284 *
Glenn Miller 4,152 *
Joseph Morgan 4,861 *
Ruth Nelson 37,951 1.56%
William C. Parsons 27,688 1.14%
All executive officers
and directors as a 242,765(3) 9.96%
group (21 persons)
Ellsworth L. Peterson 226,152 9.28%
55 Utopia Circle
Sturgeon Bay, WI 54235
Oliver Ulvilden 139,797 5.74%
P.O. Box 189
Ephraim, WI 54211
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* Less than 1%
(1) For all listed persons, the number includes shares held by, jointly with,
or in trust for the benefit of, spouse and dependent children. Shares are
reported in such cases on the presumption that the individual may share voting
and/or investment power because of the family relationship.
(2) In addition, there are also options to purchase 14,400 shares exercisable
currently or within 60 days of the date hereof.
(3) In addition, there are also options to purchase aggregate of 98,800 shares
exercisable currently or within 60 days of the date hereof.
Directors' Fees and Benefits
Directors of Baylake or Baylake Bank are paid $250 for each general board
meeting attended, and $100 for each board meeting which is not attended. Members
of any of the identified committees also receive $150 for each committee meeting
attended.
Baylake also has deferred compensation agreements with certain of its directors,
including Marie Bertschinger, John W. Bunda, George Delveaux, Jr., L. George
Evenson, Ruth Nelson, and William C. Parsons. Under these agreements,
participating directors may elect to defer their annual directors' fees until
retirement, termination, death or disability, at which time the deferred amount,
including any income or gains thereon, are payable in a lump sum or in annual
installments. At death, all sums held in the account of a participating director
are payable to designated beneficiaries. Although Baylake maintains policies of
insurance to support payments under these agreements, participating directors
have no interest in such policies or any benefits accruing under such policies.
Executive Compensation
Compensation Summary. The following table summarizes certain information for
each of the last three years concerning all compensation awarded or paid to or
earned by the Chief Executive Officer of Baylake. No other executive officers of
Baylake and/or Baylake Bank received total annual salary and bonus exceeding
$100,000 for fiscal year 1997.
Summary Compensation Table
Annual Compensation(6)
Options/ All other
Name and Principal Salary Bonus SARs Compensation
Position Year ($)(1) ($)(2) (#)(3) ($)(4)
Thomas L. Herlache 1997 263,972(5) 67,515 4,000 14,500
President and Chief 1996 249,848(5) 45,938 4,000 13,312
Executive Officer 1995 222,181(5) 43,750 4,000 15,000
(1) The salary amount set forth include base salaries, directors' fees and
employee contributions made to the account of the named executive officer
pursuant to the Baylake Bank's 401(k) Plan.
(2) Consists of bonuses earned during the year indicated pursuant to Baylake
Bank's Pay-for-Performance Program and prior bonus plans, which amount were
paid as soon as practicable in the following year. See
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"Board of Directors/Compensation Committee Report on Management Compensation
Year-end Bonuses" below for more detailed information.
(3) Consists solely of non-qualified stock options granted to the named
executive officer under Baylake's 1993 Stock Option Plan, as amended.
(4) Consists of employer matching and other contributions made to the account
of the named executive officer under Baylake Bank's 401(k) Plan.
(5) Includes annual compensation deferred at Mr. Herlache's election pursuant
to the Thomas L. Herlache Deferred Compensation Plan, under which Mr. Herlache
may defer a portion of his annual compensation in an amount equal to the
greater of $20,500 or 15.6% of his base salary. Amounts deferred are held in a
rabbi trust for the benefit of Mr. Herlache.
(6) Although the named individual received perquisites or other personal
benefits in the years shown, in accordance with SEC regulations the value of
these benefits is not shown because they did not in the aggregate exceed 10% of
the individual's salary and bonus in any year.
Mr. Herlache also has a Preferred Compensation Agreement with Baylake Bank
under which Mr. Herlache is entitled to receive a minimum cash benefit of
$20,000 per year (payable in monthly installments) upon his death, disability or
retirement at age 65. Such payment will be made for a period of at least ten
years. If Mr. Herlache decides to retire before age 65, he will be entitled to
reduced annual benefits (with the reduction equal to 6.5% multiplied by the
difference between his age at early retirement and age 65); however, Mr.
Herlache will not be entitled to any such benefits upon retirement prior to age
65.
Stock Options. The following tables set forth certain information
concerning grants of options to purchase Baylake Common made to the named
executive officer during 1997 and the number and value of options outstanding at
the end of 1997 for the named executive officer.
Options/SAR Grants in Last Fiscal Year
Individual Grants(1)
Percent of
Total Options/
Options/ SARs Granted Exercise
SARs to Employees or Base
Name Granted(#) in Fiscal Year Price($/Sh)
Thomas L.
Herlache 4,000 10.0% $26.87
Potential Realizable
Value at Assumed
Annual Rates of Stock
Market Price Price Appreciation
at Date Expiration For Option Term
of Grant Date 5%($) 10%($)
$26.87 1/2/07 67,594 171,295
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(1) Consists entirely of non(C)qualified stock option granted pursuant to
Baylake's 1993 Stock Option Plan. All options granted after April 30, 1993 have
and will have exercise prices equal to 100% of Baylake Common fair market value
on the date of grant. The options granted to date become exercisable 20% per
year, commencing one year from date of grant.
Aggregated Option/SAR Exercises in Last Fiscal Year
And Fiscal Year(C)End Option/SAR Values(1)
Name Shares Acquired Value
on Exercise (#) Realized ($)(2)
Thomas L. Herlache 0 $0.00
Number of Unexercised Value of Unexercised
Options/SARs at Fiscal In(C)the(C)Money Options/SARs
Year(C)End (#) at Fiscal Year(C)End ($)(3)
Exercisable Unexercisable Exercisable Unexercisable
7,200 8,000 30,000 24,800
(1) Consists entirely of non(C)qualified stock options; no SARs have been
granted or exercised.
(2) Market price at date of exercise of options, less option exercise price,
times number of shares, equals value realized.
(3) Calculated assuming market price of Baylake Common at fiscal year-end of
$26.87 per share.
Board of Directors/Compensation Committee Report on Management Compensation
The Board of Directors determines the compensation of Baylake Bank's
executive officers, based on the recommendations of the Personnel and
Compensation Committee (the "Committee"). However, with respect to the
compensation of Thomas L. Herlache, Baylake Bank's President and Chief Executive
Officer, the Board of Directors determined his compensation based upon an
independent evaluation by Executive Studies Group, comparing financial
institutions of equivalent asset size. Criteria selected for salary comparisons
included return on assets and net income growth and, in addition, return on
assets and return on equity results. Directors and committee members who are
also executive officers of Baylake Bank do not participate in discussions
concerning their compensation. The Board of Directors unanimously adopted the
recommendations of the Committee without modifications.
The Committee is comprised of seven persons, including four outside
directors, Thomas L. Herlache, Richard A. Braun, and Sharon Haines, Director of
Human Resources. Ms. Haines is substantially responsible for initially
formulating the recommended compensation levels of the salaried
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employees and executive officers. The Committee generally meets one time during
the year to consider compensation levels and make recommendations to the Board.
It works with the human resources department which gathers and provides useful
information for the Committee's review.
The general philosophy of the Committee is to offer employees fair and
competitive compensation, based on the employee's individual contribution,
experience and performance and on Baylake Bank's overall growth and performance.
Baylake Bank's executive compensation policies are intended to attract and
retain competent management with a balance of short- and long-term
considerations and to provide incentives to individuals based upon the Bank's
growth and earnings and the attainment of certain goals. The Board of Directors
believes that this policy is critical to the long-term success and
competitiveness of Baylake.
In making its executive compensation recommendations for 1997, the
Committee considered various factors, including the following: (i) the financial
performance of Baylake Bank as a whole on both a short-term and long-term
basis (including net income, an increase in deposits and loans, return on
average shareholders' equity, and return on average assets); (ii) with respect
to each individual executive officer, the financial performance of that area of
Baylake Bank, if any, for which such executive is responsible, including whether
or not that area of the Bank achieved its goals for 1997; (iii) the length of
service of the executive and an evaluation of the executive's overall job
performance; (iv) the compensation levels of executive officers in similar
positions with similar companies; and (v) other information (such as cost of
living increases) and subjective factors which the Committee deems appropriate
in the case of a particular executive. The Committee subjectively analyzes these
factors, and certain factors may weigh more heavily than others with regard to
any individual executive officer.
The main components of Baylake Bank's executive compensation program
consist of base salary, a year-end bonus, and stock options, in addition to
standard medical, life and disability benefits and a 401(k) profit sharing plan
made available to all employees.
Base Salary. The principal component of executive compensation is base
salary. The Committee believes that base salary is most important in retaining
highly qualified officers. Accordingly, it reviews compensation surveys and
comparisons collected by the human resources department and seeks to recommend
salaries at levels above those applicable to other financial institutions and
businesses similarly situated on the basis of type, size and community, although
the Committee and human resources department do not perform any mathematical
calculations or statistical analyses to arrive at any percentile comparison.
Salary surveys include both informal surveys conducted by the human resources
department with the cooperation of nearby community financial institutions and
businesses, and formal financial surveys conducted by independent banking
consultants and banking associations.
In recommending base salary levels for 1997, the Committee (and the Board,
as to the salary of Mr. Herlache) considered such factors as growth in net
income and earnings per share and return on average assets and average
stockholders' equity. With respect to Mr. Herlache's salary in particular, the
Board took into account the sustained top performance of Baylake under his
leadership as well as Baylake's most recent annual performance. In view of these
considerations, the Board and Committee determined that a salary increase for
the executive officers ranging from
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3.00% to 25.00% including a salary increase for Mr. Herlache of 4.98% would be
appropriate.
Year-End Bonuses. The Board of Directors, in conjunction with the
Committee, implemented a year-end bonus program, called the
"Pay-for-Performance Program," which commenced in 1993. The
Pay-for-Performance Program offers incentives to executive officers and
other key employees to earn bonuses which are directly dependent on the Bank's
performance in numerous select areas and in various divisions. The bonus plans
reflect the philosophy of the Board that a significant portion of executive
compensation should be related to the financial performance of the Bank.
The Pay-for-Performance Program is intended to motivate and reward
management and other employees by linking bonuses to critical financial
performance components of the Bank. Under the Program, key indicators have been
identified which are considered by the Board to have an impact on the earnings
of Baylake Bank. These indicators include the following: growth in deposit and
loan volumes; profit in terms of both net interest margin and fee income; asset
quality with respect to loans past due over 60 days and net charge-offs;
and productivity measured by net non-interest expense as a percentage of
average assets and pre-tax income as a percentage of salary and employee
benefits expense. Certain quantitative goals were assigned to each of these
indicators (ranging from goal 1 to goal 10), and each indicator was assigned a
weighted value based on its perceived influence on earnings. The Board
determined that achievement of the maximum goals (goal 10) across all
indicators in 1997 should generate at least $3,523,000 in additional pre-tax
income, and that the bonus pool should constitute 25% of additional net income
attributable to the performance indicators (resulting in a maximum potential
bonus pool of approximately $881,000 for 1997). However, it was agreed that no
bonuses would be awarded unless Baylake's return on average stockholders'
equity for 1997 was at least 12.80%.
After determining the bonus pool, a calculation is made as to the size of
the bonus pool set forth as a percentage of total salary expense, and each
employee is eligible to receive a bonus equal to such percentage multiplied by
their base salary. Half of the bonus is guaranteed to them, with the other half
constituting an additional pool from which bonuses may be paid depending upon
the achievement of qualitative criteria applicable to divisions of the Bank in
which such employees are associated.
Based on actual results for 1997 among the various indicators which
achieved prescribed goals, a bonus pool of approximately $288,600 was
established. The goal level of at least 7 was achieved in components relating to
asset quality, fee income, and productivity indicators. The goal level of 1 was
achieved in loan and deposit growth indicators. The bonus pool amounted to
approximately 6.36% of total salaries. Executive officers of Baylake Bank
received bonuses ranging from 5.51% to 8.06% of their base salaries (as a result
of qualitative criteria affecting the divisions for which they are responsible).
However, Mr. Herlache did not receive any pay for performance bonus. The payment
of $67,515 or 35.00% of his base salary was based on the recommendation for
salary adjustment resulting from the study.
Stock Options. In April 1993, the Board of Directors approved Baylake's
1993 Stock Option Plan (the "Option Plan"), which was later approved by the
shareholders in June 1993. The Option Plan was
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established to provide a long-term incentive to the Bank's executive officers
and other key employees, to increase the overall value of Baylake in future
years. The Board seeks to further motivate management by granting them options
to purchase shares of Baylake Common and thus offering them a greater stake in
Baylake's future. The Board also views the Option Plan as a significant
component of the Bank's overall compensation package and is a complement to base
salary and bonus. The Option Plan also enables the Bank to compensate its
officers without having to make any cash payments.
A total of 400,000 shares of Baylake Common has been reserved for issuance
upon exercise of options granted and to be granted under the Option Plan.
Options to purchase an additional 42,000 shares were granted in January 1998 at
an exercise price of $28.75 per share, which approximate the then current market
value of the Baylake Common. To date, options to purchase up to 226,000 shares
in aggregate have been granted to a total of eleven executive officers of the
Bank. All options granted will have an exercise price equal to the market value
of the Baylake Common at the date of grant. Option grants have been and will be
made at or near the current market value so that any value is dependent upon an
increase in the market value of the Baylake Common. The options vest over five
years (20% per year), commencing one year after date of grant, and expire after
10 years if not exercised.
The total number of options granted to Baylake Bank's executive officers in
1997 was generally based on the Bank's continued performance in 1997 as compared
to 1996, and the number of options granted on an individual basis took into
account the executive officer's relative cash compensation, experience,
responsibilities and attribution to the Bank's past and future performance. In
1998, Mr. Herlache was granted options to purchase 4,000 shares of Baylake
Common, while other divisional vice presidents were granted options to purchase
4,000 shares and the Executive Vice-President was granted options to purchase
2,000 shares. Options granted in 1997 are based upon shares outstanding prior to
the 3 for 2 stock split of Baylake Common declared by the board of directors
based on the record date of May 1, 1998 and payable May 15, 1998.
Members of the Salary and Compensation Committee:
L. George Evenson, Sharon Haines (non-director), Thomas L. Herlache,
Glenn Miller, William C. Parsons, Joseph Morgan and Richard A. Braun
Compensation Committee Interlocks and Insider Participation
As indicated above, Thomas L. Herlache, President and Chief
Executive Officer of Baylake and Baylake Bank, and Sharon Haines,
Director of Human Resources, serve as members of the Personnel and
Compensation Committee. Mr. Herlache is a member of the Baylake Board
of Directors, although he does not participate on decisions affecting his
own compensation. Mr. Herlache is also a director of Alpine, Inc., the
organization of which Marie Bertschinger, a director of Baylake, was
assistant manager until 1992. Alpine, Inc. does not have a compensation
committee, and Mr. Herlache has not otherwise participated in decisions
regarding compensation matters for that company.
Performance Graph
The following graph shows the cumulative stockholder return on the Baylake
Common over the last five fiscal years compared to the returns
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of Standard & Poors 500 Stock Index and the Keefe, Bruyette & Woods 50 Bank
Index (the "KBW 50"). The KBW 50 is a market-capitalization-weighted index
of the market performance of the 50 largest U.S. banks, including all money
center and most major regional banks, and is published in various financial and
banking literature.
Comparison of Five Year Cumulative Return
Among S & P Index, KBW 50 Bank Index
and Baylake Corp
Measurement Period
(Fiscal Year Covered) S & P 500 KBW50 BAYLAKE
Measurement Pt - 12/31/91
1992 100 100 100
1993 110 106 203.2
1994 112 100 253.3
1995 153 160 203.9
1996 189 227 211.9
1997 252 332 241.3
(1) Assumes $100 invested on December 31, 1992 in Baylake Corp. Common Stock
compared to the same amount invested in other funds shown at the same time.
Dividends are assumed to be reinvested.
Certain Transactions with Management
Baylake Bank has, and expects to continue to have, regular dealings with
officers and directors of Baylake as well as their associates. Since January 1,
1997, several such persons have been indebted to Baylake Bank for loans made in
the ordinary course of business. Loans to all such persons remain on
substantially the same terms including interest rates and collateral, on those
prevailing at the time for comparable transactions with other persons, are
current with respect to payments, and do not involve more than the normal risk
of collectability or present other unfavorable features.
Compliance with Section 16(a) of the Exchange Act
Under Section 16(a) of the Exchange Act, Baylake's directors and executive
officers, and any persons holding more than 10% of the outstanding Baylake
Common are required to report their initial ownership of the Baylake Common and
any subsequent changes to such ownership to the Securities and Exchange
Commission. Specific due dates for these reports have been established, and
Baylake is required to disclose in this Proxy Statement/Prospectus any failure
to file such reports by these dates during 1997.
EXPERTS
The Board of Directors intends to continue to use the accounting firm of
Smith & Gesteland as independent auditors to audit the financial statements of
Baylake for 1998. Representatives of Smith & Gesteland are expected to be
present at the Baylake Annual Meeting to respond to appropriate questions and to
make a statement if they desire to do so.
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The standing Audit and Legal Committee has, on a continuing basis, considered
the possibility of a conflict of interest arising as a result of Smith &
Gesteland performing independent audit services and other non-audit services.
In each case, it was determined that no conflict resulted and that the
independence of the auditor was not compromised. Prior authorization was
granted by the Committee in each case before any services were performed.
FINANCIAL STATEMENTS AND ANNUAL REPORT
A copy of the 1997 Annual Report to shareholders is enclosed with your
proxy materials. The consolidated statements of Baylake are contained in the
1997 Annual Report. However, such report and financial statements contained
therein are not to be considered as part of this proxy statement.
Future Shareholder Proposals
Shareholder proposals must be received by Baylake no later than December
30, 1998 in order to be considered at Baylake's 1999 Annual Meeting of
Shareholders.
STURGEON BAY, WISCONSIN
DATE: APRIL 30, 1998 BAYLAKE CORP.
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PROXY FOR BAYLAKE CORP.
ANNUAL MEETING OF SHAREHOLDERS - JUNE 8, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Thomas L. Herlache and William C. Parsons as Proxies,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote, as designated below, all the shares of common stock of
Baylake Corp. held on record by the undersigned on April 24, 1998 at the Annual
Meeting of shareholders to be held on June 8, 1998, or any adjournment thereof.
ELECTION OF DIRECTORS - Nominees for Class I of the Board of Directors are:
John W. Bunda L. George Evenson Thomas L. Herlache
(Instruction: To withhold authority to vote for any individual nominee,
strike a line through the name of the nominee in the list stated above.)
1.Election of Directors: Vote for all names above
Vote for all above,
except those crossed out
Withhold vote for all names above
2.In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting:
YES NO
THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDERS. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED IN FAVOR OF PROPOSALS NUMBER ONE AND TWO.
Please sign exactly as your name appears on this Proxy. When shares are held by
joint tenants, both should sign. When signing as attorney, personal
representative, administrator, trustee, or guardian, please give full title as
such. If a corporation or partnership, please sign in full corporate name, by
the President, other authorized officer or by an authorized person.
Dated: , 1998.
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Signature signature,
if jointly held
PLEASE MARK, SIGN, DATE AND THEN RETURN THE PROXY PROMPTLY, USING THE ENCLOSED
ENVELOPE FOR YOUR CONVENIENCE.