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WESTERN BANCORP 401(K) PLAN
Financial Statements and Supplemental Schedule
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
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WESTERN BANCORP 401(K) PLAN
TABLE OF CONTENTS
PAGE
Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits -
December 31, 1999 and 1998 2
Statements of Changes in Net Assets Available for Plan Benefits -
Years ended December 31, 1999 and 1998 3
Notes to Financial Statements 4
SCHEDULE
Schedule of Assets Held for Investment Purposes at End of Year - 7
December 31, 1999
All other schedules are omitted because they are not required or are not
applicable based on disclosure requirements of the Department of Labor's Rules
and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974.
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INDEPENDENT AUDITORS' REPORT
The Administrative Committee and Participants
Western Bancorp 401(k) Plan:
We have audited the statements of net assets available for Plan benefits of the
Western Bancorp 401(k) Plan (the Plan) as of December 31, 1999 and 1998 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 of the Plan as
of December 31, 1999 and 1998 and the changes in net assets available for Plan
benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were 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 purposes at end of year as of December 31, 1999 is presented for
purposes 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
is the responsibility of the Plan's management. The supplemental schedule has
been subjected to the auditing procedures applied in the audits 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.
/s/ KPMG LLP
Los Angeles, California
July 10, 2000
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WESTERN BANCORP 401(K) PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------------- -------------------
<S> <C> <C>
Cash $ -- 242
Investments:
Participant loans 516,855 509,249
Mutual funds:
First American Prime Obligation Fund 2,956,410 2,256,569
First American Fixed Income Fund 685,897 576,000
First American Large Cap Value Fund 1,686,738 1,394,641
First American Mid Cap Value Fund 877,882 806,022
Janus Mercury Fund 3,824,624 1,203,788
Janus Worldwide Fund 1,721,860 762,702
Western Bancorp/U.S. Bancorp Common Stock (note 1) 2,567,446 2,112,845
------------------- -------------------
Total investments 14,837,712 9,621,816
Receivables:
Participant contribution receivable 51,869 51,292
Employer matching contribution receivable 690,626 439,676
------------------- -------------------
Total receivables 742,495 490,968
Net assets available for Plan benefits $ 15,580,207 10,113,026
=================== ===================
</TABLE>
See accompanying notes to financial statements.
2
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WESTERN BANCORP 401(K) PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------------- -------------------
<S> <C> <C>
Additions:
Investment income (loss):
Net appreciation (depreciation) in fair value of investments $ 2,068,063 (1,251,973)
Interest and dividends 694,102 754,941
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Net investment income (loss) 2,762,165 (497,032)
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Participant contributions 2,725,656 1,618,021
Employer matching contributions 690,276 439,676
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Total contributions 3,415,932 2,057,697
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Transfers from predecessor plans (note 1) 1,474,202 9,327,228
Loan transactions -- 199,666
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Total additions 7,652,299 11,087,559
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Deductions:
Benefits paid to participants 2,185,118 974,533
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Total deductions 2,185,118 974,533
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Net increase in Plan assets 5,467,181 10,113,026
Net assets at beginning of year 10,113,026 --
------------------- -------------------
Net assets at end of year $ 15,580,207 10,113,026
=================== ===================
</TABLE>
See accompanying notes to financial statements.
3
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(1) DESCRIPTION OF THE PLAN
Western Bank, Southern California Bank, National Bank of Southern
California and Santa Monica Bank were acquired by Western Bancorp. The
Western Bancorp 401(k) Plan (the Plan) was created effective December 31,
1997 to consolidate the benefit assets of these acquired banks into one
benefit plan. Western Bancorp's Board of Directors approved the merger of
the Western Bank 401(k) Profit Sharing Plan, Southern California Bank
Employee Retirement Plan and National Bank of Southern California 401(k)
Plan into the Plan effective December 31, 1997. The Santa Monica Bank
401(k) Plan and Santa Monica Bank Profit Sharing Plan merged into the
Plan effective May 1, 1998.
On October 23, 1998, Bank of Los Angeles (BKLA) was acquired by Western
Bancorp. Assets from the BKLA Profit Sharing and 401(K) Plan transferred
into the Plan in March 1999. On December 30, 1998, PNB Financial Group,
Inc. (PNB) was acquired by Western Bancorp. Participants of PNB's 401(k)
Profit Sharing Plan started contributing to the Plan on February 1, 1999.
No assets from the PNB 401(k) Profit Sharing Plan had been transferred
into the Plan in 1999.
Effective November 15, 1999, Western Bancorp was acquired by U.S.
Bancorp. U.S. Bancorp as successor to Western Bancorp became the Employer
and Plan Sponsor of Western Bancorp 401(k) Plan. No further contributions
will be made to the Plan effective after December 31, 1999. The
participants' balances will be merged into the U.S. Bancorp 401(k)
Savings Plan when a favorable determination from the Internal Revenue
Service is received. See (I) below.
The following description of the Plan is provided for general information
purposes only. Participants should refer to the Plan agreement for a more
complete description of the Plan's provisions.
(A) GENERAL
The Plan, as amended, was established on December 31, 1997, and is
a defined contribution plan covering all employees of Western
Bancorp. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
(B) CONTRIBUTIONS
Participants are entitled to contribute, on a
tax-deferred-salary-reduction basis, from 1% to 20% of their
annual compensation (limited to $10,000 in 1999 and 1998).
Discretionary matching contributions may be made at the option of
the employer's Board of Directors. For the 1999 and 1998 Plan
years, the employer matched 50% of the first 6% of participant
contributions for those participants employed on the last day of
the Plan year. In addition to the discretionary matching
contributions, the employer may make discretionary profit sharing
contributions. The employer made no discretionary profit sharing
contributions in 1999 and 1998.
(C) PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contribution, the employer's discretionary matching and profit
sharing contributions, if any, and allocation of Plan earnings.
The benefit to which a participant is entitled is the benefit that
can be provided from the participant's account.
Participants currently direct the investments of their accounts
among the following investment options:
- First American Prime Obligation Fund - This fund is invested
in very short-term debt issued by the U.S. government, banks
and corporations.
- First American Fixed Income Fund - This fund is invested in
high quality investment grade debt securities including
government, corporate, mortgage-backed and asset-backed
securities.
- First American Large Cap Value Fund - This fund is invested
in a broadly diversified portfolio of equities of companies
with market capitalization of at least $500 million.
- First American Mid Cap Value Fund - This fund is invested in
securities believed to be undervalued and/or temporarily
unpopular, which offer the potential for capital
appreciation because of factors such as changes in the
company or industry in which the company operates, changes
in management or management goals, or possible mergers or
acquisitions.
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- Janus Mercury Fund - This fund is invested in primarily
common stocks of companies of any size, which may include
larger well-established issuers and smaller emerging growth
companies.
- Janus Worldwide Fund - This fund is invested in companies on
a worldwide basis, regardless of country of organization or
place of principal business activity.
- Western Bancorp/U.S. Bancorp Stock Fund - This fund is
invested in primarily stock of Western Bancorp. At least 80%
of the fund is typically invested in stock with the
remaining approximately 20% in a cash equivalent investment
vehicle. Pursuant to the merger with U.S. Bancorp, all
Western Bancorp common stock in the fund have been converted
into U.S. Bancorp common stock per the merger agreement.
(D) PARTICIPANT LOANS
Participants may receive loans from their accounts up to a maximum
of the lesser of (a) 50% of the individual participant's vested
account balance or (b) $50,000 reduced by the highest outstanding
loan balance during the 12 months. The minimum loan amount is set
at $500.
(E) VESTING
Participants are 100% vested in their own employee contributions
plus the actual earnings thereon. Vesting in employer
discretionary matching or profit sharing contributions is
determined by the length of employee service.
<TABLE>
<CAPTION>
YEARS OF VESTED
SERVICE PERCENTAGE
-------------------- -------------
<S> <C>
Less than 2 years 0%
2 25
3 50
4 75
5 or more 100
-------------
</TABLE>
In the event of attainment of normal retirement age, upon
disability or death, a participant is entitled (or the beneficiary
shall be entitled in the event of death) to receive 100% of the
amount contributed by the employer.
(F) FORFEITURES
Upon termination of a participant's employment, the nonvested
portions of employer discretionary matching and profit sharing
contributions (if any) and earnings thereon are forfeited. Such
forfeitures are first used to reduce Plan expenses. Any excess is
used to reduce future employer discretionary or profit sharing
contributions.
(G) PAYMENT OF BENEFITS
On termination of service due to death, disability or retirement,
the entire balance in a participant's deferral account and the
vested balance in the employer discretionary matching and profit
sharing contributions may be distributed to the participant,
rolled over into another qualified plan or left in the Plan.
In-service distributions are allowed upon experiencing a financial
hardship, as defined by the Internal Revenue Code. Such
withdrawals are subject to applicable excise and income taxes, and
may only be made with the approval of the Plan Administrator.
(H) ADMINISTRATIVE EXPENSES
All Plan administrative expenses are paid by the employer.
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(I) TERMINATION
The employer may at any time discontinue contributions under the
Plan, terminate the Plan, or merge it or consolidate it with
another plan. Upon such discontinuance or termination,
participants would become 100% vested. Pursuant to the merger with
U.S. Bancorp, all contributions for Plan year 2000 are made to the
U.S. Bancorp 401(k) Savings Plan starting January 1, 2000. Upon
the receipt of a favorable determination letter from the Internal
Revenue Service, all the Plan assets will be merged into the U.S.
Bancorp 401(k) Savings Plan.
(J) USE OF ESTIMATES
Management has made certain estimates and assumptions relating to
the reporting of assets and liabilities, the changes therein and
the disclosure of contingent assets and liabilities to prepare
these financial statements in accordance with generally accepted
accounting principles. Actual results could differ from these
estimates.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF ACCOUNTING
The financial statements of the Plan have been prepared on the
accrual basis of accounting.
(B) LOANS
Loans are valued at their outstanding balance amount, which
approximates fair market value.
(C) INVESTMENTS
In September 1999, the American Institute of Certified Public
Accountants issued Statement of Position 99-3, Accounting for and
Reporting of Certain Defined Contribution Plan Investments and
Other Disclosure Matters (SOP 99-3). SOP 99-3 simplifies the
disclosure for certain investments and was effective for plan
years ended December 31, 1999 with earlier application encouraged.
The Plan adopted SOP 99-3 during the Plan year ended December 31,
1999. Accordingly, information previously required to be disclosed
about participant-directed fund investment programs is not
presented in the Plan's 1999 financial statements. The Plan's 1998
financial statements have been reclassified to the current year's
presentation.
Investments held in money market accounts are stated at cost,
which approximates fair value. Investments in mutual funds and
common stock are stated at fair value as determined by quoted
market prices.
Investment transactions are recognized and recorded on the trade
date (the date the order to buy or sell is executed). Interest
income is recorded as earned and dividend income is recorded on
the ex-dividend date.
Net appreciation (depreciation) in the fair value of investments
includes both realized and unrealized gains and losses in addition
to dividends paid on investments in mutual funds which are
reinvested in the form of additional mutual fund shares.
(3) INCOME TAXES
The Plan Sponsor has not submitted a request for a determination letter
on the qualified status of the Plan. The Company is in the process of
submitting such request. The Plan Sponsor believes that the Plan meets
the applicable requirements of the Internal Revenue Code.
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SCHEDULE
WESTERN BANCORP 401(K) PLAN
Schedule of Assets Held for Investment Purposes at End of Year
December 31, 1999
<TABLE>
<CAPTION>
DESCRIPTION OF INVESTMENT,
INCLUDING MATURITY DATE,
IDENTITY OF ISSUER, BORROWER, LESSOR, RATE OF INTEREST, COLLATERAL, PAR
OR SIMILAR PARTY OR MATURITY VALUE CURRENT VALUE
----------------------------------------------------------- ----------------------------------------- -------------------
<S> <C> <C>
First American Prime Obligations Fund* Mutual Fund $ 2,956,410
First American Fixed Income Fund* Mutual Fund 685,897
First American Large Cap Value Fund* Mutual Fund 1,686,738
First American Mid Cap Value Fund* Mutual Fund 877,882
Janus Mercury Fund* Mutual Fund 3,824,624
Janus Worldwide Fund* Mutual Fund 1,721,860
Western Bancorp/U.S. Bancorp Common Stock* Common stock 2,567,446
Loans to participants* Interest rates ranges from 7.75%
to 11.50% 516,855
===================
</TABLE>
* Party in interest.
See accompanying independent auditors' report.
7
