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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) -- OCTOBER 3, 1996
MONARCH BANCORP
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(Exact name of registrant as specified in its charter)
CALIFORNIA 0-13551 95-3863296
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(Name or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
30000 TOWN CENTER DRIVE, LAGUNA NIGUEL, CA 92667
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(Address of principal executive officer) (Zip Code)
(Registrants' telephone number, including area code) -- (714) 495-3300
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NA
--
(Former name or former address, if changed since last report.)
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On September 30, 1996, Monarch Bancorp (the "Company") completed the acquisition
of Western Bank ("Western"), Los Angeles, California in which Western became a
wholly-owned subsidiary of the Company.
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
In connection with the acquisition of control by the Company of Western, Castle
Creek Capital Partners Fund-1, L.P. ("Castle Creek"), San Diego, California,
acquired 11,685,385 shares directly from the Company in the Company's SEC
Regulation D private placement offering and 814,615 additional shares from
existing shareholders, for total shares acquired of 12,500,000, representing
36.36% of the issued and outstanding shares of the Company. Castle Creek paid
$1.65 per share in the Regulation D private placement offering, and $1.35 per
share for those shares purchased from existing shareholders with funds obtained
from capital contributions from partners of Castle Creek and a borrowing from
The Northern Trust Company, Chicago, Illinois (the "Lender"). The borrowing was
in the amount of $3 million and was structured as a revolving credit note.
Castle Creek pledged 6,060,607 shares of the Company to the Lender. There are
no arrangements or understandings among members of the general or limited
partners of Castle Creek with respect to the election of directors or other
matters of the Company.
Castle Creek acquired control of the Company pursuant to approvals issued by the
Federal Reserve Bank of San Francisco and the California State Banking
Department.
ITEM 2. ACQUISITION OF DISPOSITION OF ASSETS
In connection with the acquisition of Western that occurred on September 30,
1996, Western will be operated as a wholly-owned subsidiary of the Company. The
Company paid $17.25 per share for the 3,543,156 issued and outstanding shares of
Western, for total consideration of $61,119,441, and an additional $5,483,774
representing the difference between $17.25 and the exercise price of the 425,724
outstanding stock options of Western. The net consideration for the acquisition
of Western was approximately $66.6 million.
In order to fund the purchase price, the Company sold approximately $43.2
million of common stock in an SEC Regulation D private placement offering
conducted in 11 states, and from the proceeds of a three year loan of $26.5
million from the Lender.
The acquisition of Western by the Company increased the total assets of the
Company and its subsidiaries to approximately $489 million, total deposits to
approximately $423 million and total shareholders' equity to approximately $53
million as of September 30, 1996.
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ITEM 4. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
The Board of Directors of Monarch Bancorp recently appointed KPMG Peat Marwick,
LLP as its auditors, and replaced Dayton & Associates, which is now Vavrinek,
Trine, Day & Co.
Dayton & Associates' report dated February 7, 1996, except for Note 16 as to
which the date is March 31, 1996 and Note 17 as to which the date is April 25,
1996, on registrant's financial statements for the year ended December 31, 1995
did not include an adverse opinion or disclaimer opinion nor was it qualified as
to audit scope or accounting principles.
The decision to replace Dayton & Associates with KPMG Peat Marwick, LLP was
approved by the Board of Directors subject to a final review of proposed costs.
During registrant's fiscal years ended December 31, 1994 and December 31, 1995,
and the subsequent interim period, there were no disagreements with Dayton &
Associates on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which if not resolved to
Dayton & Associates' satisfaction, would have caused it to make reference to the
subject matter of the disagreement in connection with its Report.
During registrant's fiscal years ended December 31,1994 and December 31, 1995,
and the subsequent interim period:
(a) Dayton & Associates has not advised the registrant that there do not
exist the internal controls necessary for the registrant to develop reliable
financial statements;
(b) Dayton & Associates has not advised registrant that information had
come to their attention that has led it to no longer be able to rely on
management's representations, or that has made Dayton & Associates unwilling to
be associated with the financial statements prepared by management;
(c) Dayton & Associates has not advised registrant that it needed to expand
significantly the scope of its audit, or that information has come to its
attention during such time period that if further investigated may (i)
materially impact the fairness or reliability of either the previously issued
audit report or the underlying financial statements, or the financial statements
to be issued covering the fiscal period subsequent to the date of the most
recent financial statements covered by an audit report or (ii) cause Dayton &
Associates to be unwilling to rely on management's representations or be
associated with the registrant's financial statements; and
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(d) Dayton & Associates has not advised registrant that information has
come to their attention of the type described in subparagraph (c) above, the
issue not being resolved to their satisfaction prior to its dismissal.
Registrant has not, during its fiscal years ended December 31, 1994 and December
31, 1995, and the subsequent interim period, consulted with KPMG Peat Marwick,
LLP regarding the application of accounting principles to a specific transaction
or the type of audit opinion that might be rendered on registrant's financial
statements.
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS
As of October 1, 1996, Hugh S. Smith, Jr. assumed the role of Chairman of the
Board and Chief Executive Officer of the Company. Mr. John Rose resigned as
Chairman of the Board but remained a director of the Company. Mr. E. Lynn
Caswell, who served as President and Chief Executive Officer of the Company has
become Vice Chairman of the Company, and will retain his position as Chairman,
President and Chief Executive Officer of Monarch Bank. Joseph Digange,
President of Western, became Chairman of Western, and Matthew P. Wagner became
President and Chief Executive Officer of Western. Messrs. Smith, Rose, Caswell,
Digange and Wagner also were all appointed as members of the Board of Director
of the Company.
Directors Raymond Cox, David Wooten, Henry Schielein, Margaret Redmond, Cheryl
Moore and Alfred Jannard resigned as directors of the Company. Mr. Rice E.
Brown continues as a director of the Company, and will be joined on the Company
board by Mr. Dale Walter, of La Quinta, California.
The resigning directors of the Company will continue as directors of Monarch
Bank.
The management of the Company does not know of any disagreement with the Company
of any director on any matter relating to the Company's operations, policies or
practices, and the Company has not received any letter from such resigning
director describing such a disagreement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. It is impractical for the
Company to prepare the required financial statements for Western at this time,
and the Company will file the required financial statements as soon as
practical, but not later than 60 days after the report on this Form 8-K has been
filed. The required financial statements will be attached as an amendment to
this Form 8-K.
(b) PRO FORMA FINANCIAL INFORMATION. The pro forma financial information that
will be required pursuant to Article 11 of Regulation SX is intended to be filed
within the next 60 days.
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(c) EXHIBITS.
(1) Agreement and Plan of Reorganization (previously filed as part of Form
8-K dated March 21, 1996)
(2) Agreement of Merger as filed with the California Secretary of State
on September 30, 1996
(3) Letter from Dayton & Associates, now known as Vavrinek, Trine, Day &
Co.
(4) Press Release of October 1, 1996
SIGNATURE
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
MONARCH BANCORP
Dated: October 3, 1996 By: /s/ HUGH S. SMITH, JR.
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Hugh S. Smith, Jr.,
Chairman of the Board and
Chief Executive Officer
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AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER is made and entered into as of this 16th day
of September, 1996, by and between Monarch Merger Corporation ("Monarch"), a
California banking corporation, and Western Bank ("Bank"), with reference to
the following facts:
RECITALS
1. Bank is a banking corporation duly organized, validly existing and
in good standing under the laws of the State of California and is authorized by
the California Superintendent of Banks to conduct a general banking business,
with authorized capital of 10,000,000 shares of no par value common stock of
which, on the date hereof, there are 3,543,156 shares issued and outstanding
("Bank Stock").
2. Monarch is a corporation duly organized, validly existing and in
good standing under the laws of the State of California, with authorized capital
of 1,000,000 shares of common stock, no par value of which, on the date hereof,
there are 100 shares issued and outstanding ("Monarch Common Stock").
3. The respective Boards of Directors of Monarch and the Bank deem it
desirable and in the best interest of their respective corporations and
stockholders that Monarch be merged with and into the Bank as provided in this
Agreement of Merger pursuant to the laws of the State of California and that the
Bank be the surviving corporation ("Surviving Bank").
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein set forth and for the purpose of prescribing the
terms and conditions of such Merger, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Upon consummation of the Merger at the Effective Time (as defined in
Article IX hereof), Monarch shall be merged with and into the Bank which shall
thereupon be the Surviving Bank, and the separate corporation existence of
Monarch shall cease.
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ARTICLE II
NAME
The name of the Surviving Bank shall be "Western Bank."
ARTICLE III
ARTICLES OF INCORPORATION
The Articles of Incorporation of Bank as in effect immediately prior
to the Effective Time shall, at and after the Effective Time, continue to be the
Articles of Incorporation of the Surviving Bank.
ARTICLE IV
BYLAWS
The Bylaws of Bank as in effect immediately prior to the Effective
Time shall, at and after the Effective Time, continue to be the Bylaws of the
Surviving Bank.
ARTICLE V
DIRECTORS
The Board of Directors of Bank immediately prior to the Effective Time
shall, at and after the Effective Time, serve as the Directors of the Surviving
Bank until its next annual meeting of shareholders or until such time as their
successors have been elected and qualified.
ARTICLE VI
RIGHTS AND DUTIES OF SURVIVING BANK
At and after the Effective Time, all rights, privileges, powers and
franchise and property and assets of every kind and description of the Bank and
Monarch shall be vested in and be held and enjoyed by the Surviving Bank,
without further act or deed, and all the estates and interests of every kind of
the Bank and Bank, including all debts due to either of them, shall be as
effectively the property of the Surviving Bank as they were of the Bank and
Monarch, and the title to any real estate vested by deed or otherwise in either
the Bank or Monarch shall not revert or be in any way impaired by reason of the
Merger; and all rights of creditors and liens upon any property of the Bank and
Monarch shall be preserved unimpaired and all debts, liabilities and duties of
the Bank and Monarch shall be debts, liabilities and duties of the Surviving
Bank and may be enforced against it to the same extent as if said debts,
liabilities and duties had been incurred or contracted by it.
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ARTICLE VII
CONVERSION OF SHARES
In and by virtue of the Merger and at the Effective Time, pursuant to
this Agreement of Merger, the shares of Bank Stock and Monarch Stock outstanding
at the Effective Time shall be converted as follows:
(a) EFFECT ON MONARCH. Each share of Monarch Common Stock
issued and outstanding immediately prior to the Effective Time shall, on and
after the Effective Time, be automatically converted into and exchanged for one
share of common stock of the Surviving Bank ("Surviving Bank Common Stock").
(b) EFFECT ON BANK STOCK. Each share of Bank Stock issued and
outstanding immediately prior to the Effective Time, except for shares as to
which dissenters' rights are perfected pursuant to Section 1300 ET SEQ. of the
California Corporations Code ("Perfected Dissenting Shares") shall be
automatically converted into the right to receive cash in the amount of $17.25
per share.
ARTICLE VIII
FURTHER ACTION
The parties hereto shall execute and deliver, or cause to be executed
and delivered, all such deeds and other instruments, and will take or cause to
be taken all further or other action as they may deem necessary or desirable, in
order to vest in and confirm to the Surviving Bank title to and possession of
all of Monarch's and Bank's property, rights, privileges, powers and franchises
hereunder, and otherwise to carry out the intent and purposes of this Agreement
of Merger.
ARTICLE IX
EFFECTIVE TIME
The Merger will become effective upon the filing of a copy of this
Agreement of Merger and all other requisite accompanying certificates in the
office of the Secretary of State of the State of California. The date and time
of such filing with the Secretary of State of the State of California is
referred to herein as the "Effective Time".
ARTICLE X
SUCCESSORS AND ASSIGNS
This Agreement of Merger shall be binding upon and enforceable by the
parties hereto and their respective successors, assigns and transferees, but
this Agreement of Merger may not be assigned by either party without the
written consent of the other.
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ARTICLE XI
GOVERNING LAW
This Agreement of Merger has been executed in the State of California,
and the laws of the State of California shall govern the validity and
interpretation hereof and the performance by the parties hereto.
ARTICLE XII
TERMINATION
This Agreement of Merger may, by the mutual consent and action of the
Boards of Directors of Monarch and the Bank, be abandoned at any time before or
after approval thereof by the shareholder of Bank, but not later than the filing
of this Agreement of Merger with the Secretary of State of the State of
California.
IN WITNESS WHEREOF, Monarch and the Bank, pursuant to the approval and
authority duly given by resolution of their respective Board of Directors, have
caused this Agreement of Merger to be signed by their respective officers on the
day and year first above written.
MONARCH MERGER CORPORATION
By: /s/ E. Lynn Caswell
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E. Lynn Caswell, President
By: /s/ Bobbe Sigler
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Bobbe Sigler, Secretary
WESTERN BANK
By: /s/ Hugh S. Smith, Jr.
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Hugh S. Smith, Jr.,
Chairman of the Board
By: /s/ James D. McDowell
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James D. McDowell, Secretary
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OFFICERS' CERTIFICATE
E. Lynn Caswell and Bobbe Sigler certify that:
1. They are the President and the Secretary, respectively, of Monarch
Merger Corporation, a California corporation organized under the laws of the
State of California.
2. The corporation has only one class of shares and the total number of
outstanding shares is 100.
3. The Agreement of Merger in the form attached was duly approved by the
Board of Directors and shareholder.
4. Shareholder approval was by the holders of 100% of the outstanding
shares of the corporation.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
Dated this 16th of September, 1996.
By: /s/ E. Lynn Caswell
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E. Lynn Caswell,
President and Chief Executive Officer
By: /s/ Bobbe Sigler
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Bobbe Sigler, Secretary
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OFFICERS' CERTIFICATE
Hugh S. Smith, Jr. and James McDowell certify that:
1. They are the Chairman and the Secretary respectively, of Western
Bank, a California corporation ("Western") organized under the laws of the State
of California.
2. Western has only one class of stock. Western has only one class
of Common Stock outstanding, and the total number of shares of Western Common
Stock outstanding is 3,543,156.
3. The principal terms of the Merger Agreement in the form attached
was duly approved by Western by the vote of a number of shares of the Common
Stock which equaled or exceeded the vote required.
4. The percentage vote required of the class of Western Common stock
is more than 50%.
We further declare under penalty of perjury under the laws of the
State of California that the matters set forth in this certificate are true and
correct of our own knowledge.
Dated this 16th day of September, 1996
By: /s/ Hugh S. Smith, Jr.
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Hugh S. Smith, Jr.,
Chairman of the Board
By: /s/ James D. McDowell
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James D. McDowell,
Secretary
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[LETTERHEAD]
October 3, 1996
Securities and Exchange Commission
Mail Stop 9-5
450 5th Street, N.W.
Washington, D.C. 20549
Dear Sirs/Madams:
We have read and agree with the comments in the first, second, fourth and fifth
paragraphs of Item 4 of Form 8-K of Monarch Bancorp dated October 3, 1996.
Sincerely,
/s/ David L. Dayton
David L. Dayton
Certified Public Accountant
DLD/cw
Distributed to News Organizations at 4:20 p.m. Tuesday. - 10/1/96
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PRESS RELEASE
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Monarch Bank
30000 Town Center Drive, Laguna Niguel, CA 92677
Contact: E. Lynn Caswell
Phone: 714-495-3300
FAX: 714-495-3135
FOR IMMEDIATE RELEASE
PURCHASE OF WESTERN BANK COMPLETED
September 30, 1996
John W. Rose, Chairman of the Board of Monarch Bancorp, Laguna Niguel, and Hugh
S. Smith, Jr., Chairman of the Board of Western Bank, Los Angeles, jointly
announced today the completion of the acquisition of Western Bank by Monarch
Bancorp.
Western Bank will continue operations as a wholly owned subsidiary of Monarch
Bancorp which owns Monarch Bank of Laguna Niguel. In making the announcement
Mr. Rose stated, "The acquisition of Western Bank, with its record of
outstanding performance and consistent profitability gives Monarch Bancorp a
significant opportunity for expansion in an important market. It will also
allow significant efficiencies of operation which will reduce our operating
overhead, and further improve earnings." Mr. Smith noted, "We are very pleased
to complete this project and to join with the Monarch organization. We believe
our two companies compliment each other and the merger of our organizations will
provide the basis for a substantial independent
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bank holding company while allowing the banks to maintain their own identities
and continue the excellent customer service for which they are known."
As of October 1, Hugh Smith will assume the role of Chairman and Chief Executive
Officer of Monarch Bancorp, with Mr. Rose remaining a Director of the revised
Monarch Bancorp Board of Directors. E. Lynn Caswell, who has served as
President and Chief Executive Officer will become Vice Chairman of the company.
Joseph Digange will move from President of Western Bank to Chairman of the
Western Bank Board of Directors and Matthew P. Wagner will become President and
Chief Executive Officer of Western Bank. Mr. Caswell will retain his positions
as Chairman, President and Chief Executive Officer of Monarch Bank. All will
serve as directors of Monarch Bancorp and will be joined on the parent company
board by Rice E. Brown of Laguna Niguel and Dale E. Walter of La Quinta.
In order to accomplish the purchase of Western Bank, Monarch Bancorp, with the
assistance of its financial advisor, Belle Plaine Financial of Rancho Santa Fe,
sold $43.2 million of new capital stock in a SEC Regulation D private placement
offering conducted in eleven states. The balance of the purchase price was
financed in a credit facility provided by The Northern Trust Company of Chicago.
The acquisition of Western Bank by Monarch Bancorp will give the independent
banking company total assets of approximately $480 million as of September 30,
1996.
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