<PAGE> 1
Total number of pages: 36
Exhibit Index on page: 14
FORM 10-QSB
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________________________________
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15 OF THE
SECURITIES EXCHANGE ACT OF 1934
________________________________________________________________________________
Commission File Number 0-17650
FP Bancorp, Inc. (formerly FP Bancorp)
(Exact name of small business issuer as specified in its charter)
<TABLE>
<S> <C>
CALIFORNIA 33-0018976
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
613 West Valley Parkway, Escondido 92025-2597
(Address of principal executive offices) (ZIP Code)
(619) 741-3312
(Issuer's telephone number)
</TABLE>
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
As of June 30, 1995 the number of shares outstanding of the Registrant's only
class of common stock was 2,648,016.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FP BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS June 30, 1995 December 31, 1994
------------------------------------------------------------------------ ------------- -----------------
<S> <C> <C>
Cash and due from banks $ 16,984,000 $ 9,627,000
Federal funds sold 15,000,000 -
Interest earning deposits 495,000 -
Investment securities available for sale, at fair value 12,767,000 8,192,000
Investment securities held to maturity, at amortized cost 16,390,000 15,465,000
Loans, net of allowance for loan losses of $2,848,000 at June 30, 1995
and $2,666,000 at December 31, 1994 139,209,000 118,183,000
Other real estate owned, net 5,985,000 5,044,000
Premises and equipment, net 6,920,000 5,956,000
Goodwill, net 1,456,000 -
Accrued interest and other assets 2,806,000 2,251,000
------------------------------------------------------------------------ ------------- -----------------
$218,012,000 $164,718,000
======================================================================== ============= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------------------------------------------
Deposits:
Noninterest bearing $ 49,653,000 $ 28,027,000
Interest bearing 146,529,000 118,416,000
------------------------------------------------------------------------ ------------- -----------------
Total Deposits 196,182,000 146,443,000
------------------------------------------------------------------------ ------------- -----------------
Federal funds purchased - 2,800,000
Accrued expenses and other liabilities 1,642,000 1,080,000
Debentures 4,575,000 4,575,000
------------------------------------------------------------------------ ------------- -----------------
Total Liabilities 202,399,000 154,898,000
------------------------------------------------------------------------ ------------- -----------------
Stockholders' Equity:
Common stock 24,544,000 20,289,000
Accumulated deficit (8,791,000) (9,821,000)
Net unrealized losses on investments available for sale (23,000) (515,000)
Receivable from ESOP (117,000) (133,000)
------------------------------------------------------------------------ ------------- -----------------
Total Stockholders' Equity 15,613,000 9,820,000
------------------------------------------------------------------------ ------------- -----------------
$218,012,000 $164,718,000
======================================================================== ============= =================
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 3
FP BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
--------------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $4,059,000 $2,781,000 $7,174,000 $5,433,000
Federal funds sold 112,000 22,000 166,000 38,000
Interest earning deposits 12,000 1,000 12,000 4,000
Investment securities 412,000 289,000 729,000 610,000
--------------------------------------- ---------- ---------- ---------- ----------
Total interest income 4,595,000 3,093,000 8,081,000 6,085,000
--------------------------------------- ---------- ---------- ---------- ----------
Interest expense:
Deposits 1,150,000 619,000 2,074,000 1,261,000
Other 119,000 121,000 244,000 243,000
--------------------------------------- ---------- ---------- ---------- ----------
Total interest expense 1,269,000 740,000 2,318,000 1,504,000
--------------------------------------- ---------- ---------- ---------- ----------
Net interest income 3,326,000 2,353,000 5,763,000 4,581,000
Provision for loan losses - - - -
--------------------------------------- ---------- ---------- ---------- ----------
Net interest income after
provision for loan losses 3,326,000 2,353,000 5,763,000 4,581,000
--------------------------------------- ---------- ---------- ---------- ----------
Other operating income:
Service charges 296,000 197,000 502,000 388,000
Other 570,000 329,000 888,000 671,000
--------------------------------------- ---------- ---------- ---------- ----------
Total other operating income 866,000 526,000 1,390,000 1,059,000
--------------------------------------- ---------- ---------- ---------- ----------
Other operating expenses:
Salaries and employee benefits 1,438,000 1,182,000 2,670,000 2,489,000
Occupancy 310,000 286,000 554,000 575,000
Furniture and equipment 237,000 158,000 402,000 338,000
Other real estate owned 313,000 265,000 436,000 336,000
Other 1,149,000 877,000 2,061,000 1,779,000
--------------------------------------- ---------- ---------- ---------- ----------
Total other operating expenses 3,447,000 2,768,000 6,123,000 5,517,000
--------------------------------------- ---------- ---------- ---------- ----------
Earnings before income taxes 745,000 111,000 1,030,000 123,000
Income taxes - - - -
--------------------------------------- ---------- ---------- ---------- ----------
Net earnings $ 745,000 $ 111,000 $1,030,000 $ 123,000
======================================= ========== ========== ========== ==========
Primary earnings per share $ 0.28 $ 0.09 $ 0.46 $ 0.10
====================================== ========== ========== ========== ==========
Fully diluted earnings per share $ 0.27 $ 0.09 $ 0.46 $ 0.10
====================================== ========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
FP BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
---------------------------
1995 1994
------------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 1,030,000 $ 123,000
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation and amortization 449,000 409,000
Provision for losses on other real estate owned 196,000 217,000
Gain on sale of other real estate owned (278,000) (40,000)
(Gain) loss on sale of investment securities available for sale 46,000 (18,000)
Decrease in accrued interest and other assets 132,000 386,000
Increase (decrease) in accrued expenses and other liabilities 3,000 (150,000)
Increase (decrease) in deferred loan origination fees (112,000) 122,000
------------------------------------------------------------------------ ----------- -----------
Net cash provided by operating activities 1,466,000 1,049,000
------------------------------------------------------------------------ ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in loans outstanding 6,733,000 2,762,000
Proceeds on sale of other real estate owned 2,311,000 1,469,000
Net maturities of interest earning deposits 1,358,000 788,000
Maturities of investment securities available for sale 237,000 1,786,000
Maturities of investment securities held to maturity 83,000 237,000
Purchase of investment securities available for sale (5,398,000) (1,000,000)
Purchase of investment securities held to maturity (839,000) -
Proceeds from sale of investment securities available for sale 4,798,000 2,198,000
Payments from ESOP 16,000 17,000
Net capital expenditures for premises and equipment (561,000) (36,000)
Net cash acquired in merger 4,312,000 -
------------------------------------------------------------------------ ----------- -----------
Net cash provided by investing activities 13,050,000 8,221,000
------------------------------------------------------------------------ ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in interest bearing deposits (1,686,000) (5,373,000)
Net increase in noninterest bearing deposits 12,327,000 2,568,000
Decrease in Federal funds purchased (2,800,000) -
------------------------------------------------------------------------ ----------- -----------
Net cash provided by (used in) financing activities 7,841,000 (2,805,000)
------------------------------------------------------------------------ ----------- -----------
Net increase in cash and cash equivalents 22,357,000 6,465,000
Cash and cash equivalents at beginning of period 9,627,000 12,546,000
------------------------------------------------------------------------ ----------- -----------
Cash and cash equivalents at end of period $31,984,000 $19,011,000
======================================================================== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 2,163,000 $ 1,478,000
Supplemental disclosure of noncash investing and financing activities:
Transfer from loans to other real estate owned $ 1,533,000 $ 3,031,000
Transfer of investment securities from held to maturity to available
for sale upon adoption of Statement 115 $ - $11,792,000
Change in unrealized losses on investment securities available for sale $ (492,000) $ 317,000
Common stock issued in merger $ 4,255,000 $ -
========================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
FP BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements include the accounts of FP
Bancorp, Inc. (formerly FP Bancorp) (the "Company") and its
wholly-owned subsidiary, First Pacific National Bank (FPNB). All
material intercompany accounts and transactions have been eliminated.
The consolidated financial statements as of June 30, 1995 and for the
three- and six-month periods ended June 30, 1995 and 1994 are
unaudited and reflect all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of management, necessary for a
fair presentation of the financial position and operating results of
the interim periods. The consolidated financial statements should be
read in conjunction with the consolidated financial statements and
notes thereto, together with management's discussion and analysis of
financial condition and results of operations, contained in the
Company's Annual Report on Form 10-KSB for the year ended December 31,
1994. The results of operations for the three- and six-month periods
ended June 30, 1995 are not necessarily indicative of the results for
the entire year ending December 31, 1995.
2. Primary earnings per share is computed by dividing net earnings by the
weighted average number of shares of common stock and common stock
equivalents outstanding during the period. Stock options for all
periods presented are considered to be common stock equivalents and are
used in the primary earnings per share calculations unless they are
antidilutive. The weighted average number of shares used for the
primary earnings per share calculations for the three-month periods
ended June 30, 1995 and 1994 were 2,658,000 and 1,213,000,
respectively. The weighted average numbers of shares used for the
primary earnings per share calculations for the six-month periods
ended June 30, 1995 and 1994 were 2,247,000 and 1,213,000,
respectively.
Fully diluted earnings per share is computed by dividing net earnings
by the weighted average number of shares of common stock, common stock
equivalents, and other potentially dilutive securities. Stock options
are considered to be common stock equivalents and are used in the fully
diluted earnings per share calculations unless they are antidilutive.
The subordinated convertible debentures are considered to be other
potentially dilutive securities and are used in the fully diluted
earnings per share calculations unless they are antidilutive. The
weighted average numbers of shares used for the fully diluted earnings
per share calculations for the three-month periods ended June 30, 1995
and 1994 were 3,115,000 and 1,213,000 in 1995 and 1994, respectively.
The weighted average numbers of shares used for the fully diluted
earnings per share calculations for the six-month periods ended June
30, 1995 and 1994 were 2,705,000 and 1,213,000, respectively.
3. In May 1993, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards No. 114, "Accounting
by Creditors for Impairment of a Loan" ("Statement 114"), and in
October 1994, the FASB issued Statement of Financial Accounting
Standards No. 118. "Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosures" ("Statement 118"). Under the
provisions of Statement 114, a loan is considered impaired when it is
probable that a creditor will be unable to collect all amounts due
according to the contractual terms of the loan agreement. Statement 114
defines methods of measuring impairment and if the measure of the
impaired loan is less than the recorded investment in the loan. It
requires a creditor to create a valuation allowance with a
corresponding charge to the provision for loan losses. Statement 118
amends Statement 114 to allow a creditor to use existing methods for
recognizing interest income on impaired loans. In addition, Statement
118 amends certain disclosure requirements for Statement 114. Statement
114 and 118 apply to financial statements for fiscal years beginning
after December 15, 1994, and initial adoption is required to be
reflected prospectively. The Company adopted Statements 114 and 118
effective January 1, 1995. The adoption of these statements did not
have a material impact on the Company's financial position or results
of operations.
5
<PAGE> 6
4. Because of the nature of its activities, the Company is at all times
subject to pending and threatened legal actions which arise out of the
normal course of its business. In the opinion of management, based in
part upon opinions of legal counsel, the disposition of all litigation
will not have a material effect on the Company's financial position or
results of operations.
5. Goodwill is amortized on a straight-line basis over an estimated useful
life of fifteen years.
6. Certain 1994 amounts have been reclassified to conform to the
presentation used in 1995.
6
<PAGE> 7
FP BANCORP, INC.
MATERIAL SUBSEQUENT EVENTS AND CONTINGENCIES
1. On April 1, 1995, the Company completed the merger of Overland Bank
("Overland") into FPNB (the "Overland Merger"). Overland was a
state-chartered bank with branch offices located in Moreno Valley and
Temecula, California. The merger was consummated after obtaining all
applicable regulatory approvals and the approval of the shareholders of
both the Company and Overland on March 22, 1995.
Pursuant to the merger agreement, all of the outstanding shares of
Overland common stock were converted into newly issued shares of
Company common stock and all outstanding Overland warrants were
converted into warrants to purchase Company stock. The number of shares
of Company common stock issued upon the conversion of each share of
Overland common stock was .1006 shares, resulting in the issuance of
826,000 shares of Company common stock. Upon consummation of the
merger, Overland ceased to exist and FPNB continued as the surviving
entity.
The calculation of the exchange ratio of .1006 shares of Company common
stock for each share of Overland common stock was based on each
entity's relative book value at December 31, 1994, adjusted for various
items as defined in the merger agreement.
<TABLE>
<S> <C>
Cash and due from banks $ 2,867,000
Federal funds sold 2,500,000
Investment securities 4,015,000
Interest earning deposits 1,853,000
Loans, net 29,180,000
Other real estate owned, net 1,637,000
Premises and equipment, net 746,000
Goodwill from merger 1,482,000
Accrued interest and other assets 687,000
-----------
Total assets 44,967,000
-----------
Deposits 39,098,000
Accrued expenses and other liabilities 559,000
-----------
Total liabilities 39,657,000
-----------
Aggregate purchase price, including
costs of acquisition $ 5,310,000
===========
</TABLE>
7
<PAGE> 8
The following pro forma data presents the historical results of the combined
bank as if the Overland Merger had occurred at the beginning of the three- and
six-month periods ended June 30, 1995 and 1994, with intangibles from the
merger being amortized on a straight-line basis over a period of 15 years. This
data is presented for information purposes only and does not purport to be
indicative of what would have occurred had the merger been consummated at the
beginning of each of the periods, or of results which may occur in the future.
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
--------------------------- ---------------------------
(in thousands, except for share
and per share data) 1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest income $ 4,595 $ 4,030 $ 9,232 $ 8,059
Interest expense 1,269 1,045 2,547 2,090
Provision for loan losses - 46 - 92
Noninterest income 866 683 1,518 1,366
Noninterest expense 3,447 3,535 6,737 7,069
---------- ---------- ---------- ----------
Net earnings before income taxes $ 745 $ 87 $ 1,466 $ 174
========== ========== ========== ==========
Net earnings $ 745 $ 87 $ 1,466 $ 174
========== ========== ========== ==========
Net earnings per share $ 0.28 $ 0.04 $ 0.65 $ 0.09
========== ========== ========== ==========
Average shares outstanding 2,658,000 2,039,000 2,247,000 2,039,000
========== ========== ========== ==========
</TABLE>
2. Effective Tuesday, April 11, 1995, following the approval of the
shareholders of the Company on March 22, 1995, the Company was
reincorporated as a Delaware corporation under the name FP Bancorp, Inc.
3. On Thursday, April 13, 1995, the Company's common stock was listed for
trading on the Nasdaq SmallCap Market under the symbol FPBN. The
Company's common stock had previously been traded in the
over-the-counter market.
8
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
OVERVIEW
The Company's net earnings for the quarter ended June 30, 1995 were $745,000 or
$.28 per share, compared to net earnings of $111,000 or $.09 per share for the
same quarter in 1994. The Company's return on average assets and return on
average stockholders' equity were .36% and 4.88%, respectively, for the
three-month period ended June 30, 1995, compared with .07% and 1.59%,
respectively, for the same period in 1994. The increase in earnings of $634,000
for the three-month period ended June 30, 1995 as compared with the same period
in 1994 was due to an increase in net interest income of $973,000 or 41.35%, an
increase in noninterest income of $340,000 or 64.64% and an offsetting increase
in noninterest expenses of $679,000 or 24.53%.
The Company's net earnings for the six months ended June 30, 1995 were
$1,030,000 or $.46 per share compared to net earnings of $123,000 or $.10 per
share for the same period in 1994. The Company's return on average assets and
return on average stockholders' equity were .55% and 8.08% for the six-month
period ended June 30, 1995 compared with .07% and 1.76%, respectively, for the
same period in 1994. The increase in earnings of $907,000 or 737.40% for the
six-month period ended June 30, 1995 as compared to the same period in 1994 was
due to an increase in net interest income of $1,182,000 or 25.80%, an increase
in other operating income of $331,000 or 31.26%, and an offsetting increase in
noninterest expenses of $606,000 or 10.98%.
The increases in net interest income during the three- and six-month periods
ended June 30, 1995 as compared to 1994 were a result of the Overland Merger,
the effect of increases in interest rates on the Company's asset sensitive
balance sheet and active liability management. Total noninterest expenses for
the three- and six-month periods ended June 30, 1995 increased by only 24.53%
and 10.98%, respectively, including additional expenses from the Overland
Merger, due to increased efficiencies.
Total assets increased $53,294,000 or 32.36% from $164,718,000 as of December
31, 1994 to $218,012,000 as of June 30, 1995. The increase was primarily due to
the Overland Merger, which increased the Company's assets by $45.0 million on
the merger date. Net loans increased from $118,183,000 as of December 31, 1994
to $139,209,000 as of June 30, 1994, an increase of $21,026,000 or 17.79%. The
Overland Merger accounted for $29,180,000 of the increase, offset by a net
decrease of $8,000,000 in loans due to a number of large individual loan
paydowns since year end and $1,533,000 of loans transferred into other real
estate owned. Deposits increased from $146,443,000 as of December 31, 1994 to
$196,182,000 as of June 30, 1995, an increase of $49,739,000 or 33.97%. The
Overland Merger resulted in $39,098,000 of the increase with the balance of the
increase primarily in noninterest bearing deposits.
NET INTEREST INCOME
Net interest income before provision for loan losses increased $973,000 or
41.35% for the quarter ended June 30, 1995 compared with the same period in
1994. Net interest income is affected by changes in average rates, average
volumes of interest earnings assets, and average volumes of interest bearing
liabilities. During the three-month period ended June 30, 1995, $29,180,000 of
loans and $29,799,000 of interest bearing deposits were acquired in the
Overland Merger, which contributed to the increase.
The rate earned on interest earning assets for the quarter ended June 30, 1995
increased to 10.17% from 8.97% for the same period in 1994 due to the increase
in interest rate during 1994 and 1995. Average loans outstanding during the
quarter ended June 30, 1995 were $143,817,000 which earned interest at an
average rate of 11.32%. This rate was offset by the lower rates earned on
Federal funds sold and other investments during that period resulting in an
average rate of 10.17% for the three-month period ended June 30, 1995.
9
<PAGE> 10
The rate paid on interest bearing liabilities was 3.33% for the quarter ended
June 30, 1995 as compared to 2.38% for the same period in 1994. Average
outstanding interest bearing deposits of $148,375,000 for the three months
ended June 30, 1995 were paid an average rate of 3.11% as compared to average
outstanding interest bearing deposits of $120,211,000 which were paid an
average of 2.07%.
The rate earned on interest earning assets for the six-month period ended
June 30, 1995 increased to 9.94% from 8.71% for the same period in 1994 due to
the increase in interest rates during 1994 and 1995. Average loans outstanding
during the quarter ended June 30, 1995 were $131,402,000 which earned interest
at an average rate of 11.01%. This rate was offset by the lower rates earned on
Federal funds sold and other investments during that period resulting in an
average rate of 9.94% for the six-month period ended June 30, 1995.
The rate paid on interest bearing liabilities was 3.29% for the six-month period
ended June 30, 1995, as compared to 2.34% for the same period in 1994. Average
outstanding interest bearing deposits of $137,204,000 for the six months ended
June 30, 1995 were paid an average rate of 3.05% as compared to average
outstanding interest bearing deposits of $124,750,000 which were paid an
average rate of 2.04%.
The following table presents for the periods indicated a summary of changes in
interest income and interest expense for the major categories of average
interest earning assets and average interest bearing liabilities and the
amounts of change attributable to variations in volume and in interest rates.
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1995 compared to 1994 1995 compared to 1994
-------------------------- ----------------------------
(in thousands) (in thousands)
Increase (Decrease) Increase (Decrease)
-------------------------- ----------------------------
Volume Rate Net Volume Rate Net
------ ---- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Interest earned on interest earning assets:
Loans(1) $786 $492 $1,278 $848 $ 893 $1,741
Taxable investment securities 71 61 132 71 88 159
Nontaxable investment securities (9) - (9) (40) - (40)
Interest earning deposits 8 3 11 6 2 8
Federal funds sold 50 40 90 67 61 128
---- ---- ------ ---- ------ ------
Total interest on interest earning assets $906 $596 $1,502 $952 $1,044 $1,996
==== ==== ====== ==== ====== ======
Interest paid on interest bearing liabilities:
Interest bearing deposits:
Savings and time $132 $291 $ 423 $269 $ 449 $ 718
Interest bearing demand 38 70 108 (8) 103 95
---- ---- ------ ---- ------ ------
Total interest bearing deposits 170 361 531 261 552 813
Debentures and Federal funds purchased (3) 1 (2) 4 (3) 1
---- ---- ------ ---- ------ ------
Total interest on interest bearing liabilities $167 $362 $ 529 $265 $ 549 $ 814
==== ==== ====== ==== ====== ======
</TABLE>
(1) Nonaccrual loans are included in the loan totals used in the calculation
of this table.
Interest income on loans includes the accretion of loan fees resulting from the
Company's lending activities. Net fees included in interest income for the three
months ended June 30, 1995 and 1994 were $48,000 and $83,000, respectively. Net
fees included in interest income for the six months ended June 30, 1995 and 1994
were $129,000 and $144,000, respectively.
10
<PAGE> 11
OTHER OPERATING EXPENSES
Total other operating expenses for the three months ended June 30, 1995 were
$3,447,000, an increase of $679,000 or 24.53% compared to the same quarter in
1994. An increase of $256,000 or 21.66% was reported in salaries and employee
benefits during the quarter ended June 30, 1995. Occupancy expenses increased
$24,000 or 8.39%, other real estate owned expenses increased $48,000 or 18.11%,
and the balance of the other operating expenses increased $351,000 or 33.91%
for the three-month period ended June 30, 1995 as compared to 1994. These
increases were a direct result of the Overland Merger.
Total other operating expenses for the six months ended June 30, 1995 were
$6,123,000, an increase of $606,000 or 10.98% compared to the same period in
1994. An increase of $181,000 or 7.27% was reported in salaries and employee
benefits during the six months ended June 30, 1995. Occupancy expenses were
reduced by $21,000 or 3.65%, other real estate owned expenses increased
$100,000 or 29.76%, and the balance of the other operating expenses increased
$346,000 or 16.34% for the six-month period ended June 30, 1995 as compared to
1994. The increases were a direct result of the Overland Merger offset by
efficiencies and cost reductions realized during 1995.
OTHER OPERATING INCOME
Other operating income was $866,000 for the quarter ended June 30, 1995
compared with $526,000 for the same period in 1994, an increase of $340,000 or
64.64%. Service charges increased by $99,000 or 50.25% while other noninterest
income increased $241,000 or 73.25%.
Other operating income was $1,390,000 for the six month period ended June 30,
1995 compared with $1,059,000 for the same period in 1994, an increase of
$331,000 or 31.26%. Service charges increased by $114,000 or 29.38% while other
noninterest income increased $217,000 or 32.34%.
The increases in service charges during the three- and six-month periods ended
June 30, 1995 as compared to the same periods in 1994 were a result of the
Overland Merger and an increase in merchant VISA activity. The increases in
other noninterest income were due primarily to gains on the sale of other real
estate owned of $278,000 as well as additional increases in service charges and
other fee income due to the deposits acquired in the Overland Merger.
ALLOWANCE AND PROVISION FOR LOAN LOSSES
Loan quality is monitored on an ongoing basis. On a quarterly basis, management
conducts an analysis of the composition and quality of the Company's loan
portfolio. The Company determines the allocation for allowances based upon the
evaluation of quality of the loan portfolio, total outstanding loans, previous
charges against the allowance, and current and anticipated economic conditions.
The provision for loan losses is a charge against earnings in the period
in which the potential loss is identified. Actual loan losses are charged
against the allowance for loan losses in the period in which they occur.
No provision for loan losses was recognized for the three- and six-month
periods ended June 30, 1995 and 1994. Based on a review of the loan portfolio
and considering historical experience with regard to potential loan losses, the
allowances for loan losses as of June 30, 1995 and 1994 were deemed adequate to
absorb potential losses.
At June 30, 1995, the allowance for loan losses totaled $2,848,000, or 1.99% of
total loans outstanding compared with $2,666,000 or 2.21% of total loans
outstanding as of December 31, 1994. Due to the positive trend in asset quality
and based on management's evaluation of the loan portfolio considering the
factors mentioned above, management believes that the allowance for loan losses
was adequate as of June 30, 1995.
11
<PAGE> 12
INCOME TAXES
No income tax expense or benefit was recorded during the three or six month
periods ended June 30, 1995 and 1994 due to the significant net operating loss
carryforward position of the Company for tax purposes. As of December 31,
1994, the Company had net operating loss carryforwards for Federal and state
income tax purposes of $5,650,000 and $3,949,000, respectively, which are
available to offset future Federal and state taxable income, if any, through
2009 and 1999, respectively. In addition, the Company has alternative minimum
tax credit carryforwards of approximately $119,000 which are available to
reduce future Federal regular income taxes, if any, over an indefinite period.
LIQUIDITY AND ASSET/LIABILITY MANAGEMENT
Effective asset liability management is achieved by maintaining adequate
liquidity and minimizing the impact of future interest rate changes on net
interest income. The responsibility of monitoring the Company's liquidity and
interest rate sensitivity lies with the Asset/Liability and Executive
Committees of FPNB. The Executive Committee meets weekly and the
Asset/Liability Committee meets quarterly to monitor liquidity, investment
strategies, rate sensitivity strategy, and loan demand as well as the adequacy
of funding sources.
Liquidity measures the ability of the Company to meet its maturing obligations
and existing commitments, to withstand fluctuations in deposit levels, to fund
its operations, and to provide for customers' credit needs. Liquidity is
provided by cash and due from banks, Federal funds sold, investments available
for sale, interest earning deposits in other financial institutions, and loan
repayments. The Company's total liquid assets as a percentage of deposits
totaled 23.06% and 12.17% as of June 30, 1995 and December 31, 1994,
respectively. The increase in liquidity is due to a relative increase in
deposit balances since the end of the year as well as $8,000,000 in short-term
extraordinary deposits accepted on June 30, 1995.
The Company actively manages its interest rate sensitivity position. The
objectives of interest rate risk management are to control exposure of net
interest income to risks associated with interest rate movements to achieve
consistent growth in net interest income, and to profit from favorable market
opportunities. The Company manages the rate sensitivity position by adjusting
the average maturity of and establishing rates on earning assets and interest
bearing liabilities in line with its expectation for future interest rates.
However, even with perfectly matched repricing of assets and liabilities,
interest rate risk cannot be avoided entirely. Interest rate risk remains
in the form of prepayment risk of assets and liabilities, risks related to
differences in the timing and indexes for interest rate adjustments for assets
and liabilities with adjustable interest rates, and basis risk. In the
Company's experience, in a rising rate environment rates on short-term
liabilities rise more slowly than rates on its adjustable rate assets, while in
a decreasing rate environment, the Company would expect rates on its short-term
liabilities to decrease more consistently with the rates on its adjustable
assets.
CAPITAL RESOURCES
The Company engages in an ongoing assessment of its capital needs in order to
maintain an adequate level of capital to support business growth and to ensure
depositor protection. The Company's two sources of capital are internally
generated funds and the capital markets. In 1993, the Company completed the
offering of $4,575,000 of 9% convertible subordinated debentures due December
31, 1997. On November 22, 1994, the Company completed two private offerings of
the Company's common stock. After deducting the direct costs of approximately
$99,000 for the private offerings, the offerings generated $3,034,000 in
additional capital for the Company.
12
<PAGE> 13
The Federal Reserve Board (the "FRB") in December 1988, the Office of the
Comptroller of the Currency (the "OCC") in January 1989, and the Federal
Deposit Insurance Corporation in March 1989 adopted risk-based capital adequacy
guidelines for bank holding companies and banks. The risk-based capital
adequacy guidelines establish a risk-based capital ratio based on the overall
risk of the entity determined by assigning various weighted risks to each
balance sheet asset and certain off-balance sheet commitments, adding up all of
the weighted risk amounts, and dividing Tier 1 capital (capital, surplus, and
retained earnings) into the risk-weighted assets. At June 30, 1995, the
Company's Tier 1 risk-based capital to risk-weighted assets totaled 8.74%
compared to 7.82% at December 31, 1994.
Additionally, the FRB and the OCC adopted leverage requirements effective
January 1, 1992 which apply in addition to the risk-based capital requirements.
Under these requirements, bank holding companies and national banking
associations are required to maintain core capital of at least 3% of total
assets. On June 30, 1995 and December 31, 1994, the Company's core capital to
total assets stood at 6.58% and 6.33%, respectively.
13
<PAGE> 14
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
A Special Meeting of Shareholders of the Company was held on March 22, 1995 at
10:00 a.m. at the Lake San Marcos Country Club, 1750 San Pablo Drive, Lake San
Marcos, California. There were 1,175,316 shares represented at the meeting by
proxy or in person, constituting a quorum of all shareholders of FP Bancorp.
The following proposals were approved at the Company's Special Meeting of
Shareholders:
<TABLE>
<CAPTION>
Votes Votes Broker
Votes For Against Withheld Non-votes
--------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
1. Proposed merger of Overland Bank
with and into FPNB. 1,130,929 23,496 20,891 0
2. Proposed reincorporation of FP Bancorp
as a Delaware corporation. 1,136,655 25,935 12,726 0
</TABLE>
The Annual Meeting of Stockholders of the Company was held on July 27, 1995 at
5:30 p.m. at the California Center for the Arts, 340 North Escondido Boulevard,
Escondido, California. There were 2,133,218 shares represented at the meeting by
proxy or in person, constituting a quorum of all stockholders of the Company.
The following proposals were approved at the Company's Annual Meeting of
Stockholders:
<TABLE>
<CAPTION>
Votes Votes Broker
Votes For Against Withheld Non-votes
--------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
1. Election of 12 persons to serve as
Directors of the Company until their
successors are duly elected and
qualified. 2,116,796 0 16,422 0
2. Ratification of the appointment of
KPMG Peat Marwick, LLP as the
independent auditor for 1995. 2,110,632 13,770 8,816 0
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Ex-2.(i) Agreement and Plan of Reorganization dated October 12,
1994 among FP Bancorp, First Pacific National Bank, and
Overland Bank (incorporated by reference to Exhibit A to
the Registration Statement on Form S-4, File No. 33-87388.)
Ex-2.(ii) Agreement to Merge made between First Pacific National Bank
and Overland Bank under the Charter of First Pacific
National Bank under the title of First Pacific National
Bank (incorporated by reference to Exhibit (1) to the
Current Report on Form 8-K, File No. 0-17650 dated April 1,
1995.)
Ex-2.(iii) Certificate of Ownership and Merger of FP Bancorp
(incorporated by reference to Exhibit (2) to the Current
Report of Form 8-K, File No. 0-17650 dated April 1, 1995.)
14
<PAGE> 15
Ex-3.(i) Certificate of Incorporation of FP Bancorp, Inc.
(incorporated by reference to Exhibit (3) to the Current
Report on Form 8-K, File No. 0-17650 dated April 1, 1995.)
Ex-3.(ii) Certificate of Amendment of Certificate of Incorporation of
FP Bancorp, Inc. (incorporated by reference to Exhibit (4)
to the Current Report on Form 8-K, File No. 0-17650 dated
April 1, 1995.)
Ex-3.(iii) Amended and Restated By-laws of FP Bancorp, Inc., adopted
June 20, 1995.
(b) Reports on Form 8-K.
Form 8-K, File No. 0-17650 dated April 1, 1995 was filed to report the
merger of Overland Bank with and into FP Bancorp's wholly-owned
subsidiary, First Pacific National Bank, on April 1, 1995, the
reincorporation of the Company as a Delaware Corporation on April 11,
1995, and the listing of the Company's common stock on the Nasdaq
SmallCap Market on April 13, 1995. The Overland Bank Report and
Financial Statements as of and for the years ended December 31, 1994,
1993, and 1992 were filed with the Form 8-K.
15
<PAGE> 16
SIGNATURES
In the opinion of management, the financial statements presented reflect all
adjustments which are necessary to a fair statement of the results for the
periods presented.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FP Bancorp, Inc.
By: /s/ MICHAEL J. PERDUE
-----------------------------
Michael J. Perdue
Executive Vice President and
Chief Operating Officer
(duly authorized officer and
principal financial officer)
Dated: August 11, 1995
16
<PAGE> 1
EXHIBIT 3.(iii)
AMENDED AND RESTATED
BY-LAWS
OF
FP BANCORP, INC.
(A DELAWARE CORPORATION)
ADOPTED JUNE 20, 1995
<PAGE> 2
AMENDED AND RESTATED
BY-LAWS OF
FP BANCORP, INC.
(A DELAWARE CORPORATION)
<TABLE>
<S> <C>
ARTICLE I CORPORATE OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 REGISTERED OFFICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 OTHER OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II MEETINGS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 PLACE OF MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.4 NOTICE OF STOCKHOLDERS' MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS . . . . . . . . . 2
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE . . . . . . . . . . . . . . . . . . . 2
2.7 QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.8 ADJOURNED MEETING; NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9 VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING . . . . . . . . . . . . . 3
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING . . . . . . . . . . . . . . . . . . . . 3
2.12 PROXIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.13 ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 POWERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.4 RESIGNATION AND VACANCIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.5 REMOVAL OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.7 FIRST MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.8 REGULAR MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.9 SPECIAL MEETINGS; NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.10 QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.11 WAIVER OF NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.12 ADJOURNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
3.13 NOTICE OF ADJOURNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING . . . . . . . . . . . . . . . . 7
3.15 FEES AND COMPENSATION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . 7
3.16 APPROVAL OF LOANS TO OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.17 SOLE DIRECTOR PROVIDED BY CERTIFICATE OF INCORPORATION . . . . . . . . . . . . . 7
ARTICLE IV COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1 COMMITTEES OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 MEETING AND ACTION OF COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 COMMITTEE MINUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE V OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.2 ELECTION OF OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.3 SUBORDINATE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.4 REMOVAL AND RESIGNATION OF OFFICERS . . . . . . . . . . . . . . . . . . . . . . . 9
5.5 VACANCIES IN OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.6 CHAIRMAN OF THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.7 PRESIDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.8 VICE PRESIDENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.9 SECRETARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.10 CHIEF FINANCIAL OFFICER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.11 ASSISTANT SECRETARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.12 ADMINISTRATIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.13 AUTHORITY AND DUTIES OF OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS . . . . . . 11
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . 11
6.2 INDEMNIFICATION OF OTHERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.3 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VII RECORDS AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.1 MAINTENANCE AND INSPECTION OF RECORDS . . . . . . . . . . . . . . . . . . . . . . 12
7.2 INSPECTION BY DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.3 ANNUAL STATEMENT TO STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS . . . . . . . . . . . . . . . . . . 13
7.5 CERTIFICATION AND INSPECTION OF BY-LAWS . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VIII GENERAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING . . . . . . . . . . . . . . 13
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED . . . . . . . . . . . . . . . . 14
8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES . . . . . . . . . . . . . . . . . 14
8.5 SPECIAL DESIGNATION ON CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . 14
8.6 LOST CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.7 TRANSFER AGENTS AND REGISTRARS . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.8 CONSTRUCTION; DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IX AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.1 AMENDMENT BY STOCKHOLDERS OR DIRECTORS . . . . . . . . . . . . . . . . . . . . . . 15
9.2 AMENDMENT TO CONFORM TO CALIFORNIA LAW . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
iii
<PAGE> 5
AMENDED AND RESTATED
BY-LAWS
OF
FP BANCORP, INC.
(A DELAWARE CORPORATION)
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be fixed in the
certificate of incorporation of the corporation.
1.2 OTHER OFFICES
The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETING
Meetings of stockholders shall be held at any place within or outside
the State of Delaware designated by the board of directors. In the absence of
any such designation, stockholders' meetings shall be held at the principal
executive office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date
and at a time designated by the board of directors. In the absence of such
designation, the annual meeting of stockholders shall be held on the second
Tuesday in April in each year at 10:00 a.m. However, if such day falls on a
legal holiday, then the meeting shall be held at the same time and place on the
next succeeding full business day. At the meeting, directors shall be elected,
and any other proper business may be transacted.
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
board of directors, or by the chairman of the board, or by the president, or by
one or more stockholders holding shares in the aggregate entitled to cast not
less than ten percent (10%) of the votes of stock owned by stockholders
entitled to vote at that meeting. If a special meeting is called by any person
or persons other than the board of directors or the president or the chairman
of the board, then the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the board, the president, any
vice president or the secretary of the corporation. The officer receiving the
request shall cause notice to be promptly given to the
1
<PAGE> 6
stockholders entitled to vote, in accordance with the provisions of Sections
2.4 and 2.6 of these by-laws, that a meeting will be held at the time requested
by the person or persons calling the meeting, so long as that time is not less
than thirty-five (35) nor more than sixty (60) days after the receipt of the
request. If the notice is not given within twenty (20) days after receipt of
the request, then the person or persons requesting the meeting may give the
notice. Nothing contained in this paragraph of this Section 2.3 shall be
construed as limiting, fixing or affecting the time when a meeting of
stockholders called by action of the board of directors may be held.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings of stockholders shall be sent or otherwise
given in accordance with Section 2.5 of these by-laws not less than ten (10)
nor more than sixty (60) days before the date of the meeting. The notice shall
specify the place, date and hour of the meeting and (i) in the case of a
special meeting, the purpose or purposes for which the meeting is called (no
business other than that specified in the notice may be transacted) or (ii) in
the case of the annual meeting, those matters which the board of directors, at
the time of giving the notice, intends to present for action by the
stockholders (but any proper matter may be presented at the meeting for such
action). The notice of any meeting at which directors are to be elected shall
include the name of any nominee or nominees who, at the time of the notice, the
board intends to present for election.
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS
To be properly brought before an annual meeting or special meeting,
nominations for the election of directors or other business must be (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the board of directors, (b) otherwise properly brought before
the meeting by or at the direction of the board of directors or (c) otherwise
properly brought before the meeting by a stockholder.
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders shall be given either
personally or by first-class mail or by telegraphic or other written
communication. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the stockholder at the address of that stockholder
appearing on the books of the corporation or given by the stockholder to the
corporation for the purpose of notice. Notice shall be deemed to have been
given at the time when delivered personally or deposited in the mail or sent by
telegram or other means of written communication.
An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
2.7 QUORUM
The holders of a majority in voting power of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum is not present or
represented at any meeting of the stockholders, then either (i) the chairman of
the meeting or (ii) the stockholders entitled to vote thereat, present in
person or represented by proxy, shall have power to adjourn the meeting in
accordance with Section 2.7 of these by-laws.
When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the
question is one upon which, by express provision of the laws of the State of
Delaware or of the certificate of incorporation or these by-laws, a different
vote is required, in which case such express provision shall govern and control
the decision of the question.
2
<PAGE> 7
If a quorum be initially present, the stockholders may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken is approved by a
majority of the stockholders initially constituting the quorum.
2.8 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time and place, unless these
by-laws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting the corporation may transact
any business that might have been transacted at the original meeting. If the
adjournment is for more than thirty (30) days, or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
2.9 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.11 of these
by-laws, subject to the provisions of Section 217 and 218 of the General
Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors
and joint owners, and to voting trusts and other voting agreements).
Except as may be otherwise provided in the certificate of
incorporation or these by-laws, each stockholder shall be entitled to one vote
for each share of capital stock held by such stockholder.
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required or permitted to be taken at any annual or special
meeting of stockholders may be taken without a meeting, without prior notice
and without a vote, if a consent or consents in writing setting forth the
action so taken shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted. Such consents shall be delivered to the corporation by
delivery to its registered office in the state of Delaware, its principal place
of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to a corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested.
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING
For purposes of determining the stockholders entitled to notice of any
meeting or to vote thereat, the board of directors may fix, in advance, a
record date, which shall not precede the date upon which the resolution fixing
the record date is adopted by the board of directors and which shall not be
more than sixty (60) days nor less than ten (10) days before the date of any
such meeting, and in such event only stockholders of record on the date so
fixed are entitled to notice and to vote, notwithstanding any transfer of any
shares on the books of the corporation after the record date.
If the board of directors does not so fix a record date, the record
date for determining stockholders entitled to notice of or to vote a meeting of
stockholders shall be at the close of business on the business day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting
unless the board of director fixes a new record date for the adjourned meeting,
but the board of directors shall fix a new record date if the meeting is
adjourned for more than thirty (30) days from the date set forth the original
meeting.
The record date for any other purpose shall be as provided in Section
8.1 of these by-laws.
3
<PAGE> 8
2.12 PROXIES
Every person entitled to vote for directors, or on any other matter,
shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the secretary
of the corporation, but no such proxy shall be voted or acted upon after three
(3) years from its date, unless the proxy provides for a longer period. A
proxy shall be deemed signed if the stockholder's name is placed on the proxy
(whether by manual signature, typewriting, telegraphic transmission,
telefacsimile or otherwise) by the stockholder or by the stockholder's
attorney-in-fact. The revocability of a proxy that states on its face that it
is irrevocable shall be governed by the provisions of Section 212(e) of the
General Corporation Law of Delaware.
2.13 ORGANIZATION
The president, or in the absence of the president, the chairman of the
board, shall call the meeting of the stockholders to order, and shall act as
chairman of the meeting. In the absence of the president, the chairman of the
board, and all of the vice presidents, the stockholders shall appoint a
chairman for such meeting. The chairman of any meeting of stockholders shall
determine the order of business and the procedures at the meeting, including
such matters as the regulation of the manner of voting and the conduct of
business. The secretary of the corporation shall act as secretary of all
meetings of the stockholders, but in the absence of the secretary at any
meeting of the stockholders, the chairman of the meeting may appoint any person
to act as secretary of the meeting.
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of the corporation
shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware
and to any limitations in the certificate of incorporation or these by-laws
relating to action required to be approved by the stockholders or by the
outstanding shares, the business and affairs of the corporation shall be
managed and all corporate powers shall be exercised by or under the direction
of the board of directors.
3.2 CLASSIFICATION OF BOARD.
The board of directors shall consist of 14 members who shall be
divided by the board into two classes in respect of term of office at such time
as the corporation is no longer subject to California law prohibiting such
classification. Each shall contain as near as may be one-half of the whole
number of the Board
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3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS
So long as the corporation is subject to California law requiring that
all of the directors be elected at each annual meeting of stockholders, all
directors will serve one year terms until their successors shall be elected and
qualified. At such time as the corporation is no longer subject to California
law requiring the election of all directors at each annual meeting of
stockholders, the members of one class shall serve until the annual meeting of
stockholders following such event and until their successors shall be elected
and qualified. The members of the other class shall serve until the second
annual meeting of stockholders following such event and until their successors
shall be elected and qualified. Thereafter, directors shall serve two year
terms with one class of directors being elected at each annual meeting of
stockholders to serve until the annual meeting of stockholders held in the
second year after such meeting and until their successors shall be elected and
qualified.
3.4 RESIGNATION AND VACANCIES
Any director may resign effective on giving written notice to the
chairman of the board, the president, the secretary or the board of directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a director is effective at a future time,
the board of directors may elect a successor to take office when the
resignation becomes effective.
Vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote
of the stockholders or by court order may be filled only by the affirmative
vote of a majority of the shares represented and voting at a duly held meeting
at which a quorum is present (which shares voting affirmatively also constitute
a majority of the required quorum) Each director so elected shall hold office
until the next annual meeting of the stockholders and until a successor has
been elected and qualified.
Unless otherwise provided in the certificate of incorporation or these
by-laws:
(i) Vacancies and newly created directorships resulting
from any increase in the authorized number of directors elected by all
of the stockholders having the right to vote as a single class may be
filled by a majority of the directors then in office, although less
than a quorum, or by a sole remaining director.
(ii) Whenever the holders of any class or classes of stock
or series thereof are entitled to elect one or more directors by the
provisions of the certificate of incorporation, vacancies and newly
created directorships of such class or classes or series may be filled
by a majority of the directors elected by such class or classes or
series thereof then in office, or by a sole remaining director so
elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a
stockholder, or other fiduciary entrusted with like responsibility for the
person or estate of a stockholder, may call a special meeting of stockholders
in accordance with the provisions of the certificate of incorporation or these
by-laws, or may apply to the Court of Chancery for a decree summarily ordering
an election as provided in Section 211 of the General Corporation Law of
Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as
aforesaid, which election shall be governed by the provisions of Section 211 of
the General Corporation Law of Delaware as far as applicable.
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3.5 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of
incorporation or by these by-laws, any director or the entire board of
directors may be removed, with or without cause, by the holders of a majority
of the shares then entitled to vote at an election of directors; provided,
however, that, if and so long as stockholders of the corporation are entitled
to cumulative voting, if less than the entire board is to be removed, no
director may be removed without cause if the votes cast against his removal
would be sufficient to elect him if then cumulatively voted at an election of
the entire board of directors.
3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
Regular meetings of the board of directors may be held at any place
within or outside the State of Delaware that has been designated from time to
time by resolution of the board. In the absence of such a designation, regular
meetings shall be held at the principal executive office of the corporation.
Special meetings of the board may be held at any place within or outside the
State of Delaware that has been designated in the notice of the meeting, or if
not stated in the notice or if there is no notice, at the principal executive
office of the corporation.
Any meeting of the board, regular or special, may be held by
conference telephone or similar communication equipment, so long as all
directors participating in the meeting can hear one another, and all such
participating directors shall be deemed to be present in person at the meeting.
3.7 FIRST MEETINGS
The first meeting of each newly elected board of directors shall be
held at such time and place as shall be fixed by the vote of the stockholders
at the annual meeting. In the event of the failure of the stockholders to fix
the time or place of such first meeting of the newly elected board of
directors, or in the event such meeting is not held at the time and place so
fixed by the stockholders, the meeting may be held at such time and place as
shall be specified in a notice given as hereinafter provided for special
meetings of the board of directors, or as shall be specified in a written
waiver signed by all of the directors.
3.8 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice
at such time as shall from time to time be determined by the board of
directors. If any regular meeting day shall fall on a legal holiday, then the
meeting shall be held at the same time and place on the next succeeding full
business day.
3.9 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose may be
called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail,
telecopy or telegram, charges prepaid, addressed to each director at that
director's address as it is shown on the records of the corporation. If the
notice is mailed, it shall be deposited in the United States mail at least four
(4) days before the time of the holding of the meeting. If the notice is
delivered personally or by telephone, telecopy or telegram, it shall be
delivered personally or by telephone or to the telegraph company at least
forty-eight (48) hours before the time of the holding of the meeting. Any oral
notice given personally or by telephone may be communicated either to the
director or to a person at the office of the director who the person giving the
notice has reason to believe will promptly communicate it to the director. The
notice need not specify the purpose or the place of the meeting, if the meeting
is to be held at the principal executive office of the corporation.
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3.10 QUORUM
A majority of the authorized number of directors shall constitute a
quorum for the transaction of business, except to adjourn as provided in
Section 3.12 of these by-laws. Every act or decision done or made by a
majority of the directors present at a duly held meeting at which a quorum is
present shall be regarded as the act of the board of directors, subject to the
provisions of the certificate of incorporation and applicable law.
A meeting in which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the quorum for that meeting.
3.11 WAIVER OF NOTICE
Notice of a meeting need not be given to any director (i) who signs a
waiver of notice, whether before or after the meeting, or (ii) who attends the
meeting other than for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. All such waivers shall be filed with the corporate records
or made part of the minutes of the meeting. A waiver of notice need not
specify the purpose of any regular or special meeting of the board of
directors.
3.12 ADJOURNMENT
A majority of the directors present, whether or not constituting a
quorum, may adjourn any meeting of the board to another time and place.
3.13 NOTICE OF ADJOURNMENT
Notice of the time and place of holding an adjourned meeting of the
board need not be given unless the meeting is adjourned for more than
twenty-four (24) hours. If the meeting is adjourned for twenty-four (24)
hours, then notice of the time and place of the adjourned meeting shall be
given before the adjourned meeting takes place, in the manner specified in
Section 3.9 of these by-laws, to the directors who were not present at the time
of the adjournment.
3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required or permitted to be taken by the board of directors
may be taken without a meeting, provided that all members of the board
individually or collectively consent in writing to that action. Such action by
written consent shall have the same force and effect as a unanimous vote of the
board of directors. Such written consent and any counterparts thereof shall be
filed with the minutes of the proceedings of the board of directors.
3.15 FEES AND COMPENSATION OF DIRECTORS
Directors and members of committees may receive such compensation, if
any, for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the board of directors. This Section 3.15 shall
not be construed to preclude any director from serving the corporation in any
other capacity as an officer, agent, employee or otherwise and receiving
compensation for those services.
3.16 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or any of its
subsidiaries, including any officer or employee who is a director of the
corporation or any of its subsidiaries, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares
of stock of the corporation. Nothing contained in this section
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shall be deemed to deny, limit or restrict the powers of guaranty or warranty
of the corporation at common law or under any statute.
3.17 SOLE DIRECTOR PROVIDED BY CERTIFICATE OF INCORPORATION
In the event only one director is required by these by-laws or the
certificate of incorporation, then any reference herein to notices, waivers,
consents, meetings or other actions by a majority or quorum of the directors
shall be deemed to refer to such notice, waiver, etc., by such sole director,
who shall have all the rights and duties and shall be entitled to exercise all
of the powers and shall assume all the responsibilities otherwise herein
described as given to the board of directors.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution adopted by a majority of the
authorized number of directors, designate one (1) or more committees, each
consisting of two or more directors, to serve at the pleasure of the board.
That board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. The appointment of members or alternate members of a committee
requires the vote of a majority of the authorized number of members or
alternate members of a committee requires the vote of a majority of the
authorized number of directors. Any committee, to the extent provided in the
resolution of the board, shall have and may exercise all the powers and
authority of the board, but no such committee shall have the power or authority
to (i) amend the certificate of incorporation (except that a committee may, to
the extent authorized in the resolution or resolutions providing for the
issuance of shares of stock adopted by the board of directors as provided in
Section 151(a) of the General Corporation Law of Delaware, fix the designations
and any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the corporation or the
conversion into, or the exchange of such shares for, shares of any other class
or classes or any other series of the same or any other class or classes of
stock of the corporation), (ii) adopt an agreement of merger or consolidation
under Section 251 or 252 of the General Corporation Law of Delaware, (iii)
recommend to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, (iv) recommend to
the stockholders a dissolution of the corporation or a revocation of a
dissolution or (v) amend the by-laws of the corporation; and, unless the board
resolution establishing the committee, the by-laws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to
adopt a certificate of ownership and merger pursuant to Section 253 of the
General Corporation Law of Delaware.
4.2 MEETING AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the following provisions of Article III of these
by-laws: Section 3.6 (place of meetings; meetings by telephone), Section 3.8
(regular meetings), Section 3.9 (special meetings; notice), Section 3.10
(quorum), Section 3.11 (waiver of notice), Section 3.12 (adjournment), Section
3.13 (notice of adjournment) and Section 3.14 (board action by written consent
without meeting), with such changes in the context of those by-laws as are
necessary to substitute the committee and its members for the board of
directors and its members; provided, however, that the time of regular meetings
of committees may be determined either by resolution of the board of directors
or by resolution of the committee, that special meetings of committees may also
be called by resolution of the board of directors, and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The board of directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these by-laws.
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4.3 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report
the same to the board of directors when required.
ARTICLE V
OFFICERS
5.1 OFFICERS
The Corporate Officers of the corporation shall be a president, a
secretary and a chief financial officer. The corporation may also have, at the
discretion of the board of directors, a chairman of the board, one or more vice
presidents (however denominated), one or more assistant secretaries, one or
more assistant treasurers, and such other officers as may be appointed in
accordance with the provisions of Section 5.3 of these by-laws. Any number of
offices may be held by the same person.
In addition to the Corporate Officers of the Company described above,
there may also be such Administrative Officers of the corporation as may be
designed and appointed from time to time by the president of the corporation in
accordance with the provisions of Section 5.12 of these by-laws.
5.2 ELECTION OF OFFICERS
The Corporate Officers of the corporation, except such officers as may
be appointed in accordance with the provisions of Section 5.3 or Section 5.5 of
these by-laws, shall be chosen by the board of directors, subject to the
rights, if any, of an officer under any contract of employment, and shall hold
their respective offices for such terms as the board of directors may from time
to time determine.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or may empower the president to
appoint, such other Corporate Officers as the business of the corporation may
require, each of whom shall hold office for such period, have such power and
authority, and perform such duties as are provided in these by-laws or as the
board of directors may from time to time determine.
The president may from time to time designate and appoint
Administrative Officers of the corporation in accordance with the provisions of
Section 5.12 of these by-laws.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of a Corporate Officer under any
contract of employment, any Corporate Officer may be removed, either with or
without cause, by the board of directors at any regular or special meeting of
the board or, except in case of a Corporate Officer chosen by the board of
directors, by any Corporate Officer upon whom such power of removal may be
conferred by the board of directors.
Any Corporate Officer may resign at any time by giving written notice
to the corporation. Any resignation shall take effect at the date of the
receipt of that notice or at any later time specified in that notice; and,
unless otherwise specified in that notice, the acceptance of the resignation
shall not be necessary to make it effective. Any resignation is without
prejudice to the rights, if any, of the corporation under any contract to which
the Corporate Officer is a party.
Any Administrative Officer designated and appointed by the president
may be removed, either with or without cause, at any time by the president.
Any Administrative Officer may resign at any time by giving written notice to
the president or to the secretary of the corporation.
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5.5 VACANCIES IN OFFICES
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these by-laws for regular appointments to that office.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise such other
powers and perform such other duties as may from time to time be assigned to
him by the board of directors or as may be prescribed by these by-laws. If
there is no president, then the chairman of the board shall also be the chief
executive officer of the corporation and shall have the powers and duties
prescribed in Section 5.7 of these by-laws.
5.7 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the
board of directors to the chairman of the board, if there be such an officer,
the president shall be the chief executive officer of the corporation and
shall, subject to the control of the board of directors, have general
supervision, direction and control of the business and the officers of the
corporation. He or she shall preside at all meetings of the stockholders and,
in the absence or nonexistence of a chairman of the board, at all meetings of
the board of directors. He or she shall have the general powers and duties of
management usually vested in the office of president of a corporation, and
shall have such other powers and perform such other duties as may be prescribed
by the board of directors or these by-laws.
5.8 VICE PRESIDENTS
In the absence or disability of the president, and if there is no
chairman of the board, the vice presidents, if any, in order of their rank as
fixed by the board of directors or, if not ranked, a vice president designated
by the board of directors, shall perform all the duties of the president and
when so acting shall have all the powers of, and be subject to all the
restrictions upon, the president. The vice presidents shall have such other
powers and perform such other duties as from time to time may be prescribed for
them respectively by the board of directors, these by-laws, the president or
the chairman of the board.
5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of the
board of directors, committees of directors and stockholders. The minutes
shall show the time and place of each meeting, whether regular or special (and,
if special, how authorized and the notice given), the names of those present at
directors' meetings or committee meetings, the number of shares present or
represented at stockholders' meetings and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register or a duplicate share register, showing the names of
all stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law
or by these by-laws. He or she shall keep the seal of the corporation, if one
be adopted, in safe custody and shall have such other powers and perform such
other duties as may be prescribed by the board of directors or by these
by-laws.
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5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The books of account shall at all reasonable
times be open to inspection by any director for a purpose reasonably related to
his position as a director.
The chief financial officer shall deposit all money and other
valuables in the name and to the credit of the corporation with such
depositories as may be designated by the board of directors. He or she shall
disburse the funds of the corporation as may be ordered by the board of
directors, shall render to the president and directors, whenever they request
it, an account of all of his or her transactions as chief financial officer and
of the financial condition of the corporation, and shall have such other powers
and perform such other duties as may be prescribed by the board of directors or
these by-laws.
5.11 ASSISTANT SECRETARY
The assistant secretary, if any, or, if there is more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
5.12 ADMINISTRATIVE OFFICERS
In addition to the Corporate Officers of the corporation as provided
in Section 5.1 of these by-laws and such subordinate Corporate Officers as may
be appointed in accordance with Section 5.3 of these by-laws, there may also be
such Administrative Officers of the corporation as may be designated and
appointed from time to time by the president of the corporation.
Administrative Officers shall perform such duties and have such powers as from
time to time may be determined by the president or the board of directors in
order to assist the Corporate Officers in the furtherance of their duties. In
the performance of such duties and the exercise of such powers, however, such
Administrative Officers shall have limited authority to act on behalf of the
corporation as the board of directors shall establish, including but not
limited to limitations on the dollar amount and on the scope of agreements or
commitments that may be made by such Administrative Officers on behalf of the
corporation, which limitations may not be exceeded by such individuals or
altered by the president without further approval by the board of directors.
5.13 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing powers, authority and duties, all
officers of the corporation shall respectively have such authority and powers
and perform such duties in the management of the business of the corporation as
may be designated from time to time by the board of directors.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner
permitted by the General Corporation Law of Delaware as the same now exists or
may hereafter be amended, indemnify any person against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred in connection with any threatened, pending or completed
action, suit, or proceeding in which such person was or is a
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party or is threatened to be made a party by reason of the fact that such
person is or was a director or officer of the corporation. For purposes of
this Section 6.1, a "director" or "officer" of the corporation shall mean any
person (i) who is or was a director or officer of the corporation, (ii) who is
or was serving at the request of the corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise, or
(iii) who was a director or officer of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of such
predecessor corporation.
The corporation shall be required to indemnify a director or officer
in connection with an action, suit, or proceeding (or part thereof) initiated
by such director or officer only if the initiation of such action, suit, or
proceeding (or part thereof) by the director or officer was authorized by the
Board of Directors of the corporation.
The corporation shall pay the expenses (including attorneys' fees)
incurred by a director or officer of the corporation entitled to
indemnification hereunder in defending any action, suit or proceeding referred
to in this Section 6.1 in advance of its final disposition; provided, however,
that payment of expenses incurred by a director or officer of the corporation
in advance of the final disposition of such action, suit or proceeding shall be
made only upon receipt of an undertaking by the director or officer to repay
all amounts advanced if it should ultimately be determined that the director or
officer is not entitled to be indemnified under this Section 6.1 or otherwise.
The rights conferred on any person by this article shall not be
exclusive of any other rights which such person may have or hereafter acquire
under any statute, provision of the corporation's Certificate of Incorporation,
these by-laws, agreement, vote of the stockholders or disinterested directors
or otherwise.
Any repeal or modification of the foregoing provisions of this Article
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
6.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the maximum extent and in the
manner permitted by the General Corporation Law of Delaware as the same now
exists or may hereafter be amended, to indemnify any person (other than
directors and officers) against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred in connection with any threatened, pending or completed action, suit,
or proceeding, in which such person was or is a party or is threatened to be
made a party by reason of the fact that such person is or was an employee or
agent of the corporation. For purposes of this Section 6.2, an "employee" or
"agent" of the corporation (other than a director or officer) shall mean any
person (i) who is or was an employee or agent of the corporation, (ii) who is
or was serving at the request of the corporation as an employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, or
(iii) who was an employee or agent of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of such
predecessor corporation.
6.3 INSURANCE
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity, or arising out of his or her status as
such, whether or not the corporation would have the power to indemnify him or
her against such liability under the provisions of the General Corporation Law
of Delaware.
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ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these by-laws as amended to date,
accounting books and other records of its business and properties.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean
a purpose reasonably related to such person's interest as a stockholder. In
every instance where an attorney or other agent is the person who seeks the
right to inspection, the demand under oath shall be accompanied by a power of
attorney or such other writing that authorizes the attorney or other agent to
so act on behalf of the stockholder. The demand under oath shall be directed
to the corporation at its registered office in Delaware or at its principal
place of business.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders and its other books and records for a
purpose reasonably related to his or her position as a director.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at
any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, if any, the president, any vice president,
the chief financial officer, the secretary or any assistant secretary of this
corporation, or any other person authorized by the board of directors or the
president or a vice president, is authorized to vote, represent and exercise on
behalf of this corporation all rights incident to any and all shares of the
stock of any other corporation or corporations standing in the name of this
corporation. The authority herein granted may be exercised either by such
person directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having authority.
7.5 CERTIFICATION AND INSPECTION OF BY-LAWS
The original or a copy of these by-laws, as amended or otherwise
altered to date, certified by the secretary, shall be kept at the corporation's
principal executive office and shall be open to inspection by the stockholders
of the corporation, at all reasonable times during office hours.
13
<PAGE> 18
ARTICLE VIII
GENERAL MATTERS
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING
For purposes of determining the stockholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the board of directors may fix, in advance, a record date, which shall not
precede the date upon which the resolution fixing the record date is adopted
and which shall not be more than sixty (60) days before any such action. In
that case, only stockholders of record at the close of business on the date so
fixed are entitled to receive the dividend, distribution or allotment of
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date so
fixed, except as otherwise provided by law.
If the board of directors does not so fix a record date, then the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the board of directors adopts the
applicable resolution.
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS
From time to time, the board of directors shall determine by
resolution which person or persons may sign or endorse all checks, drafts,
other orders for payment of money, notes or other evidences of indebtedness
that are issued in the name of or payable to the corporation, and only the
persons so authorized shall sign or endorse those instruments.
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED
The board of directors, except as otherwise provided in these by-laws,
may authorize and empower any officer or officers, or agent or agents, to enter
into any contract or execute any instrument in the name of and on behalf of the
corporation; such power and authority may be general or confined to specific
instances. Unless so authorized or ratified by the board of directors or
within the agency power of an officer, no officer, agent or employee shall have
any power or authority to bind the corporation by any contract or engagement or
to pledge its credit or to render it liable for any purpose or for any amount.
8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES
The shares of the corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply
to shares represented by a certificate until such certificate is surrendered to
the corporation. Notwithstanding the adoption of such a resolution by the
board of directors, every holder of stock represented by certificates and, upon
request, every holder of uncertificated shares, shall be entitled to have a
certificate signed by, or in the name of the corporation by, the chairman or
vice-chairman of the board of directors, or the president, and by the treasurer
or an assistant treasurer, or the secretary or an assistant secretary of such
corporation representing the number of shares registered in certificate form.
any or all of the signatures on the certificate may be a facsimile. In case
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate has ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he or she were such officer,
transfer agent or registrar at the date of issue.
Certificates for shares shall be of such form and device as the board
of directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; a summary statement or reference to the powers,
designations, preferences or other special rights of such stock and the
qualifications, limitations or restrictions of such preferences and/or rights,
if
14
<PAGE> 19
any; a statement as to any applicable voting trust agreement; if the shares be
assessable, or, if assessments are collectible by personal action, a plain
statement of such facts.
Upon surrender to the secretary or transfer agent of the corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
The corporation may issue the whole or any part of its shares as
partly paid and subject to call for the remainder of the consideration to be
paid therefor. Upon the face or back of each stock certificate issued to
represent any such partly paid shares, or upon the books and records of the
corporation in the case of uncertificated partly paid shares, the total amount
of the consideration to be paid therefor and the amount paid thereon shall be
stated. Upon the declaration of any dividend on fully paid shares, the
corporation shall declare a dividend upon partly paid shares of the same class,
but only upon the basis of the percentage of the consideration actually paid
thereon.
8.5 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the
designations, the preferences and the relative, participating, optional or
other special rights of each class of stock or series thereof and the
qualification, limitations or restrictions of such preferences and/or rights.
8.6 LOST CERTIFICATES
Except as provided in this Section 8.6, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; the board
may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
8.7 TRANSFER AGENTS AND REGISTRARS
The board of directors may appoint one or more transfer agents or
transfer clerks, and one or more registrars, each of which shall be an
incorporated bank or trust company, either domestic or foreign, who shall be
appointed at such times and places as the requirements of the corporation may
necessitate and the board of directors may designate.
8.8 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules
of construction and definitions in the General Corporation Law of Delaware
shall govern the construction of these by-laws. Without limiting the
generality of this provision, as used in these BY-LAWS, the singular number
includes the plural, the plural number includes the singular, and the term
"person" includes both an entity and a natural person.
15
<PAGE> 20
ARTICLE IX
AMENDMENTS
9.1 AMENDMENT BY STOCKHOLDERS OR DIRECTORS
The original or other by-laws of the corporation may be adopted,
amended or repealed by the stockholders entitled to vote; provided, however,
that the corporation may, in its certificate of incorporation, confer the power
to adopt, amend or repeal by-laws upon the directors. The fact that such power
has been so conferred upon the directors shall not divest the stockholders of
the power, nor limit their power to adopt, amend or repeal by-laws.
Whenever an amendment or new by-law is adopted, it shall be copied in
the book of by-laws with the original by-laws, in the appropriate place. If
any by-law is repealed, the fact of repeal with the date of the meeting at
which the repeal was enacted or the filing of the operative written consent(s)
shall be stated in said book.
9.2 AMENDMENT TO CONFORM TO CALIFORNIA LAW
Any and all provisions of these By-laws which do not conform to
California Corporations Code Section 2115(b) shall be deemed amended to conform
to Section 2115(b) unless and until the corporation qualifies for exemption
from Section 2115(b) pursuant to California Corporations Code Section 2115(e)
and the corporation has received advice of counsel to such effect.
16
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