As filed with the Securities and Exchange Commission on May , 1996
Registration No. 333-1231
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SDNB FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
California 95-3725079
(State or other (I.R.S.
jurisdiction of Employer
incorporation Identification
or organization) Number)
1420 Kettner Boulevard
San Diego, California 92101
(619) 233-1234
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive office)
Murray L. Galinson
President and Chief Executive Officer
1420 Kettner Boulevard
San Diego, California 92101
(619) 233-1234
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
With Copies to:
Lawrence M. Sherman, Esq. Theodore G.Johsen, Esq.
Sherman & Eggers,P.C. Arnold & Porter
350 West Ash Street, Suite 1100 777 South Figueroa Street
Suite 1100 Los Angeles, California
San Diego, California 92101 90017-2513
(619) 338-4900 (213) 243-4000
Approximate date of commencement of proposed sale to the public: From
time to time following the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. X
CALCULATION OF REGISTRATION FEE
Title of
class of
securities Amount to Proposed maximum Proposed maximum Amount of
to be be offering price aggregate registration
registered registered per security(1) offering price(1) fee
Common Stock
(no par value) 952,677 $5.62 5,358,794 $1,847.86
(1) Estimated solely for the purpose of calculating the registration fee.
(2) 1/29 of 1% of the proposed maximum aggregate offering price.
Page 1 of 13 Exhibit Index at page 10 of
sequentially numbered pages. sequentially numbered pages.
<PAGE>
SDNB Financial Corp.
PROSPECTUS
952,677 Shares of Common Stock
(no par value)
This Prospectus relates to the offering of 952,677 shares (the
"Shares") of Common Stock, no par value ("Common Stock"), of SDNB Financial
Corp. (the "Company") by certain selling shareholders (the "Selling
Shareholders"). See "Selling Shareholders." All of the Shares offered
hereby may be offered from time to time by the Selling Shareholders. See
"Plan of Distribution." The Company will not receive any of the proceeds
from the sale of the Shares by the Selling Shareholders. See "Use of
Proceeds." The Shares were acquired by the Selling Shareholders from the
Company in the following circumstances:
1. 510,121 shares of Common Stock were issued March 28, 1995 at a price
of $4.34 per share pursuant to a private placement to two limited
partnerships of which WHR Management Corp. is the general partner
("WHR"). The 510,121 shares issued to WHR then constituted 24.9% of
the Company's outstanding Common Stock after such issuance.
2. A warrant to purchase 37,363 shares of Common Stock at $4.34 per share
was issued to Torrey Pines Securities, Inc. ("Torrey Pines") pursuant
to a Rights Agent Agreement in connection with a rights offering to
existing shareholders of the Company (the "Rights Offering"). The
Rights Offering, which resulted in the issuance of 769,582 shares of
Common Stock at $4.34 per share, was completed on September 28, 1995.
Subsequently, Torrey Pines assigned the warrants and its related
registration rights to two of its officers, Jack C. Smith and Henry A.
Dahlgren.
3. 255,193 shares of Common Stock were issued October 6, 1995, at a price
of $4.34 per share pursuant to a private placement to WHR in accordance
with an agreement whereby WHR maintained its 24.9% ownership of the
Company's outstanding Common Stock, taking into account the shares issued
in the Rights Offering.
4. A warrant to purchase 150,000 shares of the Company's Common Stock at a
price of $5.44 per share was issued on November 30, 1995, to PKH
Kettner Investors, LLC ("PKH") as additional consideration for granting
a new loan secured by a first deed of trust on property owned by the San
Diego National Bank Building Joint Venture ("Joint Venture"), the
Company's subsidiary. A member of PKH, Mr. Sol Price, is a principal
shareholder of Price Enterprises, Inc. Mr. Murray L. Galinson,
President, Chief Executive Officer and a Director of the Company and
Chief Executive Officer and a Director of the Bank, serves as a Director
of Price Enterprises Inc.
The Common Stock is traded on the NASDAQ National Market System (the
"NASDAQ/NMS") under the symbol "SDNB" and, on [day before date of filing] the
last sale price of the Common Stock was $ .
HOLDERS SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH UNDER
"RISK FACTORS" (PAGES 4-6).
_______________
The Shares may be offered from time to time in transactions through the
Nasdaq National Market System, in negotiated transactions, or by a combination
of such methods of sale. The Shares may be offered at fixed prices which
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, or at negotiated prices. The
Selling Shareholders may effect such transactions by selling the Shares to or
through underwriters, brokerdealers, or agents. Such underwriters, broker-
dealers, or agents may receive compensation in the form of discounts,
concessions, or commissions from the Selling Shareholders or the purchases
of the Shares (or a combination of the two). Compensation to a particular
broker-dealer might be in excess of customary commissions. See "Plan of
Distribution."
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.
_________________
THESE SECURITIES ARE NOT SAVINGS OR DEPOSIT ACCOUNTS AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE BANK INSURANCE FUND, OR ANY OTHER GOVERNMENTAL AGENCY.
The date of this Prospectus is May ____, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (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 facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at its
Regional Offices at Seven World Trade Center, Suite 1300, New York, New
York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained from the
Commission's Public Reference Section at 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates.
The Company has filed with the Commission a Registration Statement on
Form S-3 (together with all amendments and exhibits, the "Registration
Statement") relating to the Shares. This Prospectus does not contain all
of the information set forth in the Registration Statement and exhibits
thereto that the Company has filed with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"), and to which
reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated by reference in this Prospectus are the following
documents filed by the Company with the Commission pursuant to the
Exchange Act:
1. the Company's Annual Report on Form 10-K for the year ended
December 31, 1995; and
2. the description of the Common Stock in the Company's
registration statement filed under the Exchange Act with respect to the Common
Stock, including any amendments and reports filed for the purpose of
updating such description.
All documents subsequently filed by the Company with the Commission
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 registration
statement shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the date such documents are filed. Any
statement contained in a document incorporated or deemed to be
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 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 this
Prospectus is delivered, on the written or oral request of any such
person, a copy of any or all of the information incorporated herein by
reference other than exhibits to such information (unless such exhibits
are specifically incorporated by reference into such information).
Written or oral requests should be directed to SDNB Financial Corp., 1420
Kettner Boulevard, San Diego, California 92101, Attention: Howard W. Brotman,
telephone (619) 233-1234, ext. 717.
THE COMPANY
SDNB Financial Corp. (the "Company") is a bank holding company
incorporated under the laws of the State of California in 1982 and is
registered under the federal Bank Holding Company Act (the "BHCA"). The
Company's principal subsidiary is San Diego National Bank, San Diego,
California (the "Bank"), a national banking association organized in
1981, the deposits of which are insured by the Bank Insurance Fund
("BIF") of the Federal Deposit Insurance Corporation (the "FDIC") up to
applicable limits. Through the Bank, the Company provides general
commercial banking services in the metropolitan San Diego area, focusing
primarily upon wholesale commercial banking operations and emphasizing the
needs of small and medium size business firms and corporations and the
personal banking needs of business executives and professional persons
located in the Bank's service area. At December 31, 1995, the Company had
consolidated assets of approximately $179 million, consolidated liabilities
of approximately $162 million (which includes total deposits through the
Bank of approximately $140 million), and shareholders' equity of
approximately $17 million. The Company's principal executive office is
located at 1420 Kettner Boulevard, San Diego, California 92101, and its
telephone number is (619) 233-1234.
The Company is a joint venture partner in the San Diego National Bank
Building Joint Venture (the "Joint Venture"), a partnership formed for the
purpose of constructing and developing the office building that houses the
Company and the Bank. The Joint Venture is 62% owned by the Company and the
Company is the general partner. In addition, the Company owns SDNB
Mortgage Bankers, a California corporation, which is currently inactive.
<PAGE>
RISK FACTORS
Dividend Limitations
The capital stock of San Diego National Bank (the "Bank") is one of the
Company's two principal assets. See "THE COMPANY." As a national bank
subject to the regulation of the Office of the Comptroller of the Currency
(the "Comptroller"), the Bank is subject to legal limitations on the source
and amount of dividends it is permitted to pay to the Company. The
approval of the Comptroller is required for any dividend by a national bank
if the total of all dividends declared by the bank in any calendar year
would exceed the total of its net profits, as defined by the Comptroller,
for that year, combined with its retained net profits for the preceding two
years. As of December 31, 1995, the Bank had available for dividends
approximately $1,370,000 without the approval of the Comptroller. The payment
of dividends by the Bank may also be affected by other factors, such as
requirements for the maintenance of adequate capital. In addition, the
Comptroller and the Federal Deposit Insurance Corporation (the "FDIC") are
authorized to determine under certain circumstances relating to the
financial condition of a national bank whether the payment of dividends would
be an unsafe or unsound banking practice and to prohibit payment thereof.
Finally, under the Federal Deposit Insurance Corporation Improvement Act
("FDICIA"), an insured depository institution is prohibited from making any
capital distribution to its owner, including any dividend, if, after making
such distribution, the depository institution fails to meet the required
minimum level for any relevant capital measure, including the risk-based
capital adequacy and leverage standards discussed under "Capital" below.
The Company and the Federal Reserve Bank of San Francisco (the
"Reserve Bank") entered into an agreement on November 20, 1992,
pursuant to which the Company must obtain the approval of the Reserve Bank
prior to, among other actions, the declaration of any cash dividends.
Capital
The Federal Reserve Board (the "Reserve Board") and the Comptroller have
adopted risk-based capital adequacy guidelines for bank holding companies
and banks under their supervision. Under the Comptroller's guidelines, a
bank is "well capitalized" (the highest rating) if its so called "Tier 1
capital" and "total capital" as a percentage of risk-weighted assets and
certain off-balance sheet instruments are at least 6% and 10%,
respectively. Under the Reserve Board's guidelines, the Tier 1 capital and
total capital of all bank holding companies must be at least 4% and 8%,
respectively.
The Reserve Board and the Comptroller have also imposed a leverage
standard to supplement their risk-based ratios. This leverage standard
focuses on a banking institution's ratio of Tier 1 capital to average total
assets adjusted for goodwill and certain other items. Under these
guidelines, banking institutions that meet certain criteria, including
excellent asset quality, high liquidity, low interest rate exposure, and
good earnings, and have received the highest regulatory rating, must maintain
a ratio of Tier 1 capital to total assets of at least 3%. Institutions
not meeting these criteria, as well as institutions with supervisory,
financial, or operational weaknesses, along with those experiencing or
anticipating significant growth, are expected to maintain a Tier 1 capital to
total assets ratio equal to at least 4% to 5%.
As reflected in the following table, the risk-based capital ratios and
leverage ratios of the Company and the Bank, as of December 31, 1995,
exceeded the fully phased-in risk-based capital adequacy
guidelines and the leverage standard.
<PAGE>
Capital Components and Ratios
(Dollars in Thousands)
December 31, 1995
Company Bank
Capital Components
Tier 1 Capital $16,726 $13,656
Total Capital 18,218 15,017
Risk-weighted assets
and off-balance sheet
instruments 117,967 107,310
Regulatory Capital
Tier 1 risk-based:
Actual 14.18% 12.73%
Required 4.00% 6.00%
Excess 10.18% 6.73%
Total risk-based:
Actual 15.43% 13.98%
Required 8.00% 10.00%
Excess 7.43% 3.98%
Leverage:
Actual 9.37% 8.43%
Required 5.00% 5.00%
Excess 4.37% 3.43%
FDICIA requires each federal banking agency, including the Reserve
Board, to revise its risk-based capital standards to ensure that those
standards take adequate account of interest rate risk, concentration of credit
risk, and the risk of non-traditional activities, and reflect the actual
performance and expected risk of loss on multifamily mortgages. The
Reserve Board, the FDIC, and the Comptroller have issued proposed rules
whereby exposures to interest rate risk would be measured as the effect that
a specified change in market interest rates would have on the net
economic value of a bank. This economic perspective considers the effect
that changing market interest rates may have on the value of a bank's
assets, liabilities, and off-balance sheet positions. Institutions with
interest rate risk exposure in excess of a threshold level would be
required under the proposed rules to hold additional capital proportional
to that risk. The Reserve Board, the FDIC, the Comptroller, and the
Office of Thrift Supervision have issued a final rule amending the risk-based
capital guidelines to take account of concentration of credit risk and
the risk of non-traditional activities. The final rule amends each
agency's risk-based capital standards by explicitly identifying concentration
of credit risk and the risk arising from non-traditional activities, as
well as an institution's ability to manage those risks, as important factors
to be taken into account by the agency in assessing an institution's
overall capital adequacy. The final rule became effective on January 17,
1995. The final rule has not materially impacted on the Company's capital
requirements, but there can be no assurance that the adoption of other
proposals implementing FDICIA will not have an adverse impact on the Company's
capital requirements.
Bank regulators and legislators continue to indicate their desire to
raise capital requirements applicable to banking organizations beyond their
current levels. However, management is unable to predict whether and when
higher capital requirements would be imposed and, if imposed, at what levels
and on what schedule.
Dilution
Following is a table showing the effect on the Company's
shareholders' equity and per share book value of the potential exercise of the
outstanding warrants (765,314 shares being registered had already been
accounted for):
No. of Shares Shareholders' Per Share
Outstanding Equity Book
Value
December 31, 1995 amount -
per financial statements 3,073,260 $16,685,992 $5.43
Add proceeds from the exercise
of warrants @ $4.34 per share 3,110,623 162,155 ____
as to 37,363 Shares 16,848,147 5.42
Add proceeds from the exercise of
warrants @ $5.44 per share 3,260,623 816,000 ____
as to 150,000 Shares $17,664,147 $5.42
<PAGE>
Litigation
In January 1993, the Bank was named as a defendant in an adversary
proceeding filed by Pioneer Liquidating Corporation ("PLC"), successor to
six bankrupt Pioneer Mortgage Company entities (collectively, "Pioneer")
in the Bankruptcy Court for the Southern District of California.
Investors in Pioneer had previously filed suit against the Bank, which
litigation was settled in 1992. The PLC case was settled with the final
settlement agreement approved by the Federal District Court for the Southern
District of California on November 29, 1995.
A preliminary agreement between the Bank and PLC contemplated that the
Bank would make payment to PLC on execution of the settlement agreement
and assign to PLC certain charged-off loans, without recourse. The
preliminary agreement further provided that after being given credit for
the payment by the Bank and the collections on the assigned charged-off
loans, payment of the remaining balance of the total settlement amount was
to be guaranteed by Charles I. Feurzeig, Chairman of the Board of the
Company, and PVCC, Inc., a corporation controlled by Mr. Feurzeig
(collectively, the "Feurzeig Entities"). Such guarantee was being given
by the Feurzeig Entities for consideration independent of Mr. Feurzeig's
investment in the Company.
Subsequent negotiations led to the settlement agreement approved by the
Court whereby the Bank paid $600,000 to PLC and the Feurzeig Entities paid
$1,050,000 to PLC upon execution of the settlement agreement and the
Feurzeig Entities took the place of PLC with respect to assignment of the
charged-off loans. In consideration of the modification of the original
list of charged-off loans to eliminate certain loans which had been only
partially charged-off, the Bank agreed to assign additional newly
charged-off loans (90 days after charge-off) to the Feurzeig Entities,
until the first to occur of:
(a) Five years after the date of the settlement agreement; or
(b) Such time as the Feurzeig Entities have collected on such
loans $1,050,000 plus a return equal to the rate of 9.5% per year on the
unpaid portion of such $1,050,000.
Pursuant to the settlement agreement the Feurzeig Entities do not have
recourse or a claim against the Bank should the collections on the assigned
charged-off loans amount to less than $1,050,000. Should collections
exceed $1,050,000 plus the return referred to above, the Feurzeig Entities
have agreed to pay to the Bank 50% of such excess collections.
Interests of WHR
At May , 1996, there were 3,073,260 shares of Common Stock of
the Company outstanding and entitled to vote. As of such date, WHR
beneficially owned 765,314 shares of Common Stock, representing 24.9%
of the outstanding shares of Common Stock.
There is a pre-existing relationship between the Bank and
Danielson Trust Company ("Danielson"), an affiliate of WHR, in which the
Bank refers potential trust customers to Danielson for a referral fee.
Additionally, Danielson acts as trustee for the Bank's Deferred Savings
Plan. The Company has been informed that Danielson has over $41.45 billion
in trust assets under administration. The referral fee arrangement is and
trusteeship are conducted on an arm's-length basis and on market terms
and conditions. They are not significant financial transactions for
either the Bank or Danielson. The Company is also advised that a
corporation controlled by Charles I. Feurzeig, the Chairman of the
Company's Board of Directors, is a customer of Danielson, with an account
of approximately $800,000950,000 under administration. There are no other
existing affiliations, other than those described herein, between WHR and the
Company or any of the Company's officers and directors.
Special Considerations Affecting the San Diego National Bank Deferred Savings
Plan
On May 22, 1995, the Company submitted an exemption request with the
Department of Labor (the "DOL") with respect to the exercise of rights
pursuant to the Rights Offering by the San Diego National Bank Deferred
Savings Plan (the "Plan"), which request, if approved, will be retroactively
effective to the expiration date of the Rights Offering. In the event that
the exemption request is not approved by the DOL, any subscription rights
exercised by the Plan, or Common Stock issued to the Plan pursuant to such
exercise, will be invalidated by the Company and the aggregate subscription
price paid by the Plan ($72,743) to exercise such subscription rights will
be returned to the Plan, without interest.
<PAGE>
SELLING SHAREHOLDERS
The table below sets forth the name of each Selling Shareholder, the
number of Shares owned by each Selling Shareholder as of approximately
February 1, 1996, the number of Shares offered hereby for each Selling
Shareholder, the amount and percentage of the Common Stock to be owned by
each Selling Shareholder assuming that all of the Shares offered for
sale by that Selling Shareholder are sold, and the nature of any material
relationship that the Selling Shareholder has had within the past three
years with the Company or any of its affiliates. The information in the
following table as to a Selling Shareholder was supplied to the
Company by that Selling Shareholder.
Amount and Percentage
of Common Stock to be
Number of Shares Owned After the Offering
or Warrant Number of Shares
Selling Currently Offered
Shareholder Owned Hereby Amount Percent
WHR 765,314 Shares 765,314 none -0-
Jack C. Smith 18,681 Warrants 18,681 none -0-
Henry A. Dahlgren 18,682 Warrants 18,682 none -0-
PKH 150,000 Warrants 150,000 none -0-
PLAN OF DISTRIBUTION
Any or all of the Shares offered hereby may be sold from time to time by
the Selling Shareholders. The Selling Shareholders may sell the Shares in
transactions through the Nasdaq National Market System, in negotiated
transactions, or by a combination of such methods of sale. The Shares may
be offered at fixed prices that may be changed, at market prices prevailing
at the time of sale, at prices related to such prevailing market prices, or
at negotiated prices. Such prices will be determined by each Selling
Shareholder or by agreement between a Selling Shareholder and his or her
underwriter, broker-dealer, or agent.
Any underwriter, broker-dealer, or agent participating in the
distribution of the Shares offered hereby may receive compensation in the
form of underwriting discounts, concessions, commissions, or fees from the
Selling Shareholders or the purchasers of the Shares (or both). Such
compensation may be in excess of customary commissions. In addition, the
Selling Shareholders and any underwriter, brokerbroker-dealer, or agent
that participates in the distribution of the Shares may be deemed to be
an underwriter under the Securities Act (although neither the Company nor
any Selling Shareholder so concedes), and any profit on the sale of Shares
and any discount, commission, or concession received by any of such
underwriter, broker-dealer, or agent may be deemed to be underwriting
discounts and commissions under the Securities Act.
Certain agreements between the Company and WHR, between the Company and
Messrs. Smith and Dahlgren (as assignees), and between the Company and PKH
(collectively, the "Registration Agreements"), provide that the Company will
pay all the expenses incident to the Registration Statement and certain
other expenses related to the offering of the Shares, other than
underwriting fees, discounts, or commissions attributable to the sale of
the Shares. The Registration Agreements also provide that the Company will
indemnify the Selling Shareholders against certain liabilities and
expenses in connection with the Registration Statement.
USE OF PROCEEDS
The Shares offered hereby are for the accounts of the Selling
Shareholders. Accordingly, the Company will not receive any of the
proceeds from any sales of the Shares by the Selling Shareholders.
If Selling Shareholders exercise warrants to receive as yet unissued Shares,
the Company will receive proceeds from the exercise of warrants. If all
warrants underlying as yet unissued Shares are exercised, the aggregate
exercise price of the warrants will be $978,155, which the Company
intends to use for general corporate purposes.
<PAGE>
EXPERTS
The consolidated balance sheets as of December 31, 1995 and 1994 and the
consolidated statements of operations, shareholders' equity and cash flows for
each of the three years in the period ended December 31, 1995, incorporated
by reference in this Prospectus, have been incorporated herein in
reliance on the report of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
OPINION
Arnold & Porter, Los Angeles, California, special counsel to the
Company, has rendered an opinion to the effect that the Common Stock
offered hereby, when issued as contemplated in this Prospectus, will be
legally issued, fully paid, and nonassessable.
<PAGE>
No person has been authorized to give
any information or to make any
representation not contained in this
Prospectus and, if given or made, such
information or representation must not
be relied upon as having been authorized
by the Company. This Prospectus does not
constitute an offer to sell or a
solicitation of an offer to buy any of
the securities offered hereby in any
jurisdiction to any person to whom it
is unlawful to make such offer in such
jurisdiction. Neither the delivery of
this Prospectus nor any sale made
hereunder shall, under any circumstances,
create an implication that the information
herein is correct as of any time subsequent SDNB FINANCIAL CORP.
to the date hereof or that there has been
no change in the affairs of the Company
since such date. 952,677 Shares
TABLE OF CONTENTS
Page
Available Information................3
Incorporation of Certain
Documents by Reference.............3
The Company..........................3 Common Stock
Risk Factors.........................4 (no par value)
Selling Shareholders.................7
Plan of Distribution.................7
Use of Proceeds......................8
Capitalization.......................8
Experts..............................8 PROSPECTUS
Opinion..............................8
May ____, 1996
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Securities and Exchange Commission registration fee $1,847.86
Legal fees and expenses $10,000.00*
Blue Sky fees and expenses $1,000.00*
Accounting fees and expenses $1,000.00*
Total $13,847.86
________________
* Estimated
Item 15. Indemnification of Directors and Officers
The Company has adopted provisions in its Restated Articles of
Incorporation which provide for indemnification of its officers and
directors in excess of the indemnification expressly permitted by
Section 317 of the California General Corporation Law, as amended (the
"Code"), subject to applicable limits in the Code with respect to breach
of duty to the Company and its shareholders. As authorized by the Code, the
Restated Articles of Incorporation limit the liability of directors to the
Company for monetary damages. The effect of this provision is to
eliminate the rights of the Company and its shareholders (through
shareholders' derivative suits on behalf of the Company) to recover
monetary damages against a director for breach of the fiduciary duty of care
as a director (including breaches resulting from negligent behavior) except
in certain limited situations. This provision does not limit or eliminate
the rights of the Company or any shareholder to seek non-monetary relief
such as an injunction or rescission in the event of a breach of a
director's duty of care. These provisions will not alter the liability
of directors under federal securities laws. In addition, the Company has
entered into Indemnification Agreements with each director and executive
officer which provide that the Company shall indemnify such directors
and executive officers to the fullest extent authorized by the Code. The
Company and its directors and officers are also insured up to $3 million for
liability arising from claims against the Company's directors and officers
in their capacities as such.
Item 16. Exhibits
3(a) Restated Articles of Incorporation, as amended (incorporated by reference
from the Company's Annual Report on Form 10-K for the year ended December 31,
1988, SEC File No. 0-11117).
3(b) Bylaws, as amended through May 18, 1988 (incorporated by reference from
the Company's Annual Report on Form 10-K for the year ended December 31, 1988,
SEC File No. 0-11117).
4 Common Stock Specimen Certificate (incorporated by reference from the
Company's Registration Statement on Form S-14, filed April 27, 1982, SEC File
No. 2-77187).
5 Opinion of Arnold & Porter
23(a)Consent of Coopers & Lybrand L.L.P.
23(b)Consent of Arnold & Porter (included as part of Exhibit 5).
<PAGE>
____________________________________
Item 17. Undertakings
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual
report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d)
of the Exchange Act) that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling
persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer, or controlling person of the Company in the successful
defense of any action, suit, or proceeding) is asserted by such director,
officer, or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and
has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of San Diego,
California, on May 3, 1996.
SDNB Financial Corp.
/s/ Murray L. Galinson
By MURRAY L. GALINSON
President and Chief Executive Officer
POWERS OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned directors and
officers of the Company hereby constitute and appoint Murray L. Galinson and
Howard W. Brotman and each of them (with full power of each of them to act
alone and with full power of substitution and resubstitution), their true and
lawful attorney-in-fact and agent for them and on their behalf and in their
name, place, and stead, in any and all capacities, including on behalf of the
Company, to sign, execute, and file with the Securities and Exchange
Commission (or any other governmental or regulatory authority) any amendments
to this Registration Statement (including post-effective amendments) with all
exhibits and any and all documents required to be filed with respect thereto,
relating to the registration of shares of the Company's Common Stock under
the Securities Act of 1933, as amended, in connection with the offering of
such Common Stock by certain shareholders of the Company, granting unto said
attorneys-in-fact and each of them, full power and authority to do and to
perform each and every act and thing requisite, necessary, or appropriate to
be done in order to effectuate the same as fully to all intents and purposes
as they themselves might or could do if personally present, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them,
may lawfully do or cause to be done by virtue hereof
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signatures Title Date
/s/ Charles I. Feurzeig* Chairman of the Board May 3, 1996
CHARLES I. FEURZEIG and Director
/s/ Murray L. Galinson* President, Chief Executive May 3, 1996
MURRAY L. GALINSON Officer, and Director
/s/ Douglas E. Barnhart* Director May 3, 1996
DOUGLAS E. BARNHART
/s/ Margaret Costanza* Director May 3, 1996
MARGARET COSTANZA
___________________ Director May 3, 1996
KARLA J. HERTZOG
/s/ Robert B. Horsman* Director May 3,1996
ROBERT B. HORSMAN
/s/ Mark P. Mandell* Director May 3, 1996
MARK P. MANDELL
/s/ Patricia L. Roscoe* Director May 3, 1996
PATRICIA L. ROSCOE
/s/ Julius H. Zolezzi* Director May 3, 1996
JULIUS H. ZOLEZZI
/s/ Howard W. Brotman* Senior Vice President, May 3, 1996
HOWARD W. Brotman Secretary, and Chief
Financial Officer
*By Howard W. Brotman,
attorney in fact
/s/Howard W. Brotman
Howard W. Brotman
[ARNOLD & PORTER Letterhead]
April 30, 1996
SDNB Financial Corp.
1420 Kettner Boulevard
San Diego, California 92101
Re: SDNB Financial Corp.; Public Offering of up
to 952,677 Shares of Common Stock, No Par
Value
Ladies and Gentlemen:
We have acted as special counsel to SDNB Financial Corp.
("SDNB") in connection with the preparation of a registration statement on
Form S-3 (as amended, the "Registration Statement") and the form of
prospectus constituting a part thereof (the "Prospectus"), filed with the
Securities and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended, relating to the offering for sale by certain securities
holders of SDNB of up to 952,677 shares of the Common Stock, no par value,
of SDNB (the "Shares"). Of the Shares, 765,314 shares are issued and
outstanding and the remaining 187,363 shares are issuable pursuant to
outstanding warrants (individually a "Warrant" and collectively the
"Warrants"), all as described in the Prospectus. Capitalized terms used
herein without definition shall have the meanings attributed to such terms
in the Registration Statement.
In connection with rendering this opinion, we have examined and
relied upon, among other things: (i) the registration Statement; (ii) the
Prospectus; (iii) the opinion of Sherman & Eggers, P.C. delivered to
Arnold & Porter in connection with this opinion (a copy of which is
attached hereto); (iv) the Rights Agent Agreement and the related Warrant
pursuant to which 37,363 of the Shares are issuable; (v) the Warrant
pursuant to which the remaining 150,000 shares are issuable; and (vi)
originals, or copies identified to our satisfaction as being true copies
of originals, of such other documents relating to SDNB, the Common Stock,
and the Warrants as we have deemed appropriate. In such examination, we
have assumed the genuineness of all signatures on original documents, the
authenticity of all documents submitted to us as original documents, the
conformity to original documents of all documents submitted to us as
copies thereof, the legal capacity of all natural persons, and the due
execution and delivery of all documents, where due execution and delivery
are requisite to the effectiveness thereof.
<PAGE>
ARNOLD & PORTER
SDNB Financial Corp.
April 30, 1996
Page 2
On the basis of the foregoing examination and assumptions, and
in reliance thereon, and upon consideration of applicable law, we are of
the opinion that:
The 765,314 outstanding Shares are legally issued, fully paid,
and nonassessable; and the 187,363 Shares, when issued and paid for in
accordance with the Warrants, will be legally issued, fully paid, and
nonassessable.
We hereby consent to the inclusion of this opinion as an exhibit
to the Registration Statement and to the use of our name in connection
therewith.
Very truly yours,
/s/Arnold & Porter
Attachment
<PAGE>
[SHERMAN & EGGERS Letterhead]
April 26, 1996
Arnold & Porter
777 S. Figueroa St., Ste. 4400
Los Angeles, CA 90017
Ladies & Gentlemen:
You have requested this firm's opinion as special counsel to SDNB
Financial Corp., a California corporation (the "Company"), as to certain
matters in connection with the offering for sale by certain securities
holders of the Company (the "Offering") of up to 952,677 shares of the
Common Stock, no par value (the "Shares") of the Company. Of the Shares,
765,314 shares are issued and outstanding and the remaining 187,363 shares
are issuable pursuant to outstanding warrants (individually a "Warrant" and
collectively the "Warrants"), all as described in the Registration
Statement (hereinafter defined). Capitalized terms used herein without
definition shall have the meanings attributed to such terms in the
Registration Statement on Form S-3 (as amended, the Registration
Statement"), filed with the United States Securities and Exchange
Commission on February 27, 1996 (File No. 33-01231), relating to the
Offering.
In rendering the opinions set forth below, we have examined the
Registration Statement and the Prospectus constituting a part thereof. We
have also examined originals or copies' certified or otherwise identified
to our satisfaction, of the Articles of Incorporation of the Company, as
restated and currency in effect (the "Articles"), the Bylaws of the
Company, as currently in effect (the "Bylaw's"), the Rights Agent Agreement
and the related Warrant pursuant to which 37,363 of the Shares are
issuable, the Warrants pursuant to which the remaining 150,000 shares are
issuable, the minutes of the meetings of each of the Company's Board of
Directors and Shareholders, and such other corporate records and documents
and certificates of government officials as we have deemed appropriate for
the purposes of the opinions set forth below. We have made such
investigations of law as we deem appropriate for purposes of the opinions
set forth below.
<PAGE>
Arnold & Porter
April 26, 1996
Page -2-
In addition, in arriving at the opinions expressed below, we have
assumed, but have not verified, that the signatures on all documents that
we have examined are genuine. We have also assumed the authenticity of all
documents submitted to us as originals and the conformity to original
documents of all documents submitted to us as copies.
Based on the foregoing, and subject to the further qualifications set
forth below, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of California. The
Company has full corporate power and authority to perform its obligations
in connection with the Offering, as contemplated by the Prospectus,
including, but not limited to, the execution and filing of the
Registration Statement.
2. The execution and filing of the Registration Statement by the
Company will not violate in any material respect any provision of the
Articles or Bylaws any resolution of the Board of Directors or
Shareholders of the Company, or any law, statute, ordinance, code, rule,
regulation or, to the best of our knowledge, any agreement to which the
Company is a party or any court or administrative order relating to the
Company.
3. The authorized capital stock of the Company consists of
15,000,000 shares of its Common Stock no par value. All the outstanding
shares of Common Stock of the Company have been duly authorized and validly
issued and delivered and are fully paid and nonassessable and are not
subject to any preemptive rights. The Company has reserved a sufficient
number of shares of its Common Stock for issuance pursuant to the Warrants.
4. The Company's Board of Directors consists of the following
individuals, each of whom has been duly elected as a director of the
Company in accordance with the terms of the Company's Articles and Bylaws,
and none of whom has resigned or otherwise been removed from his or her
position as a director of the Company:
Douglas E. Barnhart Karla J. Hertzog
Howard W. Brotman Robert B. Horsman
Charles I. Feurzeig Mark P. Mandell
Murray L. Galinson Patricia L. Roscoe
Margaret Costanza Julius H. Zolezzi
5. The Registration Statement, the Offering, and the issuance of a
total of 187,363 Shares pursuant to the Warrants have been duly and validly
authorized by resolutions adopted by
<PAGE>
Arnold & Porter
April 26, 1996
Page -3-
the Company's Board of Directors pursuant to the authority granted to it by
the Articles and Bylaws or the California Corporations Code.
The delivery of this opinion letter to Arnold & Porter is made for the
purpose and with the understanding that Arnold & Porter will rely on the
opinions set forth herein in order to render its opinion to the United
States Securities and Exchange Commission in connection with the Offering.
This opinion letter does not address any matters other than those
expressly addressed hereto. This opinion letter does not express any
opinions as to matters arising under the laws of any jurisdiction other
than California. This opinion letter is given for the sole benefit of
Arnold & Porter; no one else is entitled to rely upon this opinion without
our express written consent. This letter specks only as of the date hereof,
and we undertake no responsibility to update or supplement it after such
date.
Very truly yours,
/s/Sherman & Eggers, PC.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
of SDNB Financial Corp. (the "Company") on Form S-3 of our report, dated
February 5, 1996 on our audits of the consolidated financial statements of
the Company as of December 31, 1995 and 1994, and for each of the three
years in the period ended December 31, 1995, which is in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995. We also consent to
the reference to our Firm under the caption "Experts".
/s/COOPERS & LYBRAND L.L.P.
San Diego, California
May 2, 1996
