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PROSPECTUS
2,297,950 SHARES
WESTERN BANCORP
COMMON STOCK
This Prospectus relates to the offer and sale from time to time by the
holders (the "Selling Shareholders") thereof of up to 2,297,950 shares (the
"Shares") of common stock, no par value ("Common Stock") of Western Bancorp (the
"Company"). The Company is registering the Shares pursuant to the terms of the
Standby Stock Purchase Agreements (the "Standby Stock Purchase Agreements")
entered into in connection with the acquisition of Santa Monica Bank by and
between the Company and certain holders of Common Stock. The registration of the
Shares does not necessarily mean that any of the Shares will be offered and sold
by the Selling Shareholders. See "Securities to be Offered" and "Plan of
Distribution."
The Common Stock is traded on the Nasdaq National
Market-Registered Trademark- under the symbol "WEBC."
The Selling Shareholders from time to time may offer and sell the Shares
held by them directly or through agents or broker-dealers on terms to be
determined at the time of sale. To the extent required, the names of any agent
or broker-dealer and applicable commissions or discounts and any other required
information with respect to any particular offer will be set forth in an
accompanying Prospectus Supplement. See "Plan of Distribution." Each of the
Selling Shareholders reserves the sole right to accept or reject, in whole or in
part, any proposed purchase of the Shares to be made directly or through agents.
The Company will not receive any of the proceeds from the sale of Shares by
the Selling Shareholders but has agreed to bear certain expenses relating to
registration of the Shares under Federal and state securities laws.
The Selling Shareholders and any agents or broker-dealers that participate
with the Selling Shareholders in the distribution of Shares may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), and any commission received by them and any profit on the
resale of the Shares may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Registration Rights" for indemnification
arrangements between the Company and the Selling Shareholders.
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SEE "INVESTMENT CONSIDERATIONS" BEGINNING ON PAGE 4 FOR CERTAIN
CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE COMMON STOCK.
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.
The date of this Prospectus is June 15, 1998.
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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, the Company files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information filed can be inspected and copied at the
Commission's Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.,
20549, and at the following regional offices of the Commission: Seven World
Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Commission also maintains
a World Wide Web site that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
Commission. The address of the Commission's site is http://www.sec.gov. In
addition, the Company's Common Stock is traded on the Nasdaq National
Market-Registered Trademark- and similar information concerning the Company can
be inspected and copied at the offices of the National Association of Securities
Dealers, Inc., Reports Section, 1735 K Street, N.W., Washington, D.C.
20006-1500.
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement") (of which this Prospectus is a part) under
the Securities Act with respect to the Shares. This Prospectus does not contain
all of the information set forth in the Registration Statement, certain portions
of which have been omitted as permitted by the rules and regulations of the
Commission. Statements contained in this Prospectus as to the contents of any
contract or other documents are not necessarily complete, and in each instance,
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference and the exhibits and schedules thereto. For
further information regarding the Company and the Shares, reference is hereby
made to the Registration Statement and such exhibits and schedules, which may be
obtained from the Commission at its principal office in Washington, D.C. upon
payment of the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company under the Exchange
Act with the Commission and are incorporated herein by reference:
a. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
b. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998;
c. The Company's Current Reports on Form 8-K dated February 11, 1998
and April 30, 1998 and on Form 8-K/A dated April 7, 1998.
d. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 10 (File No. 2-85442).
Each document filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of all Shares to which this Prospectus relates
shall be deemed to be incorporated by reference in this Prospectus and to be
part hereof from the date of filing such documents.
Any statement contained herein or 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 the applicable Prospectus Supplement) 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 such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
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Copies of all documents that are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered upon written or oral request. Requests should be
directed to Julius G. Christensen, Executive Vice President, General Counsel and
Secretary, Western Bancorp, 4100 Newport Place, Suite 900, Newport Beach,
California 92660, telephone number: (949) 863-2459.
ALL REFERENCES TO THE "COMPANY" INCLUDE WESTERN BANCORP, THOSE ENTITIES
OWNED OR CONTROLLED BY WESTERN BANCORP AND PREDECESSORS OF WESTERN BANCORP,
UNLESS THE CONTEXT INDICATES OTHERWISE.
THE COMPANY
The Company is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended, and its principal business is to serve as a
holding company for its banking subsidiaries, Southern California Bank ("SCB")
and Santa Monica Bank ("SMB" and, together with SCB, the "Banks"). The Company
was organized on May 20, 1983 as a California corporation and commenced
operation as a bank holding company on June 18, 1984. At March 31, 1998, the
Company had total assets, total securities, net loans, goodwill, total deposits
and total shareholders' equity of approximately $2.1 billion, $257 million, $1.2
billion, $148 million, $1.8 billion and $285 million, respectively. The
Company's principal business is to provide, through the Banks, financial
services throughout Southern California. The Company has no industry segments
other than banking. The Banks are full-service community banks offering a broad
range of banking products and services, including accepting time and demand
deposits, originating commercial, consumer and real estate loans, providing
trust and escrow services and making other investments. On January 27, 1998, the
Company acquired Santa Monica Bank (the "SMB Acquisition") through the merger of
Santa Monica Bank with and into Western Bank, a wholly-owned subsidiary of the
Company at that time. As part of the SMB Acquisition, the name of Western Bank
was changed to "Santa Monica Bank." Upon the SMB Acquisition becoming effective,
each share of common stock, $3.00 par value, of Santa Monica Bank (the "SMB
Common Stock") issued and outstanding at the time was converted into the right
to receive either (i) $28.00 in cash (the "Cash Consideration") or (ii) 0.875
shares of Common Stock (the "Stock Consideration"). Of the 7,084,244 shares of
SMB Common Stock outstanding at the time of the SMB Acquisition, approximately
57.3 percent elected to receive the Cash Consideration, resulting in a payment
of approximately $113,723,000 in the aggregate, and approximately 42.7 percent
received the Stock Consideration, resulting in the issuance of approximately
2,646,000 shares of Common Stock.
To fund a portion of the Cash Consideration paid in the SMB Acquisition, on
January 27, 1998, the Company issued 2,327,550 shares of Common Stock (the "1998
Private Placement Shares") for $28.00 per share in a private placement (the
"1998 Private Placement") exempt from registration under the Securities Act
pursuant to Regulation D of the Securities Act. The 1998 Private Placement
Shares were sold to certain "accredited investors" within the meaning of Rule
501(a) under the Securities Act, some of whom are officers, directors and/or
shareholders of the Company (the "1998 Private Placement Investors"). The 1998
Private Placement was effected pursuant to the several Standby Stock Purchase
Agreements entered into by and between the Company and the 1998 Private
Placement Investors. Pursuant to the Standby Stock Purchase Agreements, the
Company agreed to file under the Securities Act, by no later than May 27, 1998,
a "shelf" registration statement providing for the registration of the 1998
Private Placement Shares.
The Company has entered into an agreement to acquire the Bank of Los Angeles
("BKLA") pursuant to which shareholders of BKLA will receive 0.4224 shares of
Common Stock for each share of BKLA's common stock (the "BKLA Acquisition").
BKLA is a California state chartered bank with approximately $275 million in
total assets. Subject to regulatory and shareholder approvals, the BKLA
Acquisition is expected to close in the fourth quarter of 1998, at which time
the Company expects to issue approximately 2,400,000 shares of Common Stock in
connection with the acquisition.
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The Company's principal executive offices are located at 4100 Newport Place,
Suite 900, Newport Beach, California 92660, and its telephone number is (949)
863-2300.
SECURITIES TO BE OFFERED
This Prospectus relates to the offer and sale from time to time by the
Selling Shareholders of up to 2,297,950 shares of Common Stock. The Company is
registering the Shares pursuant to the terms of the Standby Stock Purchase
Agreements. The registration of the Shares does not necessarily mean that any of
such Shares will be offered and sold by the Selling Shareholders.
USE OF PROCEEDS
The Company will not receive any of the proceeds of the sale of Shares by
the Selling Shareholders but has agreed to bear certain expenses relating to
registration of the Shares under Federal and state securities laws.
INVESTMENT CONSIDERATIONS
Prospective investors should carefully consider the following information in
conjunction with the other information contained in this Prospectus and any
applicable Prospectus Supplement before purchasing the Shares offered hereby.
FORWARD-LOOKING STATEMENTS MAY NOT PROVE ACCURATE
When used or incorporated by reference in this Prospectus or any applicable
Prospectus Supplement, the words "anticipate," "estimate," "expect," "project,"
"believe" and similar expressions are intended to identify forward-looking
statements. Such statements are subject to certain risks, uncertainties and
assumptions including those set forth below. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated, expected
or projected. Several key factors that have a direct bearing on the Company's
ability to attain its goals are discussed below.
COMPETITION
The banking business in California generally, and in the Company's service
area in particular, is highly competitive with respect to both loans and
deposits and is dominated by a relatively small number of major financial
institutions that have many offices operating throughout wide geographic areas.
In addition, there are numerous other independent commercial banks and savings
associations within the Company's primary service area, many of which have
greater resources, greater capital and, in some cases, less stringent regulatory
limitations. Certain of the Company's competitors may be better able to respond
to changing capital and other regulatory requirements and may be better able to
maintain or improve market share.
RAPID GROWTH
The Company has experienced rapid growth in total assets, primarily due to
several recent significant acquisitions. In the first of such acquisitions, the
Company acquired Western Bank on September 30, 1996, thereby increasing its
total assets, as of September 30, 1996, from approximately $80 million to
approximately $490 million, an increase of 513%. In June 1997, the Company
merged (the "CCB Merger") with California Commercial Bankshares ("CCB"), thereby
acquiring National Bank of Southern California and increasing the Company's
total assets from approximately $512 million at December 31, 1996 to
approximately $860 million at June 30, 1997, an increase of 68%. As a result of
the Company's merger (the "SCB Merger") with SC Bancorp, which was consummated
on October 10, 1997, the Company's total assets increased from approximately
$867 million at September 30, 1997 to $1.38 billion at December 31, 1997, an
increase of 60%. Following the SMB Acquisition, as of March 31, 1998, the
Company's total assets
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increased to $2.08 billion, an increase of approximately $700 million or 51%
from $1.38 billion at December 31, 1997. Assuming the consummation of the BKLA
Acquisition, the Company would add approximately $280 million of additional
assets. The ability of the Company to operate effectively following this rapid
growth will depend in part on its ability to integrate the operations of the
recently acquired entities and its ability to attract and retain key personnel.
If the integration of Western Bank, CCB, SCB, SMB and BKLA does not proceed as
anticipated, the results of operations of the Company could be adversely
affected. Also, there can be no assurance that the Company will be able to
realize the operating efficiencies that the management of the Company expects to
achieve through the CCB Merger, the SCB Merger, the SMB Acquisition and the BKLA
Acquisition.
In addition, due to the substantial size of these acquisitions, any
comparison of financial data as of and for the time periods prior to such
acquisitions may not be meaningful.
GENERAL BUSINESS RISK
The business of the Company is subject to various business risks. The volume
of loan originations is dependent upon demand for loans of the type originated
and serviced by the Company. The level of consumer confidence, fluctuations in
real estate values, fluctuations in prevailing interest rates and fluctuations
in investment returns expected by the financial community could combine to make
loans of the type originated by the Company less attractive. In addition, the
Company may be adversely affected by other factors that could (a) increase the
cost to the borrower of loans originated by the Company, (b) create alternative
lending sources for such borrowers or (c) increase the cost of funds of the
Company at rates faster than any increase in interest income, thereby narrowing
its net interest rate margins. Although the Company also has seen continued
improvement in loan demand consistent with overall market growth during the
continued recovery of the Southern California economy, the increase in demand to
date has not been sufficient to permit the Company fully to utilize new deposits
to fund loans, and accordingly, the Company has maintained a significant portion
of its funds in securities and federal funds sold. In addition, competition for
loans has increased, and some lenders have shown a willingness to lend on terms
that management of the Company is unwilling to match due to its credit
philosophy. Management of the Company believes that loan demand will continue to
improve, but there can be no assurance that there will be sufficient loan demand
in the future that matches the Company's credit philosophy and keeps pace with
increases in deposits such that the asset mix desired by the Company can be
achieved and maintained. In addition, governmental interventions through
elimination of tax benefits for home equity loans, regulation of an increased
scope of loans or introduction of additional regulations aimed at mortgage loans
could also adversely affect the business in which the Company is engaged.
In the ordinary course of business, the Company is subject to claims made
against it by borrowers, depositors and investors arising from, among other
things, losses that are claimed to have been incurred as a result of (a) alleged
breaches of fiduciary obligation, (b) alleged misrepresentations, errors or
omissions by employees and officers (including appraisers), (c) alleged
incomplete documentation or (d) alleged failure by the Company to comply with
applicable laws and regulations. The Company believes that any liability with
respect to any currently asserted claims or legal actions against the Company is
not likely to be material to the consolidated financial position or results of
operations of the Company; however, any claims asserted in the future may result
in legal expense or liabilities that could have a material adverse effect on the
financial positions and results of operations of the Company.
CONCENTRATION OF OPERATIONS; RECESSIONARY ENVIRONMENTS; DECLINE IN REAL ESTATE
VALUES
The business activities of the Company currently are focused in Southern
California, with the majority of its business concentrated in Los Angeles and
Orange counties. The business of the Company is expected to continue to be
concentrated in Southern California for the foreseeable future. Although the
Company intends to expand within Southern California, there can be no assurance
when or if such expansion will take place. Consequently, the results of
operations and financial condition of the Company are dependent
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upon general trends in the Los Angeles County, Orange County and Southern
California economies and residential and commercial real estate markets. The
risks to which the business of the Company is subject become more acute during
an economic slow-down or recession such as that experienced during the recent
California recession. During such periods, delinquencies and foreclosures
generally increase and can result in increased numbers of, and larger, claims
and legal actions and in a decline in demand for the services provided by the
Company. In addition, a significant decline in market values of properties of
the type that secure loans originated by the Company would reduce homeowners'
equity in their homes and businesses' equity in their properties, thereby
reducing their borrowing power and also weakening collateral coverage on loans
made previously by the Company. Such a decline could also diminish the market
for loans originated by the Company. Any of the foregoing could have a material
adverse effect on the financial position and results of operations of the
Company, and could have a greater adverse impact on the Company than on certain
competitors that may have greater resources and capital. In addition, the
concentration of the Company's operations in Los Angeles and Orange counties
exposes the Company to greater risk than other banking companies with a wider
geographic base in the event of catastrophes, such as earthquakes, fires and
floods, in this region.
INTEREST RATE RISK
It is expected that the Company, through the Banks, will continue to realize
income primarily from the differential or "spread" between the interest earned
on loans, securities and other interest-earning assets and interest paid on
deposits, borrowings and other interest-bearing liabilities. Net interest
spreads are affected by the difference between the maturities and repricing
characteristics of interest-earning assets and interest-bearing liabilities. In
addition, loan volume and yields are affected by market interest rates on loans,
and rising interest rates generally are associated with a lower volume of loan
originations. There can be no assurance that the Company's interest rate risk
will be minimized or eliminated. In addition, an increase in the general level
of interest rates may adversely affect the ability of certain borrowers to pay
the interest on, and principal of, their obligations. Accordingly, changes in
levels of market interest rates could materially adversely affect the Company's
net interest spread, asset quality, loan origination volume and overall results
of operation.
SHARES ELIGIBLE FOR FUTURE SALE; DILUTION
Shares of Common Stock eligible for future sale could have a dilutive effect
on the market for Common Stock and could adversely affect market prices.
As of March 31, 1998, the Restated Articles of Incorporation of the Company
authorized 100,000,000 shares of Common Stock, of which 15,689,866 shares were
outstanding. As of March 31, 1998, pursuant to the Company's stock option plans,
options to purchase 408,245 shares of Common Stock with exercise prices of
between $5.25 and $32.375 have been granted and 644,394 additional options are
available to be granted to the Company's directors, officers and certain key
employees. As of March 31, 1998, the Company also had outstanding warrants to
purchase an additional 140,675 shares of Common Stock with exercise prices of
between $13.77 and $16.83.
It is the Company's intention to pursue acquisitions of other financial
institutions from time to time where such acquisitions are believed by the
Company to enhance shareholder value or satisfy other strategic objectives. Such
acquisitions, if any, could be accomplished by the issuance of additional shares
of Common Stock or other securities convertible into or exercisable for Common
Stock. Sales of substantial amounts of Common Stock in connection with the
issuance of shares in any future acquisition could adversely affect the market
price of Common Stock.
In addition, Hovde Capital, Inc., as a purported assignee of Financial
Institution Partners, L.P. (collectively, "FIP"), has asserted a right under an
agreement between FIP and CCB to purchase 266,659 additional shares of common
stock of CCB at $6.75 per share and to an ongoing right of first refusal to
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maintain FIP's beneficial ownership interest in CCB. FIP seeks specific
enforcement of this agreement, but does not in its complaint specify whether the
common stock it believes it has the right to purchase is that of CCB or of the
Company. Nor does FIP specify whether the number of shares it seeks to purchase
or have a right of first refusal to purchase, if in Common Stock, is subject to
adjustment in any way as a result of the CCB Merger. The Company has filed a
motion for partial summary judgment against FIP's right of first refusal claim.
That motion is pending. The Company has also filed a counterclaim against FIP
and related persons. The management of the Company considers FIP's claims to be
without merit and believes that FIP has no contractual right or current right of
first refusal to purchase any shares of common stock of CCB or the Company. If,
however, FIP were entitled to purchase 266,659 additional shares of Common
Stock, the management of the Company estimates, for illustrative purposes, that
the diluted shares outstanding, for the purpose of computing earnings per share,
would have increased by approximately 2.5% for the quarter ended March 31, 1998,
resulting in earnings per share dilution of approximately 2.4%.
REGULATION
The operations of the Company are subject to extensive regulation by
federal, state and local governmental authorities and are subject to various
laws and judicial and administrative decisions imposing requirements and
restrictions on part or all of their respective operations. The Company believes
that it is in substantial compliance in all material respects with applicable
federal, state and local laws, rules and regulations. Because the business of
the Company is highly regulated, the laws, rules and regulations applicable to
the Company are subject to regular modification and change. There are currently
proposed various laws, rules and regulations that, if adopted, would impact the
Company. There can be no assurance that these proposed laws, rules and
regulations, or other such laws, rules or regulations, will not be adopted in
the future, which could make compliance much more difficult or expensive,
restrict the Company's ability to originate, broker or sell loans, further limit
or restrict the amount of commissions, interest or other charges earned on loans
originated or sold by the Company or otherwise adversely affect the business or
prospects of the Company.
LIMITED MARKET FOR COMMON STOCK
There is currently only a limited trading market for Common Stock, which was
designated for quotation on the Nasdaq National Market-Registered Trademark- on
June 3, 1997. There can be no assurance that an active trading market for Common
Stock will develop, or if developed, will continue, or that shareholders of the
Company will be able to resell their securities or otherwise liquidate their
investment, if at all, without considerable delay or considerable impact on the
sales price.
There can be no assurance as to the market value of Common Stock, which
market value may be significantly affected by various factors, including but not
limited to announcements of expanded services by the Company or its competitors,
acquisitions of related companies and variations in quarterly operating results,
as well as by the dilutive effects of the matters described above in "--Shares
Eligible for Future Sale; Dilution." The limited trading market for Common Stock
may cause fluctuations in the market value of Common Stock to be exaggerated,
leading to price volatility in excess of that which would occur in a more active
trading market.
LACK OF MANAGING UNDERWRITER
The Selling Shareholders may from time to time offer the Shares through
underwriters, dealers or agents. Alternatively, the Shares may be sold from time
to time by any of the Selling Shareholders directly to purchasers thereof. See
"Plan of Distribution." If the sales of the Shares by the Selling Shareholders
are not coordinated or controlled by a managing underwriter, the Company cannot
be certain that the market for the Shares will be free from practices prohibited
by Regulation M under the Exchange Act. In addition, certain Selling
Shareholders may be deemed to be underwriters, as such term is defined by the
Securities Act, and may therefore be subject to the restrictions on and
liabilities of underwriters pursuant to the
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Securities Act. Selling Shareholders will, during any distribution period, also
be subject to the restrictions on their purchases and sales of Shares as set
forth in Regulation M under the Exchange Act.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company as of March 31, 1998 consists of
100,000,000 shares of Common Stock, of which 15,689,866 shares are issued and
outstanding as of March 31, 1998 and 5,000,000 shares of serial preferred stock,
no par value (the "Preferred Stock"), none of which is outstanding.
The Preferred Stock may be divided into such number of series as the Board
of Directors of the Company (the "Board") may determine. The Board is authorized
to determine and alter the rights, preferences, privileges and restrictions
granted to or imposed upon any wholly unissued series of Preferred Stock, and to
fix the number of shares of any series of Preferred Stock and the designation of
any such series of Preferred Stock. The Board, within the limits and
restrictions stated in any resolution or resolutions of the Board originally
fixing the number of shares constituting any series, may increase or decrease
(but not below the number of shares of such series then outstanding) the number
of shares of any series subsequent to the issue of shares of that series.
Holders of shares of Common Stock are entitled to one vote for each share of
record on all matters voted upon by shareholders of the Company, except that in
connection with the election of directors, shares may be voted cumulatively if
notice of the intention to do so is given by a shareholder to the Company.
Shares of Common Stock are not subject to redemption, conversion or sinking fund
provisions. In the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities and liquidation preferences of any
outstanding shares of Preferred Stock. Holders of shares of Common Stock have no
preemptive, subscription, redemption or conversion rights with respect to such
shares. Holders of Common Stock are entitled to receive dividends declared by
the Board out of funds legally available therefor under the laws of the State of
California, subject to the rights of holders of any Preferred Stock that may be
issued after the date hereof. The outstanding shares of Common Stock are duly
authorized, validly issued, fully paid and nonassessable.
INDEMNIFICATION OF DIRECTORS AND OFFICERS AND LIMITATION ON DIRECTORS' AND
OFFICERS' LIABILITY
Section 317 of the California General Corporation Law (the "CGCL")
authorizes a court to award, or a corporation's Board of Directors to grant,
indemnity to directors, officers and employees in terms sufficiently broad to
permit such indemnification under certain circumstances for liabilities
(including reimbursement for expenses incurred) arising under the Securities
Act. Article Five of the Company's Restated Articles of Incorporation provides
for elimination of liability for monetary damages of its directors, and Article
Six of the Company's Restated Articles of Incorporation and Article VI of the
Company's Restated Bylaws provide for indemnification of its directors,
officers, employees and other agents to the fullest extent permitted by the
CGCL. 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 Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
TRANSFER AGENT
The transfer agent and registrar for the Common Stock is U.S. Stock Transfer
Corporation.
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SHARES ELIGIBLE FOR FUTURE SALE
As of March 31, 1998, there were 15,689,866 shares of Common Stock issued
and outstanding. In addition, 1,000,000 shares of Common Stock have been
reserved for issuance pursuant to the Company's stock option plans. As of March
31, 1998, pursuant to the Company's stock options plans, options to purchase
408,245 shares of Common Stock with exercise prices of between $5.25 and $32.375
have been granted and 644,394 additional options are available to be granted to
the Company's directors, officers and certain key employees. As of March 31,
1998, the Company also had outstanding warrants to purchase an additional
140,675 shares of Common Stock with exercise prices of between $13.77 and
$16.83.
In certain circumstances, holders of Shares may elect to sell their shares
in accordance with the exemptions provided by Rule 144 under the Securities Act
rather than pursuant to this Prospectus. In general, under Rule 144 as currently
in effect, a person (or persons whose shares are aggregated in accordance with
the Rule) who has beneficially owned his or her shares for at least one year, as
well as any persons who may be deemed "affiliates" of the Company (as defined in
the Securities Act), would be entitled to sell within any three month period a
number of shares of Common Stock that does not exceed the greater of 1% of the
then outstanding number of shares or the average weekly trading volume of the
shares during the four calendar weeks preceding each such sale. After shares are
held for two years, a person who is not deemed an "affiliate" of the Company is
entitled to sell such shares under Rule 144 without regard to the volume
limitations. As defined in Rule 144, an "affiliate" of an issuer is a person
that directly or indirectly, through the use of one or more intermediaries,
controls, or is controlled by, or is under common control with, such issuer.
No prediction can be made as to the effect, if any, that future sales of
shares of Common Stock, or the availability of shares for future sale, will have
on the market price prevailing from time to time. Sales of substantial amounts
of shares of Common Stock (including shares issued upon the exercise of
options), or the perception that such sales could occur, could adversely affect
the prevailing market price of the Common Stock.
REGISTRATION RIGHTS
The Company has filed the Registration Statement of which this Prospectus is
a part pursuant to its obligations under the Standby Stock Purchase Agreements.
The following summary does not purport to be complete and is qualified in its
entirety by reference to the Standby Stock Purchase Agreements.
Under the Standby Stock Purchase Agreements, the Company agreed, at its
expense, to file under the Securities Act this Registration Statement. Pursuant
to the Standby Stock Purchase Agreements, the Company also agreed to indemnify
each Selling Shareholder and the officers and directors and each person who
controls such Selling Shareholder against certain losses, claims, damages and
expenses arising under the securities laws. In addition, each Selling
Shareholder agreed to indemnify the Company, its directors, officers who sign
this Registration Statement, and any person who controls the Company against
certain other losses, claims, damages and expenses arising under the securities
laws with respect to written information furnished to the Company by such
Selling Shareholder.
SELLING SHAREHOLDERS
The following table provides (i) the names of, and the number and percentage
of shares of Common Stock beneficially owned by, each Selling Shareholder and
(ii) the number and percentage of shares of Common Stock beneficially owned by
each Selling Shareholder upon completion of the offering and sale of the Shares
(the "Offering"), assuming each Selling Shareholder sells all of his or her
Shares pursuant to this Prospectus. The number of shares of Common Stock in the
following table represents the number of shares of Common Stock each Selling
Shareholder holds plus the number of options and warrants to purchase Common
Stock that are exercisable within 60 days of May 22, 1998. The Selling
Shareholders named below may have sold, transferred or otherwise disposed of all
or a portion of their shares of Common Stock since the date on which they
provided the information regarding their shares of Common Stock in transactions
exempt from the registration requirements of the Securities Act.
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<PAGE>
The Shares offered by this Prospectus may be offered from time to time by
the Selling Shareholders named below and other Selling Shareholders named in
supplements to this Prospectus:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO THE OFFERING(1) AFTER THE OFFERING(1)
----------------------------- -----------------------------
NUMBER OF PERCENTAGE OF NUMBER OF NUMBER OF PERCENTAGE OF
SHARES OF SHARES OF SHARES SHARES OF SHARES OF
COMMON COMMON STOCK OFFERED COMMON COMMON STOCK
STOCK(1) OUTSTANDING(1) HEREBY STOCK(1) OUTSTANDING(1)
---------- ----------------- ----------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Amalgamated Investments, L.P................... 267,600 1.7 67,600 200,000 1.3
Banc Fund III L.P.(2).......................... 43,453 0.3 11,607 31,846 0.2
Banc Fund III Trust(2)......................... 133,190 0.8 35,575 97,615 0.6
Banc Fund IV, L.P.(2).......................... 49,390 0.3 12,977 36,413 0.2
Banc Fund IV Trust(2).......................... 166,111 1.1 43,641 122,470 0.8
Bay Pond Investors (Bermuda) L.P.(3)........... 212,899 1.4 67,840 145,059 0.9
Bay Pond Partners, L.P.(3)..................... 443,152 2.8 137,800 305,352 1.9
Betsy Huizenga Trust(4)........................ 4,597 * 1,750 2,847 *
Castle Creek Capital Partners Fund-I,
L.P.(5)...................................... 2,289,689 14.6 528,900 1,760,789 11.2
The Common Fund(3)............................. 28,889 0.2 6,360 22,529 0.1
Cook Charitable Foundation(6).................. 4,150 * 4,150 0 0
Digange Family Trust(7)........................ 4,450 * 4,450 0 0
John M. Eggemeyer(8)........................... 2,388,232 15.1 5,900 1,853,232 11.7
First Financial Fund, Inc.(3).................. 217,000 1.4 212,000 5,000 *
GAM Equity (#10) Inc.(9)....................... 16,000 0.1 16,000 0 0
Greta Huizenga Trust(4)........................ 4,597 * 1,750 2,847 *
Arnold C. Hahn(10)............................. 12,272 0.1 4,700 7,572 *
B. Scott Hardt(11)............................. 13,515 0.1 4,300 9,215 0.1
Heidi A. Huizenga(4)........................... 9,321 0.1 9,321 0 0
Keefe Offshore Fund Ltd.(9).................... 284,500 1.8 192,500 92,000 0.6
Keefe Partners, L.P.(9)........................ 323,500 2.1 215,500 108,000 0.7
McKay Family Partnership(12)................... 77,946 0.5 2,000 75,946 0.5
Mutual Discovery Fund(13)...................... 732,663 4.7 62,900 669,763 4.3
Mutual Discovery Securities Fund(13)........... 67,975 0.4 20,000 47,975 0.3
Mutual Financial Services Fund(13)............. 473,621 3.0 446,000 27,621 0.2
Peter C. Cook Trust(6)......................... 54,000 0.3 4,150 49,850 0.3
Peter H. Huizenga Testamentary Trust(4)........ 111,244 0.7 25,179 86,065 0.5
Peter H. Huizenga, Jr. Trust(4)................ 4,597 * 1,750 2,847 *
RDV Capital Management L.P..................... 85,894 0.5 50,600 35,294 0.2
Richard M. DeVos Jr. Annuity Trust............. 7,000 * 7,000 0 0
Robert L. McKay Revocable Trust(12)............ 576,825 3.7 39,500 537,325 3.4
John Rose(14).................................. 35,545 0.2 5,900 29,645 0.2
William J. Ruh(15)............................. 27,346 0.2 4,300 23,046 0.1
Hugh S. Smith(16).............................. 23,357 0.1 5,900 17,457 0.1
Thomas M. Tully Trust(17)...................... 8,300 0.1 8,300 0 0
Timothy Dean Huizenga Trust(4)................. 4,597 * 1,750 2,847 *
Tubergen Investment Trust...................... 10,000 0.1 10,000 0 0
Matthew P. Wagner(18).......................... 48,886 0.3 9,500 39,386 0.3
The Walter Family Trust(19).................... 4,300 * 4,300 0 0
William Jacoby Family Trust(20)................ 235,396 1.5 4,300 231,096 1.5
</TABLE>
- ------------------------
* less than 0.1%.
10
<PAGE>
(1) Beneficial ownership has been calculated according to Rule 13d-3 under the
Exchange Act.
(2) Banc Funds Company L.L.C. ("BFC") acts as an investment adviser for Banc
Fund III L.P., Banc Fund III Trust, Banc Fund IV, L.P. and Banc Fund IV
Trust. BFC is an investment adviser registered with the Commission under
Section 203 of the Investment Advisers Act of 1940, as amended. BFC, in its
capacity as investment adviser, may be deemed to have beneficial ownership
of shares of Common Stock that are owned by investment advisery clients of
BFC. As of May 20, 1998, investment advisery clients of BFC own an
aggregate of 392,144 shares of Common Stock and no such client is known to
have ownership of more than five percent of outstanding Common Stock.
(3) Wellington Management Company, LLP ("WMC") acts as an investment adviser to
Bay Pond Investors (Bermuda) L.P., Bay Pond Partners, L.P., The Common Fund
and First Financial Fund, Inc. WMC is an investment adviser registered with
the Commission under Section 203 of the Investment Advisers Act of 1940, as
amended. WMC, in its capacity as investment adviser, may be deemed to have
beneficial ownership of shares of Common Stock that are owned by investment
advisery clients of WMC. As of May 20, 1998, investment advisery clients of
WMC own an aggregate of 928,685 shares of Common Stock, and no such client
is known to have ownership of more than five percent of outstanding Common
Stock.
(4) Peter H. Huizenga is the Trustee of the Betsy Huizenga Trust, the Peter H.
Huizenga Testamentary Trust, the Greta Huizenga Trust and the Peter H.
Huizenga, Jr. Trust and has sole voting and investment power with respect
to the 125,035 shares of Common Stock held therein. In addition, Mr.
Huizenga beneficially owns 54,761 shares of Common Stock. Heidi A. Huizenga
is the Trustee of the Timothy Dean Huizenga Trust and has sole voting and
investment power with respect to the 4,597 shares of Common Stock held
therein. In addition, Ms. Huizenga beneficially owns 9,321 shares of Common
Stock.
(5) Castle Creek Capital Partners Fund-I, L.P. (the "Fund") beneficially owns
2,256,132 shares of Common Stock and warrants to purchase 33,557 shares of
Common Stock.
(6) Peter C. Cook, Trustee of the Cook Charitable Foundation and the Peter C.
Cook Trust, may be deemed to have beneficial ownership of the shares of
Common Stock held therein.
(7) Joseph J. Digange, Vice Chairman and a Director of SMB, beneficially owns
11,755 shares of Common Stock jointly with his wife as Trustees of the
Digange Family Trust in addition to beneficially owning 1,925 shares of
Common Stock held in IRA accounts and options to purchase 713 shares of
Common Stock.
(8) Mr. Eggemeyer, a Director of the Company, has direct beneficial ownership
of 40,000 shares of Common Stock, options to purchase 588 shares of Common
Stock and warrants to purchase 57,755 shares of Common Stock. Mr. Eggemeyer
has or shares voting power and/or investment power through the Fund, of
which he is a principal, with respect to 2,256,132 shares of Common Stock
and warrants to purchase 33,557 shares of Common Stock. Mr. Eggemeyer
disclaims any beneficial ownership of the shares of Common Stock held by
the Fund except to the extent of his interest in the Fund.
(9) Keefe Managers, Inc. ("Keefe") acts as an investment adviser for GAM Equity
(#10) Inc., Keefe Offshore Fund Ltd. and Keefe Partners, L.P. Keefe is an
investment adviser registered with the Commission under Section 203 of the
Investment Advisors Act of 1940, as amended. Keefe, in its capacity as
investment adviser, may be deemed to have beneficial ownership of shares of
Common Stock that are owned by investment advisery clients of Keefe as a
result of its power to vote and dispose of such shares of Common Stock. As
of May 20, 1998, investment advisery clients of Keefe owned an aggregate of
750,582 shares of Common Stock and no such client is known to have
ownership of more than five percent of outstanding Common Stock.
11
<PAGE>
(10) Mr. Hahn, an Executive Vice President of the Company, beneficially owns
2,278 shares of Common Stock directly, 4,700 shares of Common Stock held
in an IRA account and options to purchase 5,294 shares of Common Stock.
(11) Mr. Hardt, a Director of SMB, beneficially owns 10,182 shares of Common
Stock and options to purchase 3,333 shares of Common Stock.
(12) Robert L. McKay, a Director of the Company, beneficially owns 77,946
shares of Common Stock held in the McKay Family Partnership of which Mr.
McKay is a General Partner. In addition, Mr. McKay beneficially owns
576,825 shares of Common Stock held in the Robert L. McKay Revocable
Trust, options to purchase 455 shares of Common Stock and 111,111 shares
of Common Stock in the McKay Charitable Remainder Trust.
(13) The 1,297,183 shares of Common Stock beneficially owned by Franklin Mutual
Advisors ("FMAI") are held by various investment advisery clients of FMAI,
including Mutual Discovery Fund, Mutual Discovery Securities Fund and
Mutual Financial Services Fund. FMAI has sole voting and investment power
with respect to such shares of Common Stock. FMAI disclaims beneficial
ownership of all such shares of Common Stock.
(14) Mr. Rose beneficially owns 24,786 shares of Common Stock and warrants to
purchase 10,759 shares of Common Stock.
(15) Mr. Ruh is the President of WJR Corp., a member of Castle Creek Capital
L.L.C., which is the General Partner of the Fund. Mr. Ruh beneficially
owns 12,908 shares of Common Stock and warrants to purchase 14,438 shares
of Common Stock.
(16) Mr. Smith, Chairman of the Board of Directors of the Company, beneficially
owns 22,644 shares of Common Stock directly and options to purchase 713
shares of Common Stock.
(17) Thomas M. Tully beneficially owns 8,300 shares of Common Stock as Trustee
of the Thomas M. Tully Trust in addition to beneficially owning 25,014
shares of Common Stock directly.
(18) Mr. Wagner, President, Chief Executive Officer and a Director of the
Company, beneficially owns 29,278 shares of Common Stock held in an IRA
account and options to purchase 19,608 shares of Common Stock.
(19) Dale E. Walter, a Director of the Company, beneficially owns 4,300 shares
of Common Stock jointly with his wife as Trustees of The Walter Family
Trust in addition to beneficially owning 7,058 shares of Common Stock
directly and options to purchase 784 shares of Common Stock.
(20) William H. Jacoby beneficially owns 235,396 shares of Common Stock as
Trustee of the William Jacoby Family Trust in addition to beneficially
owning options to purchase 3,333 shares of Common Stock and 6,435 shares
of Common Stock subject to the Company's stock bonus plan.
Information concerning the Selling Shareholders may change from time to time
and any such changed information will be set forth in supplements to this
Prospectus if and when necessary.
PLAN OF DISTRIBUTION
This Prospectus relates to the offer and sale from time to time by the
Selling Shareholders of up to 2,297,950 shares of Common Stock. The Company has
registered the Shares for sale pursuant to the Standby Stock Purchase
Agreements, but registration of such Shares does not necessarily mean that any
of such Shares will be offered or sold by the Selling Shareholders.
The Company will not receive any proceeds from the Offering by the Selling
Shareholders. The Shares may be sold from time to time to purchasers directly by
any of the Selling Shareholders. Alternatively, the Selling Shareholders may
from time to time offer the Shares through dealers or agents, who may receive
12
<PAGE>
compensation in the form of commissions from the Selling Shareholders and/or the
purchasers of Shares for whom they may act as agent. The Selling Shareholders
and any dealers or agents that participate in the distribution of Shares may be
deemed to be "underwriters" within the meaning of the Securities Act, and any
profit on the sale of Shares by them and any commissions received by any such
dealers or agents might be deemed to be underwriting commissions under the
Securities Act.
The distribution of the Shares also may be effected from time to time in one
or more underwritten transactions at a fixed price or prices, which may be
changed, or at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Any such underwritten
offering may be on a "best efforts" or a "firm commitment" basis. In connection
with any such underwritten offering, underwriters or agents may receive
compensation in the form of discounts, concessions or commissions from the
Selling Shareholders or from purchasers of Shares for whom they may act as
agents. Underwriters may sell Shares to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents.
At a time a particular offer of Shares is made, a Prospectus Supplement, if
required, will be distributed that will set forth the name and names of any
dealers or agents and any commissions and other terms constituting compensation
from the Selling Shareholders and any other required information. The Shares may
be sold from time to time at varying prices determined at the time of sale or at
negotiated prices.
In order to comply with the securities laws of certain states, if
applicable, the Shares may be sold only through registered or licensed brokers
or dealers. In addition, in certain states, the Shares may not be sold unless
they have been registered or qualified for sale in such state or an exemption
from such registration or qualification requirement is available and is complied
with.
The Shares may also be sold in one or more of the following transactions:
(a) block transactions (which may involve crosses) in which a broker-dealer may
sell all or a portion of such stock as agent but may position and resell all or
a portion of the block as principal to facilitate the transaction; (b) purchases
by any such broker-dealer as principal and resale by such broker-dealer for its
own account pursuant to a Prospectus Supplement; (c) a special offering, an
exchange distribution or a secondary distribution in accordance with applicable
Nasdaq National Market-Registered Trademark- or stock exchange rules; (d)
ordinary brokerage transactions and transactions in which any such broker-dealer
solicits purchasers; (e) sales "at the market" to or through a market maker or
into an existing trading market, on an exchange or otherwise, for such shares;
and (f) sales in other ways not involving market makers or established trading
markets, including direct sales to purchasers. In effecting sales,
broker-dealers engaged by the Selling Shareholders may arrange for other
broker-dealers to participate.
EXPERTS
The consolidated financial statements of Western Bancorp and subsidiaries as
of December 31, 1997 and 1996, and for the years then ended, have been
incorporated by reference herein and in the registration statement in reliance
on the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. Such report indicates that: (i) KPMG
Peat Marwick LLP did not audit either the 1996 consolidated financial statements
of California Commercial Bankshares or the 1996 consolidated financial
statements of SC Bancorp, both of which were acquired during 1997 in mergers
accounted for as poolings-of-interests. Such financial statements were audited
by other auditors whose reports were furnished to KPMG Peat Marwick LLP, and
KPMG Peat Marwick LLP's opinion, insofar as it relates to California Commercial
Bankshares and SC Bancorp, is based solely on the reports of the other auditors;
(ii) The 1995 consolidated statements of operations, changes in shareholders'
equity, and cash flows of Western Bancorp, prior to their restatement for the
1997 poolings-of-interests, were audited by other auditors;
13
<PAGE>
(iii) The separate 1995 consolidated financial statements of California
Commercial Bankshares and SC Bancorp included in the 1995 consolidated financial
statements of Western Bancorp were audited by other auditors; and (iv) The
combination of the consolidated statements of operations, changes in
shareholders' equity and cash flows for the year ended December 31, 1995, after
restatement for the 1997 poolings-of-interest, has been audited by KPMG Peat
Marwick LLP.
The consolidated financial statements of the Company for the year ended
December 31, 1995 have been incorporated by reference herein in reliance upon
the report given thereto upon the authority of Vavrinek, Trine, Day & Co. (the
successor to Dayton & Associates) as experts in accounting and auditing.
The consolidated statement of financial condition of California Commercial
Bankshares and subsidiaries as of December 31, 1996, and the related
consolidated statements of operations, changes in shareholders' equity and cash
flows for each of the two years in the period ended December 31, 1996
incorporated in this prospectus by reference from the Annual Report on Form
10-K, for the year ended December 31, 1997, of Western Bancorp (formerly Monarch
Bancorp) have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and has been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The consolidated balance sheet of SC Bancorp and subsidiary as of December
31, 1996, and the related consolidated statements of operations, changes in
shareholders' equity and cash flows for each of the two years in the period
ended December 31, 1996 incorporated in this prospectus by reference from the
Annual Report on Form 10-K, for the year ended December 31, 1997, of Western
Bancorp (formerly Monarch Bancorp) have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated herein by
reference, and has been so incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
The financial statements of Santa Monica Bank as of and for the years ended
December 31, 1997 and 1996, incorporated by reference herein, have been audited
by Arthur Andersen LLP, as indicated in their report thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said report.
The statements of operations, changes in stockholders' equity and cash
flows, of Santa Monica Bank, for the year ended December 31, 1995 incorporated
in this prospectus by reference from the Current Report on Form 8-K/A, dated
April 7, 1998, of Western Bancorp (formerly Monarch Bancorp) have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their report, which
is incorporated herein by reference, and has been so incorporated in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
VALIDITY OF SHARES
The validity of the Shares will be passed upon for the Company by Julius G.
Christensen, Executive Vice President, General Counsel and Secretary of the
Company.
14
