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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Baylake Corporation
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(Name of Registrant as Specified in Its Charter)
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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 7:30 p.m., local time, on Monday, June 7, 1999, 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,
1999.
At the Annual Meeting, Baylake shareholders will be asked to elect four (4)
directors to serve as Class II directors, whose terms as directors will expire
in 2002. 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 23, 1999, will be entitled to
one vote for each share of Baylake Common registered in such shareholder's name.
At that date there were 3,699,387 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 II. 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 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
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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 23, 1999 may obtain a
copy (without exhibits) of Baylake's (i) Annual Report on Form 10-K, as amended,
for the year ended December 31, 1998, and (ii) Quarterly Report on Form 10-Q,
for the three months ended March 31, 1999, 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 II 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 thirteen (13)
directors, including four (4) Class I directors, whose terms expire in 2001,
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 four
(4) individuals named below for election as directors of Class II, to serve for
terms expiring at the 2002 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 II Directors for Term Expiring in 2002:
Principal Occupation and Director
Name and Age Business Experience Since
John D. Collins (68) Owner of C&S Manufacturing 1979
(2) (metal production)
George Delveaux, Jr. (56) Dairy Farmer 1981
(3)(5)
Glenn Miller (68) Retired; formerly Vice President of 1983
(2)(4) Sturgeon Bay Yacht Harbor and Co-Owner
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of Ephraim Yacht Harbor
Joseph Morgan (56) President of Mary Morgan, Inc. (printing) 1995
(4)(5)
Continuing Class III Directors Whose Term Expires in 2000:
Principal Occupation and Director
Name and Age Business Experience Since
Ronald D. Berg (64) Retired; formerly, Senior Vice President of 1979
(1)(3) Baylake Bank
Marie Bertschinger (71) Management of Alpine, Inc. 1979
(2)(3) (resort)
Richard A. Braun (56) Executive Vice President and Vice Chairman 1994
(1)(4)(5) of Baylake; previously President of Baylake
Ex officio:(2) Bank - Kewaunee and President of
Kewaunee County Banc-Shares, Inc.
Ruth Nelson (64) General Manager of Ephraim Shores 1983
(1)(5) (motel and restaurant)
William C. Parsons (62) President of Palmer Johnson Enterprises 1979
(1)(3)(4) (shipbuilding and marine components)
Continuing Class I Directors Whose Term Expires in 2001:
Principal Occupation and Director
Name and Age Business Experience Since
John W. Bunda (64) Owner and manager of Bunda's Hutch 1972
(3) (retail clothing)
L. George Evenson (70) Retired; formerly, dairy farmer 1978
(1)(2)(4) (1949-1993)
Thomas L. Herlache (56) 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
Paul Jay Sturm (48) Vice President & General Counsel for 1998
(5) A. Sturm & Sons, Inc.; (food products)
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(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 34 meetings during 1998.
(2)Member of the Director Loan Committee which reviews certain loan transactions
of Baylake Bank. This committee meets on a weekly basis and held 52 meetings
during 1998.
(3)Member of the Audit and Legal Committee which reviews financial and legal
matters of Baylake and held 12 meetings in 1998.
(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 1998.
(5)Member of the Special Services Committee, which reviews the function 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 1998.
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 1998 except that Glen Miller attended 58% of board meetings, 63% of
Director Loan Committee meetings, and missed the Personnel & Compensation
Committee meeting, William C. Parsons attended 50% of Executive Committee
meetings and missed the Personnel & Compensation Committee meeting. and Paul Jay
Sturm, who was appointed to the board of directors on October 20, 1998, attended
17% of the Special Services Committee meetings.
Ownership of Baylake Common
The table below sets forth information regarding the beneficial ownership of
Baylake Common as of April 23, 1999 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.
Name (1) Number of Shares Percent
Thomas L. Herlache 57,327 1.55%
Ronald D. Berg 6,249 *
Marie Bertschinger 80,692 2.18%
Richard A. Braun 38,950(2) 1.05%
John W. Bunda 3,222 *
John D. Collins 33,486 *
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George Delveaux, Jr. 752 *
L. George Evenson 3,284 *
Glenn Miller 6,380 *
Joseph Morgan 7,290 *
Ruth Nelson 56,990 1.54%
William C. Parsons 41,532 1.12%
Paul Jay Sturm 1,190 *
All executive officers and directors 362,456(3) 9.80%
as a group (22 persons)
Ellsworth L. Peterson 337,849 9.13%
55 Utopia Circle
Sturgeon Bay, WI 54235
Oliver Ulvilden 208,137 5.63%
P.O. Box 189
Ephraim, WI 54211
* 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 5,000 shares exercisable currently or within 60 days of
the date hereof.
(3)In addition, there are also options to purchase aggregate of
124,250 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
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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
$100,000 for fiscal year 1998.
Summary Compensation Table
Annual Compensation(6)
Options/ All other
Name and Principal Salary Bonus SARs Compensation
Position year ($)(1) ($)(2) (#)(3) ($)(4)
Thomas L. Herlache 1998 283,413(5) 80,800 6,000 14,000
President and Chief 1997 263,972(5) 67,515 6,000 14,500
Executive Officer 1996 249,848(5) 45,938 6,000 13,312
(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 "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. These have been
adjusted for the 3 for 2 stock split paid on May 15, 1998.
(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
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is entitled to receive a minimum cash benefit of $20,000 per year (payable in
monthly installments) upon his death, disability or retirement at age 65. Such
payment will be made for a period of at least ten years. If Mr. Herlache decides
to retire before age 65, he will be entitled to reduced annual benefits (with
the reduction equal to 6.5% multiplied by the difference between his age at
early retirement and age 65); however, Mr. Herlache will not be entitled to any
such benefits upon retirement prior to age 60.
Stock Options. The following tables set forth certain information concerning
grants of options to purchase Baylake Common made to the named executive officer
during 1998 and the number and value of options outstanding at the end of 1998
for the named executive officer.
Options/SAR Grants in Last Fiscal Year
Individual Grants(1)
Potential Realizable
Percent of Value at Assumed
Total Options/ Annual Rates of Stock
Options/ SARs Granted Exercise Market Price Price Appreciation
SARs to Employees or Base at Date Expiration For Option Term
Name Granted(#) in Fiscal Year Price($/sh) of Grant Date 5%($) 10%($)
Thomas L. Herlache 6,000 10.0% $19.50 $19.50 1/2/08 73,581 186,468
(1)Consists entirely of non-qualified stock option granted pursuant to Baylake's
1993 Stock Option Plan. All options granted after April 30, 1993 have and will
have exercise prices equal to 100% of Baylake Common fair market value on the
date of grant. The options granted to date become exercisable 20% per year,
commencing one year from date of grant.
Aggregated Option/SAR Exercises in Last Fiscal Year
And Fiscal Year-End Option/SAR Values(1)
Number of Unexercised Value of Unexercised
Options/SARs at Fiscal In-the-Money Options/SARs
Year-End (#) at Fiscal Year-End ($)(3)
Shares Acquired Value
Name on Exercise (#) Realized ($)(2) Exercisable Unexercisable Exercisable Unexercisable
Thomas L. Herlache 4,800 $58,962 16,800 19,200 323,028 167,532
(1)Consists entirely of non-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
$33.00 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
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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 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 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 1998, 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 1998; (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.
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In recommending base salary levels for 1998, 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 2.57% to 13.16% including a salary increase for Mr. Herlache of
4.72% 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 eligible 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 net income; and asset
quality with respect to loans past due over 60 days and net charge-offs. 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 1998 should generate at least
$1,824,000 in additional pre-tax income, and that the bonus pool should
constitute 40% of additional net income attributable to the performance
indicators (resulting in a maximum potential bonus pool of approximately
$729,600 for 1998). However, it was agreed that no bonuses would be awarded
unless Baylake's return on average stockholders' equity for 1998 was at least
14.00%.
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.
Based on actual results for 1998 among the various indicators which achieved
prescribed goals, a bonus pool of approximately $207,200 was established. The
goal level of at least 3 was achieved in components relating to net income. The
goal level of 10 was achieved in loan quality indicators. The bonus pool
amounted to approximately 4.13% of total salaries. Executive officers of Baylake
Bank received bonuses of 4.13% 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 $80,800 or 40.00% 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 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
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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. Under an
Amendment to the Plan dated and filed with the Securities and Exchange
Commission, the number of shares reserved has been increased to 600,000. Options
to purchase an additional 63,000 shares were granted in January 1999 at an
exercise price of $30.50 per share, which approximate the then current market
value of the Baylake Common. To date, options to purchase up to 370,450 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 earned by Baylake Bank's executive officers in 1998
was generally based on the Bank's continued performance in 1998 as compared to
1997, 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 1999, Mr. Herlache
was granted options to purchase 6,000 shares of Baylake Common, while other
divisional vice presidents were granted options to purchase 6,000 shares and the
Executive Vice-President was granted options to purchase 3,000 shares.
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 participated in decisions regarding
compensation 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 of
Standard & Poors 500 Stock Index and the Nasdaq Bank Index, prepared for Nasdaq
by the Center for Research in Securities Prices at the University of Chicago.
(1)Assumes $100 invested on December 31, 1993 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
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as well as their associates. Since January 1, 1998, 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 1998.
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 1999. 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.
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 1998 Annual Report to shareholders is enclosed with your proxy
materials. The consolidated statements of Baylake are contained in the 1998
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,
1999 in order to be considered at Baylake's 2000 Annual Meeting of Shareholders.
STURGEON BAY, WISCONSIN
DATE: APRIL 30, 1999 BAYLAKE CORP.
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[BAYLAKE CORP. LETTERHEAD]
April 30, 1999
Dear Baylake Shareholder.
You are invited to attend the Annual Meeting of Shareholders of Baylake
Corp. to be held on Monday, June 7, 1999 at the Cornerstone Conference Center,
222 North Third Avenue, Sturgeon Bay, Wisconsin. The Annual Meeting will begin
at 7:30 p.m.
At The Annual Meeting, you will be asked to elect four (4) directors in
Class II, whose terms will expire in 2002 and take up consideration of any other
matter which may properly come before the meeting.
To assure that your shares are represented in voting on these very
important matters, please complete and return the accompanying proxy card
promptly in the enclosed envelope, whether or not you plan to attend the Annual
Meeting. If you do attend, you may revoke your proxy and vote your shares in
person at the Annual Meeting.
The attached Request Form should be completed by you ONLY if you plan
to attend the meeting. Upon receipt of the form, we will send you an Entrance
Card which is to be presented to us when you attend the meeting. Please return
the form by May 10th to allow us to make proper accommodations for those
attending the meeting.
If you have any questions or require assistance, please contact Stephen
A. Kase at Baylake Bank at either 920-743-5551 or 800-267-3610.
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REQUEST FOR ENTRANCE CARD
If you plan to attend the Annual Meeting, please complete and
return in the proxy envelope.
NAME:
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ADDRESS:
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HOLDING COMPANY FOR BAYLAKE BANK
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BAYLAKE CORP.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 7, 1999
April 30, 1999
To the Shareholders of Baylake Corp.:
NOTICE is hereby given that the Annual Meeting of the shareholders of
Baylake Corp., a Wisconsin corporation ("Baylake"), will be held at Cornerstone
Conference Center, 222 North Third Avenue, Sturgeon Bay, Wisconsin on Monday,
June 7, 1999, at 7:30 p.m., local time, for the purpose of considering and
voting upon the following matters:
1. Election of four (4) directors of Class II, whose terms will
expire in 2002;
2. Such other matters relating to the foregoing as may properly
be brought before the meeting or any adjournment thereof;
each as set forth in the accompanying Proxy Statement.
The Board of Directors has fixed the close of business on April 23,
1999 as the record date for the determination of shareholders entitled to
receive notice of and to vote at the Annual Meeting or any adjournment thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE MARK, SIGN, DATE,
AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ACCOMPANYING POSTAGE-PAID
ENVELOPE. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING,
WHETHER YOUR HOLDINGS ARE LARGE OR SMALL. IF FOR ANY REASON YOU SHOULD DESIRE TO
REVOKE YOUR PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS VOTED.
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PROXY FOR BAYLAKE CORP.
ANNUAL MEETING OF SHAREHOLDERS - JUNE 7,1999
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 23, 1999 at
the Annual Meeting of shareholders to be held on June 7, 1999, or any
adjournment thereof.
ELECTION OF DIRECTORS - Nominees for Class II of the Board of Directors are:
John D. Collins George Delveaux, Jr. Glenn Miller Joseph Morgan
(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
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THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED ABOVE BY THE UNDERSIGNED SHAREHOLDER(S). IF PROPERLY
SIGNED, BUT 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: ,1999.
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Signature Signature, it jointly held
PLEASE MARK, SIGN, DATE AND THEN RETURN THE PROXY PROMPTLY, USING THE
ENCLOSED ENVELOPE FOR YOUR CONVENIENCE.
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STEVEN JENNERJOHN 1473.6251
857 S 21ST PL
STURGEON BAY WI 54235-1018