<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
-------------------- --------------------
Commission file number: 33-34124
-------------------------------------------------
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Santa Monica Bank 401(k) Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Santa Monica Bank
1251 Fourth Street
P.O. Box 1320
Santa Monica, California 90406
<PAGE> 2
SANTA MONICA BANK 401(k) PLAN
FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1996 AND 1995
TABLE OF CONTENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Plan Benefits, with Fund
Information as of December 31, 1996 and 1995
Statement of Changes in Net Assets Available for Plan
Benefits, with Fund Information for the Year Ended
December 31, 1996
NOTES TO FINANCIAL STATEMENTS
SUPPLEMENTAL SCHEDULES:
Schedule I: Item 27a - Schedule of Assets Held for Investment
Purposes as of December 31, 1996
Schedule II: Item 27d - Schedule of Reportable Transactions for
the Year Ended December 31, 1996
<PAGE> 3
[ARTHUR ANDERSEN LLP LOGO]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Profit Sharing Retirement Committee of
Santa Monica Bank:
We have audited the accompanying statements of net assets available for plan
benefits with fund information of the SANTA MONICA BANK 401(K) PLAN (the Plan)
as of December 31, 1996 and 1995, and the related statement of changes in net
assets available for plan benefits with fund information and supplemental
schedules for the year ended December 31, 1996, as listed in the accompanying
index. These financial statements and schedules are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts of disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits with fund
information of the Plan as of December 31, 1996 and 1995, and the changes in net
assets available for plan benefits with fund information for the year ended
December 31, 1996, in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The Fund Information in the
statement of net assets available for plan benefits and the statement of changes
in net assets available for plan benefits is presented for purposes of
additional analysis rather than to present the net assets available for plan
benefits and the changes in net assets available for plan benefits of each fund.
The supplemental schedules and Fund Information have been subjected to
<PAGE> 4
the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, are fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Los Angeles, California
June 30, 1997
<PAGE> 5
SANTA MONICA BANK 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS,
WITH FUND INFORMATION
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
----------------------------------------------------------------------------
WELLS FARGO WESTCORE INVESCO
STABLE INTERMEDIATE SELECT WELLS FARGO STRONG
ASSET FUND TERM BOND FUND INCOME FUND S&P 500 FUND OPPORTUNITY FUND
----------- -------------- ----------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments at Fair Value:
Cash and cash equivalents $ -- $ -- $ -- $ -- $ --
Common stock -- -- -- -- --
Common/collective trusts 38,887 -- -- 125,002 --
Registered investment companies -- 65,341 50,121 -- 221,499
-------- -------- -------- -------- --------
Total investments 38,887 65,341 50,121 125,002 221,499
-------- -------- -------- -------- --------
Employer contributions receivable -- -- -- -- --
-------- -------- -------- -------- --------
TOTAL ASSETS 38,887 65,341 50,121 125,002 221,499
-------- -------- -------- -------- --------
LIABILITIES:
Excess contributions 764 4,077 1,191 7,808 8,176
-------- -------- -------- -------- --------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, as of December 31, 1996 $ 38,123 $ 61,264 $ 48,930 $117,194 $213,323
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
NON-
PARTICIPANT
PARTICIPANT DIRECTED DIRECTED
-------------------------- ------------
STRONG TOTAL SANTA MONICA SANTA MONICA
RETURN FUND BANK STOCK BANK STOCK TOTAL
------------ ------------ ------------ --------
<S> <C> <C> <C> <C>
ASSETS:
Investments at Fair Value:
Cash and cash equivalents $ -- $ 113 $ -- $ 113
Common stock -- 56,839 -- 56,839
Common/collective trusts -- -- -- 163,889
Registered investment companies 49,358 -- -- 386,319
-------- -------- -------- --------
Total investments 49,358 56,952 -- 607,160
-------- -------- -------- --------
Employer contributions receivable -- -- 157,768 157,768
-------- -------- -------- --------
TOTAL ASSETS 49,358 56,952 157,768 764,928
-------- -------- -------- --------
LIABILITIES:
Excess contributions 2,682 3,155 27,519 55,372
-------- -------- -------- --------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, as of December 31, 1996 $ 46,676 $ 53,797 $130,249 $709,556
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of this financial statement.
<PAGE> 6
SANTA MONICA BANK 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS,
WITH FUND INFORMATION
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
-------------------------------------------------------------------------------
WESTCORE INVESCO STRONG
BANKERS INTERMEDIATE SELECT EQUITY OPPORTUNITY STRONG TOTAL
GIC FUND TERM BOND FUND INCOME FUND INDEX FUND FUND RETURN FUND TOTAL
-------- -------------- ----------- ---------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments at Fair Value:
Common/collective trusts $ 34,540 $ -- $ -- $ 23,232 $ -- $ -- $ 57,772
Registered investment companies -- 18,096 16,003 -- 38,059 9,763 81,921
TOTAL ASSETS 34,540 18,096 16,003 23,232 38,059 9,763 139,693
-------- -------- -------- -------- -------- -------- --------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, as of December 31, 1995 $ 34,540 $ 18,096 $ 16,003 $ 23,232 $ 38,059 $ 9,763 $139,693
======== ======== ======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of this financial statement.
<PAGE> 7
SANTA MONICA BANK 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS,
WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
----------------------------------------------------------------------------
Wells Fargo Westcore INVESCO
Stable Intermediate Select Wells Fargo Strong
Asset Fund Term Bond Fund Income Fund S&P 500 Fund Opportunity Fund
----------- -------------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR
PLAN BENEFITS, beginning of year $ 34,540 $ 18,096 $ 16,003 $ 23,232 $ 38,059
ADDITIONS:
Employee contributions 23,427 48,067 42,162 82,005 152,784
Employer contributions -- -- -- -- --
--------- --------- --------- --------- ---------
Total contributions 23,427 48,067 42,162 82,005 152,784
--------- --------- --------- --------- ---------
Investment Income:
Dividends 1,415 2,915 2,499 -- 23,061
Net appreciation (depreciation) in
fair value of investments -- (335) (209) 16,047 2,923
--------- --------- --------- --------- ---------
Total investment income 1,415 2,580 2,290 16,047 25,984
--------- --------- --------- --------- ---------
Total additions 24,842 50,647 44,452 98,052 178,768
--------- --------- --------- --------- ---------
DEDUCTIONS:
Benefits paid to participants -- (4,276) (1,942) (47) (3,038)
Excess contributions (764) (4,077) (1,191) (7,808) (8,176)
--------- --------- --------- --------- ---------
Total deductions (764) (8,353) (3,133) (7,855) (11,214)
NET INTERFUND TRANSFERS (20,495) 874 (8,392) 3,765 7,710
--------- --------- --------- --------- ---------
NET INCREASE 3,583 43,168 32,927 93,962 175,264
--------- --------- --------- --------- ---------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, end of year $ 38,123 $ 61,264 $ 48,930 $ 117,194 $ 213,323
========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
NON-
PARTICIPANT
PARTICIPANT DIRECTED DIRECTED
-------------------------- ------------
Strong Total Santa Monica Santa Monica
Return Fund Bank Stock Bank Stock Total
----------- ------------ ------------ -----
<S> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR
PLAN BENEFITS, beginning of year $ 9,763 $ -- $ -- $ 139,693
ADDITIONS:
Employee contributions 35,455 32,111 -- 416,011
Employer contributions -- -- 157,768 157,768
--------- --------- --------- ---------
Total contributions 35,455 32,111 157,768 573,779
--------- --------- --------- ---------
Investment Income:
Dividends 8,194 259 -- 38,343
Net appreciation (depreciation) in
fair value of investments (3,539) 10,783 -- 25,670
--------- --------- --------- ---------
Total investment income 4,655 11,042 -- 64,013
--------- --------- --------- ---------
Total additions 40,110 43,153 157,768 637,792
--------- --------- --------- ---------
DEDUCTIONS:
Benefits paid to participants (2,725) (529) -- (12,557)
Excess contributions (2,682) (3,155) (27,519) (55,372)
--------- --------- --------- ---------
Total deductions (5,407) (3,684) (27,519) (67,929)
NET INTERFUND TRANSFERS 2,210 14,328 -- --
--------- --------- --------- ---------
NET INCREASE 36,913 53,797 130,249 569,863
--------- --------- --------- ---------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, end of year $ 46,676 $ 53,797 $ 130,249 $ 709,556
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of this financial statement.
<PAGE> 8
SANTA MONICA BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
1. PLAN DESCRIPTION
The following description of the Santa Monica Bank 401(k) Plan (the Plan) is
provided for general information purposes only. More complete information
regarding the Plan's provisions may be found in the plan document.
General
Effective September 1, 1995, Santa Monica Bank (the Bank) established the
Plan as a defined contribution plan under the provisions of Section 401(a)
of the Internal Revenue Code (IRC), which includes a qualified cash or
deferred arrangement as described in Section 401(k) of the IRC, for the
benefit of eligible employees of the Bank. All employees of the Bank who
have completed one year of service, as defined by the Plan, are eligible
to participate. Employees who are "leased employees" as defined in the IRC
may not participate in the Plan. The Plan is subject to the provisions of
the Employee Retirement Security Act of 1974 (ERISA), as amended.
Plan Administration
Wells Fargo Bank N.A. (the Trustee), formerly First Interstate Bank of
California, is the record keeper and trustee of the Plan. The Bank is the
plan administrator.
Contributions
Employees may defer up to fifteen percent of their before-tax compensation
subject to certain limitations. These employee contributions are normally
made through payroll deductions which are remitted to the Plan on a
bi-monthly basis.
The Bank may also make discretionary matching and discretionary profit
sharing contributions in amounts determined by the Board of Directors of
the Bank. The Bank made a commitment for a matching contribution of
$157,768 in 1996 but did not elect to make either of these contributions
in 1995.
<PAGE> 9
-2-
Vesting
Participants are always 100 percent vested in employee contributions and
related earnings. The Bank's contributions and related earnings vest at 20
percent after three years of service and at the rate of an additional 20
percent per year for each succeeding year until 100 percent vested.
Forfeitures
At December 31, 1996 forfeited matching contributions totaled
approximately $5,700. There were no forfeited amounts at December 31,
1995. Forfeited matching contributions are applied to reduce matching
contributions for the year. Any forfeited profit sharing Bank
contributions are allocated among all participants who are employees at
year-end, pro rata, based on eligible earnings for the plan year or are
applied to restore forfeited amounts to the plan accounts of participants
who are rehired within 5 years.
Benefits
Upon termination of service including death, disability, or retirement, a
participant fully vests in any previously unvested amounts. The
participant or beneficiary may elect to receive an amount equal to the
value of the participant's vested interest in his or her account. The form
of payment is a lump-sum distribution.
Allocations to Participant's Accounts
Gains and losses and investment income are posted to each participant's
individual investment fund based on each fund's earnings performance
percentage return as published monthly by the Trustee.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The accompanying financial statements are prepared on the accrual basis of
accounting. The preparation of the financial statements in conformity with
generally accepted accounting principles requires the Plan's management to
use estimates and assumptions that affect the accompanying financial
statements and disclosures. Actual results could differ from these
estimates.
Valuation of Investments
Investments are stated at fair value as of the plan's year-end. Realized
and unrealized gains or losses are recorded as "net appreciation /
depreciation of investments" in the statement of changes in net assets
available for plan benefits.
<PAGE> 10
-3-
Realized and unrealized gains and losses are based on the difference
between the market value of the assets at the beginning of the plan year
or at the time of purchase for assets purchased during the plan year and
the market value of those assets at the end of the year.
Dividends
Dividends are recorded as income when earned.
Administrative Expenses
Administrative expenses including Trustee and recordkeeping fees are paid
for by the Bank. For the year ended December 31, 1996 Plan expenses paid
for by the Bank totaled approximately $6,000.
3. INVESTMENT OPTIONS
At December 31, 1996, the majority of the Plan's assets were invested in
participant-directed mutual funds administered by the Trustee. Under the
investment arrangement, investments are directed among seven investment options.
A description of each fund is as follows:
Wells Fargo Stable Asset Fund
Previously Bankers GIC Fund, this fund seeks to provide stability of
principal and relatively high current income by investing primarily in
investment contracts of selected insurance companies and banks. The yield
on investment contracts is more stable than most fixed income funds, but
will fluctuate with market interest rates.
Westcore Intermediate-Term Bond Fund
This fund seeks to provide current income with relatively small volatility
of principal. This is achieved through investments in high-quality
corporate and government bonds with intermediate maturities between three
and six years. The value of shares will fluctuate with market rates.
INVESCO Select Income Fund
This fund seeks a high level of current income by investing primarily in
government and corporate bonds and other debt securities. The price of
bonds will fluctuate with market conditions.
Wells Fargo S&P 500 Fund
Previously Equity Index Fund, this fund seeks to provide capital growth
and current income that closely corresponds to the total return of the
Standard and Poor's 500 Stock Index (S&P 500). This portfolio offers broad
diversification among issues and sectors.
<PAGE> 11
-4-
Strong Opportunity Fund
This fund seeks capital growth by investing primarily in equity securities
of small and medium sized companies. The fund is appropriate for investors
who have a long-term investment horizon. Stocks require a long investment
period because their high historical returns relative to other types of
investments have been accomplished by greater price fluctuations.
Strong Total Return Fund
This fund seeks a high total return by investing for capital growth and
income. The Fund invests primarily in common stocks, corporate bonds and
debentures, and money market instruments.
Santa Monica Bank Stock
Effective January 1, 1996, this fund was added as an investment option.
Contributions to this fund are used solely to purchase shares of the
Bank's Common Stock. Also, the Plan was amended effective January 1, 1996
to invest all matching contributions into the fund.
4. TAX STATUS
Subsequent to year end, the Internal Revenue Service issued a determination
letter dated January 23, 1997 stating that the Plan was designed in accordance
with applicable IRC requirements as of that date. The Plan has been amended
since receiving the determination letter. However, the plan administrator
believes that the Plan is currently designed and is being operated in compliance
with the applicable requirements of the IRC. Therefore, the plan administrator
believes that the Plan was qualified and the related trust was tax-exempt for
the years ended December 31, 1996 and 1995.
5. PLAN TERMINATION
Although it has not expressed any intent to do so, the Bank has the right under
the Plan to amend or discontinue its contributions at any time and to terminate
the Plan subject to the provisions of ERISA. In the event of plan termination,
participants will become 100 percent vested in their accounts.
<PAGE> 12
-5-
6. RECONCILIATION TO FORM 5500
The following table reconciles net assets available for benefits per the
financial statements to the Form 5500 as filed by the Company for the years
ended December 31, 1996 and 1995:
<TABLE>
<CAPTION>
Net Assets Available
Benefits for Plan Benefits
Payable to Benefits ---------------------------
Participants Paid 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Per financial statements $ -- $ 12,557 $ 709,556 $ 139,693
1996 Employer contributions receivable -- -- (157,768) --
1996 Excess contributions -- -- 55,372 --
------------ ------------ ------------ ------------
Per Form 5500 $ -- $ 12,557 $ 607,160 $ 139,693
============ ============ ============ ============
</TABLE>
<PAGE> 13
SCHEDULE I
SANTA MONICA BANK 401(K) PLAN
EIN #95-1191910
PLAN #002
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
Identify of Issuer,
Borrower, Lessor, or
Similar Party Description of Investment Cost Value
- -------------------- ------------------------------- ---------- ----------
<S> <C> <C> <C>
* Wells Fargo Stable Asset Fund
Guaranteed Investment Contracts $ 38,887 $ 38,887
* Santa Monica Bank Corporate Common Stock 46,106 56,839
* Wells Fargo S&P 500 Stock
Mutual Fund 107,509 125,002
INVESCO Select Income
Mutual Fund 49,848 50,121
* Santa Monica Bank Stock Liquidity
Mutual Fund 113 113
Strong Opportunity
Mutual Fund 219,409 221,499
Strong Total Return
Mutual Fund 53,221 49,358
Westcore Intermediate-Term Bond
Mutual Fund 65,477 65,341
-------- --------
Total investments $580,570 $607,160
======== ========
</TABLE>
* Indicates a party-in-interest
<PAGE> 14
SCHEDULE II
SANTA MONICA BANK 401(K) PLAN
EIN #95-1191910
PLAN #002
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Current
Value of
Cost Asset on Net
Purchase Selling of Transaction Gain or
Identity of Party Description of Assets Price Price Asset Date Loss
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Wells Fargo Bank
Stable Asset Fund
Guaranteed Investment
Contracts
39 Acquisitions $ 32,579 $ 32,579 $ -
7 Dispositions $28,232 $28,232 -
Westcore
Intermediate-Term Bond
Mutual Fund
44 Acquisitions 57,033 57,033 -
13 Dispositions 9,453 9,483 (30)
INVESCO
Select Income
Mutual Fund
43 Acquisitions 45,291 45,291 -
14 Acquisitions 10,965 11,189 (224)
Wells Fargo Bank
S&P 500 Stock
Mutual Fund
35 Acquisitions 173,591 173,591 -
5 Dispositions 1,683 2,118 (435)
Strong
Opportunity Fund
Mutual Fund
39 Acquisitions 193,546 193,546 -
9 Dispositions 13,029 12,333 696
Strong
Total Return Fund
Mutual Fund
33 Acquisitions 47,018 47,018 -
8 Dispositions 3,884 3,668 216
Santa Monica Bank
Stock Liquidity
31 Acquisitions 46,698 46,698 -
9 Dispositions 46,585 46,585 -
Santa Monica Bank
Common Stock
Corporate Stock
8 Acquisitions 46,585 46,585 -
1 Disposition 529 479 50
</TABLE>
<PAGE> 15
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
SANTA MONICA BANK 401(k)
By /s/ Dario Quiroga
-------------------------------------
Dario Quiroga
Senior Vice President and
Chief Financial Officer
Date: July 14, 1997
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated June 30, 1997, included in this Form 11-k for the year ended
December 31, 1996, into Santa Monica Bank's previously filed Registration
Statement No. 33-34124
/s/ ARTHUR ANDERSEN LLP
Los Angeles, California
July 14, 1997
