SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 11-K
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________
Commission file number 0-11113
Full Title of the Plan and the Address of the Plan:
Santa Barbara Bank & Trust
Employee Stock Ownership Plan and Trust
1021 Anacapa Street
Santa Barbara, CA 93101
Name of Issuer of the securities held pursuant to the plan and the
address of the principal executive office:
Santa Barbara Bancorp
1021 Anacapa Street
Santa Barbara, CA 93101
Exhibit Index on Page 14
<PAGE> 2
Item 1 Changes in the Plan
The Plan was amended in its entirety and restated on June 28, 1994
to reflect all prior amendments to the Plan and the requirements of the
Tax Reform Act of 1986 and subsequent legislation.
Santa Barbara Bank & Trust Employee Stock Ownership Plan and Trust, as
amended and restated through July 6, 1995 (previously filed with the
Commission as Exhibit 4.1 to the Post-Effective Amendment No. One to the
Company's Registration Statement on Form S-8, filed with the Commission on
July 10, 1995, File No. 33-43560, incorporated herein by this reference).
Item 2 Changes in Investment Policy
Effective January 1, 1995, the Plan was amended to permit eligible
participants to satisfy the diversification requirements of the Internal
Revenue Code by transferring the relevant percentge of assets from their
ESOP account balance to another qualified retirement plan sponsored by
Santa Barbara Bank & Trust.
First ammendment to Santa Barbara Bank & Trust Employee Stock Ownership
Plan executed February 24, 1995 (previously filed with the Commission as
Exhibit 10.1.10 to the Company's Form 10-K Filing, filed with the
Commission March 28, 1996, File Number 000-11113, incorporated herein by
this reference).
Item 3 Contributions Under the Plan
The Issuer, Santa Barbara Bank & Trust, has made the following
contributions during the last five fiscal years:
Plan Year Contribution
1991 $1,234,443
1992 $ 942,023
1993 $1,403,638
1994 $ 0
1995 $ 0
Item 4 Participating Employees
As of December 31, 1995 there were 409 employees participating in the Plan.
Item 5 Administration of the Plan
a. The names and addresses of the persons who administer the plan, the
capacity in which they act, and their positions or offices with the
issuer are as follows:
Managers:
Donald M. Anderson Chairman of Board, Bancorp
David W. Spainhour Chairman of the Board, SBB&T
William S. Thomas, Jr. President, Chief Executive
Officer of SBB&T
John J. McGrath Senior Vice President,
Chief Credit Officer
Jay D. Smith Senior Vice President, General
Counsel and Corporate Secretary
Kent M. Vining Senior Vice President,
Strategic Planning Officer
David Ristig Vice President,
MIS/Operations Manager
<PAGE> 3
Trustee:
Santa Barbara Bank & Trust
Paulette Posch, Trust Officer
Vice President, EBT and Plan
Administration Manager
The address for all of the above is Santa Barbara Bank & Trust,
P.O. Box 1119, Santa Barbara, CA 93102.
b. None of the above received any compensation from the Plan for services
in any capacity during the last fiscal year.
Item 6 Custodian of Investments
a. The name, address, and business of the custodian of the securities
and investments of the Plan is Paulette Posch, Trust Division, Santa
Barbara Bank & Trust, P.O. Box 1119, Santa Barbara, CA 93102. She is EBT
and Plan Administration Manager for the Issuer of the Plan.
b. The above person received no compensation from the Plan for services
rendered in any capacity during the last fiscal year.
c. The Bank holds an errors and omissions bond in the amount of
$5,000,000 in connection with the custody of security investments
including those of the Plan.
Item 7 Reports to Participating Employees
Each employee received a Certificate of Participation in the Plan on or
about March 4, 1996. This certificate sets forth the status of the
individual's account as of the end of the Plan year. The Summary Annual
Report is distributed during the third quarter of the year. This report
summarizes operations for the Plan year and explains participants' rights.
Item 8 Investment of Funds
- - not applicable -
Item 9 Financial Statements and Exhibits
a. Financial Statements of the Plan for the years ended
December 31, 1995 and 1994 filed herewith include:
i. Statements of Net Assets Available for Plan Benefits
ii. Statements of Changes in Net Assets Available for Plan Benefits
b. Exhibits:
The following exhibits are included herewith:
i. Consent of expert.
<PAGE> 4
Signatures:
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this
annual report to be signed by the undersigned thereunto duly authorized.
Santa Barbara Bank & Trust
Employee Stock Ownership Plan & Trust
Date June 28, 1996 By /s/Jay Donald Smith
Jay Donald Smith
Senior Vice President
of Santa Barbara Bank & Trust, Trustee
<PAGE> 5
SANTA BARBARA BANK & TRUST EMPLOYEE STOCK OWNERSHIP PLAN & TRUST
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
FOR THE YEARS DECEMBER 31, 1995 AND 1994
AUDITOR'S REPORT
FINANCIAL STATEMENTS
Statements of Net Assets Available for Plan Benefits as of
December 31, 1995 and 1994
Statements of Changes in Net Assets Available for Plan Benefits for the
Years Ended December 31, 1995 and 1994
Notes to Financial Statements
SUPPLEMENTAL SCHEDULE
Schedule of Assets Held for Investment as of December 31, 1995
<PAGE> 6
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Trustees of the Santa Barbara Bank & Trust
Employee Stock Ownership Plan & Trust:
We have audited the accompanying statements of net assets available
for plan benefits of Santa Barbara Bank & Trust Employee Stock
Ownership Plan & Trust (the Plan) as of December 31, 1995 and 1994,
and the related statements of changes in net assets available for plan
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements 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 and 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 as of December 31, 1995 and 1994, and the changes in its net
assets available for plan benefits for the years then ended in
conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of
assets held for investment as of December 31, 1995 is presented for
the purpose of additional analysis and is not a required part of the
basic financial statements but is 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 supplemental schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation
to the basic financial statements taken as a whole.
Los Angeles, California
June 26, 1996
<PAGE> 7
Santa Barbara Bank & Trust
Plan Number 003
EIN 95-2089059
Employee Stock Ownership Plan & Trust
Statements of Net Assets Available for Plan Benefits
as of December 31, 1995 and 1994
ASSETS: 1995 1994
Investment in Common Stock of Santa Barbara
Bancorp, at fair value (Notes 1 and 5) $ 16,427,565 $ 13,821,800
Investment in Mutual Funds, at fair value 492,366 440,147
Cash 5,161 11,776
Dividend receivable 356 434
Interest receivable 230 229
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $ 16,925,678 $ 14,274,386
The accompanying notes are an integral part of these statements.
<PAGE> 8
Santa Barbara Bank & Trust
Plan Number 003
EIN 95-2089059
Employee Stock Ownership Plan & Trust
Statements of Changes in Net Assets Available for Plan Benefits
for the Years Ended December 31, 1995 and 1994
1995 1994
Net assets at beginning of year $ 14,274,386 $ 12,780,701
Net investment gain:
Realized appreciation on Common Stock of
Santa Barbara Bancorp 12,909 60,501
Realized appreciation
(depreciation) on Mutual Funds 7,520 (1,176)
Unrealized appreciation
on Common Stock of
Santa Barbara Bancorp 3,389,970 1,934,971
Unrealized appreciation (depreciation)
on Mutual Funds 49,569 (12,568)
Dividends on Common Stock of
Santa Barbara Bancorp 428,540 434,098
Dividends on Mutual Funds 11,120 8,518
Interest income 2,796 3,100
Capital gain distribution 36,345 4,534
3,938,769 2,431,978
Payment of dividends to
participants (Note 7) (414,921) (418,806)
Transfer to profit sharing plan
for diversification (Note 1) (21,875) 0
Distributions to Plan participants (850,681) (519,487)
Net assets at end of year $ 16,925,678 $ 14,274,386
The accompanying notes are an integral part of these statements.
<PAGE> 9
Santa Barbara Bank & Trust
Employee Stock Ownership Plan & Trust
Plan Number 003
EIN 95-2089059
Notes to Financial Statements
December 31, 1995 and 1994
1. Plan Description and Significant Accounting Policies
The Santa Barbara Bank & Trust Employee Stock Ownership Plan & Trust
(the "Plan") was approved by the Board of Directors of Santa Barbara
Bank & Trust (the "Bank") on January 8, 1985. The Bank is a wholly
owned subsidiary of Santa Barbara Bancorp (the "Company"). The Bank is
also the Trustee of the Plan. Since the initial purchase of common
stock of the Company in January, 1985, the Plan has made several other
large purchases of the Company's stock.
The Plan covers employees of the Bank after one year of employment who
are full-time or part-time and who work more than 1,000 hours during
the plan year. Contributions by the Bank to the Plan are
discretionary, but generally have been approximately 10 percent of pre-
tax Bank profits prior to employer contributions to the Plan, reduced
by the amounts paid to the Bank's other profit sharing plan, the
Incentive & Investment and Salary Savings Plan, and adjusted for the
difference between the provision for loan loss and actual net charge-
offs, unless additional amounts are required by the Plan for debt
service and/or stock purchases. No contributions were made in the plan
for the 1994-1995 plan years. The Plan is noncontributory.
The Plan is subject to the applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended.
When employees have been participating in an Employee Stock Ownership
Plan ("ESOP") for ten years and have attained age 55, the Internal
Revenue Code requires the ESOP to permit those "qualified" employees to
begin to diversify the assets that are held in their accounts. While
the Plan would not be in effect ten years until 1995, in 1993 the Bank
decided to permit those participants who would become "qualified
participants" in the years 1995 - 2000 to diversify a portion of their
vested account balance. They were permitted to have the Plan sell a
number of their allocated shares representing not more than 25% of the
value of their account balance. These shares were purchased by the
Company through the tender offer that the Company made to its
shareholders on October 1, 1993 and retired. The proceeds from the
sale of the stock were used to purchase mutual funds. These
investments remained in the ESOP and are reported in the Statements of
Net Assets as Investments in Mutual Funds. This first diversification
occurred in 1994.
In 1995, when the Plan was in effect ten years, the Plan was required
to permit some of the above participants to further diversify. The
Company again purchased shares from the Plan, but in these subsequent
distributions, the proceeds were transferred to the participants'
accounts in the Incentive & Investment and Salary Savings Plan.
<PAGE> 10
Participants in the Plan receive allocations of forfeitures and Bank
contributions based on their eligible compensation. The Plan's
invested assets consist of Santa Barbara Bancorp stock, a money market
fund invested at the Bank and shares in various mutual funds as shown
in the supplemental Schedule of Assets Held for Investment as of
December 31, 1995. The realized appreciation shown on the Statements
of Changes in Net Assets Available for Plan Benefits arises from
distribution of participants' shares upon their termination.
Participants vest in their account as follows:
Plan Years of Service Percent Vested
Less than 2 years 0%
2 years 20%
3 years 30%
4 years 40%
5 years 60%
6 years 80%
7 years 100%
All participants are considered fully vested upon attainment of
retirement age (65) or their earlier qualifying retirement or
disability, or their death.
In the event of termination of the Plan, all participants will be fully
vested and the Bank, as the Trustee, will be directed to distribute the
participants' equity to participants in proportion to their accounts.
All administrative expenses are paid by the Bank.
The significant accounting policies of the Plan are as follows:
A. Contributions from the Bank are recorded on an accrual basis and
are allocated annually to individual participants' accounts as provided
by the Plan and in accordance with the law, net of amounts used to make
payments on any debt.
B. Investment income is accrued and is allocated to individual
participants' accounts quarterly.
C. The Plan requires unvested amounts forfeited by former
participants to be allocated among the individual accounts of active
participants at the end of the next plan year.
D. Investments in the Common Stock of the Company are stated at
fair value and unrealized appreciation or depreciation is recorded in
income currently, but is not allocated to individual participants'
accounts. Fair value is determined by an independent appraiser.
Realized appreciation on investments represents the excess of fair
value over cost (cost equals the market value at the beginning of the
period as more fully described below) of vested shares distributed to
terminated plan participants.
E. The Plan accounts for investments by means of the current value
approach whereby the realized and unrealized appreciation and
depreciation of Plan assets is based on the value of the assets at the
beginning of the plan year or at the time of purchase during the year.
The use of the current value approach is required for reporting to the
U.S. Department of Labor.
F. Certain prior year amounts have been reclassified to conform
with the 1995 presentation.
<PAGE> 11
Subsequent to December 31, 1995 the Board of Directors of the
Company declared a 3-for-2 stock split. In situations such as this,
Securities and Exchange Commission rules required the Company to
restate the number of its shares and its earnings per share in its
annual report as if the split had occurred before the end of the year.
For comparability purposes, the number of shares held by the Plan have
been restated.
2. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for benefits
per the financial statements to the Form 5500 as of December 31:
1995 1994
Net assets available for benefits
per the financial statememts $16,925,678 $14,274,386
Amounts allocated to withdrawing
participants (758,596) (470,631)
Net assets available for benefits
per the Form 5500 $16,167,082 $13,803,755
The following is a reconciliation of benefits paid to participants per
the financial statements to the Form 5500 for the year ended December
31, 1995:
Benefits paid to participants
per the financial statements $ 850,681
Add: Amounts allocated to withdrawing
participants at December 31, 1995 758,596
Less: Amounts allocated to withdrawing
participants at December 31, 1994 (470,631)
Benefits paid to participants per the Form 5500 $ 1,138,646
Amounts allocated to withdrawing participants are recorded on the Form
5500 for benefits claims that have been processed and approved for
payment prior to December 31 but not yet paid as of that date.
3. Tax Status
The Plan obtained its last determination letter from the Internal
Revenue Service on February 23, 1995. At that time, the Plan was
deemed to be designed to satisfy the qualification requirements, and
consequently the related trust appeared to satisfy the tax exempt
requirements of the Internal Revenue Code. The Plan has been amended
subsequently. The Plan administration and tax counsel believe that the
Plan is currently designed and being operated in compliance with the
qualification requirements of the Internal Revenue Code, and the
related trust was tax exempt as of the financial statement date.
4. Administration of Plan Assets
The Plan's assets, which consist principally of the Company's common
shares, are held by the Trustee of the Plan.
Bank contributions are held and managed by the Trustee, which invests
cash received, interest, and dividend income and makes distributions to
participants.
Certain administrative functions are performed by officers or employees
of the Bank. No such officer or employee receives compensation from
the Plan. Administrative expenses for the Trustee's fees are paid
directly by the Bank. The amount of these expenses amounted to $40,319
in fiscal year 1995.
5. Investment in Common Stock of Santa Barbara Bancorp
The changes in the investment account of Common Stock of the Company
for the year ended December 31, 1995 are summarized as follows:
Total number of shares as of January 1, 1995 829,313
Distribution to plan participants (47,048)
Balance as of December 31, 1995 782,265
Fair value per share as of December 31, 1995 $21.00
Number of participants 409
As explained in Note 1, under the current value method of accounting
for investments, the cost of investments is equal to the market value
of the investment at the end of the previous year. The cost of the
Company's shares at the end of the previous period for determining
realized and unrealized appreciation was $16.67 per share. Investment
in common stock of the Company represent greater than 5% of the net
assets of the Plan.
6. Repurchase of Shares
Because the Company's stock is not traded on an exchange, the Internal
Revenue Code requires that terminating employees at the time of their
termination may require that the Plan repurchase Santa Barbara Bancorp
stock that was distributed to them. If requested to repurchase by the
employee, the Plan repurchases the stock at the fair value of the stock
at the end of the preceding quarter. Repurchased shares are retained
by the Plan and therefore are not reported in the table as a change in
the Investment in Common Stock of the Company. The market value of
investments other than stock is distributed to terminating employees in
cash so there is no repurchase provision needed with respect to the
diversification assets.
7. Dividends
Cash dividends on allocated shares are distributed directly to
participants as received from the Company. Cash dividends on
unallocated shares were allocated to participants' accounts at the end
of year.
<PAGE> 13
Santa Barbara Bank & Trust
Plan Number 003
EIN 95-2089059
Employee Stock Ownership Plan
Schedule of Assets Held for Investment as of December 31, 1995
<TABLE>
<CAPTION>
Identity of issue,
borrower, lessor, or Current
similar party Description of investment Cost Value
<S> <C> <C>
Santa Barbara Bancorp * 782,265 common stock shares $13,037,595 $16,427,565
Federated U.S. Gov't Securities 4,233 shares 42,878 44,150
Federated Income Trust 6,375 shares 61,377 66,041
Federated Stock Trust 89 common stock shares 2,201 2,688
Federated Index Tr Mid-Cap 10,221 common stock shares 107,167 126,741
Federated Index Tr Mini-Cap 3,791 common stock shares 43,978 50,839
Federated Index Tr Max-Cap 12,080 common stock shares 144,207 162,842
Federated
International Equity Fund 2,369 common stock shares 40,803 39,065
Santa Barbara Bank & Trust
Money Market Fund * 5,161 shares 5,161 5,161
Total Investments $13,485,367 $16,925,092
* Party in interest to the Plan
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> 14
EXHIBIT INDEX
Sequential
Page Number
Exhibit
23 Consent of Independent Public Accountants 15
<PAGE> 15
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated June 26, 1996 into this Form 11-K and into Santa
Barbara Bancorp's previously filed Form S-8 Registration Statements File
Nos. 33-5493, 2-83293, 33-43560, 33-48724, 333-05117 and 333-05119. It
should be noted that we have not audited any financial statements of Santa
Barbara Bancorp and Subsidiaries subsequent to December 31, 1995 or
performed any audit procedures subsequent to the date of our report.
Arthur Andersen LLP
Los Angeles, California
June 26, 1996
