SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
PROFESSIONAL BANCORP, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
PROFESSIONAL BANCORP, INC.
606 Broadway
Santa Monica, California 90401
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 21, 1997
---------------
Dear Professional Bancorp, Inc. Shareholders:
The Annual Meeting of Shareholders of PROFESSIONAL BANCORP, INC. (the
"Company") will be held at the Miramar Sheraton Hotel, 101 Wilshire Boulevard,
Santa Monica, California 90401, on Wednesday, May 21, 1997 at 5:00 p.m., for the
purpose of considering and voting upon the following matters:
1. ELECTION OF DIRECTORS. The election of the following seven persons
to the Board of Directors to serve until the 1998 Annual Meeting of Shareholders
and until their successors are elected and qualified:
<TABLE>
<S> <C>
Richard A. Berger Ray T. Oyakawa, M.D.
Ronald L. Katz, M.D. Lynn O. Poulson
James A. Markley, Jr. Julie P. Thompson
Walter T. Mullikin, M.D.
</TABLE>
2. APPROVAL OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS. The
approval of the appointment of the firm of KPMG Peat Marwick LLP as independent
public accountants for the Company for the 1997 fiscal year.
3. OTHER BUSINESS. The transaction of such other business as may
properly come before the Annual Meeting and any adjournment or adjournments
thereof.
Shareholders of record at the close of business on March 17, 1997 are
entitled to notice of, and to vote at, the meeting and any adjournment(s)
thereof.
By Order of the Board of Directors
/s/ Julie P. Thompson
JULIE P. THOMPSON
Chairman of the Board
Dated: April 21, 1997
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
The Bylaws of the Company provides for the nomination of directors in the
following manner:
"Section 3.3. Nominations of Directors. Nominees for election to the Board
shall be selected by the Board or a committee of the Board to which the Board
has delegated the authority to make such selections pursuant to Section 3.11 of
these Bylaws. Effective May 1, 1990, the Board or such committee, as the case
may be, will consider written recommendations from shareholders for nominees for
election to the Board provided such recommendations, together with (i) such
information regarding each nominee as would be required to be included in a
proxy statement filed pursuant to the Exchange Act, (ii) a description of all
arrangements or other understandings among the recommending shareholders and
each nominee and any other person with respect to such nomination, and (iii) the
consent of each nominee to serve as a director are received by the Secretary of
the Corporation, in the case of an annual meeting of shareholders, not later
than the date specified in the most recent proxy statement of the Corporation as
the date by which shareholder proposals for consideration at the next annual
meeting of shareholders must be received, and, in the case of a special meeting
of shareholders, not later than the tenth day after the giving of notice of such
meeting. Only persons duly nominated for election to the Board in accordance
with this Section 3.3 and persons with respect to whose nominations proxies have
been solicited pursuant to the proxy statement filed pursuant to the Exchange
Act shall be eligible for election to the Board. Each notice to shareholders of
a meeting of shareholders at which directors are to be elected shall contain a
statement to the effect set forth in this Section 3.3."
- 2 -
<PAGE>
PROFESSIONAL BANCORP, INC.
606 Broadway
Santa Monica, California 90401
--------------
PROXY STATEMENT
--------------
ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 21, 1997
--------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Professional Bancorp, Inc. (the "Company")
for use at the Annual Meeting of Shareholders (the "Meeting"), to be held at the
Miramar Sheraton Hotel, 101 Wilshire Boulevard, Santa Monica, California 90401,
on Wednesday, May 21, 1997 at 5:00 p.m., and at any and all adjournments
thereof. These proxy materials are first being mailed to shareholders on or
about April 21, 1997.
THE PROXY
REVOCABILITY OF PROXIES
The Board of Directors solicits proxies so that each shareholder has the
opportunity to vote on the proposals to be considered at the Meeting. A form of
proxy for voting your shares at the Meeting is enclosed. When the proxy is
properly executed and returned, the shares it represents will be voted at the
Meeting in accordance with the instructions on the proxy. Any shareholder may
revoke a proxy at any time before it is exercised by filing with the Secretary
of the Company an instrument revoking it or a duly executed proxy bearing a
later date, or by attending and voting at the Meeting in person. IF NO
INSTRUCTION IS SPECIFIED WITH RESPECT TO A PROPOSAL TO BE ACTED UPON, THE SHARES
REPRESENTED BY YOUR EXECUTED PROXY WILL BE VOTED IN FAVOR OF THE ELECTION OF THE
NOMINEES FOR DIRECTOR SET FORTH HEREIN, AND IN FAVOR OF RATIFYING THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
1997 FISCAL YEAR. IF ANY OTHER BUSINESS IS PROPERLY PRESENTED AT THE MEETING,
THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD.
PERSONS MAKING THE SOLICITATION
This solicitation of proxies is being made by the Board of Directors of
the Company. The expense of preparing, assembling, printing and mailing this
Proxy Statement and the materials used in the solicitation of proxies will be
borne by the Company. It is contemplated that proxies will be solicited
principally through the use of the mail, but officers, directors and employees
of the Company and its subsidiary, First Professional Bank, N.A. (the "Bank"),
may solicit proxies personally or by telephone or facsimile, for which no
compensation will be paid. The Company has retained the proxy solicitation firm
of McCormick & Pryor, for a fee of $3,500 plus expenses, to assist it in
soliciting proxies, including those from shareholders who own Company shares
through banks, brokerage houses and other custodians or nominees. Although there
is no formal agreement to do so, the Company may reimburse banks, brokerage
houses and other custodians, nominees and fiduciaries for their reasonable
expenses in forwarding these proxy materials to shareholders whose shares of the
Company's Common Stock are held of record by such entities.
VOTING SECURITIES
There were 1,343,048 shares of the Company's common stock (the "Common
Stock") issued and outstanding at the close of business on March 17, 1997, the
record date for the purpose of determining the shareholders entitled to notice
of and to vote at the Meeting (the "Record Date"). Only shareholders of record
on the Record Date are entitled to vote at the Meeting. Each holder of Common
Stock is entitled to one vote for each
<PAGE>
share of Common Stock held of record on the books of the Company as of the
Record Date on any matter submitted to the vote of the shareholders, except that
in connection with the election of directors, the shares may be voted
cumulatively if a shareholder present and voting at the Meeting gives notice at
the Meeting and prior to the voting of his or her intention to so vote. If any
shareholder gives such notice, all shareholders may cumulate their votes for
nominees. Cumulative voting means that a shareholder has the right to vote the
number of shares he or she owns as of the Record Date, multiplied by the number
of directors to be elected. This total number of votes may be cast for one
nominee or it may be distributed among nominees in any manner as the shareholder
sees fit. If cumulative voting is declared at the Meeting, votes represented by
proxies delivered pursuant to this Proxy Statement may be cumulated in the
discretion of the proxy holders, in accordance with the recommendations of the
Board, and discretionary authority to do so is included in the proxy.
VOTING
The presence, in person or by proxy, of the holders of at least a majority
of the total number of outstanding shares of Common Stock is necessary to
constitute a quorum at the Meeting. At the Meeting, directors will be elected by
a plurality of the votes cast. Therefore, the seven nominees receiving the
highest number of affirmative votes shall be elected directors of the Company at
the conclusion of the tabulation of the votes. The actual number of directors
elected may be less than seven in the event that fewer than seven nominees
receive any affirmative votes under the rules of cumulative voting (see "VOTING
SECURITIES" herein). Shares represented by proxies which are marked "authority
withheld" or proxies marked to deny discretionary authority with respect to the
election of any one or more nominees for election as directors will be counted
for the purpose of determining the number of shares represented at the meeting,
but will not be considered as a vote for or as a vote against the respective
nominee or nominees. Each other matter presented at the Meeting will be decided
by a majority of the votes cast on that matter. Shares voted on one proposal but
not all proposals on the proxies returned by brokers will be counted for the
purpose of determining the number of shares represented at the meeting, but will
not be considered as a vote for or against any matter not voted on. Abstentions
will also be counted for the purpose of determining the number of shares
represented at the meeting, but will not be considered as a vote for or against
any matter as to which the abstention is effective.
For additional information concerning the election of directors, please
see the section entitled "ELECTION OF DIRECTORS" below.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists the holdings of the only persons (including any
"group" as that term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended) known by the Company to be the beneficial owners of more
than five percent (5%) of its outstanding Common Stock during its last fiscal
year.
<TABLE>
<S> <C> <C>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
------------------- -------------------- --------
Heartland Advisors, Inc. 120,972 (a) 8.3%
790 North Milwaukee Street
Milwaukee, WI 53202
<FN>
___________________________
a As reported in Amendment No. 2 to a Schedule 13G filed with the
Securities and Exchange Commission ("SEC") on February 14, 1997.
120,972 shares may be deemed beneficially owned within the meaning of
Rule 13(d)(3) of the Securities Exchange Act of 1934 by Heartland
Advisors, Inc., including 112,782 shares of common stock resulting from
the assumed conversion of $1,500,000 of 8.5% Convertible Bonds due
March 1, 2004.
</FN>
</TABLE>
- 2 -
<PAGE>
<TABLE>
<S> <C> <C>
Kennedy Capital Management, Inc. 135,750 (b) 10.3%
10829 Olive Blvd.
St. Louis, MO 63141
Joel W. Kovner, Dr., P.H. 394,739 (c) 21.1%
29665 Harvester Road
Malibu, CA 90265
Robert H. Leshner 117,416 (d) 8.0%
312 Walnut Street
Suite 2100
Cincinnati, OH 45202
Patricia W. Niehoff 97,571 (e) 7.5%
One Hill and Hollow Lane
Cincinnati, OH 45208
The following table sets forth certain information, as of March 17,
1997, concerning the beneficial ownership of the Company's outstanding Common
Stock by each director, executive officers of the Company and the Bank, each
nominee to the Board of Directors and by all directors and executive officers of
the Company as a group.
Amount and
Nature of
Beneficial Percent of
Name Ownership (1) Class (2)
- ---- --------- -----
Richard A. Berger 24,571.(3) 1.31%
Alan S. Borstein 200 .01%
Ronald L. Katz, M.D. 18,710.(4) 1.00%
Joel S. Moskowitz 3,858 .21%
<FN>
_______________________
b As reported in Amendment No. 1 to a Schedule 13G filed with the SEC on
February 10, 1997.
c Includes 354,579 Exercisable Option Shares (as defined below).
d As reported in Amendment No. 3 to Schedule 13D filed with the SEC on
November 15, 1996. 110,250 of the reported shares are covered by a
presently exercisable Warrant.
e As reported in a Schedule 13D filed with the SEC on September 3, 1996.
1 Unless otherwise indicated, the persons named herein have sole and/or
joint voting power over shares reported and such shares are owned directly.
2 Options and Warrants to purchase shares of Common Stock held by
directors, officers and other individuals that were exercisable within 60
days after March 17, 1997 ("Exercisable Option Shares" or "Exercisable
Warrant Shares"), are treated as outstanding for the purpose of computing
the number and percentage of outstanding securities of the class owned by
such person but not for the purpose of computing the percentage of the
class owned by any other person.
3 Includes 1,874 Exercisable Option Shares.
4 Includes 1,874 Exercisable Option Shares.
</FN>
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Ray T. Oyakawa, M.D. 10,624 .57%
Lynn O. Poulson 13,307 (5) .71%
Julie P. Thompson 100 .005%
Chris Chan 0 0%
Walter T. Mullikin, M.D. 100 .005%
James A. Markley, Jr. 1,102 .06%
Melinda McIntyre-Kolpin 200 .01%
David G. Rodeffer (6) 63,562 (7) 3.40%
Daniel S. Rader (8) 6,218 .33%
Joel W. Kovner, Dr., 394,739 (10) 21.12%
P.H. (9)
All Directors and Executive 536,089 (11) 28.68%
Officers
ELECTION OF DIRECTORS
NOMINEES
The Company's Bylaws provide that the Board shall consist of one or more
directors as determined by the Board. The Board has fixed the number at seven.
The seven persons named below will be nominated for election as directors to
serve until the 1998 Annual Meeting of Shareholders and until their successors
are elected and have qualified. Votes will be cast in such a way as to effect
the election of all seven nominees, or as many thereof as possible under the
rules of cumulative voting (see "VOTING SECURITIES" herein). In the event that
any of the nominees should be unable to serve as a director, it is intended that
the proxy will be voted for the election of such substitute nominees, if any, as
shall be designated by the Board. The Board has no reason to believe that any of
the nominees will be unavailable to serve if elected. Additional nominations can
only be made by complying with the notice provision set forth in the Bylaws of
the Company, an extract of which is included in the Notice of Annual Meeting of
Shareholders accompanying this Proxy Statement. This Bylaw provision is designed
to give the Board
<FN>
________________________
5 Includes 1,874 Exercisable Option Shares.
6 Mr. Rodeffer, Executive Vice President of the Bank, has submitted his
resignation effective April 15, 1997.
7 Includes 27,562 Exercisable Option Shares.
8 Mr. Rader was Chief Financial Officer and Treasurer of the Company, and
Executive Vice President, Chief Investment Officer and Chief Financial
Officer of the Bank, until December 9, 1996.
9 Mr. Kovner was the Chairman of the Board and Chief Executive Officer of
the Company, and Chairman of the Board, President and Chief Executive
Officer of the Bank, until July 9, 1996.
10 Includes 354,579 Exercisable Option Shares.
11 Includes the shares owned by the current directors and named executive
officers (11 in number) as a group, and includes 387,763 Exercisable
Option Shares.
</FN>
</TABLE>
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<PAGE>
advance notice of competing nominations, if any, and the qualifications of
competing nominees, and may have the effect of precluding third-party
nominations if the notice provisions are not followed.
In accordance with the Settlement Agreement (as defined and discussed in
the section entitled "Employment Contracts and Termination of Employment
Arrangements" below), the director nominees set forth below were selected by the
following procedure: the four directors who were nominated by the Shareholders
Protective Committee and elected to the Board at the 1996 Annual Shareholders
Meeting (Ms. Thompson, Mr. Moskowitz, Mr. Borstein and Dr. Oyakawa), by majority
vote, proposed the following four nominees for election: Ms. Thompson, Dr.
Oyakawa, Dr. Mullikin, and Mr. Markley; and the three directors who were
nominated by management and re-elected at the 1996 Annual Meeting (Mr. Poulson,
Mr. Berger and Dr. Katz) proposed the following three nominees for election: Mr.
Poulson, Mr. Berger and Dr. Katz. The Settlement Agreement requires the
directors to take all efforts to cause the nomination and election at this
Meeting of the seven nominees selected in accordance with the procedure set
forth in the preceding sentence.
IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names and certain information as of
March 1, 1997, concerning the persons to be nominated by the Board for election
as directors of the Company and one executive officer of the Company:
<TABLE>
<S> <C> <C> <C> <C>
YEAR YEAR
BUSINESS EXPERIENCE ELECTED ELECTED
NAME, ADDRESS AND TITLE DURING THE PAST DIRECTOR OF DIRECTOR OF
(OTHER THAN DIRECTOR) AGE FIVE YEARS THE COMPANY BANK (1)
- ----------------------- --- ---------- ----------- -----------
DIRECTOR OR NOMINEE
Richard A. Berger 65 President, Richard A. Berger 1982 1982
45495 Osage Court & Assoc. (Real Estate
Indian Wells, CA 92210 Investments); Realtor, Fred
Sands Desert Realty
Ronald L. Katz, M.D. 64 Chairman and Professor of 1982 1982
1200 N. State Street Anesthesiology, USC Medical
Suite 14901 Center; Professor (until June,
Los Angeles, CA 90033 1995) and Chairman (until
June, 1990) of
Anesthesiology, UCLA
Medical Center
James A. Markley, Jr. 75 President, Leshner Financial, N/A N/A
312 Walnut St., Suite 2100 Inc. (financial services
Cincinnati, OH 45202 holding company) (until
2/28/97); formerly President
and Chairman of the Board of
The Provident Bank,
Cincinnati, Ohio; Director of
Sycamore National Bank
<FN>
________________________
1 The Directors indicated also serve as Directors on the Board of
Directors of First Professional Bank, N.A., the Company's wholly-owned
subsidiary (the "Bank").
</FN>
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Walter T. Mullikin, M.D. 79 Director of MedPartners Inc.; N/A N/A
MedPartners/Mullikin Director of Health Net
5000 Airport Plaza Drive (HMO); former Chairman of
Long Beach, CA 90815 the Board and President of
Mullikin Medical Enterprises
(until November, 1995)
Ray T. Oyakawa, M.D. 49 Chief Executive Officer, 1987-3/96 1987-3/96
5670 Wilshire Blvd. Pacific EyeNet, Inc. 7/96 7/96
Suite 2350 (physician practice
Los Angeles, CA 90036 management company);
President, Ray T. Oyakawa,
M.D., Inc. (until December,
1993)
Lynn O. Poulson 59 President of Johnson, 1982 1982
10880 Wilshire Blvd. Poulson, Coons & Slater (law
Suite 1100 firm)
Los Angeles, CA 90024
Julie P. Thompson, 39 Chairman of the Board, First 1996 1996
Chairman of the Board Professional Bank, N.A.;
1640 Marengo Street President and Chief Executive
7th Floor Officer, Health Research
Los Angeles, CA 90033 Association (Medical
Research)
EXECUTIVE OFFICER
- -----------------
Chris Chan, (2) Acting 35 Chief Operating Officer (until N/A N/A
Chief Financial Officer December 9, 1996) and
606 Broadway Acting Chief Financial
Santa Monica, CA 90401 Officer (since December 9,
1996), First Professional
Bank, N.A.; Vice President,
Financial Officer, First Public
Savings Bank, F.S.B. (until
August, 1996)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "AUTHORITY GIVEN" FOR ALL
DIRECTOR NOMINEES.
COMPENSATION COMMITTEE REPORT
The directors serving on the Bank's Board, exclusive of any directors who
also serve as executive officers, have acted as the Company's and Bank's
Compensation Committee, which will be referred to herein as the Compensation
Committee. The Compensation Committee is responsible for setting corporate
compensation policies. The goal of the Company's and Bank's compensation program
is to attract, motivate, reward and retain the management talent required to
achieve corporate objectives and increase shareholder value.
Base salaries of all executives were determined by the Compensation
Committee using executive management's recommendations. Salaries were decided
based on qualifications, individual performance and utilization of independent
compensation surveys.
<FN>
_______________________
2 Mr. Chan was appointed Acting Chief Financial Officer of the Company
on March 26, 1997.
</FN>
</TABLE>
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<PAGE>
During the period Joel W. Kovner acted as Chairman of the Board and Chief
Executive Officer of the Company, his compensation was based on a study
commissioned by the Board of Directors in mid-1995 and conducted by Strategic
Compensation Associates ("SCA"), an independent firm specializing in advising
Boards regarding executive compensation. The Board unanimously adopted the
recommendations of SCA commencing in January, 1996. During the period that John
S. Buchanan served as Interim Chief Executive Officer and President, his salary
of $20,833.33 per month was established under the terms of his employment
agreement. Julie P. Thompson, Chairman of the Board, was granted operational
authority for the Company by the Board of Directors during the period when there
has been no acting chief executive officer of the Company. Ms. Thompson received
$125 per hour for the services she performed in this capacity, which the
Compensation Committee believes is consistent with industry standards.
Compensation Committee (a)
Joel S. Moskowitz, Lynn O. Poulson, Richard A. Berger, Julie P. Thompson,
Ray T. Oyakawa, M.D., Alan S. Borstein, Ronald L. Katz, M.D.
COMPENSATION TABLES
The following tables list information on compensation received for
services by any person who served as the chief executive officer or functioned
in a similar capacity of the Company, and the next four highest compensated
executive officers of the Company and the Bank for services in all capacities to
the Company and the Bank, during the year ended December 31, 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Long-Term Compensation
Compensation Awards Payouts
------------ ------ -------
Other Securities
Annual Restricted Underlying All Other
Compen- Stock Options #/ LTIP Compen-
Name and Principal Position Year Salary Bonus (1) sation Awards SARs Payouts sation
- --------------------------- ---- ------ ----- ------ --------- -------- ------- ------
Joel W. Kovner, Dr., 1996 148,958 -0- -0- -0- -0- -0- 160,518 (3)
P.H. 2, Chairman of 1995 208,500 249,400 -0- -0- -0- -0- 4,500 (3)
the Board and Chief 1994 203,000 249,400 -0- -0- -0- -0- 3,000 (3)
Executive Officer of
the Company
<FN>
_________________________
a In 1997, the Boards appointed an ad hoc committee to study and make
recommendations to the Boards, functioning as the Compensation Committee,
regarding compensation of executive officers and directors. At present,
the committee consists of Dr. Oyakawa (Chairman), Mr. Borstein, Mr.
Moskowitz and Ms. McIntyre-Kolpin (Interim Chief Executive Officer and
President of the Bank).
1 Includes bonuses accrued in 1995 and 1994 and paid in 1996 and 1995,
respectively, except for Ms. McIntyre-Kolpin; $102,500 of Ms.
McIntyre-Kolpin's bonus earned in 1995 was paid in 1995, $87,500 of her
bonus earned in 1994 was paid in 1994.
2 Mr. Kovner resigned as Chairman of the Board and Chief Executive Officer
of the Company, and as Chairman of the Board, President and Chief
Executive Officer of the Bank, on July 9, 1996.
3 Reflects the Bank's contribution to Mr. Kovner's savings plan account
pursuant to Section 401(k) of the Internal Revenue Code, and, for 1996, it
also reflects disability benefits in the amount of $6,228, an accrued
vacation payment of $25,000 which was paid upon his resignation, and a
$124,999.98 severance/settlement payment, all made pursuant to the
Settlement Agreement (see discussion of the Settlement Agreement in the
section entitled "Employment Contracts and Termination of Employment
Arrangements" below).
</FN>
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John S. Buchanan (4) 1996 22,916 -0- -0- -0- -0- -0- -0-
Interim President and 1995 -0- -0- -0- -0- -0- -0- -0-
Chief Executive Officer 1994 -0- -0- -0- -0- -0- -0- -0-
of the Company and
First Professional
Bank, N.A.
Julie P. Thompson 1996 -0- -0- 24,002 (5) -0- -0- -0- -0-
Chairman of the Board 1995 -0- -0- -0- -0- -0- -0- -0-
1994 -0- -0- -0- -0- -0- -0- -0-
Melinda McIntyre- 1996 32,782 -0- -0- -0- -0- -0- 42,000
Kolpin (6) 1995 140,500 125,000 -0- -0- -0- -0- -0-
Interim President and 1994 136,500 125,000 -0- -0- -0- -0- -0-
Chief Executive Officer
of First Professional
Bank, N.A.
David G. Rodeffer, MPH 1996 180,203 -0- -0- -0- -0- -0- 17,490 (7)
Executive Vice President 1995 154,500 70,000 -0- -0- -0- -0- 4,500 (7)
of First Professional 1994 150,000 75,000 -0- -0- 25,000 -0- 75,816 (7)
Bank, N.A.
<FN>
__________________________________
4 Mr. Buchanan was Interim President and Chief Executive Officer of the
Company and the Bank from July 10, 1996 until August 18, 1996.
5 Represents an annual fee of $5,000 for serving as Chairman of the Board,
Board committee fees, and a fee of $125 per hour for the time she
exercised operational authority for the Company when there was no acting
chief executive officer.
6 Ms. McIntyre-Kolpin resigned as a Director of the Company and as
President and a director of the Bank effective February 9, 1996, at which
time she was paid $42,000 for accrued vacation time, $37,000 of which Ms.
McIntyre-Kolpin paid back to the Bank to purchase her Bank vehicle for its
then current market value. In September, 1996, Ms. McIntyre-Kolpin was
appointed Interim Chief Executive Officer, President and a Director of the
Bank. Ms. McIntyre-Kolpin is also Chief Executive Officer and President of
Network Health Financial Services, Inc., a Delaware corporation which
receives consulting fees from the Company and Bank pursuant to the terms
of the Consulting Agreement (see "Interest of Management and Others in
Certain Transactions").
pursuant to Section 401(k) of the Internal Revenue Code, an auto allowance
of $13,200 in 1996, and a $75,000 signing bonus paid to Mr. Rodeffer when
he joined the Company in January, 1994.
</FN>
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Daniel S. Rader (8) 1996 140,558 -0- -0- -0- -0- -0- 4,290 (9)
Chief Financial Officer 1995 100,000 35,000 -0- -0- -0- -0- 4,050 (9)
and Treasurer of the 1994 86,000 35,000 -0- -0- -0- -0- 2,320 (9)
Company and Executive
Vice President, Chief
Investment Officer, and
Chief Financial Officer
of First Professional
Bank, N.A.
Chris Chan (10) 1996 37,196 -0- -0- -0- -0- -0- 2,250 (11)
Acting Chief Financial 1995 -0- -0- -0- -0- -0- -0- -0-
Officer of the Company 1994 -0- -0- -0- -0- -0- -0- -0-
and First Professional
Bank, N.A.
<FN>
___________________
8 Mr. Rader held these positions until December 9, 1996.
9 Reflects the Bank's contributions to Mr. Rader's 401(k) savings plan
account.
10 Mr. Chan was Chief Operating Officer of the Bank from August, 1996
until December 9, 1996, and thereafter has been Acting Chief Financial
Officer of the Bank. Mr. Chan has also been Acting Chief Financial Officer
of the Company since March 26, 1997.
11 Reflects a car allowance of $2,250.
</FN>
</TABLE>
There were no options or SARs granted in 1996.
<TABLE>
<CAPTION>
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<S> <C> <C> <C> <C>
Number of
Securities Value of
Underlying Unexercised
Shares Unexercised In-The-Money
Acquired Options/SARs Options/SARs
On Value at FY-End (#) at FY-End ($)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- ---- --------- --------- ------------- -------------
Joel W. Kovner, Dr., P.H. 34,392 296,198 354,579/0 29,591/0
John S. Buchanan -0- -0- 0/0 0/0
Julie P. Thompson -0- -0- 0/0 0/0
Melinda McIntyre-Kolpin 12,930 166,382 0/0 0/0
David G. Rodeffer -0- -0- 22,050/5,512 0/0
Daniel S. Rader -0- -0- 31,500/0 4,183/0
Chris Chan -0- -0- 0/0 0/0
</TABLE>
COMPENSATION OF DIRECTORS
Compensation is paid only to outside directors. The compensation paid to
directors changed effective July 10, 1996. Prior to July 10, 1996, each outside
director of the Company received a monthly fee of $1,000.
- 9 -
<PAGE>
After July 10, 1996, directors were paid a fee of $500 for each Board Meeting
attended. Prior to July 10, 1996, members of the joint Company and Bank Audit
Committee received $250 per month (Ronald L. Katz, M.D.) with the committee
chairman receiving $400 per month (Richard A. Berger). After July 10, 1996, each
Audit Committee member (Joel S. Moskowitz, Alan S. Borstein and Richard A.
Berger) received $400 per committee meeting attended.
The Board of Directors of the Bank has a Loan Committee. Prior to July 10,
1996, members of the Bank's Loan Committee were Messrs. James B. Jacobson, Lynn
O. Poulson, J.D., and Ray T. Oyakawa, M.D., and they received $750 per month as
such members. After July 10, 1996, the members of the Loan Committee were Ms.
Thompson, Dr. Oyakawa and Mr. Poulson and they each receive $500 per month as
committee members. Prior to July 10, 1996, the Chairman of the Bank's Community
Reinvestment Act Oversight Committee, Mr. Berger, received $700 per month. After
July 10, 1996, a joint Company and Bank Community Reinvestment Act Committee was
formed. In addition to the Board's participation, Mr. Berger acted as the Board
representative to management's Community Reinvestment Act Committee and received
a fee of $400 for each meeting attended. The Company and the Bank Boards
established a joint Asset Liability Management and Investment Committee
effective July 16, 1996, consisting of Ms. Thompson, Mr. Moskowitz and Dr. Katz,
and each member receives a fee of $400 per meeting attended.
A Strategic Planning Retreat for the directors was held in December, 1996,
and each board member who attended was paid $1,250.
CORPORATE GOVERNANCE INFORMATION
During 1996, the Board of Directors held 13 meetings. All directors of the
Company who are standing for election at the Annual Meeting attended at least
75% of the aggregate number of regular and special meetings of the Board held
during 1996 (during the period he or she was a director) and all committees of
the Board on which the director served (during the period he or she was a
committee member) during the 1996 calendar year.
The Company's Board has a joint Audit Committee with the Bank's Board. The
Compensation Committee's composition and functions are described below. The
Company does not have a standing nominating committee. The joint Audit Committee
of the Bank and Company Boards oversees the Company's outside independent public
accountants. The Audit Committee reviews recommendations on various matters made
by the outside auditors and action taken by management to implement those
recommendations. The Audit Committee also considers the proposals by the outside
auditor for the scope of the audit to be performed for the Company and the Bank
and their proposed fees for this work. The Audit Committee recommends action to
the Boards of Directors of the Company and Bank in connection with all of the
above matters. The Audit Committee consisted of Mr. Berger and Dr. Katz from
January 1, 1996 until July 16, 1996. The Audit Committee thereafter consisted of
Mr. Moskowitz, Mr. Borstein and Mr. Berger. The Audit Committee met 12 times
during 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee, which is comprised of the Bank's Board of
Directors (exclusive of any directors who also serve as executive officers),
sets policy for compensation, reviews the recommendations of the Chief Executive
Officer for compensation of officers, establishes the compensation of the
executive officers and administers the Company's various stock option plans.
James B. Jacobson served on the Compensation Committee until July 8, 1996. The
Compensation Committee held no meetings separate from Board meetings in 1996.
Mr. Berger, Dr. Oyakawa, Dr. Katz, Ms. Thompson, Mr. Poulson, executive
officers of the Company and Bank, and companies with which the foregoing are
associated, are customers of, and have had banking transactions with the Bank,
some of which have included extensions of credit during 1996. In management's
opinion, all loans and commitments to lend included in such transactions were
made in the ordinary course of business and in compliance with applicable laws
on substantially the same terms, including interest rates, collateral and
repayment terms, as those prevailing for comparable transactions with other
persons of similar
- 10 -
<PAGE>
creditworthiness and did not involve more than a normal risk of collectibility
or present other unfavorable terms. As of March 1, 1997, all such loans were
current.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's Common Stock, to file with the Securities and Exchange
Commission and the American Stock Exchange initial reports of ownership and
reports of changes in ownership of Common Stock of the Company. Officers,
directors and greater than ten percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) reports they
file.
To the Company's knowledge, based solely upon review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the year ended December 31, 1996 all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners were fulfilled in a timely manner, except that two
reports, covering an aggregate of one transaction reporting the purchase of
1,000 shares, was filed late by John S. Buchanan, and one report covering two
transactions reporting the purchase of a total of 11,683 shares, was filed late
by David G. Rodeffer.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
SETTLEMENT AGREEMENT
In connection with the 1996 Annual Meeting of Shareholders, seven
shareholders of the Company, who owned in the aggregate 11.81% of the
outstanding shares of the Company as of the record date for the 1996 Annual
Meeting (April 26, 1996), formed a committee called the Shareholders Protective
Committee ("SPC") to submit its own slate of seven directors for election at the
1996 Annual Shareholders Meeting. The Company, the Bank, the SPC, Joel W.
Kovner, David G. Rodeffer, Daniel S. Rader, Richard A. Berger, James B.
Jacobson, Anthony R. Kovner, Ronald L. Katz and Lynn O. Poulson entered into an
Agreement of July 8, 1996 (the "Settlement Agreement"), pursuant to which the
parties agreed that four of the directors nominated by the SPC and three
directors nominated by management had been elected as Directors at the 1996
Annual Shareholders Meeting. The parties also agreed to a procedure for the
selection of the director nominees to stand for election at this Meeting, which
is discussed in the "ELECTION OF DIRECTORS" section above.
As part of the Settlement Agreement, Joel W. Kovner agreed to resign
effective July 9, 1996 as Chairman of the Board and Chief Executive Officer of
the Company and as Chairman of the Board, Chief Executive Officer and President
the Bank, in exchange for a severance package, which included the continuation
of Mr. Kovner's current salary for a period of thirty months, the continuation
of his health benefits at the Company's or the Bank's expense for a period of 60
months, and the continuation of his disability benefits for a period of 36
months, all from the effective date of the Settlement Agreement. Mr. Kovner was
also paid $25,000 in accrued vacation and was given the right to use the
automobile provided by the Bank for a period of 24 months and to purchase it at
its fair market value at the end of such period. Mr. Kovner was also given the
option to require Bancorp to purchase up to 25,000 of his shares of Common Stock
of the Company at fair market value at any time up to 24 months from the
effective date of the Settlement Agreement, which option Mr. Kovner exercised on
July 15, 1996. The Bank also agreed to honor its obligations to Mr. Kovner under
his Executive Salary Continuation Agreement dated May 1, 1992 (see discussion of
such agreement below).
EXECUTIVE SALARY CONTINUATION AGREEMENT
In 1992, the Bank entered into an Executive Salary Continuation Agreement
(the "SCA"), dated May 1, 1992, with Joel W. Kovner, who at that time was the
Chairman of the Board, Chief Executive Officer and President of the Bank. The
SCA is a nonqualified, executive benefit plan pursuant to which the Bank will
pay Mr. Kovner an annual retirement benefit of $150,000 per year for 15 years
upon his reaching age 60. If Mr. Kovner dies while the SCA is in effect, his
estate will receive the payments under the SCA which he was entitled to receive
at the time of his death. Mr. Kovner's right to receive benefits under the SCA
vested on September 1, 1992 representing his completion of ten years of
continuous service since the Bank commenced operations.
- 11 -
<PAGE>
The SCA is an unfunded plan; however, as a deferred compensation plan, the Bank
is required to make sufficient accruals so that the present value of the benefit
to be paid to Mr. Kovner at age 60 is reflected as a liability on the Bank's
books by that time. During 1997, the Bank will accrue such liability at an
average rate of approximately $6,600 per month. The SCA is not an employment
contract. In order to fund its obligation under the SCA, the Bank has purchased
a single premium universal life policy under which Mr. Kovner is the insured
while the Bank is the owner and beneficiary thereof. If assumptions as to
mortality experience, policy dividends and other factors are realized, the Bank
will receive earnings under the new policy equal to the expense accruals for the
SCA retirement benefits. There can be no assurance that such assumptions will be
realized. For the year ended December 31, 1996, the Bank received earnings of
$93,149.64 on the policy.
COMMON STOCK PERFORMANCE GRAPH
The Comparison Stock Performance Graph below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
The following graph shows a five year comparison of cumulative total
returns for the Company, S&P 500 Index and Peer Group Index. The Peer Group
Index consists of commercial banks listed on the American Stock Exchange (AMSE)
and was provided to the Company by SNL Securities.
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
PROFESSIONAL BANCORP, INC., S&P 500 INDEX AND
SNL AMEX BANK INDEX (1)
[Graph appears here]
This graph visually depicts the comparison between Professional Bancorp, Inc.
and the S&P 500 and AMSE Banks performance between 12/31/91 and 12/31/96.
The chart below provides the numerical equivalent of this performance chart.
<S> <C> <C> <C> <C> <C> <C>
Period Ending
-------------------------------
Index 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- ------------------------------------------------------------------------------------------
Professional Bancorp, Inc. 100.00 135.71 126.19 73.81 125.00 106.31
S&P 500 100.00 107.62 118.47 120.03 165.13 202.89
AMSE Banks 100.00 131.30 141.93 153.98 225.74 291.86
<FN>
_________________________
1 Assumes reinvestment of all dividends.
</FN>
</TABLE>
- 12 -
<PAGE>
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
Between January and May, 1996, the Board permitted Joel W. Kovner, former
Chairman of the Board and Chief Executive Officer of the Company, to obtain
short-term loans from the Company totaling $100,000 at an interest rate of 6.8%.
At December 31, 1996, the balance, including accrued interest, was $106,487.81.
See also the discussion of the benefits Mr. Kovner receives pursuant to the
Settlement Agreement, which is set forth in the "Employment Contracts and
Termination of Employment Arrangements" section above.
The Company and the Bank entered into a Consulting Agreement dated August
12, 1996 with Network Health Financial Services, Inc. ("NHFS"), a Delaware
corporation for which Melinda McIntyre-Kolpin serves as President and Chief
Executive Officer. Pursuant to the Consulting Agreement, NHFS provides
consulting services to the Company and the Bank with respect to personnel
matters, operational procedures and client development and retention. NHFS is
paid its actual costs incurred in the performance of its duties under the
Consulting Agreement (including hourly rates for certain specified NHFS
personnel while they are performing consulting services), plus an additional 25%
of such costs. In addition, the Company and Bank pay flat monthly rates for the
services of Ms. McIntyre and Patti Derry. During 1996, the Company and the Bank
paid NHFS total fees in the amount of $288,432 pursuant to the Consulting
Agreement. Any party may terminate the Consulting Agreement by giving 30 days'
notice to the other parties.
See also "Employment Contracts and Termination of Employment Arrangements"
for the discussion about the Settlement Agreement and "Compensation Committee
Interlocks and Insider Participation" for the discussion about director and
officer banking transactions.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of KPMG Peat Marwick LLP served as independent public accountants
for the Company and the Bank for the 1996 fiscal year and has been selected by
the Boards of Directors to continue to serve in that capacity for 1997 fiscal
year.
It is anticipated that a representative of KPMG Peat Marwick LLP will be
present at the Meeting, will have an opportunity to make a statement if so
desired, and will be available to respond to appropriate questions from
shareholders.
Shareholder ratification of the selection of auditors is not required by
law, however the Board nevertheless decided to ascertain the views of the
shareholders in this regard. If the selection of KPMG Peat Marwick LLP is not
ratified at the Meeting, the Board will consider the selection of other
auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
SHAREHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Proposals of shareholders intended to be presented at the next Annual
Meeting of Shareholders of the Company (i) must be received by the Company at
its offices at 606 Broadway, Santa Monica, California 90401, no later than
December 1, 1997 and (ii) must satisfy the conditions established by the
Securities and Exchange Commission for shareholder proposals to be included in
the Company's Proxy Statement for that meeting.
OTHER MATTERS
The Company's Board of Directors does not know of any matters to be
presented at the Meeting other than those set forth above. However, if other
matters come before the Meeting, it is the intention of the persons
- 13 -
<PAGE>
named in the accompanying proxy to vote said proxy in accordance with the
recommendations of the Company's Board of Directors on such matters, and
discretionary authority to do so is included in the proxy.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Julie P. Thompson
Dated: April 21, 1997 Julie P. Thompson
Chairman of the Board
MANAGEMENT OF THE COMPANY WILL SUPPLY WITHOUT COST, UPON WRITTEN REQUEST, A COPY
OF THE COMPANY'S MOST RECENT ANNUAL REPORT ON FORM 10K INCLUDING FINANCIAL
STATEMENTS AND SCHEDULES. SUCH REQUEST SHOULD BE DIRECTED TO MR. CHRIS CHAN,
CHIEF FINANCIAL OFFICER, PROFESSIONAL BANCORP, INC., 606 BROADWAY, SANTA MONICA,
CALIFORNIA 90401.
- 14 -
<PAGE>
PROXY
PROFESSIONAL BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
May 21, 1997
The undersigned shareholder of Professional Bancorp, Inc. (the "Company")
hereby nominates, constitutes and appoints Julie P. Thompson and Lynn O.
Poulson, and each of them, the attorney, agent and proxy of the undersigned,
with full powers of substitution, to vote all the stock of the Company which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Company to be held at the Miramar Sheraton Hotel, 101 Wilshire Boulevard, Santa
Monica, CA 90401, on Wednesday, May 21, 1997 at 5:00 p.m. and at any and all
adjournments thereof, as fully and with the same force and effect as the
undersigned might or could do if personally present as follows:
1. Election of Directors
To elect the seven persons named below to serve until the 1998 Annual
Meeting of Shareholders and until their successors are elected and have
qualified:
Richard A. Berger, Ronald L. Katz, M.D., James A. Markley, Jr.,
Walter T. Mullikin, M.D., Ray T. Oyakawa, M.D., Lynn O. Poulson,
Julie P. Thompson
|_| AUTHORITY GIVEN |_| AUTHORITY WITHHELD
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR SOME BUT NOT ALL OF THE
NOMINEES NAMED ABOVE, YOU SHOULD CHECK THE BOX MARKED "AUTHORITY GIVEN" AND YOU
SHOULD ENTER THE NAME(S) OF THE NOMINEE(S) WITH RESPECT TO WHOM YOU WISH TO
WITHHOLD AUTHORITY TO VOTE IN THE SPACE PROVIDED BELOW:
2. Ratification of Appointment of Independent Public Accountants.
Ratifying the appointment of the firm of KPMG Peat Marwick LLP as independent
public accountants of the Company for the 1997 fiscal year.
|_| FOR |_| AGAINST |_| ABSTAIN
PLEASE SIGN AND DATE ON THE REVERSE SIDE
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "AUTHORITY GIVEN" ON PROPOSAL
1 AND "FOR" ON PROPOSAL 2. THE PROXY SHALL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS UNLESS A CONTRARY INSTRUCTION IS
INDICATED, IN WHICH CASE THE PROXY SHALL BE VOTED IN ACCORDANCE WITH SUCH
INSTRUCTIONS. IN ALL OTHER MATTERS, IF ANY, PRESENTED AT THE MEETING, THIS PROXY
SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
_________________ DATED:______________, 1997 ____________________________
(Number of Shares) (Please Print Your Name)
____________________________
(Signature of Shareholder)
____________________________
(Please Print Your Name)
____________________________
(Signature of
Shareholder)
(Please date this proxy and sign your name as it appears on the stock
certificates. Executors, administrators, trustees, etc. should give their full
titles. All joint owners should sign.)
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS, AND MAY
BE REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE CORPORATE SECRETARY OF THE
COMPANY AN INSTRUMENT REVOKING THIS PROXY OR A DULY EXECUTED PROXY BEARING A
LATER DATE, OR BY APPEARING IN PERSON AND VOTING AT THE MEETING.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY.
