<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
September 7, 1995
STERLING WEST BANCORP
(Exact name of registrant as specified in its charter)
California 0-10794 95-3712404
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
3287 Wilshire Boulevard, Los Angeles, California 90010
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (213) 384-4444
N/A
(Former name or former address, if changed since last report)
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ITEM 2: Acquisition or Disposition of Assets
On September 7, 1995 the Company completed the disposition
of a substantial portion of the assets of its finance
company subsidiary, Sterling Business Credit, Inc.
("Business Credit"). The transaction was structured as an
asset sale and consisted of the sale of commercial loans
with a net principal balance, after reserves, of
14,675,390.39. The purchase price was paid in cash and
amounted to 16,675,390.39. Expenses of the transaction
amounted to approximately $500,000 resulting in a gain on
the sale of approximately $1.5 million or $0.9 million after
tax. The assets were acquired by First Capital Corporation,
an entity that is not related to the Company, any of its
affiliates, officers or directors. Business Credit retained
loans with a principal balance of $3,008,174.81, real estate
owned of $345,000 and other assets of approximately $12,000.
As a result of the transaction Business Credit paid off all
of its outstanding debt and First Capital Corporation will
provide a loan to Business Credit of up to $1.5 million to
finance the assets Business Credit is retaining.
ITEM 7: Financial Statements, Pro Forma Financial Information and
Exhibits
(b) Pro Forma Financial Information:
The following consolidated pro forma financial information sets
forth the Balance Sheet and Statement of Operations of Sterling
West Bancorp and Subsidiaries at June 30, 1995 and for the six
months then ended and a Statement of Operations for the fiscal
year ended December 31, 1994, as adjusted for the sale of
substantially all of the assets of Business Credit. The pro forma
adjustments reflect the loan values on June 30, 1995 for the loans
that were sold by Business Credit to First Capital Corporation.
The presentation shows the decrease in assets of the consolidated
company as a result of the sale and the decrease in earnings from
continuing operations. The pro forma Statement of Operations does
not include the gain on the sale of these assets.
<PAGE>
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Sterling West Bancorp and Subsidiaries
CONSOLIDATED PRO FORMA BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
June 30, Pro Forma Pro Forma
1995 Adjustments Results
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 16,520,000 $ 3,907,000(A)$20,427,000
Investment securities
(market value of $7,072,000 in
1995) 7,064,000 7,064,000
Loans Receivable, net 88,377,000 (15,265,000)(B)73,112,000
Fixed assets
Land and building 227,000 227,000
Furniture and equipment 3,436,000 (41,000)(C) 3,395,000
Leasehold improvements 1,411,000 1,411,000
5,074,000 (41,000) 5,033,000
Less accumulated depreciation (3,832,000) (36,000)(C)(3,796,000)
1,242,000 (5,000) 1,237,000
Accrued interest receivable 905,000 (317,000)(D) 588,000
Real estate held for sale 6,084,000 6,084,000
Other assets 1,766,000 (603,000)(E) 1,163,000
Assets of discontinued operations 3,254,000 3,254,000
Total assets $125,212,000$(12,283,000) $112,929,000
LIABILITIES
Deposits
Demand $ 30,308,000 $ 30,308,000
Savings and NOW 52,426,000 52,426,000
Money market 6,874,000 6,874,000
Time deposits $100,000 or greater 4,340,000 4,340,000
Other time deposits 3,843,000 3,843,000
97,791,000 97,791,000
Notes payable 13,508,000 (12,808,000)(F) 700,000
Other liabilities 3,711,000 (378,000)(G) 3,333,000
Total liabilities 115,010,000 (13,186,000) 101,824,000
STOCKHOLDERS' EQUITY
Common stock - authorized 5,000,000
shares without par value; issued
and outstanding 1,710,429 shares
at June 30, 1995 8,686,000 8,686,000
Retained earnings 1,516,000 903,000 (H) 2,419,000
10,202,000 903,000 11,105,000
Total Liabilities and Stockholders
Equity $125,212,000$ 12,283,000 $112,929,000
</TABLE>
See accompanying notes to consolidated pro forma financial statements.<PAGE>
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ITEM 7(b): PRO FORMA FINANCIAL INFORMATION
Sterling West Bancorp and Subsidiaries
CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the twelve
months ended
December 31, Pro Forma Pro Forma
1994 Adjustments Results
<S> <C> <C> <C>
Interest income
Loans $11,376,000 $(3,419,000)(I) $ 7,957,000
Federal funds sold 540,000 540,000
Investment securities held
to maturity 451,000 451,000
Trading Securities 69,000 69,000
12,436,000 (3,419,000) 9,017,000
Interest expense
Savings and NOW 1,865,000 1,865,000
Money market 231,000 231,000
Time deposits $100,000
or greater 443,000 443,000
Other time deposits 218,000 218,000
Notes Payable 1,229,000 (1,163,000)(J) 66,000
3,986,000 (1,163,000) 2,823,000
Net interest income 8,540,000 (2,256,000) 6,194,000
Provision for loan losses 266,000 (5,000)(K) 261,000
Net interest income
after provision for
loan losses 8,184,000 (2,251,000) 5,933,000
Non-interest income
Service charges on deposit
accounts 278,000 278,000
Gain on sale of SBA loans 69,000 69,000
Other 578,000 (74,000)(L) 504,000
925,000 (74,000) 851,000
Non-interest expense
Salaries, wages and employee
benefits 4,374,000 (1,060,000)(M) 3,314,000
Occupancy 943,000 (29,000)(N) 914,000
Furniture and equipment 224,000 224,000
Real estate operations, net 1,311,000 1,311,000
Other 2,211,000 (438,000) 1,773,000
9,063,000 (1,527,000) 7,536,000
Income from continuing operations
before income taxes 46,000 (798,000) (752,000)
Income tax provision 17,000 (157,000) 174,000
Income from continuing operations$ 29,000$ (955,000) $ (926,000)
============ ========== ==========
Income (loss) per common share:
From continuing operations $ 0.02 $ (0.54)
============ ==========
Weighted average number of
outstanding shares 1,710,429 1,710,429
============ ===========
</TABLE>
See accompanying notes to consolidated pro forma financial statements.<PAGE>
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ITEM 7(b): PRO FORMA FINANCIAL INFORMATION
Sterling West Bancorp and Subsidiaries
CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the six
months ended
June 30, Pro Forma Pro Forma
1995 Adjustments Results
<S> <C> <C> <C>
Interest income
Loans $ 6,325,000 $(2,037,000)(I) $ 4,288,000
Federal funds sold 299,000 299,000
Investment securities held
to maturity 247,000 247,000
Trading Securities -- --
6,871,000 (2,037,000) 4,834,000
Interest expense
Savings and NOW 1,314,000 1,314,000
Money market 77,000 77,000
Time deposits $100,000
or greater 70,000 70,000
Other time deposits 85,000 85,000
Notes Payable 793,000 (729,000)(J) 64,000
2,339,000 (729,000) 1,610,000
Net interest income 4,532,000 (1,308,000) 3,224,000
Provision for loan losses 200,000 200,000
Net interest income
after provision for
loan losses 4,332,000 (1,308,000) 3,024,000
Non-interest income
Service charges on deposit
accounts 162,000 162,000
Gain on sale of SBA loans 103,000 103,000
Other 291,000 (36,000)(L) 255,000
556,000 (36,000) 520,000
Non-interest expense
Salaries, wages and employee
benefits 2,286,000 (623,000)(M) 1,663,000
Occupancy 411,000 (15,000)(N) 396,000
Furniture and equipment 172,000 172,000
Real estate operations, net 272,000 272,000
Other 1,268,000 (135,000) 1,133,000
4,409,000 (773,000) 3,636,000
Income from continuing operations
before income taxes 479,000 (571,000) (92,000)
Income tax provision 200,000 (226,000) (26,000)
Income from continuing operations$ 279,000$ (345,000)$ (66,000)
============ ========== ===========
Income (loss) per common share:
From continuing operations $ 0.16 $ (0.04)
============ ===========
Weighted average number of
outstanding shares 1,710,429 1,710,429
============ ===========
</TABLE>
See accompanying notes to consolidated pro forma financial statements.<PAGE>
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ITEM 7(b): PRO FORMA FINANCIAL INFORMATION
Notes to Pro Forma Financial Information
(A) Reflects the portion of the purchase price retained in cash after
payment of liabilities.
(B) The principal amount, on June 30, 1995 of the loans sold to First
Capital was $15,265,000.
(C) The book value on June 30, 1995 of furniture and equipment sold to
First Capital Corporation was $41,000 and the accumulated depreciation
was $36,000.
(D) Accrued interest receivable on June 30, 1995 on the loans sold to First
Capital Corporation was $317,000.
(E) The adjustment to other assets consists of a reduction of the tax
receivable as a result of the income taxes accrued on the sale.
(F) The reduction in notes payable results from the payoff of the line of
credit from Security Pacific Business Credit used by Business Credit
to finance its loan portfolio. In addition the Company will payoff its
$1.5 million capital notes, substantially all of which had been
downstreamed to Business Credit.
(G) The reduction of other liabilities results from the payment of the
accrued interest payable on the debt noted in Note F and the payment
of deferred compensation to Business Credit executives.
(H) The increase in shareholders equity reflects the after tax gain on
the sale of the assets.
(I) The decrease in interest income on loans reflects the interest income
accrued on the loans sold to First Capital Corporation.
(J) The decrease in interest expense on notes payable reflects the interest
expense on the notes payable to Security Pacific Business Credit and
the $1.5 million of capital notes issued by the Company and paid off as
a result of this transaction.
(K) The reduction in provision for loan losses reflects the provision
taken against these loans by Business Credit in 1994.
(L) The reduction in other non-interest income relates to audit fee income
charged by Business Credit on the loans sold to First Capital
Corporation.
(M) The reduction in salaries and wages and employee benefits relates to
the employees who formerly worked for Business Credit but are no longer
needed as a result of the sale of assets.
(N) The reduction in occupancy expense relates to rental costs for space
which is no longer needed as a result of the sale.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STERLING WEST BANCORP
(Registrant)
Date: September 21, 1995 /s/ D.B. Swets
D. B. Swets
Chief Financial Officer
(Principal Financial and
Accounting Officer)
