<PAGE>
Filed Pursuant to Rule 424(b)(1)
Registration No. 333-30269
PROSPECTUS
dated July 25, 1997
$40,000,000
[LOGO OF GBC BANCORP]
8.375% SUBORDINATED NOTES DUE 2007
Interest on the 8.375% Subordinated Notes due 2007 (the "Notes") issued by GBC
Bancorp (the "Company") is payable on the 15th day of October, January, April
and July of each year, commencing October 15, 1997. The Notes mature on August
1, 2007. The Notes are not redeemable prior to August 1, 2002. Thereafter, the
Notes are redeemable, in whole or in part, at the option of the Company at the
redemption prices set forth in this Prospectus plus accrued interest to the
date of redemption. The Notes have no sinking fund. The Notes will be issued
only in fully registered book-entry form in denominations of $1,000 and any
integral multiple thereof. The Notes will be unsecured general obligations of
the Company and will be pari passu with the Company's existing subordinated
debt and subordinated to all future Senior Indebtedness (as defined herein) of
the Company. There is no limitation in the Indenture on the Company's ability
to create or incur Senior Indebtedness or indebtedness ranking on a parity
with the Notes. The Notes have been approved for listing on the New York Stock
Exchange under the symbol "GBCB 07" subject to official notice of issuance.
Although the Underwriters have each indicated an intention to make a market in
the Notes, no Underwriter is obligated to make a market in the Notes and any
market making may be discontinued at any time at the sole discretion of such
Underwriter. See "Description of Notes" and "Underwriting."
Payment of principal of the Notes may be accelerated only in the case of
certain events relating to the bankruptcy, insolvency or reorganization of the
Company. There is no right to acceleration in the case of a default in the
payment of interest on the Notes or in the performance of any other covenant
of the Company. See "Description of Notes."
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
THE NOTES ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, ANY OTHER GOVERNMENTAL AGENCY OR
OTHERWISE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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<S> <C> <C> <C>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
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Per Note....................... 100.00% 3.275% 96.725%
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Total.......................... $40,000,000 $1,310,000 $38,690,000
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</TABLE>
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $300,000.
The Notes are being offered by the Underwriters named herein subject to prior
sale and when, as and if delivered to and accepted by the Underwriters. It is
expected that the Notes will be ready for delivery in book-entry form only
through the facilities of The Depository Trust Company (the "Depositary") in
New York, on or about July 30, 1997 against payment therefor in immediately
available funds.
PIPER JAFFRAY INC.
KEEFE, BRUYETTE & WOODS, INC.
OPPENHEIMER & CO., INC.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files
reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information can be inspected and copied at the Public Reference Room of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following Regional Offices of the Commission: Chicago Regional Office,
Citicorp Center, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661;
and New York Regional Office, Seven World Trade Center, 13th Floor, New York,
New York 10048. Copies of such material can also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Commission maintains a website that
contains reports, proxy and information statements and other information
regarding registrants that file electronically. The address of the website is
http://www.sec.gov. The Company's common stock is traded on the Nasdaq
National Market. Reports and other information concerning the Company can be
inspected at the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all exhibits and amendments thereto, called the
"Registration Statement") under the Securities Act of 1933, as amended, with
respect to the securities covered by this Prospectus. This Prospectus does not
contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is made to
the Registration Statement. Copies of the Registration Statement, including
any amendments and exhibits thereto, can be inspected and copied at the
offices of the Commission as set forth above. Statements contained in this
Prospectus as to the contents of any contract or any other document are not
necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Company which have been previously filed with
the Commission are hereby incorporated by reference in this Prospectus:
(a) the Company's Annual Report on Form 10-K for the Fiscal Year Ended
December 31, 1996;
(b) the Company's Quarterly Report on Form 10-Q for the Quarter Ended March
31, 1997; and
(c) the Company's Proxy Statement dated March 24, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering hereunder shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained herein or in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the oral or written request of any such
person, a copy of all documents which are incorporated by reference in this
Prospectus, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such documents). Requests for such
copies should be directed to Amy Lin, GBC Bancorp, 800 West Sixth Street, Los
Angeles, California 90017, telephone number (213) 972-4268.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES OFFERED
HEREBY. SUCH TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF SECURITIES
TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
2
<PAGE>
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SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial information appearing elsewhere in this
Prospectus or incorporated herein by reference. Unless the context clearly
suggests otherwise, and except as described under the caption "Description of
Notes," references to the Company include the Company and its subsidiaries. In
addition to the historical information contained herein, certain statements in
this Prospectus constitute "forward-looking statements" under the Private
Securities Litigation Reform Act of 1995 (the "Reform Act") which involve
risks and uncertainties. The Company's actual results may differ significantly
from those discussed herein. Factors that might cause such a difference
include, but are not limited to, those discussed under the caption "Risk
Factors" as well as those discussed elsewhere in this Prospectus or in
documents incorporated by reference herein. See "Risk Factors--Forward-Looking
Statements."
THE COMPANY
GBC Bancorp (the "Company") is a bank holding company based in Los Angeles,
California, which operates through its principal subsidiary, General Bank (the
"Bank"), a California state-chartered commercial bank. The Bank serves
primarily small to medium-sized businesses and high net worth individuals
through fifteen branch offices located in the greater Los Angeles, San Diego
and Silicon Valley areas of California. The primary emphasis of the Bank is on
commercial and real estate lending, real estate construction lending and to a
lesser extent, residential mortgage lending. Substantially all of the Bank's
funding is comprised of retail and commercial deposits generated within its
market areas. At March 31, 1997, the Company had consolidated assets of $1.4
billion, deposits of $1.2 billion and stockholders' equity of $119.3 million.
The Bank has focused on servicing the Asian community, primarily persons of
Taiwanese and Chinese descent. Consistent with this strategy, the Bank
emphasizes building long-term relationships with its customers and providing
specialized products and services for these markets. Generally the Bank's
customers have a need for both commercial and residential real estate loans to
finance their businesses and homes. In addition, many of the Bank's customers
have operations both in the U.S. and in their home countries and, therefore,
require ongoing trade financing and other international banking services to
conduct business between the two locations. The Bank's specialized services
for its customers include an International Banking Division which provides
expertise on trade-related banking matters, a Small Business Administration
("SBA") department which makes SBA guaranteed loans to assist smaller
businesses and a High Technology Division that services venture-backed, early
stage, emerging growth companies in the high technology market. In concert
with the High Technology Division, the Company established GBC Venture
Capital, Inc. in 1996 to invest in technology ventures, thereby providing a
full range of financing services to its technology customers.
The Bank's funding strategy focuses on servicing its high net worth
customers and their businesses through its fifteen branch offices. Given the
nature of its customers, a significant amount of its funding is in the form of
certificates of deposit of $100,000 or more, nearly all of which mature in one
year or less. At December 31, 1996, approximately half of the funds
represented by such certificates of deposit were maintained by the Bank for
three years or more. The Company believes its success in retaining such funds
is a result of its customers' strong ties to the Bank and their desire for
personal service.
The Company expects to continue its growth by expanding its core business
and by leveraging its product competencies and its experience in dealing with
niche customer markets. The principal components of the Company's strategy are
to:
. Grow core customer base: As a leading lending institution for the
Taiwanese and Chinese communities in California, the Company believes
that it can maintain its existing business with this core customer base
and build its customer base among the growing Taiwanese and Chinese
populations of California.
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3
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. Continue geographic expansion: The Company plans to explore other
geographic regions with a high concentration of persons of Taiwanese and
Chinese descent and where there is need for trade-related international
banking. The Company believes that the elimination of many barriers to
interstate branching should enable it to expand more efficiently to
other such markets.
. Further develop core product competencies: Through services provided to
its core customer base, the Company has developed expertise in providing
construction lending, commercial and real estate lending, trade-related
international banking and lending to technology companies. The Company
believes that it can continue to market such products to customers
outside of its core customer base. For example, a substantial amount of
the Company's construction loans as of March 31, 1997, were to non-
Taiwanese or Chinese customers.
. Enter new customer markets: Within California, the Company believes
there are growing concentrations of other ethnic groups whose members
have similar characteristics to those of the Company's core customer
base, such as high net worth, as well as similar needs, such as trade-
related international banking needs, a need for real estate lending and
a desire to conduct business in their native language. The Company
believes that it has the experience and product expertise to serve new
customer markets.
The Company is a California corporation with its principal executive offices
at 800 West Sixth Street, Los Angeles, California 90017, and its telephone
number is (213) 972-4104.
THE OFFERING
<TABLE>
<C> <S>
Notes offered.................... $40,000,000 principal amount of 8.375%
Subordinated Notes due 2007.
Denominations.................... $1,000 and integral multiples thereof.
Maturity......................... August 1, 2007
Interest payment dates........... Interest on the Notes is payable quarterly
commencing October 15, 1997 and on the 15th
day of each January, April, July and
October thereafter. The first interest
payment will represent interest from the
date of issuance of the Notes through
October 14, 1997.
Sinking fund..................... None.
Optional redemption.............. The Notes may not be redeemed prior to
August 1, 2002. The Company may elect to
redeem the Notes, in whole or in part, upon
not less than 30 nor more than 60 days'
prior written notice, at any time on or
after August 1, 2002 and prior to August 1,
2003 at 102% of the principal amount
thereof, on or after August 1, 2003 and
prior to August 1, 2004 at 101% of the
principal amount thereof and on or after
August 1, 2004, at 100% of the principal
amount thereof, in each case plus accrued
interest to the date of redemption. See
"Description of Notes--Redemption at Option
of the Company."
</TABLE>
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4
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<TABLE>
<C> <S>
Covenants........................ The indenture under which the Notes will be
issued (the "Indenture"), among other
things, restricts the ability of the
Company under certain circumstances to pay
cash dividends or to make other capital
distributions. See "Description of Notes--
Restriction on Dividends and Other
Distributions." The Indenture does not
limit the ability of the Company or its
subsidiaries to incur additional
indebtedness.
Limited rights of acceleration... Payment of principal of the Notes may be
accelerated only in case of certain events
involving the bankruptcy, insolvency or
reorganization of the Company which
constitute an Acceleration Event (as
defined). There is no right of acceleration
in the case of a default in the payment of
principal of or interest on the Notes or
the performance of any other covenant of
the Company in the Indenture. See
"Description of Notes--Acceleration
Events."
Subordination.................... The Notes will be unsecured general
obligations of the Company and will be
subordinated to all existing and future
Senior Indebtedness (as defined) of the
Company in the manner and to the extent
described herein. As of March 31, 1997, the
Company had no outstanding Senior
Indebtedness, and had $15 million of
outstanding subordinated debentures ranking
pari passu with the Notes. There is no
limitation in the Indenture on the
Company's ability to create or incur Senior
Indebtedness or indebtedness ranking on a
parity with the Notes. See "Description of
Notes--Subordination."
Use of proceeds.................. The net proceeds of this offering will be
used for general corporate purposes, which
may include repayment of the Company's
$15 million of outstanding subordinated
debentures, repurchases by the Company of
its common stock and possible future
acquisitions. The Notes are expected to be
treated as Tier 2 capital for regulatory
purposes. As Tier 2 capital, the Notes are
expected to strengthen further the capital
structure of the Company. See "Use of
Proceeds."
Listing.......................... The Notes have been approved for listing on
the New York Stock Exchange under the
symbol "GBCB 07", subject to official
notice of issuance.
Trustee.......................... BNY Western Trust Company.
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5
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SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following summary consolidated financial information of the Company and
its subsidiaries as of and for the years ended December 31, 1996, 1995, 1994,
1993 and 1992 has been derived from the Company's audited consolidated
financial statements. The following summary consolidated financial information
for the three months ended March 31, 1997 and 1996 has been derived from the
Company's unaudited consolidated quarterly financial statements which, in the
opinion of management, include all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation. The summary
consolidated financial information should be read in conjunction with the
Company's audited consolidated financial statements and related notes
incorporated herein by reference. The consolidated financial information for
the three months ended March 31, 1997 is not necessarily indicative of the
operating results to be expected for the entire year.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
---------------------- --------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Interest income......... $ 25,734 $ 23,284 $ 97,641 $ 85,126 $ 72,782 $ 65,159 $ 65,731
Interest expense........ 11,050 10,666 43,661 37,418 28,889 24,997 28,441
---------- ---------- ---------- ---------- ---------- --------- ---------
Net interest income..... 14,684 12,618 53,980 47,708 43,893 40,162 37,290
Provision for credit
losses................. 1,000 1,500 4,500 18,570 16,194 9,300 3,830
---------- ---------- ---------- ---------- ---------- --------- ---------
Net interest income
after provision for
credit losses.......... 13,684 11,118 49,480 29,138 27,699 30,862 33,460
Non-interest income..... 1,524 1,832 6,073 6,042 5,936 8,286 4,420
Non-interest expense.... 6,790 6,588 27,337 26,104 24,310 22,012 18,283
---------- ---------- ---------- ---------- ---------- --------- ---------
Income before income
taxes.................. 8,418 6,362 28,216 9,076 9,325 17,136 19,597
Provision for income
taxes.................. 2,674 2,053 9,179 1,427 1,796 5,196 6,585
---------- ---------- ---------- ---------- ---------- --------- ---------
Net income.............. $ 5,744 $ 4,309 $ 19,037 $ 7,649 $ 7,529 $ 11,940 $ 13,012
========== ========== ========== ========== ========== ========= =========
Earnings per common
share:
Net income............. $ 0.82 $ 0.62 $ 2.67 $ 1.14 $ 1.12 $ 1.76 $ 1.94
Average common shares
outstanding............ 6,983,000 6,997,000 7,135,000 6,729,000 6,693,000 6,774,000 6,707,000
SELECTED OPERATING
RATIOS AND OTHER DATA:
Return on average
assets(1).............. 1.73% 1.38% 1.46% 0.70% 0.76% 1.32% 1.59%
Return on average common
stockholders'
equity(1).............. 19.55 17.06 17.93 8.13 8.34 14.47 18.25
Net interest
margin(1)(2)........... 4.67 4.25 4.36 4.59 4.74 4.74 4.86
Net charge-offs to
average loans and
leases(1).............. 1.33 1.59 0.96 5.10 1.01 1.00 0.48
Efficiency Ratio (3).... 41.90 45.60 45.50 48.60 48.80 45.40 43.80
Ratio of earnings to
fixed charges(4):
Excluding interest on
deposits.............. 9.42x 5.64x 6.38x 2.37x 2.44x 3.16x 4.91x
Including interest on
deposits.............. 1.68x 1.52x 1.57x 1.17x 1.24x 1.53x 1.61x
BALANCE SHEET DATA:
Assets.................. $1,353,577 $1,365,719 $1,352,115 $1,204,506 $1,081,602 $ 957,260 $ 861,252
Loans and leases, net... 592,158 464,994 582,507 451,891 474,276 489,394 435,880
Securities(5)........... 553,720 662,429 532,095 540,694 440,511 310,979 336,139
Deposits................ 1,199,920 1,208,763 1,201,513 1,046,200 934,020 790,575 697,020
Subordinated debt....... 15,000 15,000 15,000 15,000 15,000 15,000 15,000
Stockholders' equity.... 119,260 101,266 116,636 99,477 87,683 86,438 76,209
Book value per common
share.................. 17.57 15.12 17.24 14.89 13.17 13.00 11.51
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6
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<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
---------------- -------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED ASSET QUALITY
DATA:
Loans 90 days or more
past due and still
accruing............... $ 5,109 $ 9 $ 6,779 $ 9 $ 999 $ 4,059 $ 87
Non-accrual loans....... 9,096 27,539 11,719 43,712 46,672 22,033 15,965
Restructured loans(6)... 22,240 20,103 23,125 10,151 20,865 11,898 --
------- ------- ------- ------- ------- ------- -------
Total non-performing
loans.................. 36,445 47,651 41,623 53,872 68,536 37,990 16,052
Other real estate owned
("OREO"), net.......... 15,866 10,452 12,988 7,686 5,051 15,541 14,713
------- ------- ------- ------- ------- ------- -------
Total non-performing
assets................. $52,311 $58,103 $54,611 $61,558 $73,587 $53,531 $30,765
======= ======= ======= ======= ======= ======= =======
SELECTED FINANCIAL
CONDITION RATIOS:
Non-accrual loans to
loans and leases, net.. 1.54% 5.92% 2.01% 9.67% 9.84% 4.50% 3.66%
Non-performing assets to
total assets........... 3.86 4.25 4.04 5.11 6.80 5.59 3.57
Non-performing assets to
loans and leases, net
and OREO, net.......... 8.60 12.22 9.17 13.39 15.35 10.60 6.83
Allowance for credit
losses to total loans
and leases............. 2.49 3.37 2.69 3.53 4.60 2.37 1.68
Allowance for credit
losses to non-accrual
loans.................. 167.17 59.21 138.31 38.15 49.33 54.36 47.00
Allowance for credit
losses to non-
performing loans....... 41.72 34.22 38.94 30.95 33.60 31.53 46.74
Regulatory capital
ratios:
Tier 1 risk-based
capital............... 12.51 12.77 11.97 13.83 13.21 11.93 11.77
Total risk-based
capital............... 14.23 14.40 13.69 15.51 15.34 14.44 14.81
Leverage ratio......... 8.98 8.00 8.74 8.27 8.69 8.96 8.67
</TABLE>
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(1) Annualized for the three-month periods ended March 31, 1997 and 1996.
(2) Tax-exempt interest income is not adjusted to a fully taxable equivalent
basis.
(3) Non-interest expense divided by the sum of net interest income plus non-
interest income.
(4) For purposes of computing the ratio on earnings to fixed charges, earnings
represents income before income taxes, extraordinary items and fixed
charges. Fixed charges represents interest expense, and net rental
expense. The portion of rents applicable to interest has been deemed
immaterial and is not included in fixed charges.
(5) Includes securities available for sale and securities held to maturity.
(6) A loan is categorized as restructured if the original interest rate on
such loan, the repayment terms, or both, are modified due to a
deterioration in the financial condition of the borrower. Restructured
loans which are non-accrual loans are not included in the balance of
restructured loans. The weighted average yield of the restructured loans
(on accrual status) as of March 31, 1997, was 10.23%.
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7
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RISK FACTORS
Prospective investors should consider, among other things, the following
factors in connection with a decision to purchase the Notes.
SOURCE OF PAYMENTS TO HOLDERS OF NOTES
As a holding company without significant assets other than its equity
interest in the Bank, the Company's ability to pay the principal of and
interest on the Notes depends primarily upon the cash dividends it receives
from the Bank. The Notes mature on August 1, 2007, and there is no sinking
fund or other mandatory provision for earlier retirement. Dividend payments
from the Bank are subject to regulatory limitations, generally based on
current and retained earnings, imposed by the California Financial Code.
Payment of dividends is also subject to regulatory restrictions if such
dividends would impair the capital of the Bank. No assurance can be given that
the Bank will be able to pay dividends in the future in amounts sufficient to
pay principal and interest on the Notes. Substantially all of the consolidated
assets of the Company are held by the Bank, and, in the event of liquidation
of both the Company and the Bank, creditors of the Bank, including depositors,
would have first claim to such assets before holders of the Notes. At March
31, 1997, the Bank had outstanding indebtedness and other liabilities,
including deposits, of approximately $1.2 billion.
ECONOMIC CONDITIONS AND GEOGRAPHIC CONCENTRATION
The Company's operations are located in California and concentrated
primarily in Southern California. As a result of the geographic concentration,
the Company's results depend largely upon economic conditions in this area. A
deterioration in economic conditions in the Company's market areas,
particularly in the real estate industry, could have a material adverse impact
on the quality of the Company's loan portfolio and the demand for its products
and services, and accordingly, its results of operations.
CREDIT QUALITY
A significant source of risk for the Company arises from the possibility
that losses will be sustained because borrowers, guarantors and related
parties may fail to perform in accordance with the terms of their loans. The
Company has adopted underwriting and credit monitoring procedures and credit
policies, including the establishment and review of the allowance for credit
losses, that management believes are appropriate to minimize this risk by
assessing the likelihood of nonperformance, tracking loan performance and
diversifying the Company's credit portfolio. Such policies and procedures,
however, may not prevent unexpected losses that could materially adversely
affect the Company's results of operations. Because a high percentage of the
Company's credit portfolio is secured by real estate, a diminution in value of
the real estate market could adversely affect the Company's results of
operations.
DEPENDENCE ON KEY PERSONNEL
The Company's success depends substantially on certain members of its senior
management, in particular Li-Pei Wu, Chairman, President and Chief Executive
Officer of the Bank. Mr. Wu serves as Chairman, President and Chief Executive
Officer pursuant to an Employment Agreement which contains a seven year term
that commenced on January 1, 1992 and ends September 9, 1998. Thereafter, the
agreement may be renewed at Mr. Wu's option for a successive 12-month period.
There would likely be a difficult transition period if the services of Mr. Wu
were lost to the Company. There is no assurance that the Company will be able
to retain its current key personnel or attract additional qualified key
persons as needed.
INTEREST RATES
Banking companies' earnings depend largely on the relationship between the
cost of funds, primarily deposits, and the yield on earning assets. This
relationship, known as the interest rate spread, is subject to
8
<PAGE>
fluctuation and is affected by economic and competitive factors which
influence interest rates, the volume and mix of interest-earning assets and
interest-bearing liabilities, and the level of non-performing assets. The
Company is subject to interest rate risk to the degree that its interest
bearing liabilities reprice or mature more slowly or more rapidly or on a
different basis than its interest earning assets. Given the Company's current
volume and mix of interest-bearing liabilities and interest earning assets,
the Company's interest rate spread could be expected to increase during times
of rising interest rates and, conversely, to decline during times of falling
interest rates. Although the Company believes its current level of interest
rate sensitivity is reasonable, declines in interest rates may have an adverse
effect on the Company's results of operations.
COMPETITION
The banking and financial services business in California generally, and in
the Bank's market areas specifically, is highly competitive. The increasingly
competitive environment is a result primarily of changes in regulation,
changes in technology and product delivery systems, and the accelerating pace
of consolidation among financial services providers. The Bank competes for
loans, deposits and customers for financial services with other commercial
banks, savings and loan associations, securities and brokerage companies,
mortgage companies, insurance companies, finance companies, money market
funds, credit unions, and other nonbank financial service providers. The
Bank's profitability is directly impacted by its ability to competitively
price loans and accept deposits in relation to its competitors' abilities to
provide the same or similar services. Many of these competitors are much
larger in total assets and capitalization, have greater access to capital
markets and offer a broader array of financial services than the Bank. There
can be no assurance that the Bank will be able to compete effectively in its
markets, and the results of operations of the Company could be adversely
affected if circumstances affecting the nature or level of competition change.
LIMITED RIGHT OF ACCELERATION OF NOTES
Payment of principal of or interest on the Notes may be accelerated only in
the case of the bankruptcy, insolvency or reorganization of the Company. There
is no right of acceleration in the case of a default in the payment of
principal or interest on the Notes or in the performance of any other covenant
of the Company, or upon a change in control of the Company. There has been and
continues to be merger, acquisition and consolidation activity in the banking
and financial services industry. The Company has from time to time received
inquiries relating to a potential acquisition. The Company hired an investment
banking firm in December 1996 to provide financial advisory and investment
banking services in connection with mergers and acquisitions, including a
potential sale of the Company. Although the Company is not currently in
negotiations with any potential purchaser, there can be no assurance that the
Company will not in the future undergo a change in control through acquisition
or otherwise. See "Description of Notes--Acceleration Events."
LIMITED COVENANTS
The covenants in the Indenture are limited. The covenants do not protect
holders of the Notes in the event of a material adverse change in the
Company's financial condition or results of operations and do not limit the
ability of the Company or any subsidiary to incur additional indebtedness.
Therefore, the provisions of the Indenture should not be considered a
significant factor in evaluating whether the Company will be able to comply
with its obligations under the Notes. See "Description of Notes."
SUBORDINATION OF NOTES
The payment of principal of and interest on the Notes is unsecured and is
subordinated in right of payment to all Senior Indebtedness of the Company, as
defined in the Indenture. As a result, in the event of the dissolution,
liquidation or reorganization of the Company, the holders of Notes would not
receive payment until the holders of Senior Indebtedness were fully satisfied.
As of March 31, 1997, the Company had no outstanding Senior Indebtedness and
had $15 million of outstanding subordinated debentures ranking pari passu with
the Notes.
9
<PAGE>
There is no limitation in the Indenture on the Company's ability to create or
incur Senior Indebtedness or indebtedness ranking on a parity with the Notes.
In addition, because substantially all of the consolidated assets of the
Company are held by the Bank, the Notes are structurally subordinated to the
liabilities of the Bank, which at March 31, 1997 were approximately $1.2
billion. See "--Source of Payments to Holders of Notes" and "Description of
Notes--Subordination."
ABSENCE OF EXISTING PUBLIC MARKET; MARKET PRICES
There is no existing market for the Notes. Application has been made to list
the Notes on the New York Stock Exchange, but there can be no assurance that
an active and liquid trading market will develop or that a continued listing
will be available. Although the Underwriters have each indicated an intention
to make a market in the Notes, none of the Underwriters is obligated to make a
market in the Notes and any market making may be discontinued at any time at
the sole discretion of such Underwriter. If the Notes are traded after their
original issuance, they may trade at a discount to their principal amount.
REGULATION
The Company, as a bank holding company, is subject to extensive regulation
by the Board of Governors of the Federal Reserve System. This regulation
limits the manner in which the Company conducts its businesses and obtains
financing and is designed primarily to protect depositors and not to benefit
holders of securities of financial institutions. The Bank is subject to
extensive regulation and supervision by the California Commissioner of
Financial Institutions, and the Federal Deposit Insurance Corporation (the
"FDIC"). The Company is subject to periodic examinations by the bank
regulatory authorities. As a result of the FDIC's examination of the Bank in
1994, the Bank entered into a Memorandum of Understanding ("MOU") with the
FDIC, which was revised in 1995. In April, 1996, the FDIC terminated the MOU
based upon the results of a safety and soundness examination. There can be no
assurance that the FDIC will not require the Bank to enter into another
memorandum of understanding or take other supervisory actions with respect to
the Bank in the future. The banking industry is subject to rapidly changing
laws and regulations, as well as changing political conditions. There can be
no assurance that implementation of and changes in laws and regulations
affecting banking will not adversely affect the Company, and therefore its
ability to meet the debt service requirements on the Notes.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Prospectus, including, without
limitation, statements containing the words "believes," "intends," "expects"
and words of similar import, constitute, "forward-looking statements" within
the meaning of the Reform Act. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, the
following: general economics and business conditions in those areas in which
the Company operates; demographic changes; competition; fluctuations in
interest rates; changes in business strategy or development plans; changes in
governmental regulation; credit quality; and other factors referenced in this
Prospectus or in documents incorporated by reference herein, including,
without limitation, under the captions "Summary," and "Risk Factors." Given
these uncertainties, prospective investors are cautioned not to place undue
reliance on such forward-looking statements. The Company disclaims any
obligation to update any such factors or to publicly announce the results of
any revisions to any of the forward-looking statements contained herein to
reflect future events or developments.
10
<PAGE>
RECENT DEVELOPMENTS
Second Quarter Earnings. For the three months ended June 30, 1997 the
Company reported net income of $6.5 million, or $0.92 per share, compared to
$4.7 million, or $0.66 per share, for the same period of 1996. Net income for
the six months ended June 30, 1997 was $12.2 million, or $1.75 per share, up
$3.2 million or 36% from the same period of 1996. The increase in net income
for the six months ended June 30, 1997 was primarily due to an increase in net
interest income, combined with a lower provision for credit losses. Net
interest income was $15.2 million for the second quarter of 1997, up 14.3%
from the same period of 1996, while no provision for credit losses was
recorded in the second quarter of 1997. For the six months ended June 30,
1997, net interest income rose $4.0 million, or 15.3%, from the same period of
1996, while the provision for credit losses was $1 million, as compared to
$2.5 million for the first six months of 1996. The increase in net interest
income was due to an increase in the net interest spread and an increase in
average earning assets. Total non-performing assets, defined as non-accrual
loans and net other real estate owned, totaled $24.6 million at June 30, 1997,
as compared with $24.7 million at December 31, 1996.
The annualized return on equity for the three months ended June 30, 1997 was
21.2%, as compared to 18.2% for the same period in 1996. For the six months
ended June 30, 1997, the return on equity was 20.4%, as compared with 17.6%
for the same period of 1996. Total deposits at June 30, 1997 were $1.3
billion, up $58.6 million from March 31, 1997 and up $57.0 million from
December 31, 1996. Total assets at June 30, 1997 were $1.4 billion, up $71
million from March 31, 1997 and up $72 million from December 31, 1996.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes offered hereby
(after deducting the underwriting discount and the estimated expenses of the
offering) are estimated to be $38,390,000. The Company intends to use a
portion of the net proceeds for general corporate purposes, which may include
the repayment of the Company's $15 million of outstanding subordinated
debentures, repurchases of the Company's common stock and possible future
acquisitions. The Company's outstanding subordinated debentures have a stated
maturity of September 1, 2000 and bear interest at a rate of 10.52%. Although
the Company has no contractual right to prepay the subordinated debentures,
the Company is currently negotiating prepayment with the holder of such
debentures. Any such prepayment would require a prepayment premium which would
be paid with a portion of the net proceeds. Pending their ultimate
application, the net proceeds may be loaned to the Bank or invested in short
term investment grade financial instruments.
The Notes are expected to be treated as Tier 2 capital for regulatory
purposes. As Tier 2 capital, the Notes will help to strengthen further the
capital structure of the Company.
11
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company and its subsidiaries at March 31, 1997, and as adjusted to give effect
to the sale of the $40,000,000 principal amount of Notes offered hereby and
the application of the estimated net proceeds therefrom. At March 31, 1997,
the Company had other funding liabilities consisting of deposits of $1.2
billion. This table should be read in conjunction with the consolidated
financial statements of the Company incorporated herein by reference.
<TABLE>
<CAPTION>
MARCH 31, 1997
------------------------
ACTUAL AS ADJUSTED(1)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
Borrowings:
Subordinated debt(2)................................ $ 15,000 $ 15,000
Notes offered hereby................................ 0 40,000
-------- --------
Total borrowings.................................. 15,000 55,000
-------- --------
Stockholders' equity:
Common Stock, no par or stated value, 20,000,000
shares authorized;
6,786,589 shares outstanding(3).................... 47,729 47,729
Securities valuation allowance, net of tax.......... (2,108) (2,108)
Retained earnings................................... 73,646 73,646
Foreign currency translation adjustments............ (7) (7)
-------- --------
Total stockholders' equity........................ 119,260 119,260
-------- --------
Total capitalization............................ $134,260 $174,260
======== ========
</TABLE>
- --------
(1) If the Company is successful in negotiating the prepayment of the
outstanding subordinated debt, total borrowings and total capitalization
as of March 31, 1997, as adjusted to give effect to the sale of the Notes
and such prepayment, would be $40,000,000 and $159,260,000, respectively
(without giving effect to any premium payable in connection with such
repayment). See "Use of Proceeds."
(2) The principal of the subordinated debt is payable in four installments of
$3,750,000 each on September 1 of 1997, 1998, 1999 and 2000.
(3) Does not include 642,960 shares of common stock issuable upon exercise of
outstanding employee stock options issued under the Company's 1988 stock
option plan, 308,500 shares of common stock issuable upon exercise of
outstanding stock options issued under the Company's contingency stock
option plan and 444,860 shares reserved for future grant under the
Company's 1988 stock option plan.
12
<PAGE>
MANAGEMENT
The following table sets forth certain information about the executive
officers of the Company and the Bank, and the directors of the Company.
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
AGE AT EXECUTIVE
DECEMBER 31, OFFICER
NAME 1996 SINCE POSITION/BACKGROUND
---- ------------ --------- -------------------
<C> <C> <C> <S>
Li-Pei Wu.......... 62 1982 President and Chief Executive
Officer of the Company and the
Bank since May 1982, Chairman of
the Board of the Company and the
Bank since 1984.
Peter Wu, Ph.D.(1). 48 1979 Chief Operating Officer of the Bank
since 1995, Executive Vice
President of the Company and
Secretary of the Company and the
Bank since 1979.
Peter Lowe......... 55 1994 Executive Vice President and Chief
Financial Officer of the Company
and the Bank since 1994; prior
thereto, Executive Vice President
and Chief Financial Officer of
Manufacturers Bank from 1990 to
1993.
Eddie Chang........ 41 1995 Senior Vice President and Manager
of the Real Estate Department
since January 1996. From July 1995
to January 1996 Manager of the
Real Estate Department. From July
1994 to July 1995 self-employed.
From 1992 to July 1994, Senior
Vice President and Manager of the
Real Estate Department.
Gloria Chen........ 54 1997 Senior Vice President and
Relationship Manager in the
Corporate Lending Department since
May 1997; prior thereto, Senior
Vice President and Manager of the
International Department at
Preferred Bank from 1992 to 1997.
Sue Lai............ 44 1997 Senior Vice President of the
Corporate Lending Department since
April 1997, Manager of the
Corporate Lending Department since
1994, in various capacities with
the Bank since 1991.
Johnny Lee......... 34 1997 Senior Vice President and Regional
Manager of the Northern California
Region since April 1997, in
various positions with the Bank
since 1990.
Domenic Massei..... 52 1989 Senior Vice President of Operations
Administration of the Bank since
1989; prior thereto, Executive
Vice President and Chief
Administrative Officer of
Transnational Bank from 1984 to
1988.
Richard Voake...... 56 1992 Senior Vice President and Credit
Administrator of the Bank since
1994, Vice President and Manager
of Corporate Credit Examination
from 1992 to 1994.
Thomas Wong, Jr.... 47 1997 Senior Vice President and Special
Assistant to the Chief Executive
Officer since April 1997; prior
thereto, Senior Vice President and
head of International Banking and
Cash Management sales at Whitney
National Bank from 1993 to 1996.
Carl Maier......... 56 1993 Vice President and Controller of
the Bank since July 1993. From
October 1991 to July 1993 self-
employed.
</TABLE>
13
<PAGE>
DIRECTORS
<TABLE>
<CAPTION>
AGE AT
DECEMBER 31, DIRECTOR
NAME 1996 SINCE POSITION/BACKGROUND
---- ------------ -------- -------------------
<C> <C> <C> <S>
Helen Y. Chen....... 54 1986 Vice President of Fullong
Enterprise Corp. from 1974 to
present.
Thomas C. T. Chiu... 49 1983 Medical doctor.
Chuang-I Lin, Ph.D.. 56 1983 Chairman and President of Myriad
Capital, Inc., Monterey Park, CA,
from 1980 to present.
Ko-Yen Lin.......... 53 1986 President of T. K. Lin Investment
Co., Calabasas, CA, from 1977 to
present.
Ting Y. Liu, Ph.D... 60 1981 Chairman of General Link Inc.,
Chatsworth, CA from 1994 to
present and Chairman of Phoenix
Hotel Group, Inc. from 1984 to
present.
John C. Wang(2)..... 34 1989 President of Pacific Coast Realty
Services, Inc. from 1991 to
present, Managing Director of
South Bay Capital Corporation,
Long Beach, CA from 1990 to
present, and Vice President of The
Wang Partnership from 1987 to
present.
Kenneth C. Wang(2).. 35 1991 Executive Vice President of Kenjohn
Trading from 1993 to present and
Executive Vice President of The
Wang Partnership from 1986 to
present.
Chien-Te Wu(1)...... 35 1994 President from August 1993 to
present, and Executive Vice
President from September 1990 to
July 1993, of Tone Yee Investments
& Developments, Rancho Cucamonga,
CA.
Julian Wu, Ph.D(1).. 55 1981 General Partner of West Union
Investment Co., Torrance, CA, from
1977 to present.
Li-Pei Wu........... 62 1982 See "-- Executive Officers."
Peter Wu, Ph.D.(1).. 48 1981 See "-- Executive Officers."
Ping C. Wu(1)....... 51 1981 President of President Global
Corp., Buena Park, CA, from 1975
to present.
Walter Wu........... 51 1981 President of Wenix International
Corp., Los Angeles, CA, from 1984
to present.
Chin-Liang Yen...... 54 1983 President of San Yang Enterprises
Corp. from 1986 to present.
</TABLE>
- --------
(1) Peter Wu, Ph.D., Ping C. Wu and Chien-Te Wu are brothers and are first
cousins to Julian Wu, Ph.D.
(2) John C. Wang and Kenneth C. Wang are brothers.
14
<PAGE>
DESCRIPTION OF NOTES
The Notes are to be issued under an Indenture (the "Indenture"), to be dated
as of July 30, 1997, between the Company and BNY Western Trust Company, as
trustee (the "Trustee"). The Notes are not savings accounts or deposits of the
Bank and are not insured by the FDIC, any other governmental agency or
otherwise.
The following summaries of certain provisions of the Notes and the Indenture
do not purport to be complete and are subject to, and are qualified in their
entirety by reference to, the provisions of the Indenture (including the
definition of certain terms in the Indenture). The form of the Indenture and
the Notes have been filed with the Commission as an exhibit to the
Registration Statement of which this Prospectus is a part. Wherever particular
provisions or definitions are referred to, such provisions and definitions are
incorporated herein by reference, and the statements made herein are qualified
in their entirety by such reference. Unless otherwise indicated, capitalized
terms shall have the meanings ascribed to them in the Indenture. Article and
Section references are to applicable Articles and Sections of the Indenture.
For purposes of the following summary, the term the "Company" excludes the
Company's Subsidiaries unless otherwise provided.
GENERAL
The Notes offered by this Prospectus will be limited to $40,000,000 in
aggregate principal amount. The Notes will be issued in registered form only,
without coupons, in denominations of $1,000 and any integral multiple thereof.
Interest on the Notes will accrue from the date of original issuance and will
be payable on the 15th day of October, January, April and July of each year,
commencing October 15, 1997, at the rate per annum stated on the cover page of
this Prospectus. Interest will be payable to the person in whose name the Note
is registered at the close of business on the business day next preceding such
Interest Payment Date. Notwithstanding the above, in the event that the Notes
are no longer in book-entry only form, the record date for such payment shall
be the first day of the month in which such payment is made. (Sections 301 and
302) The Notes will mature on August 1, 2007, unless redeemed earlier at the
option of the Company. See "Redemption at Option of the Company."
The Notes will not be secured by the assets of the Company or any of its
Subsidiaries or otherwise and will not have the benefit of a sinking fund for
the retirement of principal. In addition, the rights of the Company to
participate in any distribution of assets of any Subsidiary, including the
Bank, upon its liquidation or reorganization or otherwise (and thus the
ability of the Holders of the Notes to benefit indirectly from such
distribution) are subject to the prior claims of creditors of that Subsidiary.
Claims on the Company's Subsidiaries by creditors other than the Company may
include substantial obligations with respect to deposit liabilities, federal
funds purchased and securities sold under repurchase agreements and other debt
obligations. There are also limitations on the extent to which the Bank may
pay dividends or make other payments to the Company.
So long as the Company is a reporting company under the Exchange Act, the
Company will furnish to Holders of the Notes annual reports of the Company
containing audited consolidated financial statements and interim reports with
unaudited consolidated financial data on a quarterly basis. If the Company
ceases to be a reporting company under the Exchange Act, the Company will
furnish to Holders of the Notes annual audited consolidated financial
statements and quarterly unaudited consolidated summary income statements and
retained earnings data. (Section 704)
The Indenture does not contain provisions that would provide protection to
Holders against a sudden and dramatic decline in credit quality resulting from
takeovers, recapitalizations or similar restructurings.
REDEMPTION AT OPTION OF THE COMPANY
The Notes may not be redeemed prior to August 1, 2002. The Notes are subject
to redemption at the option of the Company, in whole at any time or in part
from time to time, upon not less than 30 nor more than 60 days' notice,
commencing on August 1, 2002, at the following redemption prices (expressed as
a percentage of the
15
<PAGE>
principal amount), plus accrued and unpaid interest to the date fixed for
redemption, if redeemed during the 12-month period beginning August 1 of the
year indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2002......................................................... 102%
2003......................................................... 101%
2004 and thereafter.......................................... 100%
</TABLE>
The redemption price will be paid with interest accrued to the date fixed for
redemption (subject to the right of the registered Holder on the Record Date
for an interest payment to receive such interest). If the Company elects to
redeem less than all of the Notes, the Trustee will select which Notes to
redeem using such method as it shall deem fair and appropriate, including the
selection for redemption of a portion of the principal amount of any Note but
not less than $1,000. On and after the redemption date, interest will cease to
accrue on the Notes or portions thereof called for redemption. (Article
Eleven)
SUBORDINATION
The Notes are subordinated, in the manner and to the extent hereinafter
described, to the prior payment of all "Senior Indebtedness" of the Company.
Senior Indebtedness of the Company means the principal of, premium, if any,
and interest on (1) all indebtedness for money borrowed (as defined below) of
the Company (including indebtedness for money borrowed of others guaranteed by
the Company) other than the Notes, whether outstanding on the date of the
Indenture or thereafter created, assumed or incurred, (2) any amendments,
renewals, extensions, modifications and refundings of any such indebtedness,
unless in either case in the instrument creating or evidencing any such
indebtedness or pursuant to which it is outstanding it is provided that such
indebtedness is not superior in right of payments to the Notes, and (3)
Derivative Obligations (as defined below).
For the purposes of such definition, "indebtedness for money borrowed" means
(a) any obligation of, or any obligation, contingent or otherwise, guaranteed
by, the Company for the repayment of borrowed money, whether or not evidenced
by bonds, debentures, notes or other written instruments, (b) any deferred
payment obligation of or any such obligation guaranteed by, the Company for
the payment of the purchase price of property, assets or services and (c) any
obligation of or any such obligation guaranteed by, the Company for the
payment of rent or other amounts under a lease of property or assets which
obligation is required to be classified and accounted for as a capitalized
lease on the balance sheet of the Company under generally accepted accounting
principles. Notwithstanding the foregoing, Senior Indebtedness shall not
include any obligation of the Company that constitutes a trade payable or
accrued liability arising in the ordinary course of business.
"Derivative Obligations" are any obligations of the Company to make payment
pursuant to the terms of any securities contracts and foreign currency
exchange contracts, derivative instruments, such as swap agreements (including
interest rate and currency and foreign exchange rate swap agreements), cap
agreements, floor agreements, collar agreements, interest rate agreements,
foreign exchange agreements, options, commodity futures contracts and
commodity options contracts (other than obligations on account of indebtedness
for money borrowed ranking pari passu with or subordinate to the Notes).
(Section 101)
Upon a distribution of assets, dissolution, winding up, liquidation or
reorganization of the Company, if an event of default has occurred and is
continuing with respect to any Senior Indebtedness or if an Acceleration Event
shall have occurred and the principal of the Notes has been declared due and
payable and such declaration has not been rescinded or annulled, then in any
such instance all Senior Indebtedness must be paid in full before any payment
of principal or interest on the Notes can be made. (Sections 1202 and 1203)
However, subordination does not prevent the occurrence of an Acceleration
Event or an "Event of Default" (as defined below) under the Indenture.
By reason of the subordination of the Notes, in the event of liquidation of
the Company, the Holders of the Notes will not receive payment until the
holders of Senior Indebtedness have been satisfied. As of March 31, 1997, the
Company had no outstanding Senior Indebtedness and had $15 million of
outstanding subordinated
16
<PAGE>
debentures ranking pari passu with the Notes. There is no limitation in the
Indenture on the Company's creation of Senior Indebtedness or indebtedness
ranking on a parity with the Notes.
DENOMINATIONS, REGISTRATION AND TRANSFER
The Notes will be represented by a global certificate registered in the name
of the Depositary or its nominee ("Global Note"). Beneficial interests in the
Notes will be shown on, and transfers thereof will be effected only through,
records maintained by the Depositary. Except as described below, Notes in
certificated form will not be issued in exchange for the global certificate.
Unless and until the Global Note is exchanged in whole or in part for the
individual Notes represented thereby, it may not be transferred except as a
whole by the Depositary for such Global Note to a nominee of such Depositary
or by a nominee of such Depositary to such Depositary or another nominee of
such Depositary or by the Depositary or any nominee to a successor Depositary
or any nominee of such successor.
The Global Note shall be exchangeable for Notes registered in the names of
persons other than the Depositary or its nominee only if (i) the Depositary
notifies the Company that it is unwilling or unable to continue as a
depositary for such Global Note and no successor depositary shall have been
appointed, or if at any time the Depositary ceases to be a clearing agency
registered under the Securities Exchange Act, at a time when the Depositary is
required to be so registered to act as such depositary or (ii) the Company in
its sole discretion determines that such Global Note shall be so exchangeable.
Any Global Note that is exchangeable pursuant to the preceding sentence shall
be exchangeable for definitive certificates registered in such names as the
Depositary shall direct. It is expected that such instructions will be based
upon directions received by the Depositary from its Participants (as defined
below) with respect to ownership of beneficial interests in such Global Note.
In the event that Notes are issued in definitive form, such Notes will be in
denominations of $1,000 and integral multiples thereof and may be transferred
or exchanged at the offices described below.
Payments on Notes represented by a Global Note will be made to the
Depositary, as the depositary for the Notes. In the event Notes are issued in
definitive form, principal and interest will be payable, the transfer of the
Notes will be registrable, and Notes will be exchangeable for Notes of other
denominations of a like aggregate principal amount, at the corporate office of
the Trustee, or at the offices of any paying agent or transfer agent appointed
by the Company, provided that payment of interest may be made at the option of
the Company, the check mailed to the address of the persons entitled thereto
or by wire transfer. In addition, if the Notes are issued in certificated
form, the record dates for payment of interest will be the first day of the
month in which such payment is to be made.
Upon the issuance of the Global Note, and the deposit of such Global Note
with or on behalf of the Depositary, the Depositary for such Global Note or
its nominee will credit, on its book-entry registration and transfer system,
the respective principal amounts of the individual Notes represented by such
Global Note to the accounts of persons that have accounts with such Depositary
("Participants"). Ownership of beneficial interests in the Global Note will be
limited to Participants or persons that may hold interests through
Participants. Ownership of beneficial interests in the Global Note will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the applicable Depositary or its nominee (with respect
to interests of Participants) and the records of Participants (with respect to
interests of persons who hold through Participants). The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the
ability to transfer beneficial interest in the Global Note.
So long as the Depositary for the Global Note, or its nominee, is the
registered owner of such Global Note such Depositary or such nominee, as the
case may be, will be considered the sole owner or holder of the Notes
represented by such Global Note for all purposes under the Indenture. Except
as provided below, owners of beneficial interests in a Global Note will not be
entitled to have any of the individual Notes represented by such Global Note
registered in their names, will not receive or be entitled to receive physical
delivery of any such Notes in definitive form and will not be considered the
owners or holders thereof under the Indenture.
17
<PAGE>
Payments of principal of and interest on individual Notes represented by a
Global Note registered in the name of the Depositary or its nominee will be
made to the Depositary or its nominee, as the case may be, as the registered
owner of the Global Note. None of the Company, the Trustee, any Paying Agent,
or the Securities Registrar for such Notes will have any responsibility or
liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the Global Note representing such
Notes or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Company expects that the Depositary or its nominee, upon receipt of any
payment of principal or interest in respect of a permanent Global Note
representing the Notes, immediately will credit Participants' accounts with
payments in amounts proportionate to their respective beneficial interest in
the principal amount of the Global Note as shown on the records of such
Depositary or its nominee. The Company also expects that payments by
Participants to owners of beneficial interests in such Global Note held
through such Participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts
of customers in bearer form or registered in "street name." Such payments will
be the responsibility of such Participants.
If the Depositary is at any time unwilling, unable or ineligible to continue
as depositary and a successor depositary is not appointed by the Company
within 90 days, the Company will issue individual Notes in exchange for the
Global Note. In addition, the Company may at any time and in its sole
discretion, determine not to have the Note represented by a Global Note and,
in such event, will issue individual Notes in exchange for the Global Note.
Further, if the Company so specifies with respect to the Notes, an owner of a
beneficial interest in a Global Note representing Notes may, on terms
acceptable to the Company, the Trustee and the Depositary for such Global
Note, receive individual Notes in exchange for such beneficial interests. In
any such instance, an owner of a beneficial interest in a Global Note will be
entitled to physical delivery of individual Notes equal in principal amount to
such beneficial interest and to have such Notes registered in its name.
Individual Notes so issued will be issued in denominations, unless otherwise
specified by the Company, of $1,000 and integral multiples thereof.
The Depositary is a limited purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depositary holds securities that its Participants deposit with the
Depositary. The Depositary also facilitates the settlement among participants
of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. "Direct Participants" include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
The Depositary is owned by a number of its Direct Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to the Depositary system is
also available to others such as securities brokers and dealers, banks and
trust companies that clear through or maintain custodial relationships with
Direct Participants, either directly or indirectly ("Indirect Participants").
The rules applicable to the Depositary and its Participants are on file with
the Commission.
Purchases of Notes within the Depositary system must be made by or through
Direct Participants, which will receive a credit for the Notes on the
Depositary's records. The ownership interest of each actual purchaser of each
Note ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from the Depositary of their purchases, but Beneficial Owners are expected to
receive written confirmations providing details of the transactions, as well
as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Notes. Transfers of
ownership interests in the Notes are to be accomplished by entries made on the
books of Participants acting on behalf of Beneficial owners. Beneficial Owners
will not receive certificates representing their ownership interests in the
Notes except in the event that use of the book-entry system for the Notes is
discontinued.
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<PAGE>
The Depositary has no knowledge of the actual Beneficial Owners of the
Notes, the Depositary's records reflect only the identity of the Direct
Participants to whose accounts such Notes are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners
will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Notes. If less than all of the Notes are being redeemed, the Depositary
will determine by lot or pro rata the amount of the Notes of each Direct
Participant to be redeemed.
Interest payments on the Notes will be made by the Trustee to the
Depositary. The Depositary's practice is to credit Direct Participants'
accounts on the relevant payment date in accordance with their respective
holdings shown on the Depositary's records unless the Depositary has reason to
believe that it will not receive payments on such payment date. Payments by
Participants to Beneficial Owners will be governed by standing instructions
and customary practices and will be the responsibility of such Participant and
not of the Depositary, the Trustee or the Company, subject to statutory or
regulatory requirements as may be in effect from time to time. Payment of
Distributions to the Depositary is the responsibility of the Trustee,
disbursement of such payments to Direct Participants is the responsibility of
the Depositary, and disbursements of such payments to the Beneficial Owners is
the responsibility of Direct and Indirect Participants.
The Depositary may discontinue providing its services as securities
depositary with respect to any of the Notes at any time by giving reasonable
notice to the Trustee and the Company. In the event that a successor
securities depositary is not obtained, definitive Note certificates
representing such Notes are required to be printed and delivered. The Company,
at its option, may decide to discontinue use of the system of book-entry
transfers through the Depositary (or a successor depositary). In any such
event, definitive certificates for such Notes will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Company
believes to be accurate, but the Company assumes no responsibility for the
accuracy thereof. The Company has no responsibility for the performance by the
Depositary or its Participants of their respective obligations as described
herein or under the rules and procedures governing their respective
operations.
RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS
The Indenture provides that the Company cannot pay cash dividends or make
any other distribution on, or purchase, redeem or acquire its capital stock,
except that the Company may (1) declare and pay a dividend in capital stock of
the Company and (2) declare and pay dividends, purchase, redeem or otherwise
acquire for value its capital stock or make other distributions in cash or
property other than capital stock of the Company if the amount of such
dividend, purchase or distribution, together with the amount of all previous
such dividends, purchases, redemptions and distributions of capital stock
after December 31, 1996, would not exceed in the aggregate the sum of
(a) $38 million, plus (b) 100% of the Company's consolidated net income (or
minus 100% of the Company's consolidated net loss, as the case may be), based
upon audited consolidated financial statements, plus (c) 100% of the net
proceeds received by the Company on account of any capital stock issued by the
Company (other than to a subsidiary of the Company) after December 31, 1996.
(Section 1008)
CONSOLIDATION, MERGER OR TRANSFER
The Indenture provides that the Company may not consolidate with, merge
with, or transfer all or substantially all of its assets to another entity
(other than a wholly-owned subsidiary, where the Company is the
19
<PAGE>
surviving entity) unless such other entity assumes the Company's obligations
under the Indenture and unless, after giving effect thereto, no event shall
have occurred and be continuing which, after notice or lapse of time, would
become a Event of Default, each insured institution controlled by the
surviving corporation shall be in compliance with applicable minimum capital
requirements and certain other conditions are met. (Section 801)
ACCELERATION EVENTS
The Indenture defines Acceleration Events as certain events involving the
bankruptcy, insolvency, or reorganization of the Company. An Event of Default
is defined in the Indenture as: (a) any Acceleration Event; (b) failure to pay
any interest on any Note when due, continued for 15 days; (c) failure to pay
principal of any Note at Maturity; and (d) failure to perform any other
covenant or warranty of the Company in the Indenture, continued for 30 days
after written notice as provided in the Indenture.
If an Acceleration Event with respect to the Notes occurs and is continuing,
either the Trustee or the Holder or Holders of at least 25% in aggregate
principal amount of the Notes by notice as provided in the Indenture may
declare the principal amount of all Outstanding Notes to be due and payable
immediately, and upon any such declaration such principal amount shall become
immediately due and payable. At any time after such a declaration of
acceleration with respect to the Notes has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee, and
subject to applicable law and certain other provisions of the Indenture, the
Holder or Holders of a majority in principal amount of the Outstanding Notes,
by written notice to the Company and the Trustee, may, under certain
circumstances, rescind and annul such acceleration.
The Indenture does not provide for any right of acceleration upon an Event
of Default, other than an Event of Default which is also an Acceleration
Event. If an Event of Default with respect to Notes occurs and is continuing,
the Trustee may in its discretion proceed to protect and enforce its rights
and the rights of the Holder or Holders of Notes by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce
any such rights, whether for the specific enforcement of any covenant or
agreement in the Indenture or to enforce any other proper remedy. The
Indenture provides that, subject to the duty of the Trustee during an Event of
Default to act with the required standard of care, the Trustee will be under
no obligation to exercise any of its rights or powers under the Indenture at
the request or direction of any Holder of Holders unless such Holders shall
have offered to the Trustee reasonable indemnity. Subject to such provision
for the indemnification of the Trustee, and subject to applicable law and
certain other provisions of the Indenture, the Holder or Holders of a majority
in aggregate principal amount of the Outstanding Notes will have the right to
direct the time, method and place of any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred on the Trustee,
with respect to the Notes. Any Event of Default with respect to the Notes may
be waived by the Holder or Holders of a majority in aggregate principal amount
of the Notes, except a failure to pay principal or interest with respect to
any Note.
Under the Indenture, the Company is required to furnish to the Trustee
quarterly a statement by certain officers of the Company to the effect that to
the best of their knowledge the Company is not in default in the fulfillment
of any of its obligations under such Indenture or, if there has been such
default, specifying each such default. (Section 1004).
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default, give to the Holder or Holders of the Notes notice of
such default known to it if uncured; provided that, except in the case of
default in the payment of principal of or interest on any of the Notes, the
Trustee will be protected in withholding such notice if the board of directors
or responsible officers of the Trustee in good faith determine that the
withholding of such notice is in the interest of the Holder or Holders of the
Notes; and, provided further, that such notice shall not be given until 30
days after the occurrence of a default in the performance of the covenants and
warranties of the Company in the Indenture other than for the payment of the
principal of or interest on the Notes. The term "default" for the purpose only
of this provision means the happening of any of the Events of Default
specified in the Indenture, excluding any grace periods and irrespective of
any notice requirements. (Section 602).
20
<PAGE>
The Holder or Holders of a majority in principal amount of the outstanding
Notes will have the right, subject to certain limitations, to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee, and to
waive certain defaults. (Sections 512 and 513). The Indenture provides that,
in case an Acceleration Event shall occur and be continuing, the Trustee shall
exercise such of its rights and powers under the Indenture, and use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs. (Section 601).
Subject to certain provisions of the Indenture, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any Holder or Holders of the Notes unless they have
offered to the Trustee reasonable security or indemnity against the costs,
expenses, and liabilities which might be incurred by it in compliance with
such request or direction. (Section 603).
MODIFICATION AND WAIVER
With certain limited exceptions which permit modification of the Indenture
by the Company and the Trustee only, the Indenture may be modified by the
Company with the consent of Holders of not less than a majority in aggregate
principal amount of outstanding Notes; provided, however, that no such changes
shall without the consent of the Holder of each Note affected thereby (a)
change the maturity date of the principal of, or the due date of any
installment of interest on, any Note, (b) reduce the principal of, or the rate
of interest on, any Note, (c) change the currency in which any portion of the
principal of, or interest on, any Note is payable, (d) impair the right to
institute suit for the enforcement of any such payment, (e) reduce the above
stated percentage of Holders of the outstanding Notes necessary to modify the
Indenture, or (f) modify the foregoing requirements or reduce the percentage
of outstanding Notes necessary to waive any past default. (Section 902)
The Holders of a majority in aggregate principal amount of outstanding Notes
may waive compliance by the Company with certain restrictive provisions of the
Indenture. (Section 1011)
SATISFACTION AND DISCHARGE OF INDENTURE
The Indenture provides that the Company may terminate its obligations under
the Indenture with respect to all Notes which will become due and payable at
their Stated Maturity within one year or are to be called for redemption
within one year, by delivering to the Trustee, in trust for such purpose,
money, Government Obligations or both which, through the payment of interest
and principal in respect thereof in accordance with their terms, will provide
on the due dates of any payment of principal and interest, or a combination
thereof, money in an amount sufficient to discharge the entire indebtedness of
such Notes. (Section 401)
THE TRUSTEE
BNY Western Trust Company will serve as Trustee under the Indenture and also
as the Note Registrar and Paying Agent. The Indenture contains certain
limitations on the right of the Trustee, should it become a creditor of the
Company, to obtain payment of claims in certain cases or to realize on certain
property received in respect of any such claim as security or otherwise. The
Trustee will generally be permitted to engage in other transactions with the
Company. The Indenture also provides that the Company will indemnify the
Trustee against loss, liability or expense incurred without negligence or bad
faith on the part of the Trustee arising out of or in connection with the
trust under the Indenture. (Sections 607 and 613)
21
<PAGE>
UNDERWRITING
The Underwriters named below have severally agreed, subject to the terms and
conditions of the Purchase Agreement, to purchase from the Company the
respective principal amount of the Notes set forth opposite their names in the
table below:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------- -----------
<S> <C>
Piper Jaffray Inc.............................................. $18,000,000
Keefe, Bruyette & Woods, Inc................................... 12,000,000
Oppenheimer & Co., Inc......................................... 10,000,000
-----------
$40,000,000
===========
</TABLE>
The nature of the obligations of the Underwriters is such that if any of the
Notes are purchased, all of them must be purchased. The Purchase Agreement
provides that the obligations of the Underwriters thereunder are subject to
approval of certain legal matters and to various other conditions.
The Underwriters have advised the Company that they propose to offer the
Notes to the public at the Price to Public and to selected dealers at such
price less a concession of not more than 2.0% of the principal amount of the
Notes. The Underwriters may allow, and such dealers may reallow, concessions
not in excess of 1.0% of the principal amount of the Notes to certain other
brokers and dealers. After the initial public offering, the Price to Public
and other selling terms may be changed by the Underwriters.
In connection with this offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the market price of
the Notes. Specifically, the Underwriters may overallot the offering, creating
a syndicate short position. The Underwriters may bid for and purchase in the
open market to cover syndicate short positions. In addition, the Underwriters
may bid for and purchase in the open market to stabilize the price of the
Notes. These activities may stabilize or maintain the market price of the
Notes above independent market levels. The Underwriters are not required to
engage in these activities, and may end these activities at any time.
The Notes have been approved for listing on the New York Stock Exchange
under the symbol "GBCB 07", subject to official notice of issuance. The
Underwriters have indicated an intention to make a market in the Notes as
permitted by applicable laws and regulations. No Underwriter, however, is
obligated to make a market in the Notes, and any such market making may be
discontinued at any time at the sole discretion of such Underwriter. There can
be no assurance that an active trading market for the Notes will develop. If
the Notes are traded after their initial issuance, they may trade at a
discount from their principal amount.
Oppenheimer & Co., Inc. provides ongoing financial advisory and investment
banking services for the Company including in connection with mergers and
acquisitions and related matters. See "Risk Factors--Limited Right of
Acceleration of Notes."
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
22
<PAGE>
LEGAL OPINIONS
The validity of the Notes to be offered hereby will be passed upon for the
Company by Sullivan & Cromwell, Los Angeles, California. Certain legal matters
will be passed upon for the Underwriters by Manatt, Phelps & Phillips, LLP,
Los Angeles, California.
EXPERTS
The consolidated financial statements of GBC Bancorp and subsidiaries as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996 have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated herein by reference,
and upon the authority of said firm as experts in accounting and auditing.
23
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR
ITS SUBSIDIARIES OR THAT INFORMATION CONTAINED HEREIN IS CURRENT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY TO ANY PERSON OR IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING THE OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
--------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Summary.................................................................... 3
Summary Consolidated Financial Information................................. 6
Risk Factors............................................................... 8
Recent Developments........................................................ 11
Use of Proceeds............................................................ 11
Capitalization............................................................. 12
Management................................................................. 13
Description of Notes....................................................... 15
Underwriting............................................................... 22
Legal Opinions............................................................. 23
Experts.................................................................... 23
</TABLE>
$40,000,000
[LOGO OF GBC BANCORP]
8.375% Subordinated Notes
due 2007
-------------------
P R O S P E C T U S
-------------------
PIPER JAFFRAY INC.
KEEFE, BRUYETTE & WOODS, INC.
OPPENHEIMER & CO., INC.
July 25, 1997
