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PRELIMINARY COPY
MONARCH BANCORP
(holding company for Monarch Bank)
30000 Town Center Drive
Laguna Niguel, California 92677
(714) 495-3300
WRITTEN CONSENT STATEMENT
FOR PROPOSED AMENDMENT TO
THE ARTICLES OF INCORPORATION TO
INCREASE NUMBER OF AUTHORIZED SHARES
To the Shareholders of Monarch Bancorp:
This Written Consent Statement is furnished in connection with the
solicitation by the Board of Directors of Monarch Bancorp (the "Company") of
consents to a proposed amendment to Article FOUR of the Articles of
Incorporation of the Company, which has been previously approved by the Board of
Directors of the Company, to increase the number of authorized shares of Common
Stock of the Company from 25,000,000 to 100,000,000 shares.
It is expected that this Written Consent Statement and accompanying
Consent form will be mailed or delivered to shareholders of the Company on or
after January 9, 1995. Written Consents are being solicited from all
shareholders of the Company.
Sections 902 and 903 of the California Corporations Code require the
approval of the proposed amendment to the Articles of Incorporation by a
majority of the outstanding shares of Common Stock of the Company. Section 603
of the Corporations Code and Section 10 of Article II of the Bylaws of the
Company authorize the Company to obtain the necessary shareholder approvals by
written consent without a meeting. Pursuant to SEC rules, because certain
documents are incorporated by reference, the Company will be able to effect the
proposed amendment to the Articles of Incorporation after twenty (20) business
days have elapsed from the date the Written Consent Statements are sent to
shareholders.
Shareholders of the Company are requested to complete, sign and date
the accompanying Written Consent form and return it to the Company as soon as
possible. Any shareholder may revoke his or her Written Consent at any time
prior to receipt by the Company of the number of Written Consents required to
authorize the proposed amendment to the Articles of Incorporation. To effect a
revocation prior to that time, a shareholder must file a written instrument
revoking such shareholder's Written Consent with the Secretary of the Company.
Any shareholder who signs and returns the Written Consent form but does not
indicate a choice thereon will be deemed to have consented to the proposed
amendment to the Articles of Incorporation.
This solicitation is being made by the Board of Directors of the
Company. The expense of preparing, assembling, printing and mailing this
Written Consent Statement and other material used in this solicitation of
Written Consents will be paid by the Company. It is
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anticipated that all of the Written Consents will be solicited through the mail,
but directors, officers and regular employees of the Company may solicit Written
Consents personally or by telephone, without receiving special compensation
therefor. 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 expense in forwarding this Written Consent
Statement to their principals. In addition, the Company may utilize the
services of individuals or companies not regularly employed by the Company in
connection with the solicitation of written consents if the Board of Directors
of the Company determines that this is advisable.
THE COMPANY MUST RECEIVE WRITTEN CONSENTS REPRESENTING A MAJORITY OF
THE OUTSTANDING SHARES OF THE COMPANY'S COMMON STOCK FOR APPROVAL OF THE
PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION.
RECORD DATE AND PERSONS ENTITLED TO GIVE WRITTEN CONSENTS
There were issued and outstanding 8,228,436 shares of the Company's
Common Stock at the close of business on December 12, 1995, which has been set
as the Record Date for the purpose of determining the shareholders entitled to
consent to the proposed amendment to the Articles of Incorporation. The Company
has no other class of stock outstanding. Consent to the proposed amendment to
the Articles of Incorporation may be given by any person in whose name shares of
Common Stock stand on the books of the Company as of the Record Date, or by his
or her duly authorized agent.
APPROVAL REQUIRED
Approval of the proposed amendment to the Articles of Incorporation
will require the affirmative written consent of shareholders holding at least a
majority of the shares of the Company's Common Stock outstanding on the Record
Date. The directors and executive officers of the Company are expected to
consent to the proposed amendment to the Articles of Incorporation.
PRINCIPAL SHAREHOLDERS
Management of the Company knows of no person who owns beneficially (1)
more than five percent (5%) of the outstanding common stock of the Company,
other than the entities listed in the following table. The following table
reflects the ownership of 5% or more shareholders and the ten (10) directors as
a group as of the Record Date:
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(1) Beneficial owner of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding, relationship,
or otherwise has or shares: (a) voting power, which includes the power to
vote, or to direct the voting power, of such security; and/or (b)
investment power, which includes the power to dispose, or to direct the
disposition of, such security. Beneficial owner also includes any person
who has the right to acquire beneficial ownership of such security as
defined above within 60 days of the Record Date. The calculation includes
vested stock options.
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Beneficial Owner Amount and Nature Percent
Director Beneficial Ownership of Class
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Basswood Partners (2)
Paramus, NJ 07652 530,000 6.44%
Launch & Co. Mutual Discovery Fund 530,000 6.44%
Short Hills, NJ 07078
Peter H. Huizenga (3) 800,000 9.72%
Oak Brook, IL 60521
NB Bank Partners II 592,600 7.20%
Chicago, IL
Rainbow Partners
Keefe Managers, Inc.
New York, N.Y. 800,000 9.72%
Robert A. Schoelhorn Trust 750,000 9.12%
c/o Bryan & Gross
Northbrook, IL 60062
All ten (10) directors
as a group 377,771 (4) 4.59%
MANAGEMENT
DIRECTORS
The following table sets forth, as of December 12, 1995, as to each of
the directors of the Company, such person's age, such person's principal
occupation during the past five years, and the period during which such person
has served as a director of the Company and the Bank.
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(2) Company shares of Basswood Partners are held in affiliated entities as
follows: 462,147 shares beneficially owned by Basswood Financial Partners,
L.P., and 67,853 shares beneficially owned by Basswood International Fund,
Inc.
(3) Company shares of Peter Huizenga are held in affiliated entities as
follows: 400,000 shares beneficially owned by Peter H. Huizenga Huizenga
Capital Management, and 400,000 shares beneficially owned by the Peter
Huizenga Testamentary Trust.
(4) All stock options as of the Record Date under the Company's 1983 Stock
Option Plan, as amended in 1989, and the Company's 1993 Stock Option Plan,
as amended in 1995, have been cancelled.
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Director of
Principal Occupation Company Director of
Name and Office Held Age For Past Five Years Since Bank Since
- -------------------- --- ------------------- ----- ----------
Rice E. Brown, Director 57 Owner and President of 1988 1988
Rice Brown Financial
Services
E. Lynn Caswell 50 Commercial Banking and 1987 1987
President and Chief Bank Holding Company
Executive Officer Management
Raymond B. Cox 87 President, Cox Marketing 1983 1979
Director Associates, marketing
consultants for real estate
investments
William C. Demmin (5) 50 Commercial Banking and 1993 1993
Director, Executive Vice Bank Holding Company
President and Chief Management
Financial Officer
Alfred H. Jannard 54 Owner - Niguel Pharmacy 1993 1993
Director
Cheryl Moore 48 Owner/operator of retail 1993 1993
Director women's apparel store
Margaret A. Redmond 56 Vice President and Office 1986 1986
Director Manager of a Professional
Orthodontia Practice Firm
John Rose, Chairman (6) 46 Executive Vice President, 1995 1995
of the Board FNB Corporation
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(5) Mr. Demmin was appointed Executive Vice President and Chief Financial
Officer of the Company. Mr. Demmin has served as a senior executive
officer and Corporate Secretary for the Company and Bank since 1987. His
appointment to the Company and Bank Board of Directors is effective as of
May 15, 1993.
(6) Mr. Rose has been an Executive Vice President in charge of community banks
for FNB Corporation for approximately one year. He formerly worked as
President of McAllen Capital Partners, an investment firm and advisor to
community banks.
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Director of
Principal Occupation Company Director of
Name and Office Held Age For Past Five Years Since Bank Since
- -------------------- -- ------------------- ----- ----------
Henry Schielein(7) 61 President and COO, 1995 1995
The Balboa Bay Club
David Wooten(8) 67 President, International 1995 1995
Bay Clubs, Inc.
EXECUTIVE OFFICERS
The following table sets forth as to each of the persons who currently
serves as an Executive Officer of the Company and the Bank, such person's age,
such person's principal occupation during the past five years, such person's
current position with the Bank, and the period during which the person has
served in such position.
<TABLE>
<CAPTION>
Position with Principal Year of Year of
Company Occupation for Appointment Appointment
Name Age and Bank Past Five Years to Company to Bank
- ---- --- ----------------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
E. Lynn Caswell(9) 50 President and Commercial Banking 1987 1987
CEO and Bank Holding
Company Management
William Demmin(10) 50 Executive Vice Bank and Bank Holding 1987 1987
President and CFO Company Management
</TABLE>
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(7) Mr. Schielein since the start of 1995 has served as President and COO of
the Balboa Bay Club in Newport Beach. From 1993 until 1995 he was
President of the Grand Wailea Resort in Hawaii and previously served as
Vice President and General Manager of The Ritz Carlton in Laguna Niguel.
Mr. Schielein previously served as a director of the Board of Directors for
both the Company and the Bank from 1988 until June 1993.
(8) Mr. Wooten has been the President of International Bay Clubs, Inc. in
Newport Beach since March 1993; previously he was President of Integrated
Protein Technology.
(9) On July 27, 1987, Mr. E. Lynn Caswell was appointed President and Chief
Executive Officer and a member of the Board of Directors of the Company and
the Bank. Mr. Caswell was formerly the President and Chief Executive
Officer of the Bank of San Diego, and Chief Operating Officer of BSD
Bancorp, its parent Company from 1984 to 1987, and he has over 27 years of
banking experience.
(10) On August 10, 1987, Mr. William C. Demmin was appointed Senior Vice
President and Chief Financial Officer of the Company and the Bank. Mr.
Demmin was promoted to Executive Vice President of the Company and the Bank
in April 1995. From 1986 to 1987, Mr. Demmin served as Cashier of
Commercial Center Bank of Santa Ana, California and he had previously
served as Senior Vice President, Chief Financial officer, and Cashier of
First American Bank & Trust in Laguna Beach from 1983 to 1986. Mr. Demmin
had previously served Bank of America for 11 years, and has over 28 years
of banking experience.
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<TABLE>
<CAPTION>
Position with Principal Year of Year of
Company Occupation for Appointment Appointment
Name Age and Bank Past Five Years to Company to Bank
- ---- --- ----------------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Louis Cumming(11) 56 Executive Vice Bank and Bank Holding -- 1995
President and CCO Company Management
of Bank
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
During 1995, the Board of Directors of the Company held eight (8)
meetings. The Bank, during 1995, held twelve (12) regular meetings, and three
(3) special meetings. All Directors attended at least 70% of the Board meetings
of the Company and Bank.
The Bank Loan Committee, which is responsible for reviewing and
approving loans, held twenty-four (24) meetings during 1995. Members of the
Bank Loan Committee also function as the Bank's Investment Committee.
The Board of Directors Audit Committee held four (4) meetings in 1995
to meet with outside auditors to review the audit findings and other matters,
and also met with outside auditors who are engaged to perform internal control
audits and review and approve various financial reports.
The Company and Bank do not have Compensation or Nominating committees
and handle matters that might otherwise be delegated to these committees in
executive session; all Board members are included in the executive sessions.
COMMON STOCK OWNERSHIP DIRECTORS, EXECUTIVE OFFICERS, AND CERTAIN PRINCIPAL
SHAREHOLDERS
The following table sets forth information concerning the beneficial
ownership of the Company's common stock as of December 12, 1995 by each director
and executive officer. The Company knows of no person who is the beneficial
owner of more than five percent of its outstanding common stock, other than as
specified below.
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(11) On April 28, 1995, Mr. Louis Cumming was appointed Executive Vice
President and Senior Credit Officer of the Bank. Mr. Cumming was
formerly the Executive Vice President and Senior Credit Officer of
Cuyamaca Bank from 1992 to April 1994, Senior Vice President of First
National Bank from 1989 to 1992, and he has over 30 years of banking
experience.
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Amount and Nature
Beneficial Owner Director Beneficial Ownership(12) Percent of Class
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Rice E. Brown 7,891 0.01%
E. Lynn Caswell(13) 81,690 0.99%
Raymond B. Cox 25,000 0.30%
Louis Cumming(14) 18,500 0.22%
William C. Demmin(13) 15,224 0.19%
Alfred H. Jannard 22,842 0.28%
Cheryl Moore 7,708 0.09%
Margaret A. Redmond 23,996 0.29%
John Rose 185,185 2.25%
Henry Schielein 4,000 0.05%
David Wooten 4,235 0.05%
All Directors and
Executive Officers as
a group (11 in number) 396,271 4.82%
PROPOSAL: APPROVE AMENDMENT TO THE
ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED
SHARES FROM 25,000,000 TO 100,000,000
BACKGROUND
The Board of Directors believes it is advisable and in the best
interests of the Company and its shareholders, and has directed that Company
solicit its shareholders, to amend Article FOUR of the Company's Articles of
Incorporation which would increase the authorized number of shares of Common
Stock of the Company from 25,000,000 to 100,000,000 shares. As a result of the
one-for-five reverse stock split effected December 14, 1993, the authorized
number of shares of Common Stock decreased form 10,000,000 shares to 2,000,000
shares. In the first quarter of 1994, the Company received shareholder approval
and increased the number of authorized shares from 2,000,000 to 25,000,000.
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(12) Beneficial owner of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has or shares: (a) voting power, which
includes the power to vote, or to direct the voting power, of such
security; and/or (b) investment power, which includes the power to
dispose, or to direct the disposition of, such security. Beneficial
owner also includes any person ho has the right to acquire beneficial
ownership of such security as defined above within 60 days of the Record
Date.
(13) Mr. Caswell and Mr. Demmin are also executive officers.
(14) Mr. Cumming is an executive officer of the Bank, but he does not hold an
officer position with the Company.
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As of December 12, 1995, 8,228,436 shares of Common Stock of the
Company were issued and outstanding. There are no other classes of stock
outstanding, and the Company has 5,000,000 shares of Preferred Stock
authorized. The Company also has approximately 46,000 options outstanding
under the 1983 Stock Option Plan, which expired in March 1993, and 63,000
shares under the 1993 Stock Option Plan.
On March 31, 1995, the Company completed a private placement
offering of 4,547,111 shares of its Common Stock, no par value at the price
of $1.35 per share to several accredited investors as defined in SEC
Regulation D, and the Company raised approximately $5,669,000 in net proceeds
in the private placement. The private placement offering was undertaken in
order to raise capital in accordance with a Section 8(b) Order issued by the
FDIC and entered into between Monarch Bank, the wholly-owned subsidiary of
the Company, and the FDIC, and a Section 1913 Order ("1913 Order") issued by
the California Superintendent of Banks and agreed to by the Bank
(collectively referred to herein as the "Orders"), and (ii) to provide
additional capital for prudent expansion of the Bank and the Company through
continued growth of its present facility and possible future facilities.
With the completion of the initial phase of the private placement offering on
March 31, 1995, the Bank's leverage capital ratio increased to approximately
7.85%. The Company retained $53,500 from the net proceeds of the private
placement offering for the retirement of debt and $2,065,000 for general
corporate purposes.
On July 14, 1995, the Company commenced an offering of up to
3,177,296 shares of its Common Stock in a rights and public offering at a
price of $1.35 per share. This offering concluded in September 1995, the
Company raised approximately $3,464,000 in net proceeds in the public
offering, and the Company increased its leverage capital ratio as of
September 30, 1995 to 15.4%.
The California State Banking Department has recently completed an
examination of the Bank, that the Bank has now been rated satisfactory, and
management of the Bank anticipates that the California Superintendent of
Banks will remove the 1913 Order in the near future. Management of the Bank
has also applied to the FDIC for removal of the Section 8(b) Order, and the
Company believes that the Section 8(b) Order will also be removed in the near
future.
If approved by the stockholders, the balance of the increased
number of authorized shares of Common Stock will be available for issuance
from time to time for such other purposes as the Board of Directors may
approve and no further vote of stockholders of the Company will be required,
except as provided under California law. The availability of additional
shares for issue, without the delay and expense of obtaining the approval of
stockholders at a meeting, will also afford the Company greater flexibility
in acting upon proposed transactions, such as stock dividends, mergers and
acquisitions, and possible additional infusions of capital into the Company
and the Bank.
The additional shares of Common Stock for which authorization is
sought would have identical rights as the shares of Common Stock of the
Company now authorized. Holders of Common Stock do not have preemptive
rights to subscribe for any additional securities which may be issued by the
Company. The issuance of additional shares of Common Stock to new
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investors may have the affect of diluting the interest of existing
stockholders of the Company. The Company has several reasons for the
increase in authorized shares, including possible mergers and acquisitions
and possible additional infusions of capital into the Company and the Bank.
The Board of Directors has therefore approved an amendment to the Articles of
Incorporation to increase the number of authorized shares of Common Stock
from 25,000,000 to 100,000,000 shares. This proposal must now be approved by
a majority of the outstanding shares of Common Stock of the Company to be
effective.
RECOMMENDATION OF MANAGEMENT
The Board of Directors of the Company believes that the approval of
the proposed amendment to the Articles of Incorporation to increase the
number of authorized shares of Common Stock of the Company from 25,000,000 to
100,000,000 shares is in the best interests of the Company and therefore
recommends that you tender your written consent in favor of the proposal.
DOCUMENTS INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1994, and Quarterly Reports on Form 10-QSB for the periods ended
March 31, 1995, June 30, 1995 and September 30, 1995 are hereby incorporated
in this Written Consent Statement by reference.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Written Consent
Statement shall be deemed to be incorporated by reference in this Written
Consent Statement 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 Written Consent Statement to the extent that a statement
contained herein or in any other subsequently filed document that 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 Written
Consent Statement.
The Company will provide by first class mail within one business
day of an oral or written request without charge to each person to whom a
copy of this Written Consent Statement is delivered a copy of any or all of
the documents incorporated by reference herein other than exhibits to such
documents. Requests should be directed to Monarch Bancorp, 30000 Town Center
Drive, Laguna Niguel, California 92657, Attention: William C. Demmin,
Executive Vice President and Chief Financial Officer.
The Board of Directors of the Company asks that you complete, date
and execute the enclosed Consent to the proposed amendment to Articles of
Incorporation and that you return the executed Consent to the Company in the
enclosed envelope.
If you have any questions regarding the Proposal, the Written
Consent Statement, or any related matter, please contact Mr. E. Lynn Caswell,
President and Chief Executive
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Officer, Mr. William C. Demmin, Executive Vice President and Chief Financial
Officer, or Ms. Carol Bowman, Senior Vice President of Monarch Bank,
telephone number (714) 495-3300.
Your interest and participation are appreciated.
Date: __________________, 1996 By Order of the Board of Directors
John Rose
Chairman of the Board
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WRITTEN CONSENT
OF SHAREHOLDERS OF
MONARCH BANCORP
(bank holding company for Monarch Bank)
TO AMEND THE ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK FROM 25,000,000 TO 100,000,000
The undersigned record holder of _______ shares of Common Stock of
Monarch Bancorp, Laguna Niguel, California (the "Company"), hereby consents
to, and does hereby approve, an amendment to the Articles of Incorporation of
the Company which, when filed with the California Secretary of State, will
increase the number of authorized shares of Common Stock of the Company from
25,000,000 to 100,000,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
By signing this Written Consent, a shareholder of the Company shall be
deemed to have voted all shares of the Company's Common Stock which he is
entitled to vote in accordance with the specifications made above, with
respect to the proposal described above. IF A SHAREHOLDER SIGNS AND RETURNS
THIS WRITTEN CONSENT, BUT DOES NOT INDICATE THEREON THE MANNER IN WHICH HE
WISHES HIS SHARES TO BE VOTED WITH RESPECT TO THE PROPOSAL DESCRIBED ABOVE,
THEN SUCH SHAREHOLDER WILL BE DEEMED TO HAVE GIVEN HIS AFFIRMATIVE WRITTEN
CONSENT TO THE PROPOSAL. A Written Consent marked "abstain" will not be
voted either for or against such proposal.
THIS WRITTEN CONSENT IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY. THIS WRITTEN CONSENT MAY BE REVOKED AT ANY TIME PRIOR TO THE
RECEIPT BY THE COMPANY OF AFFIRMATIVE WRITTEN CONSENTS REPRESENTING A
MAJORITY OF THE COMPANY'S OUTSTANDING SHARES OF COMMON STOCK BY FILING A
WRITTEN INSTRUMENT REVOKING THE WRITTEN CONSENT WITH THE COMPANY'S SECRETARY.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU GIVE
YOUR AFFIRMATIVE WRITTEN CONSENT TO THE PROPOSED INCREASE IN AUTHORIZED
SHARES OF COMMON STOCK FROM 25,000,000 TO 100,000,000 SHARES.
Dated: ____________________, 1996 ______________________________________
Typed or Printed Name
______________________________________
Signature
______________________________________
Typed or Printed Name
______________________________________
Signature
(Please date this Written Consent and sign your name as it
appears on your stock certificates. Executors, administrators,
trustees, etc., should give their full titles. All joint owners
should sign.)
