<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
OCTOBER 31, 1997
Date of Report (Date of Earliest Event Reported)
------------------------
WESTERN BANCORP
(Exact Name of Registrant As Specified In Its Charter)
CALIFORNIA
(State or Other Jurisdiction of Incorporation)
<TABLE>
<S> <C>
0-13551 95-3863296
(Commission File Number) (I.R.S. Employer Identification No.)
</TABLE>
4100 NEWPORT PLACE, SUITE 900
NEWPORT BEACH, CALIFORNIA 92660
(Address of Principal Executive Offices)(Zip Code)
(714) 863-2300
(Registrant's Telephone Number, including Area Code)
__________________________________________________________
(Former Name or Former Address, If Changed Since Last Report)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 5. OTHER EVENTS.
On July 30, 1997, Western Bancorp ("Western") entered into an Agreement and
Plan of Merger, by and among Western, Western Bank and Santa Monica Bank
("SMB"), pursuant to which SMB will merge with a subsidiary of Western.
In connection therewith, Western hereby files SMB's Quarterly Report on Form
F-4 for the quarter ended September 30, 1997, dated October 22, 1997, as
follows:
2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FEDERAL DEPOSIT INSURANCE CORPORATION
WASHINGTON, D.C. 20429
------------------------
FORM F-4
---------------
QUARTERLY REPORT
UNDER SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED SEPTEMBER 30, 1997
FDIC INSURANCE CERTIFICATE NUMBER 00114-7
------------------------
SANTA MONICA BANK
(Incorporated in the State of California on Feb. 3/1928)
IRS EMPLOYER IDENTIFICATION NO. 95-1191910
1251 FOURTH STREET
SANTA MONICA, CALIFORNIA 90401
TELEPHONE NO. (213) 394-9611
------------------------
SANTA MONICA BANK (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION
13 OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS, AND
(2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES
/X/ NO / /
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3
<PAGE>
SANTA MONICA BANK
STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
PERIOD ENDED SEPTEMBER 30,
------------------------------
1997 1996
-------------- --------------
<S> <C> <C>
ASSETS
Cash and Due from Banks.......................................................... $ 39,329,633 $ 45,494,274
-------------- --------------
Federal funds sold............................................................... 79,000,000 59,000,000
Investment securities available for sale......................................... 150,282,461 125,546,296
Loans 384,511,292 365,517,125
Less: unearned income.......................................................... 128,262 114,011
allowance for possible loan losses......................................... 8,516,632 9,407,156
Loans, net................................................................. 375,866,398 355,995,958
Bank premises and equipment, net................................................. 10,288,131 10,495,227
Real estate owned................................................................ 3,310,647 9,935,820
Accrued interest receivable...................................................... 3,921,612 4,347,289
Net deferred tax asset........................................................... 359,723 171,132
Other assets 1,163,743 1,305,364
-------------- --------------
Total assets................................................................... $ 663,522,348 $ 612,291,360
-------------- --------------
-------------- --------------
LIABILITIES
Noninterest bearing deposits..................................................... $ 179,291,496 $ 164,433,892
Interest bearing deposits........................................................ 400,341,306 373,149,183
-------------- --------------
Total Deposits................................................................. 579,632,802 537,583,075
-------------- --------------
-------------- --------------
Mortgage indebtedness............................................................ 1,966,977 1,986,715
Other liabilities................................................................ 3,045,384 2,424,014
Total liabilities.............................................................. $ 584,645,163 $ 541,993,804
-------------- --------------
-------------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Capital Stock (authorized 50,000,000 and 10,000,000 shares of $3 par value for
1997 and 1996, respectively, issued and outstanding, 7,077,332 shares for 1997
and 1996)...................................................................... 21,231,996 21,231,996
Surplus.......................................................................... 2,982,631 2,982,631
Undivided Profits................................................................ 54,251,465 45,699,959
Unrealized holding gains on securities, net of income taxes of $285,674 and
$266,132 for 1997 and 1996 respectively........................................ 411,093 382,970
-------------- --------------
Total Stockholders' equity..................................................... $ 78,877,185 $ 70,297,556
-------------- --------------
-------------- --------------
Total liabilities and stockholders' equity..................................... $ 663,522,348 $ 612,291,360
-------------- --------------
-------------- --------------
</TABLE>
Standby letters of credit total $1,998,549 at September 30, 1997 and $1,106,793
at September 30, 1996.
4
<PAGE>
SANTA MONICA BANK
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDING FISCAL YEAR TO DATE
SEPT. 30, NINE MONTHS ENDING SEPT. 30,
---------------------------- ----------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans.......................... $ 9,326,804 8,766,387 27,433,152 26,323,333
Interest on investment securities:
Taxable........................................... 2,198,956 1,610,794 5,779,475 4,504,883
Tax-exempt........................................ 186,199 268,703 635,476 826,140
Other............................................... 1,027,777 746,670 2,707,673 1,841,266
------------- ------------- ------------- -------------
Total interest Income............................. 12,739,736 11,392,554 38,555,776 33,495,622
------------- ------------- ------------- -------------
Interest Expense
Interest on deposits................................ 3,949,691 3,290,418 10,847,665 9,916,843
Interest on federal funds purchased
Interest on other liabilities....................... 49,258 48,503 146,858 146,414
------------- ------------- ------------- -------------
Total interest expense............................ 3,998,949 3,338,921 10,994,523 10,063,257
------------- ------------- ------------- -------------
Net interest Income................................. 8,740,787 8,053,633 25,561,253 23,432,365
------------- ------------- ------------- -------------
Provision for loan losses
Net interest income after provision for loan
losses............................................ 8,740,787 8,053,633 25,561,253 23,432,365
------------- ------------- ------------- -------------
Noninterest income
Trust department income............................. 819,229 746,162 2,430,785 2,190,122
Service charges on deposits accounts................ 803,852 775,689 2,373,793 2,381,891
Other service charges, commission and fees.......... 119,605 128,058 353,484 346,862
Other income........................................ 53,603 34,203 172,040 182,749
------------- ------------- ------------- -------------
Total noninterest income.......................... 1,796,289 1,684,112 5,330,102 5,101,624
------------- ------------- ------------- -------------
Noninterest Expense
Salaries............................................ 2,897,525 2,773,641 8,488,997 8,239,774
Profit sharing and other employee benefits.......... 745,520 695,448 2,218,092 2,176,270
Net occupancy expense of bank premises.............. 637,003 633,056 1,887,531 1,877,871
Furniture and equipment expense..................... 423,533 397,634 1,241,385 1,183,241
FDIC assessment..................................... 17,263 38,070 90,457 296,541
Legal fees.......................................... 147,334 298,498 904,398 1,023,427
Loss (gain) on sale of OREO......................... (21,942) (24,949) (546,855) 51,940
OREO related expenses............................... (16,347) 83,953 (9,246) 1,207,029
Other operating expense............................. 1,173,938 1,164,744 3,415,242 3,480,292
Merger costs........................................ 841,377 841,377
------------- ------------- ------------- -------------
Total noninterest expense......................... 6,845,204 6,060,095 18,531,378 19,536,385
------------- ------------- ------------- -------------
Income before income taxes.......................... 3,691,872 3,677,650 12,359,977 8,997,604
Applicable income tax expense....................... 1,333,985 1,033,184 4,338,459 2,246,852
------------- ------------- ------------- -------------
Net income.......................................... $ 2,357,887 2,644,466 8,021,518 6,750,752
------------- ------------- ------------- -------------
Net income per share................................ $ 0.33 0.37 1.13 0.95
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
See notes to Consolidated Financial Statements
5
<PAGE>
SANTA MONICA BANK
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
UNREALIZED HOLDING
GAINS ON
CAPITAL UNDIVIDED SECURITIES NET OF
STOCK SURPLUS PROFITS INCOME TAXES TOTAL
------------ ---------- ------------ ------------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995............ 21,231,996 2,982,631 39,656,939 594,838 64,466,404
Net Income............................ 6,750,752 6,750,752
Cash dividend declared at $.10 per
share............................... (707,732) (707,732)
Net change in unrealized holding gains
(losses) on investment securities
available for sale, net of income
taxes............................... (211,868) (211,868)
------------ ---------- ------------ ---------- ------------
Balance, September 30, 1996........... 21,231,996 2,982,631 45,699,959 382,970 70,297,556
------------ ---------- ------------ ---------- ------------
------------ ---------- ------------ ---------- ------------
Balance, December 31, 1996............ 21,231,996 2,982,631 48,211,600 549,080 72,975,307
Net Income............................ 8,021,518 8,021,518
Cash dividends at $.28 per share...... (1,981,653) (1,981,653)
Net chance in unrealized holding gains
(losses) on investment securities
available for sale, net of income
taxes............................... (137,987) (137,987)
------------ ---------- ------------ ---------- ------------
Balance, September 30, 1997........... 21,231,996 2,982,631 54,251,465 $ 411,093 78,877,185
------------ ---------- ------------ ---------- ------------
------------ ---------- ------------ ---------- ------------
</TABLE>
See notes to Consolidated Financial Statements.
6
<PAGE>
SANTA MONICA BANK
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
Reconciliation of net income to net cash provided by operating activities
Net income..................................................................... $ 8,021,518 $ 6,750,752
Adjustments to reconcile net income to net cash provided by operating
activities:
Accretion of discount on investments......................................... (1,512,314) (660,028)
Provision for loan losses....................................................
Accretion of deferred loan fees and costs.................................... (911,635) (502,782)
Depreciation and amortization................................................ 1,018,721 787,091
Change in accrued interest receivable........................................ (425,485) (212,811)
Change in accrued interest payable........................................... (11,604) (39,528)
Provision for deferred taxes.................................................
Change in accrued taxes on income (excluding deferred activity).............. (508,182) 171,132
Change in accounts payable and other liabilities............................. 543,886 771,152
--------------- ---------------
Total Adjustments............................................................ (1,806,613) 314,226
Net cash provided by operating activities.................................. $ 6,214,905 $ 7,064,978
--------------- ---------------
--------------- ---------------
Cash flows from investing activities:
Proceeds from sale of investment securities.................................. $ 299,020,000 $ 135,708,723
Purchase of investment securities............................................ (306,651,081) (126,655,772)
Net increase in loans........................................................ (9,966,852) (2,198,164)
Loan origination fees received............................................... 788,336 429,613
Proceeds from sale of other real estate owned................................ 5,295,395 8,622,083
Purchase of Bank premises and equipment...................................... (989,686) (413,180)
Other assets................................................................. 415,449 625,884
--------------- ---------------
Net Cash used in investing activities...................................... $ (12,088,439) $ 16,119,187
Cash flows from financing activities:
Net (decrease) increase in demand deposits, Now accounts and savings
accounts................................................................... $ 18,220,035 $ (10,117,380)
Net increase (decrease) in certificates of deposits.......................... 7,429,760 1,832,996
Dividends paid............................................................... (1,981,653) (707,732)
--------------- ---------------
Net cash provided by financing activities.................................. $ 23,668,142 $ (8,992,116)
Net increase in cash and cash equivalents...................................... 17,794,608 14,192,049
Cash and cash equivalents, beginning of year................................... 100,535,025 90,302,225
--------------- ---------------
Cash and cash equivalents, end of year......................................... $ 118,329,633 $ 104,494,274
--------------- ---------------
--------------- ---------------
</TABLE>
7
<PAGE>
SANTA MONICA BANK
Note 1: In the opinion of management, the accompanying unaudited financial
statement of Santa Monica Bank, includes all adjustments necessary to present
fairly its financial position as of September 30, 1997, its results of
operations and its cash flows for the quarter then ended.
Note 2: Income taxes for period ended 9-30-97 and 9-30-96.
Total tax expense amounted to $4,338,459 in 1997 and $2,246,852 in 1996
(effective rates of 35.2% and 20.8% respectively) a total less than the amount
of $4,325,992 in 1997 and $3,059,185 in 1996, computed by the U.S. Federal
Income Tax rate of 35% in 1997 and 34% in 1996, to income before tax. The
reasons for this difference are as follows:
<TABLE>
<CAPTION>
1997 1996
-------------------------- ------------------------
% OF PRETAX % OF PRETAX
AMOUNT INCOME AMOUNT INCOME
------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Tax expense at statutory rate...................................... $ 4,325,992 35% 3,059,185 34%
Increase (reduction) in taxes resulting from:
Tax exempt interest................................................ (203,073) (1.6) (225,043) (2.8)
State franchise taxes, net of federal income tax benefits.......... 971,058 7.9 359,100 4.1
Merger cost........................................................ 294,482 2.4
Reduction in valuation allowance................................... (1,050,000) (6.5) (917,000) (10.2)
Other.............................................................. 610
------------- ----- ----------- -----
Total.............................................................. 4,338,459 35.2 2,246,852 20.8
------------- ----- ----------- -----
------------- ----- ----------- -----
</TABLE>
Note 3: In March of 1997 the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128 Earnings Per Share
(EPS) which changes among other things the method of computing earnings per
share as follows:
Replacement of primary EPS with basic EPS. Basic EPS is computed by dividing
reported earnings available to common stockholders by weighted average shares
outstanding. Use of the average share price for the period when applying the
treasury stock method in computing diluted EPS.
Statement 128 is effective for financial statements ending after December
15, 1997. Early adoption is prohibited. Because of the limited number of options
outstanding management does not believe the adoption of SFAS No. 128 will have a
material effect on the financial position or results of operations of the Bank.
Note 4: Cash dividends declared:
On July 23, 1997, the Board of Directors declared a cash dividend of $.10
per share, to be paid on August 29, 1997 to stockholders of record August 15,
1997.
Note 5: Letters of Credit
Standby letters of credit total $1,998,549 at September 30, 1997 and
$962,883 at September 30, 1996.
Note 6: Legal Proceedings
The Bank is continually faced with legal proceedings in the ordinary conduct
of its business, which in the opinion of the counsel and the judgement of
management will not materially affect its financial position.
8
<PAGE>
SANTA MONICA BANK
MANAGEMENT'S ANALYSIS OF QUARTERLY INCOME STATEMENTS
For the third quarter of 1997, income before taxes was $3,691,872 compared
to 1996 third quarter earnings of $3,677,650. Net income for the quarter totaled
$2,357,887 or $.33 per share, down $286,579 or 11% from $2,644,466 or $.37 per
share in the third quarter in 1996. The slight decline in net income is directly
attributed to an $841,377 charge for merger related costs, or the equivalent of
$.12 per share.
For the nine months ending September 30, 1997, income before taxes was
$12,359,977, or 37% over $8,997,604 a year ago. Net income of $8,021,518 or
$1.13 per share, was an increase of 19% over $6,750,752 or $.95 per share
reported in 1996.
Our progress continued to be supported by a decline in real estate owned,
which decreased 41% to $3.3 million from $5.6 million reported in the previous
quarter ending June 1997. Delinquent and non-accrual loans are down for the
year. Credits past due 30 to 89 days totaled $2,614,734, down 9% from $2,884,935
in the quarter ended September 1996. Loans past due over 90 days and still
accruing remain at zero. Non-accrual loans totaled $2,030,207 or .53% of total
loans, a 75% decrease from September 1996 when non-accruals totaled $8.1 million
or 2.20% of total loans. During the same period, net loans grew $20 million from
$355.9 million to $375.9 million or 5.6%.
Our solid capital position exceeds all regulatory requirements for
well-capitalized banks. Equity capital to assets totals 11.48%. Equity capital
(Tier 1) to risk-weighted assets was 19.24% and total capital, (Tier 1 and Tier
2) to risk-weighted assets was 20.50%.
The pending merger announced on July 30, 1997 between Santa Monica Bank and
Western Bancorp continues to move forward smoothly. The necessary applications
for approval of the merger have been filed with the appropriate regulatory
authorities. After all regulatory approvals have been received, a joint proxy
statement containing complete details and special meeting dates will be mailed
to stockholders some time in early to mid November. As more details become
available, our stockholders and customers will be kept fully informed.
Net interest income after provision for loan losses for the first nine
months of 1997 amounted to $25,561,253 or 9% increase over the first nine months
of 1996 and 18% increase over the first nine months of 1995.
Total interest income during the first nine months of 1997 increase 9% to
$36,555,776 from $33,495,622 in 1996. Total interest expense increase 9% to
$10,994,523 from $10,063,257 in 1996.
Total other operating income, which is derived from trust, escrow and
service charges increase 4% to $5,330,102 for the first nine months of 1997, as
compared with $5,101,624 for the same period in 1996. Total other operating
expense, which includes staff, occupancy and other expenses, for the first nine
months of 1997, was $18,531,378 or a 5% decrease over the same period in 1996.
Total assets reached $663,522,348 at September 30, 1997, or 8% increase as
compared to $612,291,360 at September 30, 1996. Loans increased 6% to
$375,866,398 at September 30, 1997, from $355,995,958 at September 30, 1996.
Deposits amounted to $579,632,802 at September 30, 1997, an increase of 8% from
September 30, 1996.
9
<PAGE>
SANTA MONICA BANK
MANAGEMENT'S ANALYSIS OF QUARTERLY INCOME STATEMENTS--(CONTINUED)
Stockholders' equity at September 30, 1997, amounted to $78,877,185 an
increase of 12% over September 30, 1996. Based on 7,077,332 shares outstanding,
the per share equity value of the stock increased to $11.15 at September 30,
1997 from $9.93 at September 30, 1996.
<TABLE>
<CAPTION>
1ST NINE MONTHS 1ST NINE MONTHS
1997 1996
--------------- ---------------
<S> <C> <C>
<CAPTION>
PROFITABILITY RATIOS:
- -------------------------------------------------------------------------------
<S> <C> <C>
Return on average assets....................................................... 1.64% 1.48%
Return on average stockholders' equity......................................... 14.24% 13.56%
</TABLE>
<TABLE>
<CAPTION>
CAPITAL RATIOS: SEPT. 30, 1997 SEPT. 30, 1996
- ------------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
Tier 1 Capital to Adjusted Assets.............................................. 11.48% 11.48%
Tier 1 Capital to Risk-Weighted Assets......................................... 19.24% 18.48%
Total Capital to Risk-Weighted Assets.......................................... 20.50% 19.74%
</TABLE>
10
<PAGE>
SANTA MONICA BANK
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the bank has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
<TABLE>
<C> <S> <C>
SANTA MONICA BANK
/S/ PABLO M. ERCILLA /s/ DARIO O. QUIROGA
- ------------------------------ ------------------------------------------
Pablo M. Ercilla Dario O. Quiroga
VICE PRESIDENT\CONTROLLER SR. VICE PRESIDENT\CASHIER
CHIEF FINANCIAL OFFICER
Date: October 22, 1997 /s/ AUBREY L. AUSTIN
------------------------------------------
Aubrey L. Austin
PRESIDENT
CHIEF EXECUTIVE OFFICER
</TABLE>
11
<PAGE>
SIGNATURE
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 hereunder duly authorized.
Dated: October 31, 1997
<TABLE>
<S> <C> <C>
WESTERN BANCORP
By: /s/ ARNOLD C. HAHN
-----------------------------------------
Name: Arnold C. Hahn
TITLE: EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
</TABLE>
12
