<PAGE>
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
July 15, 1998
-------------
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)
0-13551 95-3863296
------- ----------
(Commission File Number) (IRS Employer Identification No.)
4100 Newport Place, Suite 900
Newport Beach, California 92660
-------------------------------
(Address of Principal Executive Offices)(Zip Code)
(949) 863-2444
--------------
(Registrant's Telephone Number, including Area Code)
1
<PAGE>
Item 5. Other Events.
On July 15, 1998, Western Bancorp ("Western") announced the financial
results for the second quarter of 1998. A copy of the press release issued by
Western in connection with the announcement is attached hereto as Exhibit 99.1
and is incorporated herein by this reference in its entirety.
On July 24, 1998, Western executed an Agreement and Plan of Merger (the
"Merger Agreement") with Portola Merger Sub ("Merger Sub") and Peninsula Bank
of San Diego ("Peninsula") pursuant to which Western will acquire Peninsula
through the merger of Merger Sub with and into Peninsula. The Merger Agreement
provides for the holders of common stock, no par value, of Peninsula ("Peninsula
Common Stock") to receive shares of Western Common Stock based on a purchase
price of $45.75 (after giving effect to the 5% stock dividend on Peninsula
Common Stock declared by the Board of Directors of Peninsula on June 23, 1998
and payable on July 24, 1998) using a floating exchange ratio for Western Common
Stock within a price range of $ 38.813 to $ 47.438 per share. The Merger
Agreement is subject to several conditions, including approval of the holders of
Peninsula Common Stock which is intended to be sought in the fourth quarter of
1998 and certain regulatory approval. A copy of the press release issued by
Western and Peninsula in connection with the announcement of the execution of
the Merger Agreement is attached hereto as Exhibit 99.2 and is incorporated
herein by this reference in its entirety.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The following exhibits are filed with this Current Report on Form 8-K:
Exhibit
Number Description
99.1 Press Release of Western dated July 15, 1998.
99.2 Press Release of Western and Peninsula dated July 24, 1998.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunder duly authorized.
Dated: August 4, 1998
WESTERN BANCORP
By: /s/ Arnold C. Hahn
-------------------------------------------
Name: Arnold C. Hahn
Title: Executive Vice President and
Chief Financial Officer
3
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EXHIBIT INDEX
Exhibit
Number Description
99.1 Press Release of Western dated July 15, 1998
99.2 Press Release of Western and Peninsula dated July 24, 1998
4
<PAGE>
EXHIBIT 99.1
[LETTERHEAD]
WESTERN BANCORP
- --------------------------------------------------------------------------------
PRESS RELEASE
- --------------------------------------------------------------------------------
Western Bancorp (NASDAQ: WEBC)
4100 Newport Place, Suite 900
Newport Beach, California 92660
Contacts: Matthew P. Wagner Arnold C. Hahn
President & Chief Financial Officer
Chief Executive Officer
Phone: 310/477-2401 949/863-2351
FAX: 310/231-0321 949/757-5844
FOR IMMEDIATE RELEASE
WESTERN BANCORP ANNOUNCES SECOND QUARTER 1998 EARNINGS
July 15, 1998
Newport Beach, California . . . Western Bancorp ("Western") today announced that
its consolidated net income for the quarter ended June 30, 1998 was $6,172,000
or $0.39 per diluted share. This compares with earnings of $469,000, or $0.04
per diluted share, for the quarter ended June 30, 1997. On an operating basis,
before the amortization of goodwill, net income for the three month periods
would have been $8,782,000 and $4,112,000 in 1998 and 1997, respectively, or
$0.55 and $0.38 per diluted share, respectively, a growth of approximately 45%.
Diluted operating net income per share grew approximately 6% from $0.52 per
diluted share in the first quarter of 1998. Operating results for the 1998
period include those of Santa Monica Bank, which was acquired on January 27,
1998.
Consolidated net income for the six months ended June 30, 1998 was $11,507,000,
or $0.77 per diluted share. This compares with earnings of $3,445,000, or $0.32
per diluted share, for the six months ended June 30, 1997. On an operating
basis, before the amortization of goodwill and before the after-tax gain on sale
of loans, net income for the six month periods would have been $16,068,000 and
$7,744,000 in 1998 and 1997, respectively, or $1.07 and $0.72 per diluted share,
respectively, a growth of approximately 49%. Operating results for the 1998
period include those of Santa Monica Bank, which was acquired on January 27,
1998.
5
<PAGE>
On January 27, 1998, Western consummated the acquisition of Santa Monica Bank
through the merger of Santa Monica Bank with and into Western Bank, a
wholly-owned subsidiary of Western Bancorp. The name of Western Bank has been
changed to Santa Monica Bank. The acquisition was accounted for as a purchase
and, therefore, the earnings of Santa Monica Bank have been included in
operating results since February 1, 1998. As a result of this acquisition,
approximately 4,980,000 shares of the common stock of Western Bancorp were
issued to certain holders of common stock of Santa Monica Bank and to certain
private investors. As a result of the acquisition and the issuance of
additional shares, book value per share increased from $12.18 at December 31,
1997 to $18.16 at March 31, 1998. Book value per share increased to $18.41 at
June 30, 1998.
During the second quarter, the Western Bancorp Board of Directors approved the
declaration of a quarterly dividend of $0.15 per common share which was paid on
June 26, 1998 to shareholders of record on June 5, 1998.
Western Bancorp's operating return on tangible assets improved from 1.15% in the
first quarter of 1997 to 1.46% in the fourth quarter of 1997 to 1.71% in the
first quarter of 1998 to 1.87% in the second quarter of 1998. This improvement
comes from improving credit quality, a higher net interest margin and
improvements in efficiency.
Credit quality at Western Bancorp continues to improve. The allowance for loan
and lease losses increased from 1.80% of loans and leases at December 31, 1997
to 1.99% at March 31, 1998 and down slightly to 1.94% at June 30, 1998. The
allowance for loan and lease losses to non-performing assets increased from
115.6% to 132.3% over the six month period. Western had net charge-offs of
approximately $170,000 for the first six months of 1998, an annualized net
charge-off rate of 3 basis points.
Matthew P. Wagner, President and Chief Executive Officer of Western Bancorp,
stated "Western Bancorp continues to make substantial progress on its goals:
- On April 17, 1998 Western announced the signing of a definitive
agreement to acquire the Bank of Los Angeles. Bank of Los Angeles has
approximately $275 million in assets with branches in West Hollywood,
Beverly Hills, Culver City, Encino and Glendale. Bank of Los Angeles
will be merged into Santa Monica Bank.
- - The systems integration of Santa Monica Bank is planned for the third and
fourth quarters of the year and is proceeding on plan. Western expects to
integrate Bank of Los Angeles at the end of 1998 or early in 1999.
- - Western continues to make progress on improving its operating efficiency
ratio, from 62.2% in the second quarter of 1997 to 54.7% in the first
quarter of 1998 and to 51.4% in the second quarter of 1998. This progress
comes even though there is much integration work left to complete."
6
<PAGE>
Western remains well capitalized with a leverage ratio of approximately 7.68%.
Western serves its clients in Southern California through its two banking
subsidiaries: Southern California Bank and Santa Monica Bank. Southern
California Bank serves southern Los Angeles, Orange and San Diego Counties with
sixteen branches and with its specialized escrow services and asset based
lending. Santa Monica Bank serves its clients in Santa Monica, Malibu, Marina
del Rey, Beverly Hills, Century City, Encino and Westwood with thirteen
branches and its specialized trust and investment management services.
FORWARD-LOOKING STATEMENTS
This press release includes forward-looking statements that involve inherent
risks and uncertainties. Western Bancorp cautions readers that a number of
important factors could cause actual results to differ materially from those in
the forward-looking statements. These factors include economic conditions and
competition in the geographic and business areas in which Western Bancorp and
its subsidiaries operate, inflation, fluctuations in interest rates, legislation
and governmental regulation and the progress of integrating Santa Monica Bank,
Western Bank and Southern California Bank.
7
<PAGE>
WESTERN BANCORP
UNAUDITED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30 December 31,
1998 1997
----------- ------------
(In thousands, except per share data)
<S> <C> <C>
ASSETS:
Cash and due from banks $ 155,940 $ 97,456
Federal funds sold 177,329 138,702
----------- -----------
TOTAL CASH AND CASH EQUIVALENTS 333,269 236,158
FRB and FHLB stock 5,759 5,610
Securities:
Securities available for sale 218,376 201,904
----------- -----------
TOTAL SECURITIES 224,135 207,514
Net loans and leases 1,249,930 864,840
Property, plant and equipment 32,034 13,685
Other real estate owned 4,946 6,261
Goodwill 145,525 30,430
Other assets 26,910 24,622
----------- -----------
TOTAL ASSETS $ 2,016,749 $ 1,383,510
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Non-interest bearing deposits $ 637,837 $ 457,503
Interest bearing deposits 1,059,515 769,290
----------- -----------
TOTAL DEPOSITS 1,697,352 1,226,793
Borrowed funds 15,756 12,751
Accrued interest payable and other liabilities 14,495 14,311
----------- -----------
TOTAL LIABILITIES 1,727,603 1,253,855
SHAREHOLDERS' EQUITY:
Preferred stock - -
Common stock 263,257 112,947
Retained earnings 25,819 16,802
Accumulated other comprehensive income -
unrealized net gains (losses) on securities
available for sale, net of tax 70 (94)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 289,146 129,655
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,016,749 $ 1,383,510
----------- -----------
----------- -----------
Number of common shares outstanding 15,703.8 10,648.3
Common shareholders' equity per share $ 18.41 $ 12.18
Tangible common shareholders' equity per share $ 9.15 $ 9.32
</TABLE>
8
<PAGE>
WESTERN BANCORP
UNAUDITED CONDENSED INCOME STATEMENTS
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30 June 30
------------------------- -------------------------
1998 (a) 1997 (a) 1998 (a) 1997 (a)
---------- ---------- ---------- ----------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans and leases $ 56,671 $ 38,605 $ 29,916 $ 19,560
Interest on investment securities 6,966 8,500 3,256 4,192
Interest on federal funds sold 5,285 1,653 2,983 1,041
---------- ---------- ---------- ----------
TOTAL INTEREST INCOME 68,922 48,758 36,155 24,793
INTEREST EXPENSE:
Interest expense on deposits 17,762 13,736 9,097 7,060
Interest expense on borrowed funds 556 594 339 255
---------- ---------- ---------- ----------
TOTAL INTEREST EXPENSE 18,318 14,330 9,436 7,315
---------- ---------- ---------- ----------
NET INTEREST INCOME: 50,604 34,428 26,719 17,478
Less: provision for loan and lease losses 300 1,400 150 675
---------- ---------- ---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN AND LEASE LOSSES 50,304 33,028 26,569 16,803
---------- ---------- ---------- ----------
NON INTEREST INCOME:
Service charges and fees on deposit accounts 3,786 2,779 1,877 1,396
Trust fees 1,615 - 978 -
Escrow fees 531 337 273 182
Other fees and charges 1,318 722 875 218
Gain on sale of loans and other assets - 78 - -
Securities gains 155 342 42 235
Other income 453 770 200 488
---------- ---------- ---------- ----------
TOTAL NON INTEREST INCOME 7,858 5,028 4,245 2,519
NON INTEREST EXPENSE:
Salaries and benefits 17,725 12,715 9,183 6,055
Occupancy, furniture and equipment 5,328 3,889 2,981 1,973
Advertising and business development 566 596 290 226
Other real estate owned (205) 69 (394) 23
Professional services 1,657 1,753 819 689
Telephone, stationery and supplies 1,437 1,420 701 708
Goodwill amortization 4,561 1,270 2,610 634
Data processing 1,126 791 568 403
Customer services cost 842 559 521 428
Merger costs - 3,470 - 3,404
Other 2,476 3,268 1,253 1,930
---------- ---------- ---------- ----------
TOTAL NON INTEREST EXPENSE 35,513 29,800 18,532 16,473
---------- ---------- ---------- ----------
Income before income taxes 22,649 8,256 12,282 2,849
Income taxes 11,142 4,811 6,110 2,380
---------- ---------- ---------- ----------
NET INCOME $ 11,507 $ 3,445 $ 6,172 $ 469
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average common shares outstanding:
Basic 14,821.5 10,492.5 15,695.0 10,497.9
Diluted 15,040.0 10,778.3 15,931.2 10,798.7
Net income per share:
Basic $ 0.78 $ 0.33 $ 0.39 $ 0.04
Diluted $ 0.77 $ 0.32 $ 0.39 $ 0.04
</TABLE>
a) Santa Monica Bank was acquired on January 27, 1998. Accordingly, Santa
Monica Bank's operating results are not included in the amounts for the
1997 periods and are included only since February of the 1998 periods.
9
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30 June 30
-------------------------- -------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
PER SHARE INFORMATION:
Number of shares (weighted average, in thousands) 14,821.5 10,492.5 15,695.0 10,497.9
Diluted shares (weighted average, in thousands) 15,040.0 10,778.3 15,931.2 10,798.7
Basic income per share $ 0.78 $ 0.33 $ 0.39 $ 0.04
Diluted income per share $ 0.77 $ 0.32 $ 0.39 $ 0.04
BEFORE MERGER COSTS AND GOODWILL AMORTIZATION
Basic income per share $ 1.08 $ 0.74 $ 0.56 $ 0.39
Diluted income per share $ 1.07 $ 0.72 $ 0.55 $ 0.38
PROFITABILITY MEASURES:
Return on average assets 1.20% 0.52% 1.22% 0.14%
Return on average equity 9.0% 5.3% 8.6% 1.4%
BEFORE MERGER COSTS AND GOODWILL AMORTIZATION
Return on average tangible assets 1.79% 1.20% 1.87% 1.25%
Return on average equity 12.5% 11.8% 12.2% 12.4%
Efficiency ratio 52.9% 63.6% 51.4% 62.2%
ADJUSTMENTS TO NET INCOME (IN THOUSANDS):
Net income $ 11,507 $ 3,445 $ 6,172 $ 469
Merger costs - 3,470 - 3,404
Tax benefits - 395 - 395
---------- ---------- ---------- ----------
After tax merger costs - 3,075 - 3,009
Goodwill amortization 4,561 1,270 2,610 634
Gain on sale of loans available for sale - after tax - (46) - -
---------- ---------- ---------- ----------
ADJUSTED NET INCOME $ 16,068 $ 7,744 $ 8,782 $ 4,112
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
ADJUSTMENTS TO REVENUES (IN THOUSANDS):
Net interest income $ 50,604 $ 34,428 $ 26,719 $ 17,478
Non interest income 7,858 5,028 4,245 2,519
---------- ---------- ---------- ----------
Revenue before adjustments 58,462 39,456 30,964 19,997
Gain on sale of loans - (78) - -
---------- ---------- ---------- ----------
ADJUSTED REVENUES $ 58,462 $ 39,378 $ 30,964 $ 19,997
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
ADJUSTMENTS TO EXPENSES (IN THOUSANDS):
Non interest expense $ 35,513 $ 29,800 $ 18,532 $ 16,473
Merger costs - (3,470) - (3,404)
Goodwill amortization (4,561) (1,270) (2,610) (634)
---------- ---------- ---------- ----------
ADJUSTED EXPENSES $ 30,952 $ 25,060 $ 15,922 $ 12,435
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30 June 30
------------------------------ -----------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
AVERAGE BALANCE SHEETS
(In thousands)
AVERAGE ASSETS
Loans and leases, net of deferred fees and costs $ 1,197,284 $ 819,900 $ 1,265,009 $ 827,750
Investments 247,834 294,596 231,531 289,026
Federal funds sold 193,842 60,521 219,319 73,388
------------ ------------- ------------ -----------
AVERAGE EARNING ASSETS 1,638,960 1,175,017 1,715,859 1,190,164
Goodwill 127,256 32,304 146,359 31,967
Other assets 166,633 124,801 171,303 125,088
------------ ------------- ------------ -----------
AVERAGE TOTAL ASSETS $ 1,932,849 $ 1,332,122 $ 2,033,521 $ 1,347,219
------------ ------------- ------------ -----------
------------ ------------- ------------ -----------
AVERAGE LIABILITIES AND SHAREHOLDERS' EQUITY
Non interest bearing deposits $ 585,378 $ 398,572 $ 620,236 $ 406,903
Interest bearing deposits 1,053,197 774,642 1,089,602 781,725
------------ ------------- ------------ -----------
AVERAGE DEPOSITS 1,638,575 1,173,214 1,709,838 1,188,628
Other interest bearing liabilities 16,354 16,128 17,951 14,510
Other liabilities 19,296 10,855 17,488 11,362
------------ ------------- ------------ -----------
AVERAGE LIABILITIES 1,674,225 1,200,198 1,745,277 1,214,500
------------ ------------- ------------ -----------
Shareholders' equity 258,624 131,924 288,244 132,719
------------ ------------- ------------ -----------
AVERAGE LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,932,849 $ 1,332,122 $ 2,033,521 $ 1,347,219
------------ ------------- ------------ -----------
------------ ------------- ------------ -----------
YIELD ANALYSIS
(Dollars in millions)
Average earning assets $ 1,639.0 $ 1,175.0 $ 1,715.9 $ 1,190.2
Yield 8.48% 8.37% 8.45% 8.36%
Average interest bearing deposits $ 1,053.2 $ 774.6 $ 1,089.6 $ 781.7
Cost 3.40% 3.58% 3.35% 3.62%
Average deposits $ 1,638.6 $ 1,173.2 $ 1,709.8 $ 1,188.6
Cost 2.19% 2.36% 2.13% 2.38%
Average interest bearing liabilities $ 1,069.6 $ 790.8 $ 1,107.6 $ 796.2
Cost 3.45% 3.65% 3.42% 3.68%
Interest spread 5.03% 4.72% 5.03% 4.68%
Net interest margin 6.23% 5.91% 6.25% 5.89%
</TABLE>
11
<PAGE>
CREDIT QUALITY MEASURES
(Dollars in thousands)
<TABLE>
<CAPTION>
QUARTER ENDED Year
---------------------------------------------------------------- Ended
30-Jun 31-Mar 31-Dec 30-Sep 30-Jun 31-Dec
1998 1998 1997 1997 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Loans past due 90 days and still accruing $ 2,495 $ - $ 31 $ 1,267 $ 422 $ 193
Nonaccrual loans and leases 13,709 11,713 7,488 9,468 14,665 16,157
Other real estate owned 4,946 7,508 6,261 8,354 7,680 7,082
---------- ---------- -------- ---------- -------- --------
NON-PERFORMING ASSETS 18,655 19,221 13,749 17,822 22,345 23,239
Impaired loans gross 16,192 17,579 13,482 14,960 18,530 21,034
Allocated reserves 2,274 679 679 418 1,806 2,172
---------- ---------- -------- ---------- -------- --------
NET INVESTMENT IN IMPAIRED LOANS 13,918 16,900 12,803 14,542 16,724 18,862
Charge-offs 727 296 422 1,461 1,394 4,675
Recoveries 273 580 481 551 349 1,123
---------- ---------- -------- ---------- -------- --------
NET CHARGE-OFFS 454 (284) (59) 910 1,045 3,552
Allowance for loan and lease losses (ALLL) 24,681 24,985 15,894 15,160 15,345 15,757
Loans and leases, net of deferred fees
and costs 1,274,611 1,253,887 880,734 874,283 849,141 817,358
Average loans and leases for the quarter,
net of deferred fees and costs 1,265,049 1,128,806 868,466 854,323 828,362 601,115
ALLL to loans and leases 1.94% 1.99% 1.80% 1.73% 1.81% 1.93%
ALLL to nonaccrual loans and leases 180.0% 213.3% 212.3% 160.1% 104.6% 97.5%
ALLL to non performing assets 132.3% 130.0% 115.6% 85.1% 68.7% 67.8%
Non performing assets to loans, leases
and OREO 1.46% 1.52% 1.55% 2.02% 2.61% 2.82%
Annualized net charge-offs (recoveries) to
average loans and leases 0.14% (0.10%) (0.03%) 0.43% 0.50%
Full year net charge-offs to average
loans and leases 0.31% 0.59%
</TABLE>
12
<PAGE>
EXHIBIT 99.2
[LETTERHEAD]
WESTERN BANCORP
- --------------------------------------------------------------------------------
PRESS RELEASE
- --------------------------------------------------------------------------------
Western Bancorp (NASDAQ: WEBC) Peninsula Bank of San Diego
(OTC:PNNB)
4100 Newport Place, Suite 900 1331 Rosecrans Street
Newport Beach, California 92660 San Diego, California 92166
Contacts: Matthew P. Wagner John G. Rebelo, Jr.
President & Chairman &
Chief Executive Officer Chief Executive Officer
Phone: 310/477-2401 619/226-5418
FAX: 310/231-0321 619/226-5554
FOR IMMEDIATE RELEASE
WESTERN BANCORP ANNOUNCES MERGER WITH
PENINSULA BANK OF SAN DIEGO
July 24, 1998
Newport Beach, California . . . Western Bancorp ("Western") today announced it
has signed a definitive agreement to merge with Peninsula Bank of San Diego
("Peninsula Bank"). Shareholders of Peninsula Bank will receive a post stock
dividend price of $45.75 equating to $48.04 pre stock dividend (Peninsula Bank
had declared a 5% dividend effective July 24, 1998) in shares of Western Bancorp
stock for each share of Peninsula Bank stock. The acquisition will use
pooling-of-interests accounting and is expected to close late in the fourth
quarter of the year or early in 1999. Both companies have completed their due
diligence. Completion of the transaction is conditional upon the receipt of
shareholder and regulatory approvals.
Peninsula Bank has $428 million in assets and has ten branches serving San Diego
County. Peninsula Bank will retain its name and form the third banking hub for
Western. John G. Rebelo, Jr. will remain Chairman and Chief Executive Officer
of Peninsula Bank and will join the Western Board. Mr. Larry L. Willette will
remain as President and Chief Administrative Officer of Peninsula Bank.
13
<PAGE>
Matthew P. Wagner, President and Chief Executive of Western stated "Peninsula
Bank is the premier community banking franchise in San Diego County. Western is
very fortunate to be able to add a banking hub in San Diego with an outstanding
company such as Peninsula. The management team at Peninsula has an excellent
reputation and has the skills, which will only add to the value of Western. We
expect this acquisition to be accretive to earnings in 1999."
Peninsula Bank Chairman and CEO, John Rebelo, stated "Although the bank was not
seeking a merger partner, Western Bancorp's offer provides current shareholders
with an attractive return on their investment and the opportunity to continue
their involvement and support." President, Larry L. Willette, indicated that
"Western Bancorp's philosophy and attitude mirrors that of Peninsula Bank. Both
institutions are relationship and customer service driven and as a result of
this transaction Peninsula Bank will be provided the opportunity to preserve its
name and organizational structure while adding significantly to its ability to
service and support its community. San Diego's 'Real Community Bank' will just
get better."
Pro forma with Peninsula Bank and Bank of Los Angeles, Western will have
approximately $2.7 billion in assets and three banking subsidiaries: Peninsula
Bank, Southern California Bank and Santa Monica Bank. Peninsula Bank serves San
Diego County with ten branches. Southern California Bank serves southern Los
Angeles, Orange and San Diego Counties with sixteen branches and with its
specialized escrow services and asset based lending. Pro forma with the Bank of
Los Angeles, Santa Monica Bank will serve its clients in Santa Monica, Westwood,
Malibu, Marina del Rey, Beverly Hills, Century City, Encino, Culver City, West
Hollywood, and Glendale with sixteen branches and its specialized trust and
investment management services.
Forward-Looking Statements
This press release includes forward-looking statements that involve inherent
risks and uncertainties. Western and Peninsula Bank caution readers that a
number of important factors could cause actual results to differ materially from
those in the forward-looking statements. These factors include economic
conditions and competition in the geographic and business areas in which Western
and its subsidiaries and Peninsula Bank operate, inflation, fluctuations in
interest rates, legislation and governmental regulation and the progress of
integrating Peninsula Bank of San Diego, Bank of Los Angeles and Santa Monica
Bank.
14
<PAGE>
MAJOR TERMS OF THE TRANSACTION
<TABLE>
<CAPTION>
<S> <C>
Price per share (after 5% stock dividend) $45.75 in stock (1)
Aggregate value $113.8 million
Price to book (June 30) 4.17 X
Tangible book to tangible book (June 30) 0.89X
Price to deposits 29.7%
Floating exchange ratio:
Mid point of collar ($43.125) 1.061
Low end of collar ($38.813) 1.179
High end of collar ($47.438) 0.964
Target closing December 1998 or early 1999
</TABLE>
(1) $48.04 before a 5% stock dividend effective July 24, 1998.
15
