SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended: December 31, 1995
or
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
--------- ---------
Commission File Number: 0-13528
PACIFIC CAPITAL BANCORP
- --------------------------------------------------------------------------------
(Exact Name of registrant as specified in its charter)
California 77-0003875
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
307 Main Street, Salinas, California 93901
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (408) 757-4900
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, No Par Value
--------------------------
Indicate by check mark whether the registrant (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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K [ X ]
Aggregate market value of Common Stock held by nonaffiliates of Pacific Capital
Bancorp at March 1, 1996: $53,050,518 Number of shares of Common Stock
outstanding at March 1, 1996: 2,600,588
Documents Incorporated by Reference:
1995 Annual Report to Shareholders. Part II, Items 5, 6, 7 and 8
Proxy Statement for 1996 Annual Part III, Items 10, 11, 12 and 13
Meeting of Shareholders to be filed
pursuant to Regulation 14A.
THIS REPORT INCLUDES A TOTAL OF PAGES
-----
EXHIBIT INDEX IS ON PAGE
-----
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
<S> <C> <C>
ITEM 1 BUSINESS....................................................................................................4
ITEM 2 PROPERTIES.................................................................................................16
ITEM 3 LEGAL PROCEEDINGS..........................................................................................19
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........................................................19
ITEM 5 MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.......................................20
ITEM 6 SELECTED FINANCIAL DATA....................................................................................20
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS..................................................................................20
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................................................................20
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE........................................................................20
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.........................................................21
ITEM 11 EXECUTIVE COMPENSATION.....................................................................................21
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.............................................................................................21
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............................................................21
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K............................................22
</TABLE>
1
<PAGE>
PART I
ITEM 1 BUSINESS
GENERAL
Pacific Capital Bancorp (the Company) is a California corporation and
bank holding company which was incorporated on January 26, 1983. First National
Bank of Central California, the Company's wholly-owned banking subsidiary (the
Bank), commenced operations on April 2, 1984, under the name First National Bank
of Monterey County. The Bank is a full service commercial bank serving Monterey,
Salinas, Carmel, Watsonville, Prunedale and surrounding areas in Monterey and
Santa Cruz Counties in California.
The Company itself does not engage in any business activities other
than the ownership of the Bank and the ownership of one other wholly-owned
subsidiary, Pacific Capital Services Corporation (PCSC). PCSC has no active
operations at this time. If specific opportunities were to present themselves,
the Company would consider expanding the operations of its banking subsidiary
and would seek opportunities for acquiring or forming other non-banking
subsidiaries.
GENERAL BANKING SERVICES
The Bank provides a wide range of commercial banking services to
individuals, professionals, and small and medium sized businesses. The services
provided include those typically offered by commercial banks, such as: checking,
interest checking and savings accounts, travelers checks, safe deposit boxes,
collection services, night depository facilities and wire and telephone
transfers. In addition to the above deposit services, the Bank also provides a
full array of loan products including commercial, real estate and consumer loans
as well as a variety of government assisted loan programs such as SBA or Rural
Economic Community Development Service guaranteed loans. The Bank is a member of
the Federal Deposit Insurance Corporation (the FDIC) and the deposits of each
depositor of the Bank are insured up to $100,000. Professional firms,
individuals and businesses form the core of the Bank's customer and deposit
base.
The Bank maintains lobby hours between 9:00 a.m. and 5:00 p.m., Monday
through Thursday and between 9:00 a.m. and 6:00 p.m. on Friday. In addition to a
broad range of retail products and services, the Bank offers courier pick-up
service, nationwide ATM access available through the Star(R) system, Cirrus(R),
Explore(R) and Ca$h24(R), and point of sale transactions through Explore(R),
Maestro(R) and Discover/Novus(R), merchant bank card support with electronic
ticket capture, self directed IRA'S, discount brokerage services and business
credit cards. Effective January 1, 1994, the Bank reduced its services at its
Prunedale branch, eliminating the acceptance of deposits and cashing of checks,
and on October 15, 1994, closed this branch office and converted it to an ATM
branch offering 24-hour ATM services and night depository facilities. The Bank's
loan administration department has been relocated to this location The Bank does
not offer trust services.
2
<PAGE>
DEPOSITS
Most of the Bank's deposits are obtained from individuals,
professionals and small and medium-sized businesses. As of December 31, 1995,
the Bank had a total of 21,803 accounts representing 11,248 demand deposit
(checking) accounts with an average balance of approximately $6,410 each; 7,473
savings, interest-bearing demand, and money market accounts with an average
balance of approximately $20,458 each; and 3,082 other time accounts with an
average balance of approximately $27,355 each.
LENDING ACTIVITIES
The Bank engages in a full complement of lending activities, including
commercial, consumer/installment and short-term real estate loans, with a
particular emphasis on short- and medium-term commercial obligations. Commercial
lending activities are directed principally toward small- to medium-sized
businesses, such as professional firms, retail, light industry and manufacturing
to which the Bank makes (a) loans for working capital, (b) loans secured by
receivable and inventory, (c) term loans for equipment; and (d) real estate
development loans. In addition to conventional commercial lending, the Bank also
offers an array of government assisted loan products including SBA guaranteed
loans, SBA 504 loans (primarily for commercial real estate transactions), Rural
Economic Community Development Services guaranteed loans and loans guaranteed
under the State of California guarantee program. The Bank also works to meet the
needs of the local municipalities by providing lease financing for a wide
variety of equipment purchases including energy retrofit, fire trucks, police
cars, portable classrooms, etc. Consumer lending is oriented primarily to the
needs of the Bank's customers, with an emphasis on automobile financing and real
estate loans. Real estate loans include home loans, equity advance loans and
construction loans.
The Bank concentrates its lending activities in the following areas:
real estate loans, commercial loans and consumer loans to individuals. As of
December 31, 1995, these three categories accounted for approximately 67.7%,
23.6% and 5.7%, respectively, of the Bank's loan portfolio. As of December 31,
1995, the Bank had total loans outstanding of $211,344,000. No material portion
of the Bank's loan portfolio is concentrated within a single industry or group
of related industries.
The interest rates charged for the various loans made by the Bank vary
with the degree of risk and the size and maturity of the loans involved and are
generally affected by competition, governmental regulation and by current money
market rates.
The Company's consolidated financial statements are prepared on the
accrual basis of accounting, including the recognition of interest income on the
loan portfolio. The Bank follows the policy of non-accrual of interest on a loan
when principal or interest is 90 days or more past due unless the loan is well
secured and in the process of collection. Interest income from non-accrual loans
is not accrued on the books, but rather is recorded only when and if received.
When a loan is placed on a non-accrual basis, any previously accrued but unpaid
interest is reversed and charged against current income unless there is adequate
collateral to assure recovery of the accrued interest.
3
<PAGE>
CORRESPONDENT BANKS
The Bank has correspondent relationships with First Interstate Bank of
California, Bank of California, N.A., Bank of America, N.T.& S.A. and the
Federal Reserve Bank of San Francisco. These relationships are a result of the
Bank's efforts to obtain a wide range of services for the Bank and its customers
and, as net sellers of federal funds (overnight interbank loans), to minimize
the risk of an undue concentration of its resources with a few entities. The
Bank does not currently serve, nor does it have plans to serve, as a
correspondent to other banks.
The correspondent banks perform the following services for the Bank:
arrange loan participations; purchase and sell federal funds; obtain lines for
letters of credit; buy and sell investment securities; safekeep the Bank's
investment securities; and perform stock transfer agent, and data processing
services.
EXISTING LOCATIONS
The Bank currently operates five branch offices: the Monterey branch
located at 495 Washington Street, Monterey; the Salinas branch located at 1001
South Main Street, Salinas; the Oldtown office located at 307 Main Street,
Salinas; the Carmel branch located in the Carmel Rancho Shopping Center, Carmel;
and the Watsonville branch located at 655 Main Street, Watsonville. Effective
January 1, 1994, the Bank reduced the services offered at its Prunedale branch
located in the Prunedale Shopping Center, Prunedale, discontinuing accepting
deposits or cashing checks, and on October 15, 1994, the Prunedale branch was
closed and converted to an ATM branch offering 24-hour ATM services and night
depository facilities. The Bank's loan administration department has been
relocated to this location. In addition to a banking office, the Oldtown office
in Salinas houses all of the Bank's administrative functions as well as Data
Processing/Operations department and a Community/Board room.
On January 25, 1995, the Bank filed a branch application for a new
branch office to be located at the Westridge Center in Salinas, California,
northwest of U.S. 101 and Laurel Drive. On March 7, 1996, the Bank withdrew the
application.
On March 7, 1996, the Bank filed an application for permission to
establish a Customer Bank Communication Terminal (CBCT) branch at Monterey
Peninsula College.
EMPLOYEES
As of December 31, 1995, the Company and its subsidiaries employed 165
full-time equivalent employees.
4
<PAGE>
OTHER INFORMATION CONCERNING THE COMPANY AND THE BANK
The Company and the Bank hold no material patents, trademarks,
licenses, franchises or concessions except for the licenses issued by the
Comptroller of the Currency (the Comptroller) for the Bank's banking offices.
No material expenditures were made by the Company or the Bank during
their last three fiscal years on research and development activities relating to
the development of services or the improvement of existing services.
Based upon present business activities, compliance with Federal, State
and local provisions regulating discharge of materials into the environment will
have no material effect upon the capital expenditures, earnings and competitive
position of the Company or the Bank.
PACIFIC CAPITAL SERVICES CORPORATION
Pacific Capital Services Corporation (PCSC), a wholly-owned subsidiary
of the Company, was incorporated on April 22, 1985, to arrange and broker
residential, commercial and construction loans and other extensions of credit.
PCSC commenced operations on July 1, 1985, with a primary emphasis in the area
of residential mortgage loans. In December, 1988, the functions performed by
PCSC were taken over by the Bank and PCSC ceased operations. The Company
maintains PCSC as an inactive subsidiary.
SELECTED STATISTICAL INFORMATION
Consolidated statistical information concerning the business of the
Company and the Bank is set forth in Management's Discussion and Analysis of
Financial Condition and Results of Operations (Management's Discussion and
Analysis) on pages 44 through 60 of the Company's Annual Report to Shareholders
for the fiscal year ended December 31, 1995, (the Annual Report) and in Note
1-11 to the Consolidated Financial Statements on pages 30 through 43 of the
Annual Report, which pages of the Annual Report are incorporated herein by
reference. This information should be read in conjunction with the Consolidated
Financial Statements and the Notes thereto included in the Annual Report which
have been incorporated herein by reference.
DISTRIBUTION OF AVERAGE ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
The Company's average consolidated balance sheet and an analysis of net
interest earnings for the years ended December 31, 1995, 1994 and 1993 is set
forth in Management's Discussion and Analysis on page 45 of the Annual Report.
A table setting forth the changes in interest income and interest
expense in 1995 and 1994 resulting from changes in volume and changes in rates
is set forth in Management's Discussion and Analysis on page 46 of the Annual
Report.
5
<PAGE>
INVESTMENT PORTFOLIO
The amortized cost and estimated fair values of each category of
investment securities at December 31, 1995, and 1994 and the maturities of
investment securities at December 31, 1995, are set forth in Note 3 of the Notes
to Consolidated Financial Statements on pages 33 and 34 of the Annual Report.
At December 31, 1995, investment securities from the following issuers
each totaled over ten percent (10%) of shareholder's equity of the Company:
Amortized Estimated
Cost Fair value
Held-to-maturity securities:
State and municipal $6,633,000 $6,692,000
Available-for-sale securities:
U.S. Treasury $57,328,000 $57,787,000
U.S. Government Agencies $14,000,000 $13,999,000
LOAN AND LEASE PORTFOLIO
The composition of the loan and lease portfolio for the five years
ended at December 31, 1995, is set forth in Management's Discussion and Analysis
on page 47of the Annual Report.
Maturities and sensitivity to changes in interest rates in the loan and
lease portfolio, including real estate-mortgage and consumer loans, as of
December 31, 1995, are summarized in Management's Discussion and Analysis on
page 48 of the Annual Report.
The composition of nonaccrual, past due and restructured loans and
leases for the five years ended December 31, 1995, and a discussion of the
Company's policy for placing loans on nonaccrual status is set forth in
Management's Discussion and Analysis on page 51 of the Annual Report.
SUMMARY OF LOAN LOSS EXPERIENCE
An analysis of loan loss experience for the five years ended December
31, 1995, and a description of the factors which influenced management's
judgment in determining the amount of the additions to the allowance charged to
operating expenses in each fiscal period, as well as a discussion of the risk
elements in the loan portfolio, is set forth in Management's Discussion and
Analysis on page 49 of the Annual Report.
6
<PAGE>
DEPOSITS
The average amount of and the average rate paid on major deposit
categories for the years ended December 31, 1995, 1994 and 1993 is set forth in
Management's Discussion and Analysis on page 52 of the Annual Report.
The maturity of time certificates of deposit of $100,000 or more and
other time deposits of $100,000 or more at December 31, 1995, is set forth in
Management's Discussion and Analysis on page 53 of the Annual Report.
FINANCIAL RATIOS
Certain ratios of profitability, liquidity and capital for the years
ended December 31, 1995, and 1994 are summarized in the Selected Financial Data
on page 24 of the Annual Report and in Management's Discussion and Analysis on
page 56 of the Annual Report.
COMPETITION
In California and in the Bank's primary service areas, major banks
dominate the commercial banking industry. Among the advantages which these banks
have over the Bank are their ability to finance wide-ranging advertising
campaigns and to allocate their investment assets, including loans, to regions
of higher yield and demand. By virtue of their larger amounts of capital, such
institutions have substantially greater lending limits than the Bank and perform
certain functions, including trust services and international banking, which are
not offered directly by the Bank but are offered indirectly through its
correspondent institutions.
The service area of the Monterey and Carmel offices of the Bank
encompasses the greater Monterey Peninsula, including the cities of Monterey,
Pacific Grove, Carmel, Seaside, Marina, Sand City, Del Rey Oaks, and the
unincorporated communities of Pebble Beach and Carmel Valley. As of June 30,
1995, there were twenty-seven (27) operating bank offices, including the Bank's
Monterey and Carmel offices, in the service area. There were also nineteen (19)
operating savings and loan and credit union offices in the service area as of
June 30, 1995.
The service area of the Salinas offices are comprised primarily of the
City of Salinas, Prunedale and the unincorporated areas of North Monterey
County. There were sixteen (16) bank offices in these areas, including the
Bank's Salinas and Oldtown offices, as of June 30, 1995. There were also ten
(10) savings and loan and credit union offices in the service area as of June
30, 1995.
The service area of the Bank's Watsonville office includes the City of
Watsonville and neighboring areas. As of June 30, 1995, there were eight (8)
operating bank offices, including the Bank's Watsonville office, in the service
area. There were also four (4) savings and loan and credit union offices in the
service area as of June 30, 1995.
7
<PAGE>
Other entities, both governmental and in private industry, seeking to
raise capital through the issuance and sale of debt securities, as well as other
depository institutions such as thrift and loan companies and credit unions,
also provide competition for the Bank in the acquisition of deposits. Banks also
compete with money market funds and other money market instruments which are not
subject to interest rate ceilings.
From time to time, legislation is proposed or enacted which has the
effect of increasing the cost of doing business, limiting permissible activities
or affecting the competitive balance between banks and other financial
institutions. It is impossible to predict the competitive impact these and other
changes in legislation will have on commercial banking in general or on the
business of the Bank in particular.
SUPERVISION AND REGULATION
THE EFFECT OF GOVERNMENTAL POLICY ON BANKING
The earnings and growth of the Company and the Bank are affected not
only by local market area factors and general economic conditions, but also by
government monetary and fiscal policies. For example, the Board of Governors of
the Federal Reserve System (the FRB) influences the supply of money through its
open market operations in U.S. Government securities, and adjustments to the
discount rates applicable to borrowings by depository institutions and others.
Such actions influence the growth of loans, investments and deposits and also
effect interest rates charged on loans and paid on deposits. The nature and
impact of future changes in such policies on the business and earnings of the
Company and the Bank cannot be predicted.
As a consequence of the extensive regulation of commercial banking
activities in the United States, the business of the Company is particularly
susceptible to being affected by enactment of federal and state legislation
which may have the effect of increasing or decreasing the cost of doing
business, modifying permissible activities, or enhancing the competitive
position of other financial institutions. Any change in applicable laws or
regulations may have a material adverse effect on the business and prospects of
the Company.
REGULATION AND SUPERVISION OF BANK HOLDING COMPANIES
The Company is a bank holding company subject to the Bank Holding
Company Act of 1956, as amended (BHCA). The Company reports to, registers with,
and may be examined by the FRB. The FRB also has the authority to examine the
Company's subsidiaries.
The FRB requires the Company to maintain certain levels of capital. See
"Capital Standards" herein. The FRB also has the authority to take enforcement
action against any bank holding company that commits any unsafe or unsound
practice, or violates certain laws, regulations, or conditions imposed in
writing by the FRB. See "Prompt Corrective Action and other Enforcement
Mechanisms" herein.
8
<PAGE>
Under the BHCA, a company generally must obtain the prior approval of
the FRB before it exercises a controlling influence over, or acquires directly
or indirectly, more than 5% of the voting shares or substantially all of the
assets of any bank or bank holding company. Thus, the Company is required to
obtain the prior approval of the FRB before it acquires, merges or consolidates
with any bank or bank holding company; any company seeking to acquire, merge or
consolidate with the Company also would be required to obtain the FRB's
approval.
The Company is generally prohibited under the BHCA from acquiring
ownership or control of more than 5% of the voting shares of any company that is
not a bank or bank holding company and from engaging directly or indirectly in
activities other than banking, managing banks, or providing services to
affiliates of the holding company. A bank holding company, with the approval of
the FRB, may engage, or acquire the voting shares of companies engaged, in
activities that the FRB has determined to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto. A bank holding
company must demonstrate that the benefits to the public of the proposed
activity will outweigh the possible adverse effects associated with such
activity.
The FRB generally prohibits a bank holding company from declaring or
paying a cash dividend which would impose undue pressure on the capital of
subsidiary banks or would be funded only through borrowing or other arrangements
that might adversely affect a bank holding company's financial position. The
FRB's policy is that a bank holding company should not continue its existing
rate of cash dividends on its common stock unless its net income is sufficient
to fully fund each dividend and its prospective rate of earnings retention
appears consistent with its capital needs, asset quality and overall financial
condition.
Transactions between the Company and the Bank and any future
subsidiaries are subject to a number of other restrictions. FRB policies forbid
the payment by bank subsidiaries of management fees which are unreasonable in
amount or exceed the fair market value of the services rendered (or, if no
market exists, actual costs plus a reasonable profit). Additionally, a bank
holding company and its subsidiaries are prohibited from engaging in certain
tie-in arrangements in connection with the extension of credit, sale or lease of
property, or furnishing of services. Subject to certain limitations, depository
institution subsidiaries of bank holding companies may extend credit to, invest
in the securities of, purchase assets from, or issue a guarantee, acceptance, or
letter of credit on behalf of, an affiliate, provided that the aggregate of such
transactions with affiliates may not exceed 10% of the capital stock and surplus
of the institution, and the aggregate of such transactions with all affiliates
may not exceed 20% of the capital stock and surplus of such institution. The
Company may only borrow from depository institution subsidiaries if the loan is
secured by marketable obligations with a value of a designated amount in excess
of the loan. Further, the Company may not sell a low-quality asset to a
depository institution subsidiary.
9
<PAGE>
BANK REGULATION AND SUPERVISION
As a national bank, the Bank is regulated, supervised and regularly
examined by the office of the Comptroller of the Currency (OCC). Deposit
accounts at the Bank are insured by the Bank Insurance Fund (BIF), as
administered by the Federal Deposit Insurance Corporation (FDIC), to the maximum
amount permitted by law. The Bank is also subject to applicable provisions of
California law, insofar as such provisions are not in conflict with or preempted
by federal banking law.
CAPITAL STANDARDS
The OCC and other federal banking agencies have risk-based capital
adequacy guidelines intended to provide a measure of capital adequacy that
reflects the degree of risk associated with a banking organization's operations
for both transactions reported on the balance sheet as assets and transactions,
such as letters of credit and recourse arrangements, which are reported as off
balance sheet items. Under these guidelines, nominal dollar amounts of assets
and credit equivalent amounts of off balance sheet items are multiplied by one
of several risk adjustment percentages, which range from 0% for assets with low
credit risk, such as certain U.S. government securities, to 100% for assets with
relatively higher credit risk, such as business loans.
A banking organization's risk-based capital ratios are obtained by
dividing its qualifying capital by its total risk adjusted assets and off
balance sheet items. The regulators measure risk-adjusted assets and off balance
sheet items against both total qualifying capital (the sum of Tier 1 capital and
limited amounts of Tier 2 capital) and Tier 1 capital. Tier 1 capital consists
of common stock, retained earnings, noncumulative perpetual preferred stock and
minority interests in certain subsidiaries, less most other intangible assets.
Tier 2 capital may consist of a limited amount of the allowance for possible
loan and lease losses and certain other instruments with some characteristics of
equity. The inclusion of elements of Tier 2 capital are subject to certain other
requirements and limitations of the federal banking agencies. Since December 31,
1992, the federal banking agencies have required a minimum ratio of qualifying
total capital to risk-adjusted assets and off balance sheet items of 8%, and a
minimum ratio of Tier 1 capital to risk-adjusted assets and off balance sheet
items of 4%.
In addition to the risk-based guidelines, federal banking regulators
require banking organizations to maintain a minimum amount of Tier 1 capital to
total assets, referred to as the leverage ratio. For a banking organization
rated in the highest of the five categories used by regulators to rate banking
organizations, the minimum leverage ratio of Tier 1 capital to total assets is
3%. It is improbable, however, that an institution with a 3% leverage ratio
would receive the highest rating by the regulators since a strong capital
position is a significant part of the regulators' rating. For all banking
organizations not rated in the highest category, the minimum leverage ratio is
at least 100 to 200 basis points above the 3% minimum. Thus, the effective
minimum leverage ratio, for all practical purposes, is at least 4% or 5%. In
addition to these uniform risk-based capital guidelines and leverage ratios that
apply across the industry, the regulators have the discretion to set individual
minimum capital requirements for specific institutions at rates significantly
above the minimum guidelines and ratios.
10
<PAGE>
<TABLE>
The following tables present the capital ratios for the Company and the
Bank as of December 31, 1995.
<CAPTION>
THE COMPANY THE BANK
---------------------------- ---------------------------
Amount Ratio Amount Ratio
------- ------ ------- -----
(000's) (000's)
<S> <C> <C> <C> <C>
Risk-Based Capital Ratio:
Tier 1 Capital $42,976 17.60% $40,532 16.78%
Minimum Requirement $9,765 4.00% $9,662 4.00%
Excess $33,211 13.60% $30,870 12.78%
======= ====== ======= ======
Total Capital $45,373 18.59% $42,929 17.77%
Minimum Requirement $19,529 8.00% $19,325 8.00%
Excess $25,844 10.59% $23,604 9.77%
======= ====== ======= =====
Risk-Adjusted Assets $244,114 $241,561
THE COMPANY THE BANK
---------------------------- ---------------------------
Amount Ratio Amount Ratio
------- ------ ------- ------
(000's) (000's)
Leverage Ratio:
Tier 1 Capital $42,976 12.00% $40,532 11.38%
Minimum Requirement $14,330 4.00% $14,247 4.00%
Excess $28,646 8.00% $26,285 7.38%
======= ===== ======= =====
Average Quarterly Assets $358,232 $356,173
</TABLE>
RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS
The power of the board of directors of an insured depository
institution to declare a cash dividend or other distribution with respect to
capital is subject to statutory and regulatory restrictions which limit the
amount available for such distribution depending upon the earnings, financial
condition and cash needs of the institution, as well as general business
conditions. Federal law prohibits insured depository institutions from paying
management fees to any controlling persons or, with certain limited exceptions,
making capital distributions, including dividends, if, after such transaction,
the institution would be undercapitalized.
11
<PAGE>
The payment of dividends by a national bank is further restricted by
additional provisions of federal law, which prohibits a national bank from
declaring a dividend on its shares of common stock unless its surplus fund
exceeds the amount of its common capital (total outstanding common shares times
the par value per share). Additionally, if losses have at any time been
sustained equal to or exceeding a bank's undivided profits then on hand, no
dividend shall be paid. Moreover, even if a bank's surplus exceeds its common
capital and its undivided profits exceed its losses, the approval of the OCC is
required for the payment of dividends if the total of all dividends declared by
a national bank in any calendar year would exceed the total of its net profits
of that year combined with its retained net profits of the two preceding years,
less any required transfers to surplus or a fund for the retirement of any
preferred stock. A national bank must consider other business factors in
determining the payment of dividends. The payment of dividends by the Bank is
governed by the Bank's ability to maintain minimum required capital levels and
an adequate allowance for loan losses. Regulators also have the authority to
prohibit a depository institution from engaging in business practices which are
considered to be unsafe or unsound, possibly including payments of dividends or
other payments under certain circumstances even if such payments are not
expressly prohibited by statue.
The Bank has paid a stock dividend every year since 1986 and cash
dividends were paid in 1993, 1994 and 1995.
PREMIUMS FOR DEPOSIT INSURANCE AND ASSESSMENTS FOR EXAMINATIONS
As an insured depository institution, the Company is required to pay
premiums for FDIC deposit insurance. The FDIC has adopted a risk-based
assessment system for deposit insurance premiums. Under this system, depository
institutions were charged anywhere from 23 cents to 31 cents for every $100 in
insured deposits based on that institution's capital levels and supervisory
subgroup assignment.
In May 1995, the BIF achieved its target goal of bringing the ratio of
insurance fund reserves to $1.25 for each $100 of insured deposits. Based on
this reserve level, the FDIC in September 1995, reduced the range of insurance
assessments to a range of $.04 to $.31 per $100 in insured deposits. In November
1995, the FDIC further reduced the range of insurance assessment rates to $0 to
$.31 per $100 in insured deposits. Due to these changes in assessment rates, the
Company's FDIC Assessment expense decreased for 1995 by $316,000 or 94.6%.
INTERSTATE BANKING AND BRANCHING
On September 29, 1994, the Reigle/Neal Interstate Banking and Branching
Efficiency Act of 1994 (the Interstate Act) was signed into law. This Interstate
Act effectively permits nationwide banking. The Interstate Act provides that one
year after enactment, adequately capitalized and adequately managed bank holding
companies may acquire banks in any state, even in those jurisdictions that
currently bar acquisition by out-of-state institutions, subject to deposit
concentration limits. The deposit concentration limits provide that regulatory
approval by the Federal Reserve Board may not be granted for a proposed
interstate acquisition if after the acquisition, the acquiror on a consolidated
basis would control more than 10% of the total deposits nationwide or would
control more than 30% of
12
<PAGE>
deposits in the state where the acquiring institution is located. The deposit
concentration state limit does not apply for initial acquisitions in a state and
in every case, may be waived by the state regulatory authority. Interstate
acquisitions are subject to compliance with the Community Reinvestment Act
(CRA). States are permitted to impose age requirements not to exceed five years
on target banks for interstate acquisitions. States are not allowed to opt-out
of interstate banking.
Branching between states may be accomplished either by merging separate
banks located in different states into one legal entity, or by establishing de
novo branches in another state. Consolidation of banks is not permitted until
June 1, 1997, provided that the state has not passed legislation "opting-out" of
interstate branching. If a state opts-out prior to June 1, 1997, then banks
located in that state may not participate in interstate banking. A state may
opt-in to interstate branching by bank consolidation or by de novo branching by
passing appropriate legislation earlier than June 1, 1997. Interstate branching
is also subject to a 30% statewide deposit concentration limit on a consolidated
basis, and a 10% nationwide deposit concentration limit. The laws of the host
state regarding community reinvestment, fair lending, consumer protection
(including usury limits) and establishment of branches shall apply to the
interstate branches.
De novo branching by an out-of-state bank is not permitted unless the
host state expressly permits de novo branching by banks from out-of-state. The
establishment of an initial de novo branch in a state is subject to the same
conditions as apply to initial acquisition of a bank in the host state other
than the deposit concentration limits.
Effective October 2, 1995, California opted in early to interstate
branching by permitting other state's banks to acquire an entire California bank
by merger or purchase and thereby establish one or more California branch
offices, provided the acquired bank has been in existence at lease five years.
Effective one year after enactment, the Interstate Act permits bank
subsidiaries of a bank holding company to act as agents for affiliated
depository institutions in receiving deposits, renewing time deposits, closing
loans, servicing loans and receiving payments on loans and other obligations. A
bank acting as agent for an affiliate shall not be considered a branch of the
affiliate. Any agency relationship between affiliates must be on terms that are
consistent with safe and sound banking practices. The authority for an agency
relationship for receiving deposits includes the taking of deposits for an
existing account but is not meant to include the opening or origination of new
deposit accounts. Subject to certain conditions, insured saving associations
which were affiliated with banks as of June 1, 1994, may act as agents for such
banks. An affiliate bank or savings association may not conduct any activity as
an agent which such institution if prohibited from conducting as principal.
If an interstate bank decides to close a branch located in a low-or
moderate-income area, it must comply with additional branch closing notice
requirements. The appropriate regulatory agency is authorized to consult with
community organizations to explore options to maintain banking services in the
affected community where the branch is to be closed.
To ensure that interstate branching does not result in taking deposits
without regard to a community's credit needs, the regulatory agencies are
directed to implement regulations prohibiting interstate branches from being
used as "deposit production offices." The regulations to implement its
13
<PAGE>
provisions are due by June 1, 1997. The regulations must include a provision to
the effect that if loans made by an interstate branch are less than fifty
percent of the average of all depository institutions in the state, then the
regulatory must review the loan portfolio of the branch. If the regulator
determines that the branch is not meeting the credit needs of the community, it
has the authority to close the branch and to prohibit the bank from opening new
branches in the state.
ACCOUNTING PRONOUNCEMENTS
In October 1995, the FASB issued Statement of Financial Account
Standards (SFAS) No. 123, Accounting for Stock-Based Compensation. SFAS No. 123
establishes financial accounting and reporting standards for stock-based
employee compensation plans. Those plans include all arrangements by which
employees receive shares of stock or other equity instruments of the employer or
the employer incurs liabilities to employees in amounts based on the price of
the employer's stock. Examples are stock options, restricted stock, and stock
appreciation rights. This statement defines a fair value based method of
accounting for an employee stock option or similar equity instrument. Under this
method, compensation costs are measured at the grant date based on the value of
the award and are recognized over the service period, which is the vesting
period. SFAS No. 123 encourages (but does not require) employers to adopt the
new method in place of the provisions of Accounting Principles Board Opinion
(APB) No. 25, Accounting for Stock Issued to Employees. This statement applies
to fiscal years beginning after December 15, 1995. The Company has elected to
use current practice under APB No. 25 and does not anticipate that the required
disclosures will have a material impact on the financial condition or results of
operations of the Company.
ITEM 2 PROPERTIES
SALINAS
The Salinas office of the Bank is located at 1001 South Main Street in
Salinas on premises owned by the Company. The Bank leased the premises from the
Company at the rate of $6,000 per month pursuant to the terms of a ten-year
lease executed as of April 1, 1984. On April 1, 1994, the lease was renegotiated
for an additional 10 years. The amount of monthly rent payable under the new
lease is subject to annual negotiation between the Company and the Bank. The
Bank's rental rate for 1995 is $6,000 per month. The Bank pays for all utilities
used at the premises.
The current Salinas office consist of a building which contains 4,800
square feet and is located on a lot of approximately 26,700 square feet. Parking
spaces are available for thirty-five (35) automobiles. During July 1995, a major
renovation and construction project was started that will double the size of the
Salinas Office. This project is expected to be completed approximately May 1,
1996, and cost approximately one million four hundred dollars ($1,400,000). The
Bank had previously purchased an adjacent 12,000 square foot parcel of property
located at 14 and 16 E. Romie Lane at a total cost of $430,397 for future
expansion plans. This property will now become a part of the new Salinas Office
complex by providing parking for 41 automobiles. At the completion of the
project, the Company will negotiate the Bank's rental rate for the remaining
term of the lease.
14
<PAGE>
As of December 31, 1995, the Bank had invested $415,205 for furniture,
fixtures, equipment and leasehold improvements for the Salinas Office.
The Bank's Administrative and Oldtown office is leased at market rates
from Director James L. Gattis under a lease for 15,371 square feet of office
space in a building located at 307 Main Street, Salinas, California. This
facility houses the Bank's Oldtown Banking Office, its Data
Processing/Operations department, and Community/Board room. The initial lease
term, which commenced on May 1, 1989, is for five (5) years at an initial rental
rate of $10,600 per month for the first year of the rental term. For each year
after the first year of the term, the rental rate is increased to reflect
increases in the consumer Price Index for all items for the San
Francisco/Oakland Metropolitan Area, using October, 1988 as the base month. on
September 19, 1992, the Bank exercised an option to lease the 1,662 square feet
of space in the building which it did not already occupy. The Bank, in addition
to this rental rate, pays all taxes and assessments levied against the leased
premises and pays for all utilities on the leased premises. The lease also
provides the Bank with three successive five-year options to renew at a rental
rate to be determined based on increases in the Consumer Price Index as
described above. The Bank has exercised its option to renew the lease for an
additional five year period commencing on January 1, 1994. The Bank's rental
rate for 1995 is $15,780 per month.
The Bank has invested $442,236 in leasehold improvements and $2,227,700
in furniture, fixtures and equipment for the Information Services Department and
the Administrative and Oldtown offices as of December 1995.
On February 2, 1996, the Bank entered into an agreement with
Information Technology, Inc., for the purpose of purchasing a new computer
mainframe and mainframe software at a cost of $304,603. The new computer system
is expected to be installed and operational by mid-April 1996.
Pursuant to a lease entered into on October 26, 1993, the Bank leases
from Chairman Stanley R. Haynes, 4,340 square feet of warehouse space located at
632 E. Alisal Street, Salinas, for a term of sixty months ending on October 31,
1998. The lease is cancelable by either party by giving twelve months notice.
CARMEL
The Bank's Carmel office opened for business on June 17, 1991. The
Carmel office consists of a 3,400 square foot portion of the Carmel Rancho
Shopping Center. The Carmel office is held under a lease with an initial term of
ten (10) years, commencing on November 1, 1990. The lease provides the Bank with
four (4) five-year options to extend the term for an aggregate lease term of
thirty (30) years. The Bank's rental obligation under the lease was $6,000 per
month for the first twelve (12) months and the lease provides for adjustment in
subsequent periods (including any renewal period) to reflect changes in the
Consumer Price Index for All Urban Consumers in the San Francisco-Oakland Area.
Accordingly, the Bank's rental rate for 1995 was adjusted to $7,200 per month.
The Bank had invested $423,757 in leasehold improvements and $257,997
in furniture, fixtures and equipment for the Carmel office as of December 31,
1995.
15
<PAGE>
WATSONVILLE
The Bank's Watsonville office is located at 655 Main Street in downtown
Watsonville, California in a 3,600 square foot modular building located on a
45,000 square foot parcel of land which was purchased in 1986 at a cost of
approximately $400,000. As of December 31, 1995, the Company has invested
approximately $680,146 in furniture, fixtures and equipment, $1,943,811 in
construction costs and $79,010 in leasehold improvements for the Watsonville
office.
MONTEREY
The Bank's Monterey banking office is located at 495 Washington Street,
has approximately 10,000 square feet of space, and is situated on a 21,962
square foot parcel leased by the Bank. The Bank's lease for the property has an
initial term of fifteen (15) years, commencing on July 1, 1990. The lease
provides the Bank with an initial option to extend the term for an additional
ten (10) years and with a second option to extend the term for a period which
will cause the aggregate lease term to extend to a total of thirty-four (34)
years and eleven (11) months from June 28, 1989. The lease agreement also
provides the Bank with a right of first refusal to purchase the premises and to
lease or purchase an adjacent parcel containing approximately 8,500 square feet.
The Bank's rental obligation under the lease is $7,000 per month for the first
sixty (60) months and will be adjusted in subsequent periods (including upon the
exercise of any renewal option) to reflect changes in the Consumer Price Index
for All Urban Consumers in the San Francisco-Oakland-San Jose Area, using
December, 1987 as the base month. The Bank's rental rate for 1996 was adjusted
to $8,208 per month.
The Bank had invested a total of $1,642,192 in construction costs for
the new building and an additional $437,376 in furniture, fixtures and equipment
as of December 31, 1995.
In connection with the relocation of its Monterey office in 1991, the
Bank entered into an agreement to sublease its original Monterey banking
facility, located at 601 Abrego Street. The sublease agreement, which was
entered into as of November 12, 1990, and expires on December 31, 2003, provided
for initial monthly rent of $4,971, to be adjusted each January 1, commencing
January 1, 1994, to reflect changes in the Consumer Price Index for All Urban
Consumers in the San Francisco-Oakland Metropolitan Area and to reflect
adjustments in the underlying lease.
The Bank's lease on this property was renewed for an additional ten
(10) years beginning on January 1, 1994, and ending on December 31, 2003, the
same date as the sublease discussed above. The initial rental is $4,000 per
month, to be adjusted each January l to reflect changes in the Consumer Price
Index for all Urban Consumers in the San Francisco-Oakland Metropolitan Area.
Accordingly, the Bank's rental rate for 1995 was adjusted to $4,162 per month.
The Company had invested approximately $416,718 in construction costs
in the 601 Abrego Street office as of December 31, 1995.
16
<PAGE>
PRUNEDALE
The Bank's Prunedale facility is located in a 2,847 square foot portion
of the Prunetree Shopping Center under a lease entered into as of June 28, 1988,
with an initial term of ten (10) years. The rental obligation under the lease
commenced on July 1, 1989, at an initial monthly rent of $2,847. The lease
provides for annual increases in rent during the initial term and the Company's
monthly rental obligation from July 1, 1994, to June 30, 1995, is $4,578. On
July 1, 1996, the monthly rental obligation will increase to $4,807. The Bank's
Loan Department is located at this office. The Bank offers 24-hour ATM services
and a night depository facility at this location.
The lease provides the Company with three (3) five-year options to
extend the term for an aggregate lease term of twenty-five (25) years. The
Company's minimum rental obligation under any renewal period will be the
prevailing market value rent for equivalent space, as negotiated by the Company
and the lessor, provided that the minimum rental amount in any such renewal
period will not be less than the rental amount paid during the last year of the
original lease term or the last year of the previous option period. The minimum
rental obligation during any renewal period will then be increased annually by
five percent (5%) over the rental amount for the preceding year.
The lease also provides the Company with a right of first refusal to
lease premises adjacent to the Prunedale office in the event those adjacent
premises become available during the lease term, including renewal periods.
The Company had invested approximately $154,649 in construction costs
and an additional $330,120 in furniture, fixtures and equipment in the Prunedale
office as of December 31, 1995.
ITEM 3 LEGAL PROCEEDINGS
Neither the Company nor the Bank is a party to, nor is any of their
property the subject of, any material pending legal proceedings other than
ordinary routine litigation incidental to their respective businesses nor are
any such proceedings known to be contemplated by governmental authorities.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
17
<PAGE>
PART II
ITEM 5 MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
For information concerning the Company's Common Stock and related
security holder matters, see "Pacific Capital Bancorp Stock Activity" at Page 61
of the Annual Report, which is incorporated herein by reference.
As of March 1, 1996, there were 1,602 holders of record of the
Company's Common Stock.
ITEM 6 SELECTED FINANCIAL DATA
For selected financial data concerning the Company, see "Selected
Financial Information and Comparative Per Share Data" at Page 1 of the Annual
Report, which is incorporated herein by reference.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
For Management's discussion and analysis of financial condition and
results of operations, see "Management's Discussion and Analysis" at Pages 45
through 60 of the Annual Report, which pages of the Annual Report are
incorporated herein by reference.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
For financial statements of the Company, see Pages 25 through 30 of the
Annual Report and the "Independent Auditors" Report thereon at Page 65 which
pages of the Annual Report are incorporated herein by reference.
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
18
<PAGE>
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
For information concerning directors and executive officers of the
Company, see "ELECTION OF DIRECTORS OF THE COMPANY" in the definitive Proxy
Statement for the Company's 1996 Annual Meeting of Shareholders to be filed
pursuant to Regulation 14A (the Proxy Statement), which is incorporated herein
by reference.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and any persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file. To the best knowledge of the Company, there are no persons who own
more than ten-percent of the Company's Common Stock.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, for the fiscal year ended
December 31, 1995, all filing requirements applicable to its officers and
directors have been satisfied.
ITEM 11 EXECUTIVE COMPENSATION
For information concerning executive compensation, see "EXECUTIVE
COMPENSATION" in the Proxy Statement, which is incorporated herein by reference.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
For information concerning security ownership of certain beneficial
owners and management, see "PRINCIPAL SHAREHOLDERS" and "ELECTION OF DIRECTORS
OF THE COMPANY" in the Proxy Statement, which is incorporated herein by
reference.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For information concerning certain relationships and related
transactions, see "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" and
"INDEBTEDNESS OF MANAGEMENT" in the Proxy Statement, which is incorporated
herein by reference.
19
<PAGE>
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) 1. FINANCIAL STATEMENTS.
The following consolidated financial statements of Pacific Capital
Bancorp and Subsidiaries, other financial information and the Independent
Auditors' Report on Consolidated Financial Statements are contained herein
following this Item 14.
2. FINANCIAL STATEMENT SCHEDULES.
In accordance with Regulation S-X, the financial statement schedules
have been omitted because (a) they are not applicable to or required of the
Company; or (b) the information required is included in the consolidated
financial statements or notes thereto.
With the exception of such information in the 1995 Annual Report
incorporated herein by reference, the 1995 Annual Report is not deemed "filed"
as part of this report.
3. EXHIBITS.
See Index to Exhibits at pages 69-73 of this Form 10-K.
(B) REPORTS ON FORM 8-K.
A report on Form 8-K dated February 28, 1995, was filed with the
Commission on March 21, 1995, reporting under Item 5 -- Other Events - The stock
repurchase program was amended to increase the price per share at which the
Company will repurchase shares from $18.00 per share to $22.00 per share of not
more than 300,000 shares of the Company's outstanding common stock at an
aggregate purchase price not to exceed $5,000,000.
A report on Form 8-K dated August 22, 1995, was filed with the
Commission on August 22, 1995, reporting under Item 5 -- Other Events - The
stock repurchase program was amended to increase the price per share at which
the Company will repurchase shares from $22.00 per share to $24.00 per share of
not more than 300,000 shares of the Company's outstanding common stock at an
aggregate purchase price not to exceed $5,000,000.
For the purposes of complying with the amendments to the rules
governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933,
the undersigned registrant hereby undertakes as follows, which undertaking shall
be incorporated by reference into registrant's Registration Statement on Form
S-8 No. 2-98004:
20
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act Of 1933 (the Act) may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding is asserted by such director, officer or controlling person in
connection with the securities being registered the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
21
<PAGE>
PACIFIC CAPITAL BANCORP AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 1995, 1994, and 1993
(With Independent Auditors' Report Thereon)
1
<PAGE>
<TABLE>
SELECTED FINANCIAL INFORMATION AND
COMPARATIVE PER SHARE DATA
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts) 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Interest Income $25,845 $22,156 $20,257 $21,429 $24,643
Interest Expense 7,029 5,185 5,175 7,131 10,875
- ------------------------------------------------------------------ --------------------------------------------------
Net Interest Income 18,816 16,971 15,082 14,298 13,768
Provision for Possible Loan Losses 135 100 890 925 441
- ---------------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision
for Possible Loan Losses 18,681 16,871 14,192 13,373 13,327
Other Income 1,948 2,105 2,245 2,336 2,168
Other Expense 12,342 11,968 11,691 11,251 10,908
Net Gain (Loss) on Securities Transactions (73) (17) 120 3 5
- ---------------------------------------------------------------------------------------------------- ----------------
Earnings Before Income taxes 8,214 6,991 4,866 4,461 4,592
Income Taxes 3,180 2,652 1,727 1,540 1,633
- ----------------------------------------------------------------------------- ---------------------- ----------------
Income From Continuing Operations 5,034 4,339 3,139 2,921 2,959
Cumulative Effect of Accounting Change - - 549 - -
- ---------------------------------------------------------------------------------------------------------------------
Net Income $5,034 $4,339 $3,688 $2,921 $2,959
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE DATA
Income From Continuing Operations (1) $1.86 $1.65 $1.18 $1.10 $1.11
Net Income (1) 1.86 1.65 1.39 1.10 1.11
Cash Dividends Declared .53 .40 .30 - -
Book Value 16.50 15.65 15.23 14.80 14.20
BALANCES AT YEAR END
Total Assets 353,579 343,879 308,767 307,737 291,240
Total Loans 211,344 200,780 180,592 183,744 196,743
Allowance for Possible Loan Losses 2,397 2,438 2,507 2,352 2,148
Total Deposits 307,819 303,229 271,773 272,940 259,991
Total Shareholders' Equity 42,976 38,750 35,432 32,787 29,751
AVERAGE DAILY BALANCES
Total Assets 339,351 324,919 311,867 297,747 277,957
Total Loans 201,360 190,721 177,988 191,099 198,495
Allowance for Possible Loan Losses 2,359 2,475 2,343 2,202 2,248
Total Deposits 295,560 287,293 277,246 264,799 247,199
Total Shareholders' Equity 41,280 37,216 34,131 31,401 28,658
PERFORMANCE AND CAPITAL RATIOS
Return on Average Assets 1.48% 1.34% 1.18% 0.98% 1.06%
Return on Average Equity 12.19% 11.66% 10.81% 9.30% 10.33%
Average Equity to Average Assets 12.16% 11.46% 10.94% 10.55% 10.31%
- ---------------------------------------------------------------------------------------------------------------------
<FN>
(1) Weighted average shares outstanding and all share and per share amounts
have given effect to all stock dividends and stock splits.
</FN>
</TABLE>
2
<PAGE>
<TABLE>
Pacific Capital Bancorp
and Subsidiaries
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts) 1990 1989 1988 1987 1986
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Interest Income $26,882 $25,116 $21,013 $16,662 $13,020
Interest Expense 12,698 11,916 9,543 7,573 6,351
- ----------------------------------------------------------------------------------------------------------------------
Net Interest Income 14,184 13,200 11,470 9,089 6,669
Provision for Possible Loan Losses 225 379 554 650 650
- ----------------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision
for Possible Loan Losses 13,959 12,821 10,916 8,439 6,019
Other Income 2,257 2,208 1,094 873 703
Other Expense 11,530 9,776 7,433 6,651 5,361
Net Gain (Loss) on Securities Transactions (7) 43 44 41 27
- ------------------------------------------------------------------------------------------------------ ---------------
Earnings Before Income taxes 4,679 5,296 4,621 2,702 1,388
Income Taxes 1,738 1,959 1,559 986 402
- ----------------------------------------------------------------------------------------------------------------------
Income From Continuing Operations
Cumulative Effect of Accounting Change 2,941 3,337 3,062 1,716 986
- ----------------------------------------------------------------------------------------------------------------------
Net Income $2,941 $3,337 $3,062 $1,716 $986
- ----------------------------------------------------------------------------------------------------------------------
PER SHARE DATA
Income From Continuing Operations (1) $1.07 $1.64 $1.53 $1.01 $.75
Net Income (1) 1.07 1.64 1.53 1.01 .75
Cash Dividends Declared - - - - -
Book Value 13.97 13.19 10.71 10.00 8.55
BALANCES AT YEAR END
Total Assets 273,865 262,208 239,034 212,207 179,906
Total Loans 195,461 185,689 157,160 137,575 103,117
Allowance for Possible Loan Losses 2,193 1,853 1,790 1,391 1,145
Total Deposits 243,960 234,672 204,011 188,337 136,885
Total Shareholders' Equity 28,301 24,781 20,021 18,248 11,256
AVERAGE DAILY BALANCES
Total Assets 269,592 242,871 223,884 187,851 141,739
Total Loans 196,562 169,513 143,111 113,916 85,380
Allowance for Possible Loan Losses 2,042 1,840 1,626 1,310 1,071
Total Deposits 241,079 216,627 200,690 170,256 129,107
Total Shareholders' Equity 26,454 23,207 19,607 14,909 11,243
PERFORMANCE AND CAPITAL RATIOS
Return on Average Assets 1.09% 1.37% 1.37% .91% .70%
Return on Average Equity 11.12% 14.38% 15.62% 11.51% 8.77%
Average Equity to Average Assets 9.81% 9.56% 8.76% 7.94% 7.93%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
Pacific Capital Bancorp
and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31, 1995 and 1994
- -------------------------------------------------------------------------------------------------------------------
(In thousands, except share amounts) 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $24,891 $25,977
Federal funds sold 10,326 15,961
Money market funds 6,681 324
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents 41,898 42,262
Investment securities:
Held-to-maturity securities, at amortized cost
(fair value of $8,662 and $62,367, respectively) 8,596 64,131
Available-for-sale securities, at fair value 75,896 22,258
- -------------------------------------------------------------------------------------------------------------------
Total investment securities 84,492 86,389
Loans available for sale 3,876 2,301
Loans 211,344 200,780
Less allowance for possible loan losses 2,397 2,438
- -------------------------------------------------------------------------------------------------------------------
Net loans 208,947 198,342
Premises and equipment, net 7,523 7,238
Accrued interest receivable and other assets 6,843 7,347
- -------------------------------------------------------------------------------------------------------------------
Total assets $353,579 $343,879
===================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand, non-interest bearing $71,988 $70,638
Demand, interest bearing 56,527 53,410
Savings and money market 97,087 122,816
Time certificates 82,217 56,365
- -------------------------------------------------------------------------------------------------------------------
Total deposits 307,819 303,229
Accrued interest payable and other liabilities 2,784 1,900
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 310,603 305,129
- -------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Preferred stock; no par value, 20,000,000 shares authorized and unissued - -
Common stock; no par value, 20,000,000 shares authorized: 2,603,839
and 2,476,517 shares issued and outstanding, respectively 31,235 28,056
Retained earnings 11,435 10,850
Net unrealized gain (loss) on available-for-sale securities 306 (156)
- -------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 42,976 38,750
Commitments and contingencies - -
- -------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $353,579 $343,879
===================================================================================================================
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
Pacific Capital Bancorp
and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Years ended December 31, 1995, 1994, and 1993
- ---------------------------------------------------------------------------------------------------------------
(In thousands, except per share amounts) 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $20,461 $17,329 $15,557
Interest on federal funds sold and other short-term investments 1,230 770 638
Interest on investment securities:
U.S. Treasury 3,205 3,139 2,726
U.S. government agencies 282 247 524
State and municipal 588 596 656
Other interest income 79 75 156
- ---------------------------------------------------------------------------------------------------------------
Total interest income 25,845 22,156 20,257
- ---------------------------------------------------------------------------------------------------------------
Interest expense:
Demand, interest bearing 566 551 607
Savings and money market 2,747 2,837 2,944
Time certificates 3,716 1,795 1,599
Other interest expense - 2 25
- ---------------------------------------------------------------------------------------------------------------
Total interest expense 7,029 5,185 5,175
- ---------------------------------------------------------------------------------------------------------------
Net interest income 18,816 16,971 15,082
Provision for possible loan losses 135 100 890
- ---------------------------------------------------------------------------------------------------------------
Net interest income after provision for possible loan losses 18,681 16,871 14,192
- ---------------------------------------------------------------------------------------------------------------
Other income:
Service charges 1,805 1,838 1,733
Mortgage banking fees 123 153 302
Gain on sale of loans 20 114 210
Gains on securities transactions 70 79 173
Losses on securities transactions (143) (96) (53)
- ---------------------------------------------------------------------------------------------------------------
Total other income 1,875 2,088 2,365
- ---------------------------------------------------------------------------------------------------------------
Other expenses:
Salaries and benefits 6,638 6,027 5,801
Occupancy 1,399 1,271 1,309
Equipment 1,035 1,038 1,035
Advertising and promotion 476 480 317
Stationery and supplies 310 272 267
Legal and professional fees 572 653 616
Regulatory assessments 423 736 722
Other 1,489 1,491 1,624
- ---------------------------------------------------------------------------------------------------------------
Total other expenses 12,342 11,968 11,691
- ---------------------------------------------------------------------------------------------------------------
Income before income taxes and cumulative effect of
accounting change 8,214 6,991 4,866
Income taxes 3,180 2,652 1,727
- ---------------------------------------------------------------------------------------------------------------
Income before cumulative effect of accounting change 5,034 4,339 3,139
- ---------------------------------------------------------------------------------------------------------------
Cumulative effect of change in accounting for income taxes - - 549
- ---------------------------------------------------------------------------------------------------------------
Net income $5,034 $4,339 $3,688
===============================================================================================================
Earnings per share:
Income before cumulative effect of accounting change $1.86 $1.65 $1.18
Cumulative effect of accounting change - - 0.21
- ---------------------------------------------------------------------------------------------------------------
Net income $1.86 $1.65 $1.39
===============================================================================================================
<FN>
See accompanying notes to consolidated financial statements
</FN>
</TABLE>
5
<PAGE>
<TABLE>
Pacific Capital Bancorp
and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Years ended December 31, 1995, 1994, and 1993
- ---------------------------------------------------------------------------------------------------------------------------
Net unrealized
gain (loss) on Total
Common stock Retained Guaranteed available-for- shareholders'
(In thousands, except share amounts) shares Amount earnings ESOP note sale securities equity
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1992 2,215,038 $24,726 $8,356 ($295) - $32,787
Net income for the year ended
December 31, 1993 - - 3,688 - - 3,688
Purchase and retirement of shares (77,484) (1,172) - - - (1,172)
Exercise of stock options
(net of 5,452 shares retired in
connection with cashless exercises) 78,460 526 - - - 526
5% stock dividend, including
payment of fractional shares 111,153 1,722 (1,735) - - (13)
Cash dividend declared - - (671) - - (671)
Repayment of ESOP note - - - 83 - 83
Recognition of net unrealized gain
on available-for-sale securities - - - - 204 204
- ------------------------------------------------------------------------------------------------------------------------
Balances, December 31, 1993 2,327,167 25,802 9,638 (212) 204 35,432
Net income for the year ended
December 31, 1994 - - 4,339 - - 4,339
Purchase and retirement of shares (42,772) (717) - - - (717)
Exercise of stock options
(net of 5,284 shares retired in
connection with cashless exercises) 75,071 806 - - - 806
5% stock dividend, including
payment of fractional shares 117,051 2,165 (2,181) - - (16)
Cash dividends declared - - (946) - - (946)
Repayment of ESOP note - - - 212 - 212
Recognition of net unrealized loss
on available-for-sale securities - - - - (360) (360)
- ------------------------------------------------------------------------------------------------------------------------
Balances, December 31, 1994 2,476,517 28,056 10,850 - (156) 38,750
Net income for the year ended
December 31, 1995 - - 5,034 - - 5,034
Purchase and retirement of shares (5,606) (111) - - - (111)
Exercise of stock options 9,590 158 - - - 158
5% stock dividend, including
payment of fractional shares 123,338 3,132 (3,147) - - (15)
Cash dividends declared - - (1,302) - - (1,302)
Recognition of net unrealized
gain on available-for-sale securities - - - - 462 462
- ------------------------------------------------------------------------------------------------------------------------
Balances, December 31, 1995 2,603,839 $31,235 $11,435 $ - $306 $42,976
========================================================================================================================
<FN>
See accompanying notes to consolidated financial statements
</FN>
</TABLE>
6
<PAGE>
<TABLE>
Pacific Capital Bancorp
and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Years ended December 31, 1995, 1994, and 1993
- --------------------------------------------------------------------------------------------------------------
(In thousands) 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $5,034 $4,339 $3,688
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of change in accounting method - - (549)
Depreciation and amortization 886 869 971
Accretion and amortization on investment securities (459) 721 469
Provision for possible loan losses 135 100 890
Loss (gain) on sale of investment securities, net 73 17 (120)
Net originations of loans available for sale (1,575) (2,759) (5,001)
Proceeds from sale of loans - 3,412 2,955
Gain on sale of loans (20) (114) (210)
Deferral of loan origination fees 8 (41) 138
Change in accrued interest receivable and other assets 966 (1,578) (332)
Change in accrued interest payable and other liabilities 906 338 (523)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 5,954 5,304 2,376
- --------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Net change in loans (10,750) (20,316) 2,069
Maturities of investment securities 22,368 21,062 22,488
Purchases of investment securities (62,174) (32,373) (74,493)
Proceeds from sale of available-for-sale securities 42,089 13,494 30,630
Capital expenditures, net (1,171) (789) (396)
- --------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (9,638) (18,922) (19,702)
- --------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in deposits 4,590 31,456 (1,167)
Cash paid for retirement of stock (111) (717) (1,172)
Proceeds from exercise of stock options 158 806 526
Cash paid in lieu of fractional shares (15) (16) (13)
Cash paid for dividends (1,302) (946) (671)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 3,320 30,583 (2,497)
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (364) 16,965 (19,823)
Cash and cash equivalents at beginning of year 42,262 25,297 45,120
- --------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $41,898 $42,262 $25,297
==============================================================================================================
Supplemental disclosures of cash flow information:
Cash paid during the period:
Interest $7,888 $5,289 $5,456
Income taxes 3,410 2,578 1,952
Release of guarantee of ESOP note - 212 83
==============================================================================================================
Noncash investing and financing activities:
Transfer from retained earnings to common stock due to
stock dividends $3,132 $2,165 $1,722
Transfer of securities from held-to-maturity
to available-for-sale 30,234 - -
Transfer from loans to other real estate owned 366 1,308 380
==============================================================================================================
<FN>
See accompanying notes to consolidated financial statements
</FN>
</TABLE>
7
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
December 31, 1995, 1994, and 1993
(1) Summary of Significant Accounting Policies
The accounting policies of Pacific Capital Bancorp (the Company) and
subsidiaries are in accordance with generally accepted accounting
principles and conform to general practices within the banking
industry.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Pacific Capital Bancorp is a California corporation and bank holding
company which was incorporated on January 26, 1983. First National Bank
of Central California (the Bank), the Company's wholly owned
subsidiary, commenced operations on April 2, 1984 under the name First
National Bank of Monterey County. The Bank is a full service commercial
bank serving Monterey, Salinas, Carmel, Watsonville, Prunedale and
surrounding areas in Monterey and Santa Cruz Counties in California.
Consolidation - The accompanying consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries,
First National Bank of Central California, and Pacific Capital Services
Corporation (an inactive corporation). All material intercompany
accounts and transactions have been eliminated in consolidation.
Investment Securities - The Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, Accounting for Certain Investments
in Debt and Equity Securities, as of December 31, 1993. SFAS No. 115
requires entities to classify investments in debt and equity securities
with readily determinable fair values as "held-to-maturity",
"available-for-sale", or "trading", and establishes accounting and
reporting requirements for each classification. In accordance with SFAS
No. 115, the Company has classified those securities for which it has
the positive intent and ability to hold to maturity as held-to-maturity
securities. Such securities are reported at amortized cost.
In November 1995, the Financial Accounting Standards Board (FASB)
issued a special report, A Guide to Implementation of Statement No.
115, on Accounting for Certain Investments in Debt and Equity
Securities Questions and Answers, (the Special Report). The Special
Report allowed companies to reassess the appropriateness of the
classifications of all securities held and account for any resulting
reclassifications at fair value. Reclassifications from this one-time
reassessment will not call into question the intent of an enterprise to
hold other debt securities to maturity in the future, provided that
reclassification was performed by December 31, 1995.
The Company adopted the reclassification provision in the Special
Report prior to December 31, 1995 and transferred $30,234,000 of
held-to-maturity securities into available-for-sale. The unrealized
pretax gain upon transfer was $38,000 at December 31, 1995.
8
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
The Company has classified certain securities for which it does not
have the intent to hold to maturity and which are not held principally
for the purpose of selling them in the near term as available-for-sale
securities. Such securities are reported at fair value, with unrealized
gains and losses, net of income taxes, reported in a separate component
of shareholders' equity.
Amortization of premiums and accretion of discounts arising at
acquisition of investment securities are included in income using
methods that approximate the interest method. Gains or losses on the
sale of securities are determined based on the specific identification
method.
Loans - Loans are stated at the principal amount outstanding. Interest
on loans is credited to income on a simple interest basis. Loan
origination fees and direct origination costs are deferred and
amortized to income by a method approximating the level yield interest
method over the estimated lives of the underlying loans. Loans
contractually past due over 90 days or considered impaired are placed
on nonaccrual status, unless they are well-secured by underlying
collateral and are in the process of collection.
The allowance for possible loan losses is a valuation allowance that is
maintained at a level estimated to be adequate to provide for future
loan losses through charges to current operating expense. The allowance
is based upon a continuing review of loans by management which includes
consideration of changes in the character of the loan portfolio,
current and anticipated economic conditions, past lending experience,
loan loss experience, and such other factors which, in management's
judgment, deserve recognition in estimating potential loan losses. In
addition, regulatory agencies, as an integral part of their examination
process, periodically review the Company's allowance for possible loan
losses. Such agencies may require the Company to recognize additions to
the allowance based on their judgment of information available to them
at the time of their examination.
In May 1993, the FASB issued SFAS No. 114, Accounting by Creditors for
Impairment of a Loan. This statement addresses the accounting treatment
of certain impaired loans. Management considers a loan impaired when it
is contractually past due over 90 days and when the fair value of
assets collateralizing the loan (for collateral dependent loans) has
suffered significant deterioration. SFAS No. 114 requires that impaired
loans generally be measured based on the present value of expected
future cash flows discounted at the loans' effective rate or the loans'
observable market price or the fair value of it's collateral. In
October 1995, the FASB issued SFAS No. 118, "Accounting by Creditors
for Impairment of a Loan - Income Recognition and Disclosures". SFAS
No. 118 amends SFAS No. 114 to allow a creditor to use existing methods
for recognizing interest income on an impaired loan. Both of these
Statements apply to financial statements for fiscal years beginning
after December 15, 1994. The Company has adopted both SFAS No. 114 and
SFAS No. 118 and there has been no material impact on its financial
condition or results of operation.
Loans Available for Sale - The Bank originates loans that are
guaranteed in part by the Small Business Administration. The guaranteed
portion of such loans may be sold without recourse. The Bank retains
the servicing and credit risk in the remaining unguaranteed portion.
Loans available for sale are valued at lower of cost or estimated
market value and are comprised of the portion of loans originated for
sale, which are guaranteed by the Small Business Administration. When
participating interests in loans are sold without recourse, gains are
recognized at the time of the sale which are equal to the premium
received less estimated future loan servicing costs and profits. Any
discounts related to loan interests retained are amortized using
methods that approximate the level yield basis over the remaining life
of the loan.
Mortgage Banking Fees - The Mortgage Banking Division of the Bank
operates solely as a brokerage operation. The Bank does not originate,
purchase, or sell loans in this area and thus retains no servicing
risk. The fee income derived from mortgage banking operations is
recognized when earned.
9
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
Premises and Equipment - Premises and equipment are stated at cost,
less accumulated depreciation and amortization. Depreciation and
amortization are charged to expense over the estimated useful lives of
the assets or the lease term on a straight-line basis as follows:
- --------------------------------------------------------------------------------
Buildings 40 years
Furniture and equipment 2-5 years
Leasehold improvements 5 years
Property under capital lease 5 years
- --------------------------------------------------------------------------------
Income Taxes - Income taxes are provided for under the asset and
liability method of SFAS No. 109, Accounting for Income Taxes. Deferred
tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. To the extent that current available evidence
about the future raises doubt about the realization of a deferred tax
asset, a valuation allowance is established to reduce that deferred tax
asset if it is more likely than not that the related tax benefits will
not be realized. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years
which those differences are expected to be recovered or settled. Under
SFAS No. 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes
the enactment date.
Effective January 1, 1993, the Company adopted SFAS No. 109 and has
reported the cumulative effect of that change in method of accounting
for income taxes in the 1993 consolidated statement of income.
Net Income Per Share - Net income per share is computed by dividing net
income by the weighted average number of shares of common stock
outstanding during the year plus shares issuable assuming exercise of
all employee stock options, except where antidilutive. The weighted
average shares outstanding were 2,700,850, 2,627,561, and 2,650,127 in
1995, 1994, and 1993, respectively. Weighted average shares outstanding
and all per share amounts included in the accompanying consolidated
financial statements and notes thereto have given effect to all stock
dividends.
Dividends - During 1995, the Company declared a quarterly $0.125 cash
dividend payable on March 31, June 30, and September 30, to holders of
record on March 15, June 15, and September 15. In addition, the Company
declared a $0.15 cash dividend payable on December 15, 1995 to holders
of record on November 15, 1995. The Company also declared a 5% stock
dividend payable on December 1, 1995 to holders of record as of
November 15, 1995.
Reclassifications - Certain amounts in the 1994 and 1993 consolidated
financial statements have been reclassified to conform to the 1995
presentation.
(2) Cash and Due from Banks
Cash and due from banks includes approximately $4,528,000 and
$2,805,000 as of December 31, 1995 and 1994, respectively, held by the
Federal Reserve Bank of San Francisco to meet required reserve
balances.
10
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
<TABLE>
(3) Investment Securities
The amortized cost and estimated fair values of investment securities
as of December 31 are as follows:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Estimated
Amortized Unrealized Unrealized fair
(In thousands) cost gain loss value
- ---------------------------------------------------------------------------------------------------------------------
1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Held-to-maturity securities:
State and municipal $6,633 $72 $(13) $6,692
Mortgage-backed securities
and other 1,963 7 - 1,970
- -------------------------------------------------------------------------------------------------- ------------------
$8,596 $79 $(13) $8,662
=====================================================================================================================
Available-for-sale securities:
U.S. Treasury $57,328 $536 $(77) $57,787
State and municipal 4,074 45 (9) 4,110
U.S. government agencies 14,000 9 (10) 13,999
- -------------------------------------------------------------------------------- ------------------------------------
$75,402 $590 $(96) $75,896
=====================================================================================================================
1994
- ---------------------------------------------------------------------------------------------------------------------
Held-to-maturity securities:
U.S. Treasury $51,234 $2 $(1,701) $49,535
State and municipal 12,043 68 (134) 11,977
Mortgage-backed securities
and other 854 2 (1) 855
- --------------------------------------------------------------------------------- -----------------------------------
$64,131 $72 $(1,836) $62,367
=====================================================================================================================
Available-for-sale securities:
U.S. Treasury $19,846 $- $(295) $19,551
U.S. government agencies 2,671 38 (2) 2,707
- ---------------------------------------------------------------------------------------------------------------------
$22,517 $38 $(297) $22,258
=====================================================================================================================
</TABLE>
<TABLE>
The amortized cost and estimated fair values of investment securities
as of December 31, 1995, by contractual maturity, are shown below.
Expected maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
<CAPTION>
Held-to-maturity Available-for-sale
securities securities
-----------------------------------------------------------------------
Estimated Estimated
Amortized fair Amortized fair
(In thousands) cost value cost value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Due within one year $5,282 $5,317 $3,000 $3,020
Due after one through five years 1,527 1,562 72,402 72,876
Due after five through ten years 1,247 1,243 - -
Due after ten years - - - -
- ---------------------------------------------------------------------------------------------------------------------
8,056 8,122 75,402 75,896
Federal Reserve Bank stock 540 540 - -
- ------------------------------------------------------------- -------------------------------------------------------
$8,596 $8,662 $75,402 $75,896
=====================================================================================================================
</TABLE>
As of December 31, 1995 and 1994, securities with carrying values of
approximately $23,621,000 and $31,084,000, respectively, were pledged
as collateral for such items as deposits of public funds, Federal
Reserve Bank borrowings, bankruptcy court accounts, and U.S. Treasury,
tax, and loan deposits.
11
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
Investments classified as state and municipal securities include
obligations issued by the state of California and its political
subdivisions and agencies having an aggregate carrying value of
$4,607,000 and an aggregate market value of $4,648,000 as of December
31, 1995.
The Company uses Standard & Poor's and Moody's rating services to
evaluate the quality of its investment portfolio. Of the $10,743,000 in
state and municipal securities held by the Company, $10,177,000 were
rated AAA, $425,000 were rated A, and $141,000 were nonrated
securities. For those bonds not rated, the market values were confirmed
with independent brokers. All mortgage backed securities are rated AAA.
(4) Loans
<TABLE>
A summary of loans as of December 31 is as follows:
<CAPTION>
- ----------------------------------------------------------------------------------------- ---------------------------
(In thousands) 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial $49,862 $43,783
Consumer 12,108 11,328
Real estate - mortgage 126,048 116,630
Real estate - construction 17,071 22,539
Bankers' acceptances and commercial paper - 709
Other 6,501 6,090
- ---------------------------------------------------------------------------------------------------------------------
211,590 201,079
Less deferred loan fees 246 299
- ---------------------------------------------------------------------------------------------------------------------
$211,344 $200,780
=====================================================================================================================
</TABLE>
<TABLE>
The following is an analysis of the allowance for possible loan losses
for the years ended December 31:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
(In thousands) 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $2,438 $2,507 $2,352
Provision charged to expense 135 100 890
Loans charged off (321) (304) (884)
Recoveries on loans previously
charged off 145 135 149
- ---------------------------------------------------------------------------------------------------------------------
Balance, end of year $2,397 $2,438 $2,507
=====================================================================================================================
</TABLE>
Loans for which interest is no longer being accrued totaled $993,000,
$2,023,000, and $2,286,000 as of December 31, 1995, 1994, and 1993,
respectively. Interest that would have been recognized on nonaccrual
loans was $256,000, $241,000, and $414,000 during 1995, 1994, and 1993,
respectively.
12
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
<TABLE>
The Company makes loans to executive officers, directors, and their
affiliates in the ordinary course of business. The following is an
analysis of activity with respect to such loans for the years ended
December 31, 1995, and 1994:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
(In thousands) 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Balance, beginning of year $4,838 $4,581
New loan commitments 4,203 5,690
Repayment of loans (2,251) (2,217)
Undisbursed commitments, end of year (2,557) (3,216)
- ---------------------------------------------------------------------------------------------------------------------
Balance, end of year $4,233 $4,838
=====================================================================================================================
</TABLE>
The Company and its subsidiaries operate in a geographic region
comprising Monterey and Santa Cruz Counties. The Bank's credit risk is
therefore dependent in part to the economic condition of this region.
Loans are made on the basis of a secure repayment source, namely the
cash flows generated by the borrowing entity, collateral is generally a
secondary source for loan qualification. It is the Bank's policy to
maintain the loan to value ratio on secured loans below 75%. Management
believes this practice tends to mitigate risks caused by the local
economy
<TABLE>
(5) Premises and Equipment
Premises and equipment as of December 31 are summarized as follows:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
(In thousands) 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Land $1,606 $1,606
Buildings 5,050 4,468
Furniture and equipment 5,072 4,679
Leasehold improvements 1,273 1,192
- ---------------------------------------------------------------------------------------------------------------------
13,001 11,945
Less accumulated depreciation and amortization 5,478 4,707
- ---------------------------------------------------------------------------------------------------------------------
Premises and equipment, net $7,523 $7,238
=====================================================================================================================
</TABLE>
(6) Time Deposits
As of December 31, 1995 and 1994, the Company had liabilities of
$42,976,000 and $34,885,000, respectively, for time deposits in
denominations of $100,000 or more. Interest expense for these deposits
was $2,168,000 and $1,107,000 in 1995 and 1994, respectively.
13
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
(7) Income Taxes
As discussed in Note 1, the Company adopted SFAS No. 109 as of January
1, 1993. The cumulative effect of this change in accounting for income
taxes of $549,000 is determined as of January 1, 1993, and is reported
separately in the consolidated statement of income for the year ended
December 31, 1993.
<TABLE>
Components of income tax expense for the years ended December 31, 1995,
1994, and 1993 are as follows:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
(In thousands) 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $2,420 $1,994 $1,149
State 982 809 526
- ---------------------------------------------------------------------------------------------------------------------
3,402 2,803 1,675
- ---------------------------------------------------------------------------------------------------------------------
Deferred:
Federal (157) (137) 39
State (65) (14) 13
- ------------------------------------------------------------------------------------------------- -------------------
(222) (151) 52
- ---------------------------------------------------------------------------------------------------------------------
Total $3,180 $2,652 $1,727
=====================================================================================================================
</TABLE>
<TABLE>
The temporary differences between the financial statement carrying
amounts and tax bases of assets and liabilities that give rise to
significant components of the deferred tax asset and liability amounts
relate to the following as of December 31
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
(In thousands) 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Book provision for loan losses in excess of tax provision $740 $759
Book depreciation in excess of tax 422 530
State franchise taxes 192 144
Unrealized loss on securities available-for-sale - 103
Loan fees and other, net 499 255
- ---------------------------------------------------------------------------------------------------------------------
Total deferred tax assets 1,853 1,791
Less valuation allowance - 22
- ---------------------------------------------------------------------------------------------------------------------
Deferred tax assets, net 1,853 1,769
- ---------------------------------------------------------------------------------------------------------------------
Deferred tax liabilities:
Difference in recognition of organization costs and other (16) (19)
Unrealized gain on securities available-for-sale (188) -
Total deferred tax liabilities (204) (19)
- ---------------------------------------------------------------------------------------------------------------------
Net deferred tax asset $1,649 $1,750
=====================================================================================================================
<FN>
The net deferred tax asset represents recoverable taxes and is included
in other assets in the accompanying consolidated balance sheets.
</FN>
</TABLE>
14
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
<TABLE>
Actual income tax expense differs from the "expected" tax expense (computed by
applying the U.S. federal corporate income tax rate of 34% to earnings before
income taxes) for the years ended December 31, as follows:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
(In thousands) 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed "expected" tax expense $2,793 $2,377 $1,654
Increase (reduction) in income taxes resulting from:
Tax exempt income (236) (237) (305)
Franchise taxes, net of federal income tax benefit 605 511 356
Other, net 18 1 22
- ---------------------------------------------------------------------------------------------------------------------
$3,180 $2,652 $1,727
=====================================================================================================================
</TABLE>
(8) Benefit Plans
Stock Option Plans - The Company has a stock option plan (the 1984
Plan) under which incentive stock options or nonqualified stock options
may be granted to certain key employees or directors to purchase an
aggregate of 56,778 shares of authorized, but unissued, common stock of
the Company. Unexercised options were granted and outstanding as of
December 31, 1995, for an aggregate of 56,778 shares. Options have been
granted at an exercise price not less than the fair market value of
such stock at the date of grant. All stock options become exercisable
at the rate determined by the Company's Board of Directors and expire
no later than 10 years after the date of grant.
The Company has a Directors Stock Option Plan (the 1991 Plan) under
which, nonqualified options may be granted to non-employee directors of
the Company and its subsidiaries to purchase an aggregate of 172,304
shares of authorized, but unissued, common stock of the Company
according to a formula set forth in the 1991 Plan. Unexercised options
were granted and outstanding as of December 31, 1995, for an aggregate
of 89,306 shares with an exercise price equal to the fair market value
of the Company's common stock at the date of grant. The 1991 Plan
provides that options granted thereunder vest 6 months after the date
of grant and expire no later than 10 years after the date of grant.
In May 1995, the Company's shareholders approved the 1994 Stock Option
Plan (the 1994 Plan). Under the terms of the 1994 Plan, incentive stock
options or nonqualified stock options may be granted to certain key
employees or directors to purchase an aggregate of 539,091 shares of
authorized, but unissued, common stock of the Company. Unexercised
options were granted and outstanding as of December 31, 1995, for an
aggregate of 169,594 shares with an exercise price equal to the fair
market value of the Company's common stock at the date of grant. The
1994 Plan provides that options granted thereunder vest 6 months after
the date of grant and expire no later than 10 years after the date of
grant.
<TABLE>
Below is a summary of stock option activity under the 1984, 1991, and
1994 Plans:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Options outstanding
----------------------------
Shares
available Price
for grant Shares per share
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balances, December 31, 1992 304,892 317,262 $5.43 - 18.57
Additions related to 5% stock dividend 15,284 11,640 5.43 - 18.57
Exercised - (83,912) 5.43 - 8.30
Canceled 6,394 (6,394) 5.43 - 15.98
- ---------------------------------------------------------------------------------------------------------------------
Balances, December 31, 1993 326,570 238,596 5.43 - 18.57
Additions related to 5% stock dividend 13,733 10,523 5.43 - 18.57
Exercised - (80,355) 5.17 - 15.22
Expirations (281,069) - -
</TABLE>
15
<PAGE>
<TABLE>
Pacific Capital Bancorp
and Subsidiaries
<S> <C> <C> <C>
Canceled 13,723 (13,723) 13.57 - 17.69
- ---------------------------------------------------------------------------------------------------------------------
Balances, December 31, 1994 72,957 155,041 5.55 - 17.69
Additions related to the adoption of
the 1994 Plan 371,022 168,100 16.33 - 24.63
Additions related to 5% stock dividend 3,662 7,272 5.55 - 17.69
Granted (1,525) 1,525 19.17 - 24.63
Exercised - (9,590) 5.29 - 18.10
Expirations (291) - 12.93 - 12.93
Canceled 6,670 (6,670) 12.93 - 14.50
- ---------------------------------------------------------------------------------------------------------------------
Balances, December 31, 1995 452,495 315,678 $7.53 - 24.63
=====================================================================================================================
</TABLE>
Options to purchase 302,162 shares of stock were exercisable as of
December 31, 1995. All per share amounts give retroactive effect to
stock dividends.
Employee Stock Ownership Plan - In 1986, the Company adopted an
Employee Stock Ownership Plan (ESOP) covering substantially all
employees. Effective March 1, 1991, the Company adopted an amendment to
the ESOP to restructure it as a leveraged employee stock ownership
plan, which qualifies as a stock bonus plan under the Internal Revenue
Code. The Company may make annual contributions to the ESOP in an
amount determined by the Board of Directors. Contributions are not
intended to exceed an amount estimated to be an allowable deduction for
tax purposes. The Company made contributions to the ESOP of $200,000,
$221,000, and $115,000 in 1995, 1994, and 1993, respectively.
The ESOP borrowed $500,000 to finance the acquisition of the Company's
stock in 1992. Repayment of principal and interest is wholly funded
through the Company's contributions to the ESOP. The Company's 1994
contribution included $212,000 in debt repayment and $9,000 for the
interest accrued on the loan. The note was fully repaid in September
1994.
401(k) Plan - The Company also has a tax deferred profit sharing plan
and thrift plan covering all eligible employees. The Company's
contributions amounted to $40,000, $35,000, and $29,000 for the years
ended December 31, 1995, 1994, and 1993.
In October 1995, the FASB issued SFAS No. 123, Accounting for
Stock-Based Compensation. SFAS No. 123 establishes financial accounting
and reporting standards for stock-based employee compensation plans.
Those plans include all arrangements by which employees receive shares
of stock or other equity instruments of the employer or the employer
incurs liabilities to employees in amounts based on the price of the
employer's stock. Examples are stock options, restricted stock, and
stock appreciation rights. This statement defines a fair value based
method of accounting for an employee stock option or similar equity
instrument. Under this method, compensation costs are measured at the
grant date based on the value of the award and are recognized over the
service period, which is the vesting period. SFAS No. 123 encourages
(but does not require) employers to adopt the new method in place of
the provisions of Accounting Principles Board Opinion (APB) No. 25,
Accounting for Stock Issued to Employees. This statement applies to
fiscal years beginning after December 15, 1995. The Company has elected
to use current practice under APB No. 25 and does not anticipate that
the required disclosures will have a material impact on the financial
condition or results of operations of the Company.
(9) Fair Value of Financial Instruments
SFAS No. 107, Disclosures about Fair Value of Financial Instruments,
requires that the Company disclose estimated fair value for its
financial instruments. Fair value estimates, methods, and assumptions
are set forth below for the Company's financial instruments.
The carrying amounts and estimated fair values of the Company's
financial instruments are as follows:
16
<PAGE>
<TABLE>
Pacific Capital Bancorp
and Subsidiaries
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1995 December 31, 1994
----------------- -----------------
Carrying Estimated Carrying Estimated
(In thousands) amounts fair value amounts fair value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Cash and cash cash equivalents $41,898 $41,898 $42,262 $42,262
Investment securities 84,492 84,558 86,389 84,625
Net loans 212,823 208,517 200,643 196,277
- ---------------------------------------------------------------------------------------------------------------------
Liabilities:
Demand deposits, noninterest bearing $71,988 $71,988 $70,638 $70,638
Demand deposits, interest bearing 56,527 56,527 53,410 53,410
Savings and money market 97,087 97,087 122,816 122,816
Time certificates 82,217 82,483 56,365 56,459
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is
practicable to estimate that value.
Cash and Cash Equivalents - The carrying amount approximates fair value
because of the short maturities of these instruments.
Investment Securities - The fair value of investments and
mortgage-backed securities, except certain state and municipal
securities, is estimated based on bid prices published in financial
newspapers or bid quotations received from securities dealers. The fair
value of certain state and municipal securities is not readily
available through market sources other than dealer quotations, so fair
value estimates are based on quoted market prices of similar
instruments, adjusted for differences between the quoted instruments
and the instruments being valued.
17
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
Loans - Fair values are estimated for portfolios of loans with similar
financial characteristics. Loans are segregated by type such as
commercial, commercial real estate, residential mortgage, and consumer.
Each loan category is further segmented into fixed and adjustable rate
interest terms and by performing and nonperforming categories.
The fair value of performing fixed rate loans is calculated by
discounting scheduled cash flows through the estimated maturity using
estimated market discount rates that reflect the credit and interest
rate risk inherent in the loan. The estimate of maturity is based on
the Company's historical experience with repayments for each loan
classification, modified, as required, by an estimate of the effect of
current economic and lending conditions. The fair value of performing
variable rate loans is judged to approximate book value for those loans
whose rates reprice in less than 90 days. Rate floors and rate ceilings
are not considered for fair value purposes as the number of loans with
such limitations is not significant.
Fair value for significant nonperforming loans is based on recent
external appraisals. If appraisals are not available, estimated cash
flows are discounted using a rate commensurate with the risk associated
with the estimated cash flows. Assumptions regarding credit risk, cash
flows, and discount rates are judgmentally determined using available
market information and specific borrower information.
Deposit Liabilities - The fair value of deposits with no stated
maturity, such as non-interest bearing demand deposits, savings and NOW
accounts, and money market and checking accounts, approximates the
amount payable on demand. The fair value of certificates of deposit is
judged to approximate book value for those certificates whose remaining
maturities are less than 90 days. For all other certificates, estimated
cash flows are discounted using rates currently offered for deposits of
similar remaining maturities.
Limitations - Fair value estimates are made at a specific point in
time, based on relevant market information and information about the
financial instrument. These estimates do not reflect any premium or
discount that could result from offering for sale at one time the
Company's entire holdings of a particular financial instrument. Fair
value estimates are based on judgments regarding future expected loss
experience, current economic conditions, risk characteristics of
various financial instruments, and other factors. These estimates are
subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on- and off-balance sheet
financial instruments without attempting to estimate the value of
anticipated future business and the value of assets and liabilities
that are not considered financial instruments. In addition, the tax
ramifications related to the realization of the unrealized gains and
losses can have a significant effect on fair value estimates and have
not been considered in many of the estimates.
18
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
(10) Commitments and Contingencies
Future minimum rental payments for Bank premises under noncancelable
operating leases as of December 31, 1995 are as follows:
- --------------------------------------------------------------------------------
Minimum lease
payments
Year ending December 31, (In thousands)
- --------------------------------------------------------------------------------
1996 $508
1997 499
1998 468
1999 296
2000 224
Thereafter 547
- --------------------------------------------------------------------------------
2,542
Minimum rentals receivable under noncancelable subleases (501)
- --------------------------------------------------------------------------------
$2,041
================================================================================
Rent expense under operating leases totaled $503,000, $470,000, and
$473,000 for the years ended December 31, 1995, 1994, and 1993,
respectively. Related sublease rental income totaled $82,000, $99,000,
and $93,000, respectively.
In December 1988, the Company entered into an operating lease with a
member of its Board of Directors for rental of its administrative
headquarters. This lease required payments totaling approximately
$188,000, $185,000, and $182,000 for the years ended December 31, 1995,
1994, and 1993, respectively. The lease will expire on April 30, 1999.
In the normal course of business, there are outstanding commitments,
such as commitments to extend credit, which are not reflected in the
accompanying consolidated financial statements. These commitments
involve elements of credit and interest rate risk. Management does not
anticipate any loss will result from such commitments. As of December
31, 1995, amounts committed to extend credit under normal lending
agreements aggregated approximately $53,201,000. These amounts are
subject to the same loan collateral requirements described in Note 4.
Management reviews the risk associated with these credits in evaluating
the overall adequacy of the allowance for possible loan losses.
Additionally, there are approximately $1,462,000 in outstanding standby
letters of credit which, in effect, are guarantees of obligations of
customers.
The Bank has borrowing lines of approximately $24,000,000 with primary
correspondent banks. There were no borrowings outstanding under these
lines as of December 31, 1995.
19
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
(11) Pacific Capital Bancorp (Parent Company Only
<TABLE>
The following are the financial statements of Pacific Capital Bancorp:
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
BALANCE SHEETS
Years ended December 31, 1995 and 1994
- ---------------------------------------------------------------------------------------------------------------------
(In thousands) 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $144 $135
Loans - 1,675
Premises and equipment (net of accumulated depreciation) 1,865 1,409
Investment in subsidiaries 40,532 35,244
Other assets 688 465
- ---------------------------------------------------------------------------------------------------------------------
Total Assets $43,229 $38,928
=====================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities $253 $178
Shareholders' equity 42,976 38,750
- ---------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $43,229 $38,928
=====================================================================================================================
</TABLE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
STATEMENTS OF INCOME
Years ended December 31, 1995, 1994, and 1993
- ---------------------------------------------------------------------------------------------------------------------
(In thousands) 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity in income of subsidiaries $4,826 $2,482 $2,166
Cash dividend received from Bank 500 2,120 1,171
Interest income and fees on loans 69 58 53
Other expenses (361) (321) (251)
- ---------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of accounting change 5,034 4,339 3,139
Cumulative effect of accounting change - - 549
- ---------------------------------------------------------------------------------------------------------------------
Net income $5,034 $4,339 $3,688
=====================================================================================================================
</TABLE>
20
<PAGE>
<TABLE>
Pacific Capital Bancorp
and Subsidiaries
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
STATEMENTS OF CASH FLOWS
Years ended December 31, 1995, 1994, and 1993
- ---------------------------------------------------------------------------------------------------------------------
(In thousands) 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $5,034 $4,339 $3,688
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Equity in undistributed net income of subsidiary bank (5,326) (4,602) (3,886)
Receipt of dividend from subsidiary 500 2,120 1,171
Depreciation and amortization 37 40 49
(Increase) decrease in other assets (223) (427) 551
(Decrease) increase in other liabilities (47) 54 (217)
Cumulative effect of change in accounting method - - (549)
- ---------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by operating activities (25) 1,524 807
- ---------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Net maturities of bankers' acceptances and
commercial paper 1,675 (636) -
Capital expenditures (493) (89) (11)
Reimbursement for premises and equipment from
subsidiary bank 122 122 122
- ---------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 1,304 (603) 111
- ---------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Repurchase and retirement of stock (111) (717) (1,172)
Proceeds from stock options exercised 158 806 526
Cash paid for fractional shares (15) (16) (13)
Cash paid for dividends (1,302) (946) (671)
- ---------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (1,270) (873) (1,330)
- -------------------------------------------------------------------------------------------------- ------------------
Net increase (decrease) in cash and cash equivalents 9 48 (412)
Cash and cash equivalents at beginning of year 135 87 499
=====================================================================================================================
Cash and cash equivalents at end of year $144 $135 $87
=====================================================================================================================
Supplemental disclosures:
Noncash investment and financing activities:
Transfer from retained earnings to common stock
due to stock dividend $3,132 $2,165 $1,722
=====================================================================================================================
</TABLE>
The ability of the Company to pay dividends will largely depend upon
the dividends paid to it by the Bank. There are legal limitations on
the ability of the Bank to provide funds to the Company in the form of
loans, advances, or dividends. Under the National Bank Act, the Bank
may not declare dividends in any calendar year that exceed certain
legal limitations. The approximate amount of restricted equity of the
Bank as of December 31, 1995 was $29,871,000.
21
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS
1995
THE COMPANY
Pacific Capital Bancorp (the Company) through its wholly owned
subsidiary, First National Bank of Central California (the Bank), engages in a
broad range of financial service activities. The Company's other subsidiary,
Pacific Capital Services Corporation, currently is inactive.
The following sections set forth a discussion of the significant
operating changes, business trends, financial condition, earnings, capital
position, and liquidity that have occurred in the three-year period ended
December 31, 1995, together with an assessment, when considered appropriate, of
external factors that may affect the Company in the future. This discussion
should be read in conjunction with the Company's consolidated financial
statements and notes on pages 4 of this annual report.
SUMMARY OF FINANCIAL RESULTS
Net income for 1995 was a record $5,034,000 or $1.86 per share, an
increase of $695,000 or $0.21 per share over 1994. The Company's net operating
income increased significantly for the second straight year in 1995 after
remaining relatively constant in 1993, 1992, and 1991. The Company's net income
for 1994 of $4,339,000 or $1.65 per share represented an increase of $651,000 or
$0.26 per share over 1993. Net income for 1993 included an additional $549,000
or $0.21 per share as a result of a cumulative effect of an accounting change
upon adoption of Statement of Financial Accounting Standards (SFAS) No. 109,
Accounting for Income Taxes. The Company's increased earnings in 1995 resulted
from an interest rate environment which had a beneficial impact on the net
interest margin, active management of noninterest expense and maintaining a low
level of credit losses.
In 1995 the Company paid three cash dividends of $0.125 in March, June,
and September, and one cash dividend of $0.15 paid in December. In 1994, the
Company distributed four $0.10 quarterly cash dividends. In addition, the
Company distributed a 5% stock dividend in each of the years in the three year
period ended December 31, 1995. Earnings per share amounts have been
retroactively restated to reflect these stock dividends. The return on average
shareholders' equity was 12.2% in 1995, compared to 11.7% in 1994 and 10.8% in
1993.
The Company believes that the economies in which it operates, the
Monterey and Santa Cruz Counties, have stabilized in the past two years. (See
"Earning Assets") Signs of this stabilization include sustained quality loan
demand and modest deposit growth as seen in 1995. On a national scale, the
Company is forecasting a slight decrease in interest rates due to a weakening
overall economy in 1996. If the economy does continue to slow, interest rates
will likely decline which, in turn, could lead to a reduction in net interest
income in 1996.
Certain information concerning the Company's average balances, yields
and rates on average interest-earning assets and interest-bearing liabilities is
set forth in the following table. Interest yields and amounts earned include net
loan fees of $191,000, $147,000, and $108,000 in 1995, 1994, and 1993,
respectively.
22
<PAGE>
<TABLE>
Pacific Capital Bancorp
and Subsidiaries
AVERAGE BALANCE SHEETS
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
1995 1994 1993
Average Yield/ Interest Average Yield/ Interest Average Yield/ Interest
(Dollars in thousands) Balance Rate Amount Balance Rate Amount Balance Rate Amount
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Earning Assets
Short-Term Investments:
Time Deposits with Other
Financial Institutions $769 6.1% $47 $107 3.5% $4 $- - $-
Federal Funds Sold 15,033 5.9% 887 18,057 4.3% 770 22,144 2.9% 638
Money Market Funds 6,284 5.5% 344 397 3.8% 15 4,119 3.0% 123
- ---------------------------------------------------------------------------------------------------------------------
Total 22,086 5.8% 1,278 18,561 4.2% 789 26,263 2.9% 761
Investment Securities:
Taxable 68,517 5.1% 3,527 70,472 4.8% 3,410 63,139 5.1% 3,250
Non-Taxable 11,249 5.2% 588 11,419 5.2% 596 11,836 5.5% 656
Federal Reserve Bank Stock 540 5.9% 32 540 5.9% 32 532 6.2% 33
- ---------------------------------------------------------------------------------------------------------------------
Total 80,306 5.2% 4,147 82,431 4.9% 4,038 75,507 5.2% 3,939
Loans: 201,360 10.1% 20,420 190,721 9.1% 17,329 177,988 8.7% 15,557
- ---------------------------------------------------------------------------------------------------------------------
Total Earning Assets 303,752 8.5% 25,845 291,713 7.6% 22,156 279,758 7.2% 20,257
Allowance for Possible Loan
Losses (2,359) (2,475) (2,342)
Non-Earning Assets
Premises and Equipment 7,287 7,253 7,635
Other 30,671 28,428 26,816
- ---------------------------------------------------------------------------------------------------------------------
Total Non-Earning Assets 37,958 35,681 34,451
- ---------------------------------------------------------------------------------------------------------------------
Total Assets $339,351 $324,919 $311,867
=====================================================================================================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-Bearing Deposits:
Demand $52,428 1.1% $566 $50,059 1.1% $551 $46,943 1.3% $607
Savings and Money Market 105,531 2.6% 2,747 121,079 2.3% 2,837 120,984 2.4% 2,944
Time Certificates 70,575 5.3% 3,716 52,803 3.4% 1,795 52,556 3.0% 1,599
Other Interest-Bearing
Liabilities - - - 25 8.0% 2 118 21.2% 25
- ---------------------------------------------------------------------------------------------------------------------
Total 228,534 3.1% 7,029 223,966 2.3% 5,185 220,601 2.3% 5,175
Non Interest-Bearing Deposits
and Other Liabilities:
Demand, Non Interest-Bearing 67,026 63,352 56,645
Other Liabilities 2,511 385 490
Shareholder's Equity 41,280 37,216 34,131
- ---------------------------------------------------------------------------------------------------------------------
Total 110,817 100,953 91,266
- ---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $339,351 $324,919 $311,867
=====================================================================================================================
NET INTEREST INCOME $18,816 $16,971 $15,082
NET INTEREST MARGIN 6.2% 5.8% 5.4%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
The net interest margin is expressed as the percentage of net interest income to
average total earning assets. The average balance on non-accrual loans is
immaterial as a percentage of total loans and as such has been included in total
loans. Non-taxable securities and leases have not been calculated on a tax
equivalent basis.
NET INTEREST INCOME
Net interest income, the difference between interest earned on loans
and investments and the interest paid on deposits and other sources of funds, is
the principal component of the Company's earnings. The preceding table shows the
23
<PAGE>
composition of average earning assets and average interest-bearing liabilities,
average yields and rates, and the net interest margin for 1993 through 1995.
Interest income increased $3,689,000 or 16.7% from $22,156,000 in 1994 to
$25,845,000 in 1995, after increasing $1,899,000 or 9.4% from 1993 to 1994. The
increase in 1995 is the result of higher average loan and investment yields
during 1995 and an increase in interest earning assets. The increase in 1994 was
due to primarily to the same factors which contributed to the increase in 1995,
primarily, higher loan yields and an increase in average interest earning
assets. Total interest and fees produced a 8.5% yield on average earning assets
in 1995, compared to 7.6% and 7.2% yields on average earning assets in 1994 and
1993, respectively. The yield increase in 1995 was the result of several
interest rate increases in the Bank's reference rate (the rate charged to the
Bank's most creditworthy customers) which took place during the course of 1994
and early 1995. The increase in yields in 1994 was due to the same interest rate
increases which had a beneficial impact on yields during 1995.
During 1995, the Company increased its available-for-sale portfolio
relative to held-to-maturity securities. This shift has resulted in increased
liquidity for the Company and an increase in the average yield on the portfolio
from 4.78% in 1994 to 5.30% in 1995.
Total interest expense for 1995 was $7,029,000, an increase of
$1,844,000 or 35.6% over 1994, compared to a small increase of $10,000 or 0.2%
from 1993 to 1994. The Company's cost of funds increased in 1995 by 0.58% over
1994 due to a substantial change in the mix of deposits. Certificates of
deposits increased to $82,217,000 in 1995 compared to $56,365,000 in 1994 while
savings and money market deposits decreased in 1995 by $25,729,000. The rates
paid on certificates of deposit generally are substantially higher than those
paid on savings and money market deposits thus resulting in a higher cost of
funds for the Company in 1995
<TABLE>
The Company's net yield on interest-earning assets is affected by
changes in the rates earned and paid and the volume of interest-earning assets
and interest-bearing liabilities. The impact of changes in volume and rate on
net interest income in 1995 and 1994 is shown in the following table. Changes
attributable to both volume and rate have been allocated to rate.
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
1995 Compared to 1994 1994 Compared to 1993
------------------------------------------------------------------------------
(In thousands) Volume Rate Total Volume Rate Total
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Time Deposits with other
Financial Institutions $40 $3 $43 $4 $0 $4
Federal Funds Sold (129) 246 117 (118) 250 132
Money Market Funds 222 107 329 (111) 3 (108)
Investment Securities:
Taxable (95) 212 117 377 (217) 160
Nontaxable (9) 1 (8) (23) (37) (60)
Federal Reserve Bank
Stock - - - 0 (1) (1)
Loans 967 2,124 3,091 1,113 659 1,772
- ---------------------------------------------------------------------------------------------------------------------
Total 996 2,693 3,689 1,242 657 1,899
- ---------------------------------------------------------------------------------------------------------------------
Demand, Interest Bearing 25 (10) 15 40 (96) (56)
Savings (363) 273 (90) 2 (109) (107)
Time Certificates 604 1,317 1,921 8 188 196
Fed Funds Purchased (2) - (2) (20) (3) (23)
- ---------------------------------------------------------------------------------------------------------------------
Total 264 1,580 1,844 30 (20) 10
- ---------------------------------------------------------------------------------------------------------------------
Increase in Net Interest
Income $732 $1,113 $1,845 $1,212 $677 $1,889
=====================================================================================================================
</TABLE>
24
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
<TABLE>
EARNING ASSETS
Outstanding total loans averaged $201,360,000 in 1995 compared to
$190,721,000 during 1994. This represents an increase of $10,639,000 or 5.6%,
compared to an increase of $12,733,000 or 7.2% from 1993 to 1994. The increase
in total loans outstanding during 1995 is due to increased loan demand from
qualified borrowers and is reflective of the stabilization of the economy in
most of the primary markets which the Bank serves. The following table
summarizes the composition of the loan portfolio as of December 31:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
(In thousands) 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial $49,862 $43,783 $40,588 $45,919 $47,585
Real Estate - Construction 17,071 22,539 10,394 7,637 16,373
Real Estate - Mortgage 126,048 116,630 110,618 106,237 105,690
Consumer 12,108 11,328 12,124 13,603 13,623
Bankers' Acceptances and
Commercial Paper - 709 1,542 5,047 11,022
Other 6,255 5,791 5,326 5,301 2,450
- ------------------------------------------------------------------- -------------------------------------------------
Total $211,344 $200,780 $180,592 $183,744 $196,743
=====================================================================================================================
</TABLE>
The Company lends primarily to small- and medium-sized businesses
within its markets, which is comprised principally of Monterey and Santa Cruz
Counties.
A majority of the Company's loan portfolio consists of loans secured by
commercial, industrial, and residential real estate. As of December 31, 1995,
real estate mortgage and construction loans represented $143,119,000 or 67.7% of
total loans, an increase of $3,950,000 or 2.8% from the prior year.
Real estate mortgage loans included commercial real estate loans of
approximately $89,180,000, one-to-four family home loans of approximately
$13,972,000, equity lines of credit of approximately $16,223,000, multifamily
dwelling loans of approximately $4,242,000 and farm land loans of approximately
$2,431,000. Management believes that the Bank does not have any significant loss
exposure with respect to such loans, due to the Bank's collateral position. In
general, advances do not exceed 65% of appraised value on commercial real estate
loans and 75% on residential mortgages. Continued emphasis is placed on this
policy and, accordingly, appraisals are periodically updated as conditions
change.
Construction loans totaled $17,071,000 or 8.1% of the loan portfolio as
of December 31, 1995, which represents a decrease of $5,468,000 or 24.3% from
December 31, 1994. Construction loans increased by $12,145,000 or 116.8% from
December 31, 1993 to December 31, 1994.
The Bank finances the construction of residential and commercial real
estate properties. These loans are all at variable rates, are secured by first
deeds of trust on the underlying properties, and generally have maturities of
less than 12 months. As of December 31, 1995, 56.2% of the construction
portfolio was for residential development and the remaining 43.8% was
commercial. Repayment is based on a pre-qualification analysis of the borrower's
ability to obtain take-out financing. The Bank's construction lending has been
in areas which management believes to have favorable market conditions. Advances
on residential and commercial projects are limited in general to the lower of
approximately 75% and 65%, respectively, of cost or appraised value.
Commercial loans not secured by real estate totaled $49,862,000 or
23.6% of the total loan portfolio at December 31, 1995. This represented an
increase of $6,079,000 or 13.9% over 1994. Management believes that this
increase in demand is a further indicator of the stabilization in the local
economy. Commercial loans with maturities greater than one year include
approximately $3,975,000 of fixed rate loans.
Consumer loans increased $780,000 or 6.9% during 1995. Consumer loans,
as of December 31, 1995, represent 5.7% of the total loan portfolio, compared to
5.6% of the 1994 loan portfolio.
25
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
The Company had undisbursed loans totaling $54,663,000 as of December
31, 1995, primarily representing available lines of credit and the unfunded
portion of construction loan commitments.
<TABLE>
The following table sets forth the maturity distribution of the loan portfolio
as of December 31, 1995:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
After One
In One Year Year Through After Five
(In thousands) or Less Five Years Years Total
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial $45,826 $3,654 $382 $49,862
Real Estate - Construction 17,071 - - 17,071
Real Estate - Mortgage 58,353 28,999 38,696 126,048
Consumer 6,806 5,023 279 12,108
Other 2,907 1,207 2,141 6,255
- ---------------------------------------------------------------------------------------------------------------------
Gross Loans $130,963 $38,883 $41,498 $211,344
=====================================================================================================================
</TABLE>
The fixed rate loan categories discussed above mature as follows:
$15,191,000 in 1996, $6,666,000 in 1997 $6,776,000 in 1998, $6,576,000 in 1999,
and $5,134,000 in 2000, with the remaining $41,498,000 maturing thereafter.
INTEREST RATE SENSITIVITY
Interest rate sensitivity is the relationship between market interest
rates and net interest income due to the repricing characteristics of assets and
liabilities. If more liabilities than assets reprice in a given period (a
liability sensitive position), market interest rate changes will be reflected
more quickly in liability rates. If interest rates decline, a liability
sensitive position will benefit net income. Alternatively, where assets reprice
more quickly than liabilities in a given period (an asset sensitive position) a
decline in market rates will have an adverse effect on net interest income.
<TABLE>
The table below presents the interest rate sensitivity of the Company
as of December 31, 1995. For any given period, the structure is matched when an
equal amount of assets and liabilities reprice. Any excess of assets or
liabilities over these matched items results in the gap, or mismatch, shown at
the foot of the table. A negative gap indicates liability sensitivity and a
positive gap indicates asset sensitivity.
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Interest Rate Sensitivity as of December 31, 1995
- ---------------------------------------------------------------------------------------------------------------------
Repricing Opportunity
0 - 90 91 - 180 181 - 365 Over
(In thousands) Days Days Days One Year Total
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Federal Funds Sold $17,007 - - - $17,007
Loans 112,307 7,005 17,496 74,536 211,344
Taxable Investments - 1,287 3,000 69,498 73,785
Non-taxable Investments 240 727 3,027 6,713 10,707
- ---------------------------------------------------------------------------------------------------------------------
Total Earning Assets 129,554 9,019 23,523 150,747 312,843
- ---------------------------------------------------------------------------------------------------------------------
Interest Bearing Demand 56,527 - - - 56,527
Savings Deposits 90,139 3,693 3,255 - 97,087
Time Certificates 24,095 29,301 27,592 1,229 82,217
- ---------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Liabilities 170,761 32,994 30,847 1,229 235,831
- ---------------------------------------------------------------------------------------------------------------------
Gap $(41,207) $(23,975) $(7,324) $149,518 $77,012
Cumulative Gap (41,207) (65,182) (72,506) 77,012
=====================================================================================================================
</TABLE>
The Company has remained flexible in determining the point at which to
reprice deposits. This flexibility mitigates the Company's liability sensitive
position in the under one year category.
26
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
QUALITY OF LOANS
The Company had net loan charge-offs of $176,000 and $169,000 in 1995
and 1994, respectively. Net charge-offs as a percent of average loans remained
relatively flat between 1994 and 1995 after a substantial decrease from 1993 to
1994. The net charge-offs in 1993 generally resulted from the recessionary
environment prevalent in the local economy during that period. Over the last
five years, the low amount of net charge-offs is reflective of management's
continued emphasis on quality credit standards in the loan approval process as
well as close monitoring of the loan portfolio. The Bank's net charge-offs as a
percent of average loans have been below most industry averages in each year
reflected in the table below.
Management anticipates the Bank's charge-off experience in 1996 to be
consistent with that experienced in 1995 primarily due to the stabilization in
the local economy. This factor continues to be addressed in assessing the
adequacy of the allowance for possible loan losses.
<TABLE>
The following table summarizes the actual loan losses and provision for
possible loan losses during the last five fiscal years by loan category:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Summary of Loan Loss Activity
(In thousands) 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total loans outstanding, end of year $211,344 $200,780 $180,592 $183,744 $196,743
Average net loans during the year 201,360 190,721 177,988 191,099 198,495
Allowance for possible loan losses:
Balance, beginning of year 2,438 2,507 2,352 2,148 2,193
Charge-off by loan category
Commercial 129 175 333 504 303
Consumer 61 108 292 207 261
Real estate 131 21 259 200 50
- ---------------------------------------------------------------------------------------------------------------------
Total 321 304 884 911 614
- ---------------------------------------------------------------------------------------------------------------------
Recoveries by loan category
Commercial 58 85 42 94 17
Consumer 38 30 45 94 67
Real estate 49 20 62 2 44
- ---------------------------------------------------------------------------------------------------------------------
Total 145 135 149 190 128
- ---------------------------------------------------------------------------------------------------------------------
Net charge-offs 176 169 735 721 486
Provision charged to expense 135 100 890 925 441
- ---------------------------------------------------------------------------------------------------------------------
Balance, end of year $2,397 $2,438 $2,507 $2,352 $2,148
=====================================================================================================================
Ratios:
Net charge-offs to
average loans 0.09% 0.09% 0.41% 0.38% 0.24%
Allowance to loans at end of year 1.13% 1.21% 1.39% 1.28% 1.09%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Inherent in the lending function is the fact that loan losses will be
experienced and that the risk of loss will vary with the type of loan extended
and the creditworthiness of the borrower. To reflect the estimated risks of loss
associated with its loan portfolio, provisions are made to the Company's
allowance for possible loan losses. As an integral part of this process, the
allowance for possible loan losses is subject to review and possible adjustment
as a result of regulatory examinations conducted by governmental agencies and
through management's assessment of risk. The Company's entire allowance is a
valuation allocation; that is, it has been created by direct charges against
earnings through the provision for possible loan losses. For additional
information regarding the allowance for possible loan losses, see Note 1 to the
accompanying consolidated financial statements.
27
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
The Company evaluates the allowance for possible loan losses based upon
an individual analysis of specific categories of loans. The adequacy of the
allowance can be determined only on an approximate basis, since estimates as to
the magnitude and timing of loan losses are not predictable because of the
impact of external events. In addition, the Company has for the last several
years contracted with an independent loan review consulting firm to evaluate
overall credit quality on an ongoing basis. Management then considers the
adequacy of the allowance for possible loan losses in relation to the total loan
portfolio.
The provision for possible loan losses charged against earnings is
based upon an analysis of the actual migration of loans to losses plus an amount
for other factors which, in management's judgment, deserve recognition in
estimating possible loan losses. These factors include: specific loan conditions
as determined by management; the historical relationship between charge-offs and
the level of the allowance; the estimated future loss in all significant loans;
known deterioration in concentrations of credit, certain classes of loans or
pledged collateral; historical loss experience based on volume and types of
loans; the results of any independent review or evaluation of the loan portfolio
quality conducted by or at the direction of Company management or by bank
regulatory agencies; trends in portfolio volume, maturity, and composition;
off-balance sheet credit risk; volume and trends in delinquencies and
nonaccruals; lending policies and procedures including those for charge-off,
collection, and recovery; national and local economic conditions and downturns
in specific local industries; and the experience, ability, and depth of lending
management and staff. The Company evaluates the adequacy of its allowance for
possible loan losses on a quarterly basis.
While these factors cannot be reduced to a mathematical formula, it is
management's view that the allowance for possible loan losses of $2,397,000 or
1.13% of total loans as of December 31, 1995, was adequate. This allowance is
compared to $2,438,000 or 1.21% in 1994 and $2,507,000 or 1.39% in 1993. There
are, however, no assurances that in any given period the Company will not
sustain charge-offs which are substantial in relation to the size of the
allowance. Loans are charged to the allowance for loan losses when the loans are
deemed uncollectible. It is the policy of management to make additions to the
allowance so that it remains adequate to cover anticipated losses inherent in
the Bank's loan portfolio.
<TABLE>
Any allocation or breakdown in the allowance lends an appearance of an
exactness which does not exist. Thus, the allocation below should not be
interpreted as an indication of expected amounts or categories where charge-offs
will occur. The allocation of the allowance for possible loan losses as of the
end of the last five fiscal years is summarized in the table below:
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Allocation of Allowance 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------
Percent of Percent of Percent of Percent of Percent of
Loans in Loans in Loans in Loans in Loans in
Each Each Each Each Each
Category Category Category Category Category
(Dollars in $ to Total $ to Total $ to Total $ to Total $ to Total
thousands) Loans Loans Loans Loans Loans
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
Applicable to:
Commercial $647 23.59% $848 21.81% $731 22.47% $822 24.99% $852 24.19%
Real Estate -
Construction 161 8.08% 443 11.23% 92 5.76% 78 4.16% 147 8.32%
Real Estate -
Mortgage 1,380 56.64% 884 58.09% 1,474 61.25% 1,221 57.82% 947 53.72%
Consumer 193 5.72% 253 5.64% 194 6.71% 199 7.40% 172 6.92%
Bankers'
Acceptances and
Commercial
Paper - 0.00% - 0.35% - 0.85% - 2.75% - 5.60%
Other 16 2.97% 10 2.88% 16 2.95% 32 2.88% 30 1.25%
- ------------------------------------------------------------------------------------------------------------------
Total 2,397 100.0% 2,438 100.0% 2,507 100.0% 2,352 100.0% 2,148 100.0%
==================================================================================================================
</TABLE>
28
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
<TABLE>
NONPERFORMING LOANS Interest income on the loan portfolio is recorded
on the accrual basis. However, the Company follows the policy of discontinuing
the accrual of interest income and reversing any accrued and unpaid interest
when the payment of principal or interest is 90 days past due unless the loan is
both well secured and in the process of collection. The Bank's Lending Policy
provides for strict requirements for exempting loans from nonaccrual status. The
composition of nonperforming loans as of the end of the last five fiscal years
is summarized in the following table:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Nonperforming Loans
(In thousands) 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Loans accounted for on a
nonaccrual basis $993 $2,023 $2,286 $2,926 $1,078
Other loans contractually
past due 90 days or more 141 7 - 342 1,027
- ---------------------------------------------------------------------------------------------------------------------
Total $1,134 $2,030 $2,286 $3,268 $2,105
=====================================================================================================================
</TABLE>
Loans accounted for on a nonaccrual basis experienced a substantial
decrease in 1995 to $993,000 compared to $2,023,000 at December 31, 1994. This
decrease was due to management's continuing efforts to resolve significantly
past due loans combined with a stabilizing economy.
Of total nonperforming loans as of December 31, 1995, 78.2% are secured
by real property where the loan to collateral value ratios are consistent with
the Bank's existing policies. In addition, the overall coverage of the allowance
as a percent of nonperforming loans is 211.4%. The Bank's ratio of nonperforming
loans to average loans has been below most industry averages in each year
reflected in the table above.
The Bank does not expect to sustain losses in excess of that provided
for in the allowance for possible loan losses. There were no loans which were
current as of December 31, 1995 where serious doubt existed as to the ability of
the borrower to comply with the present loan repayment terms or which represent
"troubled debt restructurings".
INVESTMENTS The average balance of Federal Funds Sold (overnight
investments with other banks) and other short-term investments (primarily money
market mutual funds) was $22,086,000 in 1995, $18,561,000 in 1994, and
$26,263,000 in 1993. These investments are maintained primarily for the
short-term liquidity needs of the Company. The major factors influencing the
levels of required liquidity are loan demand of the Company's customers and
fluctuations in the Company's level of deposits. The Company's loan to deposit
ratio averaged 68.1% in 1995, compared to 66.4% in 1994, and 64.2% in 1993. This
change in 1995 is due to the increase in average loans outstanding during the
year partially offset by an increase in certificates of deposits.
Average total investment securities were $80,306,000 in 1995, a
decrease of $2,125,000 over the 1994 average. This decrease was the result of a
slight shift from U.S. Treasury securities to Federal Funds Sold and other short
term investments in order to maximize investment yields. As of December 31,
1995, the aggregate market value of the investment portfolio exceeded book value
by $66,000. At December 31, 1994, the market value was below book value by
$1,764,000. This increase was the result of increasing prices in the bond market
during the course of 1995. It is the Company's policy not to engage in
securities trading transactions. There are no investments in the portfolio
deemed to be permanently or temporarily impaired. See Note 3 to the accompanying
consolidated financial statements.
29
<PAGE>
<TABLE>
Pacific Capital Bancorp
and Subsidiaries
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
Unrealized Unrealized Estimated
(In thousands) Amortized cost gain loss fair value
- ---------------------------------------------------------------------------------------------------------------------
1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Held-to-maturity securities:
State and municipal $6,633 $72 $(13) $6,692
Mortgage-backed securities
and other 1,963 7 - 1,970
- ---------------------------------------------------------------------------------------------------------------------
$8,596 $79 $(13) $8,662
=====================================================================================================================
Available-for-sale securities:
U.S. Treasury $57,328 $536 $(77) $57,787
State and municipal 4,074 45 (9) 4,110
U.S. government agencies 14,000 9 (10) 13,999
- ---------------------------------------------------------------------------------------------------------------------
$75,402 $590 $(96) $75,896
=====================================================================================================================
1994
- ---------------------------------------------------------------------------------------------------------------------
Held-to-maturity securities:
U.S. Treasury $51,234 $2 $(1,701) $49,535
State and municipal 12,043 68 (134) 11,977
Mortgage -backed securities and
other 854 2 (1) 855
- ---------------------------------------------------------------------------------------------------------------------
$64,131 $72 $(1,836) $62,367
=====================================================================================================================
Available-for-sale securities:
U.S. Treasury $19,846 $- $(295) $19,551
U.S. government agencies 2,671 38 (2) 2,707
- -------------------------------------------------------------------------- ------------------------------------------
$22,517 $38 $(297) $22,258
=====================================================================================================================
</TABLE>
<TABLE>
FUNDING
Average total deposits increased $8,267,000 or 2.9% during 1995,
compared to an increase of $10,047,000 or 3.6% during 1994 and an increase of
$12,446,000 or 4.7% in 1993. Average non-interest bearing deposits grew
$3,674,000 or 5.8% during 1995 compared to growth of $6,707,000 or 11.8% in 1994
and $5,866,000 or 11.6% in 1993. Average interest-bearing deposits increased
$4,593,000 or 2.1% in 1995, compared with increases of $3,458,000 or 1.6% in
1994 and $6,580,000 or 3.1% during 1993. Total deposit growth in 1996 is
expected to continue but may not increase at the same rate or in the same
categories. The Company is able to attract deposits by providing interest rates
and services competitive with other institutions located in its market area. The
Company does not have any brokered deposits or large concentrations with any one
customer.
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Average Deposits 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------
Average Average Average
(Dollars in thousands) Balance Rate Balance Rate Balance Rate
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Demand, Noninterest Bearing $67,026 - $63,352 - $56,645 -
Demand, Interest Bearing 52,428 1.08% 50,059 1.10% 47,061 1.29%
Savings 105,531 2.60% 121,079 2.34% 120,984 2.43%
Time Certificates 70,575 5.27% 52,803 3.40% 52,556 3.04%
- ---------------------------------------------------------------------------------------------------------------------
<FN>
The table above sets forth information for the last three fiscal years
regarding the Bank's average deposits and the average rates paid on each of the
deposit categories.
</FN>
</TABLE>
30
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
Average interest-bearing deposits as a percentage of average earning
assets have decreased slightly over the last three years to 75.2% in 1995 from
76.8% and 78.9% in 1994 and 1993, respectively.
In 1995, average time certificates of deposit of $100,000 or more
increased by $9,537,000, or 30.4%, to $40,915,000 and were 13.8% of total
average deposits, compared to 10.9% in 1994. Almost all of the certificates of
deposit represent local deposits. Given the Bank's forecast for interest rates,
management believes that maturing certificates of deposit will continue to be
directed into short to medium term deposits.
The remaining maturities of the Company's certificates of deposit,
including public funds, in amounts of $100,000 or more as of December 31, 1995,
are indicated in the table below. Interest expense on these certificates of
deposit totaled $2,168,000 in 1995.
- --------------------------------------------------------------------------------
(In thousands) 1995
- --------------------------------------------------------------------------------
Three month or less $14,315
Over three through six months 16,437
Over six through twelve months 12,358
Over twelve months 628
- --------------------------------------------------------------------------------
Total $43,738
================================================================================
OTHER INCOME
Total other income decreased in 1995 to $1,875,000 from $2,088,000 in
1994. The decrease was primarily due to a $94,000 decrease in gains on sale of
loans resulting from decreased activity. In addition, net losses on securities
transactions increased in 1995 to $73,000 from $17,000 in 1994. This variance
was due to a larger number of securities sales in 1995 associated with the
one-time securities reclassification as allowed under SFAS No. 115. Total other
income also decreased in 1994 by $277,000 from $2,365,000 in 1993. This decrease
was mainly the result of a decrease in mortgage banking fees of $149,000, a
decrease in net gains on securities transactions of $137,000, offset by an
increase in customer service charges of $105,000. As discussed in Note 1 of the
accompanying consolidated financial statements, the Mortgage Banking Division of
the Bank is solely a brokerage operation. The Bank does not originate, purchase,
or sell loans in this area and thus retains no credit or servicing risk.
The Bank originates and sells loans which are guaranteed in part by the
SBA. The sold portion is equal to the guaranteed portion of the loan and is sold
without recourse. The Bank retains the credit risk in the remaining unguaranteed
portion, which amounted to approximately $6,160,000 as of December 31, 1995.
OTHER EXPENSE
In 1995, total other operating expenses increased 3.1% to $12,342,000,
after an increase of 2.4% in 1994. Salaries and benefits expense increased
$611,000 or 10.1% in 1995, compared to an increase of $226,000 or 3.9% in 1994.
The increase in salaries and benefits was mainly the result of a greater number
of employees in 1995 and normal salary increases. As a percentage of average
earning assets, salaries and benefits were 2.2% in 1995 compared to 2.1% for
1994 and 1993. The Company employed 165 full-time equivalent employees at
year-end 1995, 155 at year-end 1994, and 152 at year-end 1993.
Occupancy expense increased $128,000 or 10.1% in 1995 compared to a
decrease of $38,000 or 2.9% in 1994. The increase in 1995 was due to the use of
temporary facilities during the year due to the expansion of the Salinas Office.
All other operating expenses totaled $4,305,000 in 1995 compared to
$4,670,000 in 1994, a decrease of $365,000 or 7.8%. This reduction was mainly
due to the decrease in regulatory assessments of $313,000 in 1995. In 1995, the
FDIC reduced the Bank Insurance Fund assessment for the healthiest banks from
$.23 per $100 in insured deposits to $.04 per $100 of insured deposits due to
the recapitalization of the Bank Insurance Fund. In 1994, other operating
expense increased by $89,000 or 1.9% as compared to an increase of $185,000 or
4.2% in 1993. The
31
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
<TABLE>
increase in 1994 was due mainly to advertising and promotion which increased by
$163,000 partially offset by a decline in other miscellaneous expenses of
$133,000. Overall growth in other operating expenses in 1995 is expected to be
consistent with the overall growth of the Company. The major components of other
expenses in dollars and as a percentage of average earning assets are as
indicated in the table below.
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Other Expenses 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------
Percentage Percentage Percentage
of Average of Average of Average
(Dollars in thousands) Amount Earning Assets Amount Earning Assets Amount Earning Assets
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Salaries and benefits $6,638 2.19% $6,027 2.07% $5,801 2.07%
Occupancy 1,399 0.46% 1,271 0.44% 1,309 0.47%
Equipment 1,035 0.34% 1,038 0.36% 1,035 0.37%
Advertising and promotion 476 0.16% 480 0.16% 317 0.11%
Forms and supplies 310 0.10% 272 0.09% 267 0.10%
Legal and professional fees 572 0.19% 653 0.22% 616 0.22%
Assessments 423 0.14% 736 0.25% 722 0.26%
Other 1,489 0.48% 1,491 0.51% 1,624 0.58%
- ---------------------------------------------------------------------------------------------------------------------
Total $12,342 4.06% $11,968 4.10% $11,691 4.18%
=====================================================================================================================
</TABLE>
INCOME TAXES
The provision for income taxes was $3,180,000 in 1995, compared to
$2,652,000 in 1994 and $1,727,000 in 1993. The Company's effective tax rate for
1995 was 38.7%, compared with 37.9% for 1994, and 35.5% for 1993. The increases
in 1995 and 1994 were due to slightly higher state income tax rates as well as
decreases in tax-exempt income relative to total income.
The Financial Accounting Standards Board issued SFAS No. 109 in 1992
which established new guidelines with respect to accounting and reporting for
income taxes. The Company adopted this statement effective January 1, 1993, and
recognized a cumulative benefit of $549,000 in 1993 from adoption of SFAS No.
109. The adoption of SFAS No. 109 has not had an impact on the earnings of the
Company in 1994 or 1995.
CAPITAL
Shareholders' equity increased $4,226,000 or 10.9% in 1995. The
increase was primarily a result of retention of the Company's 1995 net income
and the exercise of stock options, offset in part by a repurchase of outstanding
shares and a total cash dividend of $0.53 per share paid during 1995. The
Company paid $111,000 during 1995 to repurchase 5,606 shares. The Company
regularly assesses future capital needs so that it will remain in compliance
with the capital adequacy guidelines issued by the Federal Reserve Board for
bank holding companies and by the Comptroller of the Currency (the Comptroller)
for national banks. The Company's capital plan for 1995 contemplates continued
growth in shareholders' equity through the retention of net income.
The Company and the Bank are subject to the guidelines and regulations
of the Federal Reserve Board and the Comptroller, respectively, governing
capital adequacy. The Federal Reserve Board has established final risk-based and
leverage capital guidelines for bank holding companies which are the same as the
Comptroller's capital regulations for national banks.
32
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
The Federal Reserve Board capital guidelines for bank holding companies
and the Comptroller's regulations for national banks set total capital
requirements and define capital in terms of "core capital elements" (comprising
Tier 1 capital) and "supplemental capital elements" (comprising Tier 2 capital).
Tier 1 capital is generally defined as the sum of the core capital elements less
goodwill. The following items are defined as core capital elements: common
stockholders' equity, qualifying noncumulative perpetual preferred stock, and
minority interests in the equity accounts of consolidated subsidiaries.
Supplementary capital elements include: allowance for loan and lease losses
(which cannot exceed 1.25% of an institution's risk weighted assets), perpetual
preferred stock not qualifying as core capital, hybrid capital instruments and
mandatory convertible debt instruments, and term subordinated debt and
intermediate-term preferred stock. The maximum amount of supplemental capital
elements which qualifies as Tier 2 capital is limited to 100% of Tier 1 capital,
net of goodwill. The Company and the Bank's Tier 1 capital ratios at December
31, 1995 were 17.60% and 16.78% respectively, well in excess of the required
minimum of 4.0%.
Risk-based capital ratios are calculated with reference to
risk-weighted assets, including both on and off-balance sheet exposures, which
are multiplied by certain risk weights assigned by the Federal Reserve Board or
the Comptroller to those assets. Both bank holding companies and national banks
are required to maintain a minimum ratio of qualifying total capital to
risk-weighted assets of 8%, at least one-half of which must be in the form of
Tier 1 capital. There are presently four risk-weight categories: 0% for cash and
unconditionally guaranteed government securities; 20% for conditionally
guaranteed government securities; 50% for performing residential real estate
loans secured by first liens; and 100% for commercial loans. The Company and the
Bank's total risk-based capital ratios were 18.59% and 17.77% respectively, as
compared to the required minimum of 8.0%.
The federal banking agencies have issued a joint advance notice of
proposed rulemaking to solicit comments on a framework for revising their
risk-based capital guidelines to take account of interest rate risk. As required
by the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA),
the notice seeks comment on a proposed method of incorporating an interest rate
risk component into the current risk-based capital guidelines, with the goal of
ensuring that institutions with high levels of interest rate risk have
sufficient capital to cover their exposures. Interest rate risk is a measure of
the relationship between a change in market interest rates and the resultant
change in net interest income due to the repricing and/or maturity
characteristics of the assets and liabilities of the Company. As financial
intermediaries, depository institutions accept interest rate risk as a normal
part of their business. They assume this risk whenever the interest rate
sensitivity of their assets does not match the sensitivity of their liabilities
or off balance sheet positions. Thus, when interest-sensitive assets and
liabilities reprice at mismatched intervals, an increase or decrease in interest
rates will affect net interest income. Under the proposal, interest rate risk
exposures would be quantified by weighing assets, liabilities and off-balance
sheet items by risk factors which approximate sensitivity to interest rate
fluctuations. Institutions identified as having an interest rate risk exposure
greater than a defined threshold would be required to allocate additional
capital to support this higher risk. The capital to be allocated would be a
dollar amount equal to the percentage by which the risk exceeds the defined
threshold multiplied by the institution's total assets. Higher individual
capital allocations could be required by the bank regulators based on
supervisory concerns.
Federal banking agencies have solicited comments on this proposal but
have not yet proposed regulations to implement any interest rate risk component
into the risk-based capital guidelines. Accordingly, the ultimate impact on the
Bank and the Company of a final regulation in this area cannot be predicted at
this time.
Leverage Capital Guidelines
The Federal Reserve Board and the Comptroller have established a
minimum leverage ratio of 3% Tier 1 capital to total assets for bank holding
companies and national banks that have received the highest composite regulatory
rating and are not anticipating or experiencing any significant growth. All
other institutions will be required to maintain a leverage ratio of at least 100
to 200 basis points above the 3% minimum.
33
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
<TABLE>
Set forth below are the Company's and the Bank's risk-based and leverage capital
ratios as of December 31, 1995:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Risk Based Capital Ratio
As of December 31, 1995
- ---------------------------------------------------------------------------------------------------------------------
Company Bank
(Dollars in thousands) Amount Ratio Amount Ratio
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tier 1 capital $42,976 17.60% $40,532 16.78%
Tier 1 capital minimum
requirement 9,765 4.00% 9,662 4.00%
- ---------------------------------------------------------------------------------------------------------------------
Excess 33,211 13.60% 30,870 12.78%
=====================================================================================================================
Total capital 45,373 18.59% 42,929 17.77%
Total capital minimum
requirement 19,529 8.00% 19,325 8.00%
- ---------------------------------------------------------------------------------------------------------------------
Excess 25,844 10.59% 23,604 9.77%
=====================================================================================================================
Risk-adjusted assets $244,114 $241,561
=====================================================================================================================
</TABLE>
<TABLE>
As indicated in the table above, the Company's capital ratios
significantly exceeded the minimum capital levels required by current federal
regulations. Management believes that the Company and the Bank will continue to
meet their respective minimum capital requirements in the foreseeable future.
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Leverage Capital Ratio
As of December 31, 1995
- ---------------------------------------------------------------------------------------------------------------------
Company Bank
(Dollars in thousands) Amount Ratio Amount Ratio
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tier 1 capital to quarterly average
total assets (Leverage Ratio) $42,976 12.00% $40,532 11.38%
Minimum leverage requirement 10,747 to 3.00% to 10,685 to 3.00% to
17,912 5.00% 17,809 5.00%
- ---------------------------------------------------------------------------------------------------------------------
Excess 25,064 to 7.00% to 22,723 to 6.38% to
32,229 9.00% 29,847 8.38%
=====================================================================================================================
Total quarterly average assets $358,232 $356,173
=====================================================================================================================
</TABLE>
Federal banking laws impose restrictions upon the amount of dividends
the Bank may declare to the Company (see Note 11 to the accompanying
consolidated financial statements). Federal laws also impose restrictions upon
the amount of loans or advances that the Bank may extend to the Company. In
management's opinion, these do not affect the ability of the Company to meet its
cash obligations.
34
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
On September 29, 1995, the Reigle/Neal Interstate Banking and Branching
Efficiency act of 1995 (the Interstate Act) was signed into law. The Interstate
Act effectively permits nationwide banking. The Interstate Act provides that one
year after enactment, adequately capitalized and adequately managed bank holding
companies may acquire banks in any state, even in those jurisdictions that
currently bar acquisition by out-of-state institutions, subject to deposit
concentration limits. The deposit concentration limits provide that regulatory
approval by the Federal Reserve Board may not be granted for a proposed
interstate acquisition if after the acquisition, the acquirer on a consolidated
basis would control more than 10% of the total deposits nationwide or would
control more than 30% of deposits in the state where the acquiring institution
is located. The deposit concentration state limit does not apply for initial
acquisitions in a state and in every case, may be waived by the state regulatory
authority. Interstate acquisitions are subject to compliance with the Community
Reinvestment Act (CRA). States are permitted to impose age requirements not to
exceed five years on target banks for interstate acquisitions. States are not
allowed to opt-out of interstate banking.
Branching between states may be accomplished either by merging separate
banks located in different states into one legal entity, or by establishing de
novo branches in another state. Consolidation of banks is not permitted until
June 1, 1997 provided that the state has not passed legislation "opting-out" of
interstate branching. If a state opts-out prior to June 1, 1997, then banks
located in that state may not participate in interstate branching. A state may
opt-in to interstate branching by bank consolidation or by de novo branching by
passing appropriate legislation earlier than June 1, 1997. California has
elected to opt-in to interstate branching effective October 2, 1995. Interstate
branching is also subject to a 30% statewide deposit concentration limit on a
consolidated basis, and a 10% nationwide deposit concentration limit. The laws
of the host state regarding community reinvestment, fair lending, consumer
protection (including usury limits) and establishment of branches shall apply to
the interstate branches.
De novo branching by an out-of-state bank is not permitted unless the
host state expressly permits de novo branching by banks from out-of-state. The
establishment of an initial de novo branch in a state is subject to the same
conditions as apply to initial acquisition of a bank in a host state other than
the deposit concentration limits.
Effective one year after enactment, the Interstate Act permits bank
subsidiaries of a bank holding company to act as agents for affiliated
depository institutions in receiving deposits, renewing time deposits, closing
loans, servicing loans and receiving payments on loans and other obligations. A
bank acting as an agent for an affiliate shall not be considered a branch of the
affiliate. Any agency relationship between affiliates must be on terms that are
consistent with safe and sound banking practices. The authority for an agency
relationship for receiving deposits includes the taking of deposits for an
existing account but is not meant to include the opening or origination of new
deposit accounts. Subject to certain conditions, insured savings associations
which were affiliated with banks as of June 1, 1994, may act as agents for such
banks. An affiliate bank or savings association may not conduct any activity as
an agent with such institution if prohibited from conducting as principal.
If an interstate bank decides to close a branch located in a low-or
moderate-income area, it must comply with additional branch closing notice
requirements. The appropriate regulatory agency is authorized to consult with
community organizations to explore options to maintain banking services in the
affected community where the branch is to be closed.
To ensure that interstate branching does not result in taking deposits
without regard to a community's credit needs, the regulatory agencies are
directed to implement regulations prohibiting interstate branches from being
used as "deposit production offices." The regulations to implement its
provisions are due by June 1, 1997. The regulations must include a provision to
the effect that if loans made by an interstate branch are less than fifty
percent of the average of all depository institutions in the state, then the
regulator must review the loan portfolio of the branch. If the regulator
determines that the branch is not meeting the credit needs of the community, it
has the authority to close the branch and to prohibit the bank from opening new
branches in the state.
35
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
Bank holding companies are also restricted as to the extent to which
they, and their subsidiaries can borrow or otherwise obtain credit from one
another, or engage in certain other transactions. The "covered transactions"
that an insured depository institution and its subsidiaries are permitted to
engage in with their nondepository affiliates are limited to the following
amounts: (I) in the case of any one such affiliate, the aggregate amount of
covered transactions of the insured depository institution and its subsidiaries
cannot exceed 10% of the capital stock and the surplus of the insured depository
institution; and (II) in the case of all affiliates, the aggregate amount of
covered transactions of the insured depository institution and its subsidiaries
cannot exceed 20% of the capital stock and the surplus of the insured depository
institution. In addition, extension of credit that constitute covered
transactions must be collateralized in prescribed amounts.
"Covered transactions" are defined by statute to include a loan or
extension of credit to the affiliate, a purchase of securities issued by an
affiliate, a purchase of assets from the affiliate (unless otherwise exempted by
the Federal Reserve Board) the acceptance of securities issued by the affiliate
as collateral for a loan and the issuance of a guarantee, acceptance, or letter
of credit for the benefit of an affiliate. Further, a bank holding company and
its subsidiaries are prohibited from engaging in certain tie-in arrangements in
connection with any extension of credit, lease or sale of property or furnishing
of services.
LIQUIDITY
Liquidity represents the ability of the Company to meet the
requirements of customer borrowing needs as well as fluctuations in deposit
flows.
Core deposits, which include demand, savings and interest-bearing
demand accounts, money market accounts, and time deposits of less than $100,000,
provide a relatively stable funding base. Core deposits averaged $158,213,000 or
46.6% of average total assets in 1995, compared with $156,753,000 or 48.2% in
1994. As of December 31, 1995, core deposits were $164,574,000 or 46.5% of total
assets, compared to $154,515,000 or 44.9% as of December 31, 1994.
The Company's principal sources of asset liquidity are cash and due
from banks, time deposits with other financial institutions, federal funds sold,
short-term investments, and marketable investment securities. As of December 31,
1995 these sources represented $117,794,000 or 38.3% of total deposits, compared
to 33.9% in 1994 and 42.2% in 1993. The increase in 1995 reflects the effort
made by management to provide increased liquidity for the Company by allocating
a large percentage of the investment portfolio to available-for-sale. Other
sources of asset liquidity are maturing loans and borrowing lines of
approximately $24,000,000 with primary correspondent banks. There were no
borrowings outstanding under these lines as of December 31, 1995.
The Company guarantees the obligations or performance of its customers
by issuing standby letters of credit to a third party. These standby letters of
credit are frequently issued in support of third-party obligations, such as
retail company transactions and travel agency issuances.
The risk involved in issuing standby letters of credit is essentially
the same as the credit risk in extending loans to customers, and they are
subject to the same credit origination, maintenance, and management procedures
in effect to monitor other credit products. As of December 31, 1995 and 1994,
outstanding standby letters of credit totaled $1,462,000 and $1,288,000,
respectively. The Company does not offer or engage in any other off-balance
sheet products such as commitments to purchase and sell foreign exchange,
interest rate or currency swaps, or financial futures and options.
In the opinion of management, there are sufficient resources to meet
the liquidity needs of the Company at present and projected future levels.
EFFECTS OF CHANGING PRICES
36
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
The most direct effect of inflation is higher interest rates. However,
the Company's earnings are not necessarily dependent on the absolute level of
interest rates. Instead, earnings are affected by the spread between the yield
on loans and investments and the cost of deposits and borrowing money. Another
effect of inflation is upward pressure of the Company's operating expenses. It
is management's opinion that the effects of inflation on the consolidated
financial statements have not been material.
37
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
PACIFIC CAPITAL BANCORP AND SUBSIDIARIES
PACIFIC CAPITAL BANCORP STOCK ACTIVITY
The common stock of Pacific Capital Bancorp is not listed on any
exchange, nor is it listed for quotation with NASDAQ. It is, however, listed
with the National Quotation Service and on the Over the Counter (OTC) Bulletin
Board.
The high and low bid and ask prices listed below have been reported by
three brokerage firms known to effect transactions in the Company's stock:
Kidder Peabody & Co., Inc.; Dean Witter Reynolds, Inc.; and Hoefer & Arnett,
Inc. The quotations listed below reflect interdealer prices, without retail
markup, markdown or commission, and may not necessarily represent actual
transactions.
According to the Company's records, there were 1,602 shareholders as of
March 1, 1996. In 1995 the Company paid three cash dividends of $0.125 per share
to holders of record on March 15, June 15, September 15, payable on March 31,
June 30, and September 30. The Company also paid a $0.15 per share cash dividend
to holders of record on November 15, payable on December 15, and a five percent
(5%) stock dividend payable to shareholders of record as of November 15, 1995.
<TABLE>
For information regarding restrictions on the payment of dividends see
Note 11 to the accompanying consolidated financial Statements.
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Ranges of Common Stock Prices
1995
- ---------------------------------------------------------------------------------------------------------------------
Low High Low High
Quarter Bid Bid Ask Ask
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First $19.00 $19.25 $20.00 $20.50
Second 19.50 20.00 20.50 21.75
Third 20.00 20.13 21.75 22.00
Fourth 20.13 21.00 22.00 25.75
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
1994
- ---------------------------------------------------------------------------------------------------------------------
Low High Low High
Quarter Bid Bid Ask Ask
- ---------------------------------------------------------------------------------------------------------------------
First $16.00 $17.00 $17.00 $18.00
Second 17.00 17.50 18.00 18.50
Third 17.50 18.50 18.50 19.50
Fourth 17.75 18.50 18.75 19.75
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
<TABLE>
Pacific Capital Bancorp
and Subsidiaries
BOARD OF DIRECTORS
<S> <C> <C> <C>
PACIFIC CAPITAL BANCORP James L. Gattis William K. Sambrailo
Investor President
Stanley R. Haynes Civic Leader Charles Sambrailo
Chairman of the Board Company
President D. Vernon Horton
Cinderella Carpets President/Chief Robert B. Sheppard
Executive Officer Vice Chairman, Retired
William S. McAfee First National Bank of Allstate Insurance
Vice Chairman of the Board Central California Companies
Physician
Hubert H.Hudson Clyn Smith, Jr.
Charles E. Bancroft Consultant Physician, Retired
Chairman of the Board McSherry & Hudson
CLM Insurance Agencies, Inc Insurance DIRECTORS EMERITUS
Gene DiCicco William J. Keller Howard S. Bucquet Clinton F. Miller
Owner Physician Property Management President
Watsonville Nurseries Clint Miller Farms, Inc.
Wayne O. Hall
Lewis L. Fenton Clayton C. Larson President June Duran-Stock
Attorney President Wayne O. Hall President
Fenton & Keller Pacific Capital Bancorp Insurance Agency Legal Research &
Services Center
Gerald T. Fry Thomas M. Merrill
President William H. Pope President
Office Products, Inc. Certified Public Accountant Merrill Farms
</TABLE>
39
<PAGE>
Pacific Capital Bancorp
and Subsidiaries
THE CORPORATION
Pacific Capital Bancorp (the Company) is a California corporation and
bank holding company that was incorporated on January 26, 1983. First National
Bank of Central California (First National Bank), a wholly owned subsidiary of
the Company, commenced operations on April 2, 1984.
<TABLE>
First National Bank is a nationally chartered commercial bank serving
Monterey and Santa Cruz Counties and surrounding areas in California. The
Company itself does not engage in any business activities other than the
ownership of First National Bank.
<S> <C> <C> <C>
FIRST NATIONAL BANK OF ADMINISTRATION CENTER REGISTRAR & TRANSFER AGENT FORM 10-K
CENTRAL CALIFORNIA 307 Main Street First Interstate Bank A COPY OF THE COMPANY'S
BANKING OFFICES Salinas, California Stock Transfer FORM 10-K AS FILED WITH THE
1001 South Main Street 93902-1786 Administration SECURITIES AND EXCHANGE
Salinas, California (408) 757-4900 345 California Street COMMISSION IS AVAILABLE,
93902-1786 Eighth Floor WITHOUT CHARGE, UPON
(408) 757-4900 CREDIT ADMINISTRATION San Francisco, California WRITTEN REQUEST.
CENTER 94104 PLEASE DIRECT REQUESTS TO:
495 Washington Street 17547 Vierra Canyon Road
Monterey, California Salinas, California MARKET MAKERS DENNIS A. DECIUS
93942-2718 93907-1329 Paine Webber EXECUTIVE VICE PRESIDENT
(408) 373-4900 (408) 663-9100 26435 Carmel Rancho CHIEF FINANCIAL OFFICER
Boulevard PACIFIC CAPITAL BANCORP
307 Main Street CORPORATE COUNSEL Carmel, California 93923 P.O. BOX 1786
Salinas, California Graham & James SALINAS, CALIFORNIA
93902-1786 One Maritime Plaza Dean Witter Reynolds, Inc. 93902-1786
(408) 757-4900 San Francisco, California 1400 Del Monte Center
94111 Monterey, California 93940
655 Main Street
Watsonville, California CERTIFIED PUBLIC 111 Mission Street
95077-1540 ACCOUNTANTS Santa Cruz, California 95061
(408) 728-2265 KPMG Peat Marwick LLP
50 West San Fernando Street Hoefer & Arnett, Inc.
26380 Carmel Rancho Lane San Jose, California 95113 353 Sacramento Street
Carmel, California Tenth Floor
93922-2017 San Francisco, California
(408) 626-2900 94111
</TABLE>
40
<PAGE>
KPMG Peat Marwick LLP
Consent of Independent Auditors
-------------------------------
Shareholders and Board of Directors
Pacific Capital Bancorp
We consent to incorporation by reference in the registration statement (No.
33-83848) on Form S-8 of Pacific Capital Bancorp and subsidiaries of our report
dated January 10, 1996, relating to the consolidated balance sheets of Pacific
Capital Bancorp and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statments of income, shareholders' equity, and cash flows
for each of the years in the three-year period ended December 31, 1995, which
report appears in the December 31, 1995 annual report on Form 10-K of Pacific
Capital Bancorp and subsidiaries.
/s/ KPMG Peat Marwick LLP
March 25, 1996
<PAGE>
KPMG Peat Marwick LLP
Independent Auditors' Report
The Board of Directors
Pacific Capital Bancorp
We have audited the accompanying consolidated balance sheets of Pacific Capital
Bancorp and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the years in the three-year period ended December 31, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accpeted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Pacific Capital
Bancorp and subsidiaries at December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1995 in conformity with generally accepted accounting
principles.
As discussed in Notes 1 and 7 to the consolidated financial statements, the
Company adopted the provisions of Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes, in 1993.
/s/ KPMG Peat Marwick LLP
San Jose, California
January 10, 1996
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant had duly caused this report to be signed on
its behalf of the undersigned, thereunto duly authorized.
Date: March 27, 1996 PACIFIC CAPITAL BANCORP
-------------------------------
By: /S/ Clayton C. Larson
----------------------------------
CLAYTON C. LARSON
President
/S/ Clayton C. Larson
- -------------------------------------- Date: March 27, 1996
Charles E. Bancroft,
Director
/S/ Dennis A. DeCius
- -------------------------------------- Date: March 27, 1996
Dennis A. DeCius
Executive Vice President
and Chief Financial Officer
(principal financial officer and
principal accounting officer)
/S/ Gene DiCicco
- -------------------------------------- Date: March 27, 1996
Gene DiCicco,
Director
/S/ Clayton C. Larson
- -------------------------------------- Date: March 27, 1996
Lewis L. Fenton,
Director
<PAGE>
/S/ Gerald T. Fry
- -------------------------------------- Date: March 27, 1996
Gerald T. Fry,
Director
/S/ James L. Gattis
- -------------------------------------- Date: March 27, 1996
James L. Gattis,
Director and Secretary
/S/ Hubert W. Hudson
- -------------------------------------- Date: March 27, 1996
Hubert W. Hudson,
Director
/S/ Stanley R. Haynes
- -------------------------------------- Date: March 27, 1996
Stanley R. Haynes
Chairman of the Board
and Director
/S/ D. Vernon Horton
- -------------------------------------- Date: March 27, 1996
D. Vernon Horton,
Chief Executive officer
(principal executive
officer) and Director
/S/ William J. Keller
- -------------------------------------- Date: March 27, 1996
William J. Keller,
Director
<PAGE>
/S/ Clayton C. Larson
- -------------------------------------- Date: March 27, 1996
Clayton C. Larson,
President and Director
/S/ William S. McAfee
- -------------------------------------- Date: March 27, 1996
William S. McAfee,
Director
/S/ William H. Pope
- -------------------------------------- Date: March 27, 1996
William H. Pope,
Director
/S/ William K. Sambrailo
- -------------------------------------- Date: March 27, 1996
William K. Sambrailo,
Director
/S/ Robert B. Sheppard
- -------------------------------------- Date: March 27, 1996
Robert B. Sheppard,
Director
/S/ Clyn Smith, Jr.
- -------------------------------------- Date: March 27, 1996
Clyn Smith, Jr.,
Director
<PAGE>
<TABLE>
INDEX TO EXHIBITS
<CAPTION>
Exhibit Sequentially
Number Exhibit Numbered Page
------- ------- -------------
<S> <C> <C>
3.1 Articles of incorporation of the Company an amended to date. 1/ (*)
3.2 Bylaws of Company as amended to date. 2/ (*)
4. Not applicable. (*)
9. Not applicable. (*)
10.1 Lease -- 601 Abrego Street, Monterey, Premises. 3/ (*)
10.2 Lease for 1001 South Main Street, Salinas, Banking office. 2/ (*)
10.3 Lease dated December 15, 1988 by and between the Bank (*)
and James L. Gattis for 307 Main Street, Salinas Old Town Office. 2/
10.4 Lease dated May 1, 1985 by and between the Bank (*)
and Pacific Capital Bancorp. 4/
10.5 Pacific Capital Bancorp Employee Stock Ownership (*)
Plan and Trust Agreement. 5/
10.6 Master Equipment Lease Agreement between Bank and (*)
Parker North American Corporation. 5/
10.7 Lease dated September 22, 1986 between (*)
Bank and The Saunders Company. 5/
<FN>
*/ Not Applicable.
- -------------------------------------------------------------------
1/ Filed as Exhibits 3.1, 10.21 and 10.32, respectively, to the Company's
Annual Report on Form 10-K (File No. 0-13528) for the fiscal year ended
December 31, 1988, which are incorporated by reference.
2/ Filed as Exhibits 3.2 and 10.17, respectively, to the Company's Annual
Report on Form 10-K (File No. 2-87513) for the fiscal year ended
December 31, 1984, which are incorporated by reference.
3/ Filed as Exhibit to the Company's Registration Statement on Form S-18
(Registration No. 2-87513), which is incorporated by reference.
4/ Filed as Exhibit 10.20 to the Company's Annual Report on Form 10-K
(File No. 0-13528) for the fiscal year ended December 31, 1985, which
is incorporated by reference.
5/ Filed as Exhibits 10.24 through 10.26, respectively, to Company's
Annual Report on Form 10-K (File No. 0-13528) for the fiscal year ended
December 31, 1986, which are incorporated by reference.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Exhibit Numbered Page
------- ------- -------------
<S> <C> <C>
10.8 Matrix Funding Corporation Master Lease Agreement. 1/ (*)
10.9 Lease dated January 24, 1989 by and between First National Bank (*)
of Monterey County and Stanley R. Haynes. 6/
10.10 Executive Salary Continuation Agreement entered into (*)
August 22, 1989 by and between First National Bank of
Monterey County and Clayton C. Larson. 6/
10.11 Executive Salary Continuation Agreement entered into (*)
August 22, 1989 by and between First National Bank of
Monterey County and D. Vernon Horton. 6/
10.12 Executive Salary Continuation Agreement entered into (*)
August 22, 1989 by and between First National Bank of
Monterey County and Dennis A. DeCius. 6/
10.13 Amendment No. One to Pacific Capital Bancorp (*)
Employee Stock Ownership Plan. 2/
10.14 Amendment No. Two to Pacific Capital Bancorp (*)
Employee Stock Ownership Plan. 7/
10.15 Amendment No. Three to Pacific Capital Bancorp (*)
Employee Stock Ownership Plan. 7/
10.16 Lease dated August 10, 1990 by and between the (*)
Trustees of the Stanley Family Trust and Pacific
Capital Bancorp for Carmel Office. 7/
10.17 Assignment of Lease dated November 1, 1990 by and (*)
between Pacific Capital Bancorp and First National
Bank of Monterey-County for Carmel Office. 7/
10.18 Lease dated November 12, 1990 by and between (*)
First National Bank of Monterey County and Carmel
Monterey Travel for Premises located at 601 Abrego
Street, Monterey, California. 7/
10.19 Prunetree Shopping Center Lease dated June 28, 1988 (*)
by and between Dennis R. Keith and Pajaro Valley Bancorporation. 7/
<FN>
- --------------------------------------------------
6/ Filed as Exhibits 10.20 through 10.24, respectively, to the Company's
Annual Report on Form 10-K (File No. 0-13528) for the fiscal year ended
December 31, 1989, which are incorporated by reference.
7/ Filed as Exhibits 10.25 through 10.32 to the Company's Annual Report on
Form 10-K (File No. 0-13528) for the fiscal year ended December 31,
1990, which are incorporated by reference.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Exhibit Numbered Page
------- ------- -------------
<S> <C> <C>
10.20 Lease dated June 21, 1990 by and between Saucito (*)
Land Co. and First National Bank of Monterey County. 7/
10.22 Amendment No. Four to Pacific Capital Bancorp (*)
Employee Stock Ownership Plan. 8/
10.23 Amendment dated May 20, 1991 to Lease dated (*)
December 15, 1988 by and between the Bank and
James L. Gattis for 307 Main Street, Salinas Old Town Office. 8/
10.24 Pacific Capital Bancorp Directors' Stock Option Plan (*)
and Form of Stock Option Agreement. 8/
10.26 Pacific Capital Bancorp 1984 Stock Option Plan (*)
and Forms of Agreements as amended to date. 8/
10.30 Business Recovery Services Agreement dated (*)
September 30, 1991 by and between Bank and J.D.B. & Associates, Inc. 8/
10.31 Consolidated Agreement dated December 17, 1991 (*)
by and between Bank and Unisys with Equipment Sale Agreement,
Software License Agreement and Product License Agreement by
and between Bank and information Technology, Inc. 8/
10.32 Fidelity and Deposit Company of Maryland Directors and (*)
Officers Liability Insurance Policy including Bank Reimbursement. 8/
10.33 Fidelity and Deposit Company of Maryland (*)
Financial Institution Bond. 8/
10.34 Lease dated January 28, 1993 by and between J.W. and R.W. (*)
McClellan, Partners, and First National Bank of Central California.
10.35 Exercise of Lease Option as of September 19, 1992 by and (*)
between First National Bank of Central California and James L. Gattis.
10.36 Software License Agreement and Product License Agreements dated (*)
March 3, 1993 by and between First National Bank of Central California
and Information Technology, Inc.
10.37 Lease dated November 18, 1993 by and between Hazel Graven (*)
and Vines Stewart and First National Bank of Central
California.
10.38 Software License Agreement for Platform Transfer Module and Interface (*)
dated September 15, 1993 by and between First National Bank of
Central California and Information Technology, Inc.
<FN>
- ------------------------------------------------------
8/ Filed as Exhibits 10.23 through 10.34 to the Company's Annual Report on
Form 10-K (File No. 0-13528) for the fiscal year ended December 31,
1991, which are incorporated by reference.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Exhibit Numbered Page
------- ------- -------------
<S> <C> <C>
10.39 Equipment Sale Agreement dated December 16, 1993 by and (*)
between First National Bank of Central California and
Information Technology, Inc.
10.40 Asset/Liability Management Software Agreement dated (*)
December 31, 1993 by and between First National Bank of
Central California and Profitstar, Inc.
10.41 Applications dated December 28, 1993 by First National Bank (*)
of Central California to become a member of the California
Bankers Clearing House Association.
10.42 Consolidated Agreement for the purchase of computer hardware (*)
dated December 20, 1993 by and between First National Bank of
Central California and Unisys Corporation.
10.43 Employment Agreement dated may 22, 1993 between (*)
First National Bank of Central California and D. Vernon Horton.
10.44 Employment Agreement dated May 22, 1993 between (*)
First National Bank of Central California and Clayton C. Larson.
10.45 Employment Agreement dated May 22, 1993 between
First National Bank of Central California and Dennis A. De Cius. (*)
10.46 Pacific Capital Bancorp 1994 Stock Option Plan and Form of Incentive (*)
and Non-Qualified Stock Option Agreements. 9/
10.47 Amendment No. Five to Pacific Capital Bancorp Employee (*)
Stock Ownership Plan and Trust. 10/
10.48 Pacific Capital Bancorp 401(k) Profit Sharing Plan. 10/ (*)
10.49 Equipment Sale Agreement dated March 22, 1995, by and between 75
First National Bank of Central California and
Information Technology, Inc.
10.50 Equipment Sale Agreement dated February 2, 1996, by and between 80
First National Bank of Central California and
Information Technology, Inc.
<FN>
- --------------------------------------------------------
9/ Filed as Exhibits to the Company's Registration Statement on Form S-8
(File No. 33-83848) as filed on September 8, 1994, and Amendment No. 1
to Form S-8 as filed on November 15, 1994.
10/ Filed as Exhibits 10.47 through 10.48 to the Company's Annual Report on
Form 10-K (File No. 0-13528) for the fiscal year ended December 31,
1994, which are incorporated by reference.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Exhibit Numbered Page
------- ------- -------------
<S> <C> <C>
10.51 Standard Form of Agreement between Owner (Pacific Capital Bancorp) 86
and Contractor (Daniels & House Construction Co.) for the renovation
of existing building and construction of new addition for
First National Bank of Central California at 1001 S. Main Street,
Salinas, CA, 93901, dated June 15, 1995.
10.52 Employee Welfare Benefit Plan Agreement dated January 1, 1995, 118
between Pacific Capital Bancorp and
Great-West Life & Annuity Insurance Co.
11. Not applicable. (*)
12. Not applicable. (*)
13. Pacific Capital Bancorp 1994 Annual Report to Shareholders 24
(parts not incorporated by reference are furnished for
informational purposes only and are not filed only and are not
filed herewith).
18. Not applicable. (*)
19. Not applicable. (*)
21. Subsidiaries of the Company 74
23. Not applicable. (*)
24. Consent of KPMG Peat Marwick LLP. 64
25. Power of Attorney. 201
</TABLE>
<PAGE>
SUBSIDIARY OF PACIFIC CAPITAL BANCORP
PACIFIC CAPITAL SERVICES CORPORATION (INACTIVE).
INFORMATION TECHNOLOGY INC.
EQUIPMENT SALE AGREEMENT
Agreement made between Information Technology, Inc. (the "Vendor"), and the
"Customer" identified below.
I. PURCHASE
1.1 Customer hereby purchases from Vendor and Vendor hereby sells to
Customer the equipment identified in Appendix A (the "Equipment"), upon the
terms set forth in this agreement.
II. DELIVERY
2.1 Delivery and installation of the Equipment will be made by the
manufacturer of the Equipment identified in Appendix A (the "Manufacturer"), at
Customer's address set forth below. Customer agrees to have a site adequately
and properly prepared, in accordance with Manufacturer's instructions, to
receive and accept delivery of the Equipment. In no event shall Vendor be
responsible to Customer for any delays in delivery or installation or any
damages to Customer resulting from such delays.
III. CONSIDERATION
3.1 PURCHASE PRICE. As and for the purchase price for the Equipment,
Customer agrees to pay Vendor and Vendor agrees to accept from Customer, the
purchase price specified in Appendix A.
3.2 TAXES AND OTHER CHARGES. In addition to the purchase price,
Customer shall pay all transportation charges and all taxes (including, without
limitation, sales, use, privilege, ad valorem or excise taxes) and customs
duties paid or payable by Vendor, however designated, levied or based on amounts
payable to Vendor under this agreement, but exclusive of federal, state and
local taxes based on Vendor's net income. If additional labor and rigging are
required for installation due to Customer's special site requirements, Customer
will pay those costs, including costs to meet union or local law requirements.
Customer shall not deduct from payments to Vendor any amounts paid or payable to
third parties for transportation charges, customs duties or taxes, however
designated.
3.3 MANNER OF PAYMENTS. The purchase price and other charges arising
under this agreement shall be payable by Customer to Vendor in the following
manner
(A) A percentage of the purchase price, as specified in Appendix A,
shall be payable upon execution of this agreement by Customer; the
receipt or deposit of such payment, however, shall not constitute
Vendor's acceptance of this agreement.
(B) The balance of the purchase price, together with any
transportation charges and any taxes and duties theretofore incurred by
Vendor, shall be payable upon delivery of the Equipment to Customer.
(C) Any taxes, duties, or other charges incurred by Vendor following
delivery of the Equipment shall be payable within ten (10) days of
receipt by Customer of Vendor's invoice therefor.
3.4 CURRENCY. The purchase price and any other charges arising under
this agreement shall be invoiced and be payable in U.S. Dollars.
3.5 LATE PAYMENT. Customer shall pay a late payment charge of one and
one-half percent (1-1/2%) per month, or the maximum late payment charge
permitted by applicable law, whichever is less, on any amount payable by
Customer under this Agreement and not paid when due. Said late payment charge
shall be applied for each calendar month (or fraction thereof) that such payment
is not made following its due date.
IV. TITLE
4.1 Until such time as the purchase price and any other charges payable
to Vendor as of the date of delivery have been paid in full, the Equipment and
all instruction manuals therefor shall remain the property of Vendor and, at the
option of Vendor, shall be returned to Vendor at Customer's expense in the event
the purchase price is not paid as hereinabove provided.
V. SECURITY
5.1 Vendor reserves and Customer grants to Vendor a security interest
in the Equipment as security for the performance by Customer of its obligations
hereunder including, but not limited to, payment of the purchase price and other
charges as specified in Section III above. A copy of this agreement may be filed
in appropriate filing offices at any time after signature by Customer as a
financing statement or Vendor may require and Customer shall execute a separate
financing statement for purposes of perfecting Vendor's security interest
granted pursuant to the provisions of this paragraph.
VI. CUSTOMER OBLIGATIONS
6.1 RISK OF LOSS. From and after the date of delivery, the risk of loss
or damage to the Equipment shall be on the Customer.
6.2 OPERATION. Customer acknowledges and agrees that it is exclusively
responsible for the operation, supervision, management and control of the
Equipment, including, but not limited to, providing adequate training for its
personnel, instituting appropriate security procedures, and implementing
reasonable procedures to examine and verify all output before use. Vendor shall
have no responsibility or liability for Customer's selection or use of the
Equipment or any associated equipment.
VII. WARRANTIES
7.1 WARRANTY. Vendor warrants to Customer that it has the right to
transfer title of the Equipment to Customer. Vendor's sole liability under this
warranty shall be to obtain any title or authorization necessary to transfer
such title to Customer.
7.2 DISCLAIMER. THE FOREGOING WARRANTY IS IN LIEU OF ALL OTHER
WARRANTIES AND NO OTHER WARRANTY IS EXPRESSED OR IMPLIED, INCLUDING, BUT NOT
LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
7.3 MANUFACTURER'S WARRANTY. Customer expressly understands and agrees
that warranties regarding patents, materials, workmanship or use of the
Equipment (the "Manufacturer's Warranty"), if any, are made exclusively by the
Manufacturer and not by Vendor, and if made, shall be encompassed within a
separate agreement. Customer's exclusive remedy under Manufacturer's Warranty
shall be as provided therein and shall lie exclusively against and be obtainable
only from the Manufacturer, and Customer expressly agrees that it shall have no
claim or cause of action against Vendor in the event the Manufacturer is for any
reason unwilling or unable to perform under the terms of Manufacturer's
Warranty.
7.4 LIMITATION OF LIABILITY. Customer expressly agrees that Vendor's
responsibilities in the event of its breach of the warranties contained in
paragraph 7.1 of this agreement are as set forth in said paragraph. Vendor's
liability for damages, regardless of the form of action shall not exceed the
purchase price set forth in Appendix A to this agreement and shall arise only if
the remedies set forth in paragraph 7.1 are not fulfilled by Vendor. Customer
further agrees that Vendor will not be liable for any lost profits, or for any
claim or demand against Customer by any other party. IN NO EVENT WILL VENDOR BE
LIABLE FOR CONSEQUENTIAL DAMAGES EVEN IF VENDOR HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. No action, regardless of form, arising out of the
transactions under this agreement, may be brought by either party more than one
(1) year after the cause of action has accrued, except that an action for
non-payment may be brought within one (1) year after the date of the last
payment.
<PAGE>
THE CUSTOMER'S REMEDIES SET FORTH IN THIS AGREEMENT ARE EXCLUSIVE.
VIII. DEFAULT
8.1 REMEDY. Upon the occurrence of an event of default, as hereinafter
defined, by Customer, if the Equipment has theretofore been delivered, Vendor
may recover, together with any incidental damages, any unpaid portion of the
purchase price of the Equipment as specified in Appendix A hereto. If the
Equipment has not been delivered, in which event Vendor may withhold delivery of
such Equipment, or if the Equipment is returned to Vendor upon Vendor's election
pursuant to Section IV, Vendor shall resell the Equipment. Upon such resale,
Vendor shall recover from Customer the difference between the unpaid portion of
the purchase price, as specified in Appendix A, and the resale price, together
with any incidental damages, including expenses of resale, sustained by Vendor
by reason of Customer's breach. If the resale price exceeds the unpaid portion
of the purchase price and Vendor's incidental damages, Vendor shall remit the
excess to Customer.
8.2 EVENTS OF DEFAULT. As utilized in this agreement, an event of
default is defined as any of the following:
(A) Customer's failure to pay any amounts required to be paid to
Vendor under this agreement on a timely basis;
(B) Until the purchase price has been paid in full, any attempt by
Customer to assign, sell, mortgage, or otherwise convey the Equipment;
(C) Prior to the payment in full of the purchase price, Customer
causing or permitting any encumbrance, of any nature whatsoever, to
attach to Customer's interest in the Equipment in favor of any person
or entity other than Vendor;
(D) The entry of any order for relief under any provision of the
federal bankruptcy code in any bankruptcy proceedings initiated by or
against Customer; or
(E) Customer's breach of any of the terms of conditions of the
agreement.
IX. GENERAL
9.1 TITLES. Titles and paragraph headings are for reference purposes
only and are not to be considered a part of this agreement.
9.2 FORCE MAJEURE. No party shall be liable for delay in performance
hereunder due to causes beyond its control, including but not limited to acts of
God, fires, strikes, delinquencies of suppliers, intervention of any
governmental authority or acts of war, and each party shall take steps to
minimize any such delay.
9.3 WAIVER. No waiver of any breach of any provision of this agreement
shall constitute a waiver of any prior, concurrent or subsequent breach of the
same or any other provisions hereof and no waiver shall be effective unless made
in writing and signed by an authorized representative of the party to be charged
therewith.
9.4 SEVERABILITY. In the event that any provision of this agreement
shall be illegal or otherwise unenforceable, such provision shall be severed
from this agreement and the entire agreement shall not fail on account thereof,
the balance of the agreement continuing in full force and effect.
9.5 NOTICES. Any notice which either party hereto is required or
permitted to give hereunder shall be addressed to the party to be charged
therewith at the address set forth below and shall be given by certified or
registered mail. Any such notice shall be deemed given on the date of deposit in
the mail.
9.6 ENTIRE AGREEMENT. THE PARTIES HERETO ACKNOWLEDGE THAT EACH HAS READ
THIS AGREEMENT, UNDERSTANDS IT, AND AGREES TO BE BOUND BY ITS TERMS. THE PARTIES
FURTHER AGREE THAT THIS AGREEMENT AND ANY MODIFICATIONS MADE PURSUANT TO IT
CONSTITUTE THE COMPLETE AND EXCLUSIVE WRITTEN EXPRESSION OF THE TERMS OF THE
AGREEMENT BETWEEN THE PARTIES, AND SUPERSEDE ALL PRIOR OR CONTEMPORANEOUS
PROPOSALS, ORAL OR WRITTEN, UNDERSTANDINGS, REPRESENTATIONS, CONDITIONS,
WARRANTIES, COVENANTS, AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING
TO THE SUBJECT MATTER OF THIS AGREEMENT. THE PARTIES FURTHER AGREE THAT THIS
AGREEMENT MAY NOT IN ANY WAY BE EXPLAINED OR SUPPLEMENTED BY A PRIOR OR EXISTING
COURSE OF DEALINGS BETWEEN THE PARTIES, BY ANY USAGE OF TRADE OR CUSTOM, OR BY
ANY PRIOR PERFORMANCE BETWEEN THE PARTIES PURSUANT TO THIS AGREEMENT OR
OTHERWISE. IN THE EVENT CUSTOMER ISSUES A PURCHASE ORDER OR OTHER INSTRUMENT
COVERING THE EQUIPMENT HEREIN SPECIFIED, IT IS UNDERSTOOD AND AGREED THAT SUCH
PURCHASE ORDER OR OTHER INSTRUMENT IS FOR CUSTOMER'S INTERNAL USE AND PURPOSES
ONLY AND SHALL IN NO WAY AFFECT ANY OF THE TERMS AND CONDITIONS OF THIS
AGREEMENT.
9.7 GOVERNING LAW. This agreement is accepted in the State of Nebraska,
and shall be enforced in accordance with and governed by the laws of the State
of Nebraska.
9.8 CHOICE OF FORUM. Any action arising out of or related to this
agreement or the transaction herein described, whether at law or in equity, may
be instituted in and litigated in the state or federal courts of the State of
Nebraska. In accordance herewith, the parties hereto submit to the jurisdiction
of the courts of said state. Any party being not a resident of Nebraska at the
time of suit hereby appoints the Secretary of State of Nebraska as its agent for
receipt of service of process.
9.9 ATTORNEY'S FEES. In the event that any action or proceeding is
brought in connection with this agreement the prevailing party therein shall be
entitled to recover its costs and reasonable attorney's fees.
9.10 EFFECTIVE DATE. This agreement shall be effective on the date
accepted and executed by an authorized representative of Vendor.
CUSTOMER: VENDOR:
FIRST NATIONAL BANK OF CENTRAL CALIFORNIA
- ------------------------------------------ INFORMATION TECHNOLOGY, INC.
Signature: /S/ Philip L. Griffin Signature: /s/ Michael K. Young
------------------------------- -------------------------
Name: Philip L. Griffin Name: Michael K. Young
------------------------------------ ------------------------------
Vice President/
Title: Information Services Title: Vice President
----------------------------------- ---------------------------
Address: 307 MAIN STREET Address: 1345 Old Cheney Road
---------------------------------
SALINAS, CA 93901 Lincoln, NE 68512
---------------------------------
Date: March 22, 1995 Date Accepted: 6-29-95
--------------------------------- ---------------------
<PAGE>
APPENDIX A
EQUIPMENT AND TERMS
1. MANUFACTURER. The Manufacturer of the Equipment subject to this agreement is:
Unisys Corporation
2. PURCHASE PRICE: The purchase price for the Equipment is $97,269. 0% thereof
shall be payable upon execution of this agreement, the balance upon delivery of
the Equipment.
3. EQUIPMENT. The Equipment subject to this agreement consists of the following:
HARDWARE:
UNIT TOTAL
QTY STYLE DESCRIPTION PRICE PRICE
------------------------------------------------------------------------------
1 X601-ICP HLCN ICP Control $ 6,000 $ 6,000
2 CWD 4661210-DL (10 Units) Diskless 486 66 Mhz 7,727 15,454
System with DOS/Windows
8 CWD 4661201-DL Diskless 486 66 Mhz System 839 6,712
with DOS/Windows
28 2102013460 10" Color SVGA Monitor 649 18,172
2 CWD 4010-PAK (10 Units) Package Accessory Kit: 750 1,500
Keyboard
Mouse
Documentation
8 CWD 4001-PAK Accessory Kit: 75 600
Keyboard
Mouse
Documentation
28 EF 4272 Validation & Receipt Printer 1,100 30,800
5 EF 4600 Multifunction Document Printer 2,725 13,625
28 15-1196-102 EF 4272 Printer Cable 10' 52 1,456
5 3964-7292 FP 10 x P2 Serial Cable 45 225
10 TD 442303 Logitech DEXXA32 Scanner 102 1,020
SOFTWARE:
1 HL 128-HLC HLCN Software 128 User 8,000 8,000
--------
TOTAL: $103,564
LESS: Discount: (6,296)
------
TOTAL with Discount: $97,269
INFORMATION TECHNOLOGY INC.
EQUIPMENT SALE AGREEMENT
Agreement made between Information Technology, Inc. (the "Vendor"), and the
"Customer" identified below.
I. PURCHASE
1.1 Customer hereby purchases from Vendor and Vendor hereby sells to
Customer the equipment identified in Appendix A (the "Equipment"), upon the
terms set forth in this agreement.
II. DELIVERY
2.1 Delivery and installation of the Equipment will be made by the
manufacturer of the Equipment identified in Appendix A (the "Manufacturer"), at
Customer's address set forth below. Customer agrees to have a site adequately
and properly prepared, in accordance with Manufacturer's instructions, to
receive and accept delivery of the Equipment. In no event shall Vendor be
responsible to Customer for any delays in delivery or installation or any
damages to Customer resulting from such delays.
III. CONSIDERATION
3.1 PURCHASE PRICE. As and for the purchase price for the Equipment,
Customer agrees to pay Vendor and Vendor agrees to accept from Customer, the
purchase price specified in Appendix A.
3.2 TAXES AND OTHER CHARGES. In addition to the purchase price,
Customer shall pay all transportation charges and all taxes (including, without
limitation, sales, use, privilege, ad valorem or excise taxes) and customs
duties paid or payable by Vendor, however designated, levied or based on amounts
payable to Vendor under this agreement, but exclusive of federal, state and
local taxes based on Vendor's net income. If additional labor and rigging are
required for installation due to Customer's special site requirements, Customer
will pay those costs, including costs to meet union or local law requirements.
Customer shall not deduct from payments to Vendor any amounts paid or payable to
third parties for transportation charges, customs duties or taxes, however
designated.
3.3 MANNER OF PAYMENTS. The purchase price and other charges arising
under this agreement shall be payable by Customer to Vendor in the following
manner
(A) A percentage of the purchase price, as specified in Appendix A,
shall be payable upon execution of this agreement by Customer; the
receipt or deposit of such payment, however, shall not constitute
Vendor's acceptance of this agreement.
(B) The balance of the purchase price, together with any
transportation charges and any taxes and duties theretofore incurred
by Vendor, shall be payable upon delivery of the Equipment to Customer.
(C) Any taxes, duties, or other charges incurred by Vendor following
delivery of the Equipment shall be payable within ten (10) days of
receipt by Customer of Vendor's invoice therefor.
3.4 CURRENCY. The purchase price and any other charges arising under
this agreement shall be invoiced and be payable in U.S. Dollars.
3.5 LATE PAYMENT. Customer shall pay a late payment charge of one and
one-half percent (1-1/2%) per month, or the maximum late payment charge
permitted by applicable law, whichever is less, on any amount payable by
Customer under this Agreement and not paid when due. Said late payment charge
shall be applied for each calendar month (or fraction thereof) that such payment
is not made following its due date.
IV. TITLE
4.1 Until such time as the purchase price and any other charges payable
to Vendor as of the date of delivery have been paid in full, the Equipment and
all instruction manuals therefor shall remain the property of Vendor and, at the
option of Vendor, shall be returned to Vendor at Customer's expense in the event
the purchase price is not paid as hereinabove provided.
V. SECURITY
5.1 Vendor reserves and Customer grants to Vendor a security interest
in the Equipment as security for the performance by Customer of its obligations
hereunder including, but not limited to, payment of the purchase price and other
charges as specified in Section III above. A copy of this agreement may be filed
in appropriate filing offices at any time after signature by Customer as a
financing statement or Vendor may require and Customer shall execute a separate
financing statement for purposes of perfecting Vendor's security interest
granted pursuant to the provisions of this paragraph.
VI. CUSTOMER OBLIGATIONS
6.1 RISK OF LOSS. From and after the date of delivery, the risk of loss
or damage to the Equipment shall be on the Customer.
6.2 OPERATION. Customer acknowledges and agrees that it is exclusively
responsible for the operation, supervision, management and control of the
Equipment, including, but not limited to, providing adequate training for its
personnel, instituting appropriate security procedures, and implementing
reasonable procedures to examine and verify all output before use. Vendor shall
have no responsibility or liability for Customer's selection or use of the
Equipment or any associated equipment.
VII. WARRANTIES
7.1 WARRANTY. Vendor warrants to Customer that it has the right to
transfer title of the Equipment to Customer. Vendor's sole liability under this
warranty shall be to obtain any title or authorization necessary to transfer
such title to Customer.
7.2 DISCLAIMER. THE FOREGOING WARRANTY IS IN LIEU OF ALL OTHER
WARRANTIES AND NO OTHER WARRANTY IS EXPRESSED OR IMPLIED, INCLUDING, BUT NOT
LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
7.3 MANUFACTURER'S WARRANTY. Customer expressly understands and agrees
that warranties regarding patents, materials, workmanship or use of the
Equipment (the "Manufacturer's Warranty"), if any, are made exclusively by the
Manufacturer and not by Vendor, and if made, shall be encompassed within a
separate agreement. Customer's exclusive remedy under Manufacturer's Warranty
shall be as provided therein and shall lie exclusively against and be obtainable
only from the Manufacturer, and Customer expressly agrees that it shall have no
claim or cause of action against Vendor in the event the Manufacturer is for any
reason unwilling or unable to perform under the terms of Manufacturer's
Warranty.
7.4 LIMITATION OF LIABILITY. Customer expressly agrees that Vendor's
responsibilities in the event of its breach of the warranties contained in
paragraph 7.1 of this agreement are as set forth in said paragraph. Vendor's
liability for damages, regardless of the form of action shall not exceed the
purchase price set forth in Appendix A to this agreement and shall arise only if
the remedies set forth in paragraph 7.1 are not fulfilled by Vendor. Customer
further agrees that Vendor will not be liable for any lost profits, or for any
claim or demand against Customer by any other party. IN NO EVENT WILL VENDOR BE
LIABLE FOR CONSEQUENTIAL DAMAGES EVEN IF VENDOR HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. No action, regardless of form, arising out of the
transactions under this agreement, may be brought by either party more than one
(1) year after the cause of action has accrued, except that an action for
non-payment may be brought within one (1) year after the date of the last
payment.
<PAGE>
THE CUSTOMER'S REMEDIES SET FORTH IN THIS AGREEMENT ARE EXCLUSIVE.
VIII. DEFAULT
8.1 REMEDY. Upon the occurrence of an event of default, as hereinafter
defined, by Customer, if the Equipment has theretofore been delivered, Vendor
may recover, together with any incidental damages, any unpaid portion of the
purchase price of the Equipment as specified in Appendix A hereto. If the
Equipment has not been delivered, in which event Vendor may withhold delivery of
such Equipment, or if the Equipment is returned to Vendor upon Vendor's election
pursuant to Section IV, Vendor shall resell the Equipment. Upon such resale,
Vendor shall recover from Customer the difference between the unpaid portion of
the purchase price, as specified in Appendix A, and the resale price, together
with any incidental damages, including expenses of resale, sustained by Vendor
by reason of Customer's breach. If the resale price exceeds the unpaid portion
of the purchase price and Vendor's incidental damages, Vendor shall remit the
excess to Customer.
8.2 EVENTS OF DEFAULT. As utilized in this agreement, an event of
default is defined as any of the following:
(A) Customer's failure to pay any amounts required to be paid to
Vendor under this agreement on a timely basis;
(B) Until the purchase price has been paid in full, any attempt by
Customer to assign, sell, mortgage, or otherwise convey the Equipment;
(C) Prior to the payment in full of the purchase price, Customer
causing or permitting any encumbrance, of any nature whatsoever, to
attach to Customer's interest in the Equipment in favor of any person
or entity other than Vendor;
(D) The entry of any order for relief under any provision of the
federal bankruptcy code in any bankruptcy proceedings initiated by or
against Customer; or
(E) Customer's breach of any of the terms of conditions of the
agreement.
IX. GENERAL
9.1 TITLES. Titles and paragraph headings are for reference purposes
only and are not to be considered a part of this agreement.
9.2 FORCE MAJEURE. No party shall be liable for delay in performance
hereunder due to causes beyond its control, including but not limited to acts of
God, fires, strikes, delinquencies of suppliers, intervention of any
governmental authority or acts of war, and each party shall take steps to
minimize any such delay.
9.3 WAIVER. No waiver of any breach of any provision of this agreement
shall constitute a waiver of any prior, concurrent or subsequent breach of the
same or any other provisions hereof and no waiver shall be effective unless made
in writing and signed by an authorized representative of the party to be charged
therewith.
9.4 SEVERABILITY. In the event that any provision of this agreement
shall be illegal or otherwise unenforceable, such provision shall be severed
from this agreement and the entire agreement shall not fail on account thereof,
the balance of the agreement continuing in full force and effect.
9.5 NOTICES. Any notice which either party hereto is required or
permitted to give hereunder shall be addressed to the party to be charged
therewith at the address set forth below and shall be given by certified or
registered mail. Any such notice shall be deemed given on the date of deposit in
the mail.
9.6 ENTIRE AGREEMENT. THE PARTIES HERETO ACKNOWLEDGE THAT EACH HAS READ
THIS AGREEMENT, UNDERSTANDS IT, AND AGREES TO BE BOUND BY ITS TERMS. THE PARTIES
FURTHER AGREE THAT THIS AGREEMENT AND ANY MODIFICATIONS MADE PURSUANT TO IT
CONSTITUTE THE COMPLETE AND EXCLUSIVE WRITTEN EXPRESSION OF THE TERMS OF THE
AGREEMENT BETWEEN THE PARTIES, AND SUPERSEDE ALL PRIOR OR CONTEMPORANEOUS
PROPOSALS, ORAL OR WRITTEN, UNDERSTANDINGS, REPRESENTATIONS, CONDITIONS,
WARRANTIES, COVENANTS, AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING
TO THE SUBJECT MATTER OF THIS AGREEMENT. THE PARTIES FURTHER AGREE THAT THIS
AGREEMENT MAY NOT IN ANY WAY BE EXPLAINED OR SUPPLEMENTED BY A PRIOR OR EXISTING
COURSE OF DEALINGS BETWEEN THE PARTIES, BY ANY USAGE OF TRADE OR CUSTOM, OR BY
ANY PRIOR PERFORMANCE BETWEEN THE PARTIES PURSUANT TO THIS AGREEMENT OR
OTHERWISE. IN THE EVENT CUSTOMER ISSUES A PURCHASE ORDER OR OTHER INSTRUMENT
COVERING THE EQUIPMENT HEREIN SPECIFIED, IT IS UNDERSTOOD AND AGREED THAT SUCH
PURCHASE ORDER OR OTHER INSTRUMENT IS FOR CUSTOMER'S INTERNAL USE AND PURPOSES
ONLY AND SHALL IN NO WAY AFFECT ANY OF THE TERMS AND CONDITIONS OF THIS
AGREEMENT.
9.7 GOVERNING LAW. This agreement is accepted in the State of Nebraska,
and shall be enforced in accordance with and governed by the laws of the State
of Nebraska.
9.8 CHOICE OF FORUM. Any action arising out of or related to this
agreement or the transaction herein described, whether at law or in equity, may
be instituted in and litigated in the state or federal courts of the State of
Nebraska. In accordance herewith, the parties hereto submit to the jurisdiction
of the courts of said state. Any party being not a resident of Nebraska at the
time of suit hereby appoints the Secretary of State of Nebraska as its agent for
receipt of service of process.
9.9 ATTORNEY'S FEES. In the event that any action or proceeding is
brought in connection with this agreement the prevailing party therein shall be
entitled to recover its costs and reasonable attorney's fees.
9.10 EFFECTIVE DATE. This agreement shall be effective on the date
accepted and executed by an authorized representative of Vendor.
CUSTOMER: VENDOR:
FIRST NATIONAL BANK OF CENTRAL CALIFORNIA
- ------------------------------------------ INFORMATION TECHNOLOGY, INC.
Signature: /s/ Dennis A. DeCius Signature:
------------------------------- -------------------------
Name: Dennis A. DeCius Name:
------------------------------------ ------------------------------
Title: Chief Financial Officer Title:
----------------------------------- ---------------------------
Address: 307 MAIN STREET Address: 1345 Old Cheney Road
---------------------------------
SALINAS, CA 93901 Lincoln, NE 68512
---------------------------------
Date: February 2, 1996 Date Accepted:
--------------------------------- -------------------
<PAGE>
APPENDIX A
EQUIPMENT AND TERMS
1. MANUFACTURER. The Manufacturer of the Equipment subject to this agreement is:
2. PURCHASE PRICE: The purchase price for the Equipment is $304,623. 100%
thereof shall be payable upon execution of this agreement, the balance upon
delivery of the Equipment.
3. EQUIPMENT. The Equipment subject to this agreement consists of the following:
<TABLE>
HARDWARE:
<CAPTION>
LIST EXTENDED
STYLE DESCRIPTION QTY PRICE PRICE
----- ----------- --- ----- -----
<S> <C> <C> <C> <C>
I A 1401-CIl SYS:A 14 Model 111C 1 71,000 71,000
A 1401-SY3 PROC: A 14 Sys 1 Single 1
A 1401-MOD INSTL: Basic Sys Mod 1X 1
A 1401OP3 FUNCT'L S/W: A 1401-C11 1 1
A 1401-MBD MEM: Board (4MBIT) 1
A 14-96M MEM: 96MB Increment 1
2 A 14-CP2 INSTL: Component Pkg 2 1 24,000 24,000
RM 36-0 CABINET: 36U Open Front 1
RM 1936-FOT INSTL: Stabilizer Foot 1
EVO 400-COL DISPLAY: 15 Color Monitor 1
SVG 100-EXT CABLE: SVGA Extension I
C 3381-EXT PWR CORD: Extension 1
PCK 101-KBD KEYBD: PC 101 1
PCK 1-EXT CABLE: PS2 Kyb Extension 1
PWM 1-SER MOUSE: 2 Button Mouse/AT 1
UN 6100-MEX CABLE: Mouse Extension 1
PM 5-CA4 INSTL: Channel Adptr Mod 1
CA301-FT ADPTR: CA Rack Fee Thru 1
CBL 10-CS CABLE: 10 ft CSBUS 1
3 A 1003-MOD COM HW: Remote Sprt Modem 1 Incl Incl
4 ASP 805-2M DISK: Initial Order 2X805 1 1,500 1,500
ASD 803-SEA DISK: 805MB DR (SE HH*12.5" 2
A 8l00-SL1 DRIVERE: SCSI Disk (2 keys) 1
5 OP 378-33 ADPTR: Data Comm Host 4 1 4,000 4,000
6 CA 312-SCI ADPTR: Differential SCS12 1 7,500 7,500
7 CA 622-ETH CTRL: Enry 802.3 C/A 1 6,000 6,000
CA 622-BAS CTRL: Entry 802.3 Base 1
CP 2013-5 l/F: 802.3 LAN Transc Ver 1
CA 6OO-OMC ADPTR: ETh Adapter 1
8 CHN 36-CNV UPGRD: 3U-6U CA Rack Upgr 1 850 850
9 USR 4262-D22 DISK: Pkg DP 2X1545-16MB 1 27,726 27,726
USR 4000-SM2 DISK: SDM2 with AC/Air Mod 1
SDM 1000-F50 UPGRD: SDM 50P Feed Thru 4
SDM 1000-T50 UPGRD: SDM 50P Terminator 2
SDM 1000-RPC UPGRD: SDM 2nd AC/Air Mod 1
SDM 1000-SBS UPGRD: SDM Status Bus SLV 1
USD 2000-C23 DISK: Dev Cage 1.5GBX16MB 2
10 USR 31110-PDU POWER: Pkg 3U PDU IHUB 1 1 9,800 9,800
USR 3000-PDU PWR: 3U Rack Mount PDU 1
PDU 1000-SBM UPGRD: PDU Status Bus Mas 1
PDU 1000-PNL UPGRD: PDU Operator Panel 1
11 RM 3-APC POWER: Automatic Control 1 6,000 6,000
12 CBL 15-MLI CABLE: 15 ft MLI 1 350 350
</TABLE>
<PAGE>
<TABLE>
APPENDIX A (continued)
<CAPTION>
LIST EXTENDED
STYLE DESCRIPTION QTY PRICE PRICE
----- ----------- --- ----- -----
<S> <C> <C> <C> <C>
13 CBL8-8 CABLE: 8 ft SCSI Woven 2 100 200
14 RM 9700-LC PWR CORD: Domestic 1
15 CBL l31-10A CABLE: 10 SCSI I/O 1 100 100
16 RM 9-103 INST: MLI I/O Base 1 12,500 12,500
17 CA 301-MLI ADPTR: MLI Channel 1 10,000 10,000
18 CBL 3-8 CABLE: 8 ft Dual Woven 1 200 200
19 CBL 1-8 CABLE: 8 ft Single Ribbon 1 100 100
20 CBL 5-8 CABLE: 8 ft Printer/Tape 1 100 100
21 CBL 378-8 CABLE: CONN Box - 8 ft 1 150 150
22 CBL 131-10A CABLE: 10, SCSI I/O 1 100 100
23 cbl 7-8 cable: 8 FT icd 1 100 100
24 UMS 4640 40 PPM Laser Printer 2 30,995 61,990
25 DU 4025 PRT AC: 2 1,965 3,930
26 DU 4005 Output Tray Stacker 2 1,625 3,250
27 DU4000 Printer Stand 2 550 1,100
28 904008000 Laser Printer Inst & Setup 1 750 750
29 816116883 Start Up Kit-Supplies 1 2,600 2,600
30 1528XXXXX 30' Serial Cable 2 100 200
31 1528XXXXX 30' Parallel Cable 2 100 200
-------
TOTAL HARDWARE: $256,296
LESS: Discount: (15,378)
TOTAL HARDWARE: $240,918
</TABLE>
<TABLE>
SOFTWARE:
<CAPTION>
FIVE YEAR
LICENSE EXTENDED
STYLE DESCRIPTION QTY CHARGE PRICE
----- ----------- --- ------ -----
<S> <C> <C> <C> <C>
1 A1401-SF1 0/S: SSFForModel 111 1 48,500 48,500
A 99-CPS 0/S: Common Platform SW 1
A 14-MCM 0/S: A 14 Sys S/W Core Med 1
A 99-TAS COM 5W: TCP/IP Applicaton 1
A 14-PSS 0/S: Platform Specific SW 1
APL 99-TIC COM SW: TCPIP Unrestricted 1
A 99-TSA COM SW: SNMP Agent 1
2 A 4400-SL2 DRIVER: 4MM Tape 2 295 590
3 A 5l00-SL2 DRIVER: O-R Tape 1 1,030 1,030
4 A 9100-SL2 DRIVER: SCSI-2 Disk 2 585 1,170
5 APL 30-DCS COM SW: Data Communication 1 7,000 7,000
A 99-DCS COM SW: Data Communication 1
6 APL 30-BYC COM SW: Bisync Protocol 1 2,430 2,430
A 99-BYC COM SW: Bisync Protocol 1
7 A 9100-SLI DRIVER: SC5I-1 Disk 7 400 2,800
8 APL 30-CSS COM SW: A Series SNAV2 1 * 185 * 185
A 99-NSS COM SW: Network Srvc II 1
A 99-NAU COM SW: Network Admin 1
A 99-CPC COM SW: CP 2000 Configrtr 1
A 99-CPD 0/S: CPDLP Oper Sys 1
--------
TOTAL SOFTWARE: $63,703
GRAND TOTAL: $304,623
<FN>
* Monthly License Charge
</FN>
</TABLE>
THE AMERICAN INSTITUTE OF ARCHITECTS
AIA DOCUMENT A111
Standard Form of Agreement
Between Owner and Contractor
where the basis of payment is the
COST OF THE WORK PLUS A FEE
with or without a Guaranteed Maximum Price
1987 EDITION
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES;
CONSULTATION WITH AN ATTORNEY IS ENCOURAGED WITH RESPECT TO
ITS COMPLETION OR MODIFICATION.
The 1987 Edition of AIA Document A201, General Conditions of the
Contract for Construction, is adopted in this document by reference. Do not
use with other general conditions unless this document is modified.
This document has been approved and endorsed by The Associated General
Contractors of America.
AGREEMENT
made as of the fifteenth day of June in the year of
Nineteen Hundred and ninety five
BETWEEN the Owner: Pacific Capital Bancorp
(Name and address) 1001 S. Main Street
Salinas, CA 93901
and the Contractor: Daniels & House Construction Co.
(Name and address) P.0. Box 1470
Monterey, CA 93942
the Project is: Renovation of existing building and construction of
(Name and address) new addition: for First National Bank of Central
California at 1001 S. Main Street Salinas, CA 93901
the Architect is: HBFL Architects
(Name and address) 380 Main Street
Salinas, CA 93901
The Owner and Contractor agree as set forth below.
Copyright 1920, 1925, 1951, 1958, 1961, 1963, 1967, 1971, 1978, (c)1987 by The
American Institute of Architects, 1735 New York Avenue, N.W., Washington, D.C.
20006. Reproduction of the material herein or substantial quotation of its
provisions without written permission of the AIA violates the copyright laws of
the United States and will be subject to legal prosecution.
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 . OWNER-CONTRACTOR AGREEMENT . TENTH EDITION . AIA(R) .
(c)1987 . THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006 A111-1987 1
<PAGE>
ARTICLE I
THE CONTRACT DOCUMENTS
1.1 The Contract Documents consist of this Agreement, conditions of the Contract
(General, Supplementary and other conditions), Drawings, Specifications, Addenda
issued prior to execution of this Agreement, other documents listed in this
Agreement and Modifications issued after execution of this Agreement; these form
the Contract, and are as fully a part of the Contract as if attached to this
Agreement or repeated herein, The contract represents the entire and integrated
agreement between the parties hereto and supersedes prior negotiations,
representations or agreements, either written or oral. An enumeration of the
Contract Documents, other than Modifications, appears in Article 16. If anything
in the other Contract Documents is inconsistent with this Agreement, this
Agreement shall govern.
ARTICLE 2
THE WORK OF THIS CONTRACT
2.1 The contractor shall execute the entire Work described in the Contract
Documents, except to the extent specifically indicated in the Contract Documents
to be the responsibility of others, or as follows:
The renovation of the existing bank building and construction of a new
addition as described in the contract documents prepared by HBFL Architect.
Work to include associated demolition, sitework and construction.
Preparation of a temporary banking facility, parking lot and associated
utilities shall be the responsibility of the owner.
ARTICLE 3
RELATIONSHIP OF THE PARTIES
3.1 The contractor accepts the relationship of trust and confidence established
by this Agreement and covenants with the Owner to cooperate with the Architect
and utilize the Contractor's best skill, efforts and judgment in furthering the
interests of the Owner; to furnish efficient business administration and
supervision; to make best efforts to furnish at all times an adequate supply of
workers and materials; and to perform the Work in the best way and most
expeditious and economical manner consistent with the interests of the Owner.
The Owner agrees to exercise best efforts to enable the contractor to perform
the Work in the best way and most expeditious manner by furnishing and approving
in a timely way information required by the Contractor and making payments to
the Contractor in accordance with requirements of the Contract Documents.
ARTICLE 4
DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
4.1 The date of commencement is the date from which the contract Time of
Subparagraph 4.2 is measured; it shall be the date of this Agreement, as first
written above, unless a different date is stated below or provision is made for
the date to be fixed in a notice to proceed issued by the Owner.
(Insert the date of commencement, if it differs from the date of this Agreement
or, if applicable, state that the date will be fixed in a notice to proceed.)
Date of commencement shall be on or about June 26, 1995, unless modified by
subsequent notices to proceed.
Unless the date of commencement is established by a notice to proceed issued by
the Owner, the Contractor shall notify the Owner in writing not less than five
days before commencing the Work to permit the timely filing of mortgages,
mechanic's liens and other security interests.
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 . OWNER-CONTRACTOR AGREEMENT . TENTH EDITION . AIA(R) .
(c)1987 . THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006 A111-1987 2
<PAGE>
4.2 The Contractor shall achieve Substantial Completion of the entire Work not
later than
(Insert the calendar date or number of calendar days after the date of
commencement. Also insert any requirements for earlier Substantial Completion of
certain portions of the Work, if not stated elsewhere in the Contract
Documents.)
Substantial completion of the renovation and new construction shall be
achieved on or before May 1, 1996.
, subject to adjustments of this Contract Time as provided in the contract
Documents.
(Insert provisions, if any, for liquidated damages relating to failure to
complete on time.)
Article 5
CONTRACT SUM
5.1 The Owner shall pay the Contractor in current funds for the Contractor's
performance of the contract the Contract Sum consisting of the cost of the Work
as defined in Article 7 and the contractor's Fee determined as follows:
(State a lump sum, percentage of Cost of the Work or other provision for
determining the contractor's Fee, and explain how the Contractor's Fee is to be
adjusted for changes in the Work.)
The contractor's fee shall be six & one half percent (6.5%) of the cost of
the work as defined in Article 7 of this contract. See cost breakdown,
(Attachment "A" and Attachment "B") for sample calculation of fee/savings.
Contractor's fee will initially be increased/decreased as indicated above
pending value engineering modifications and developing a guaranteed maximum
price.
Subsequent changes in the work will cause the contractor's fee to be
increased in accordance with the provisions in Article 6 of this contract.
For changes increasing the scope of work, the fee will be increased by an
amount not to exceed 10% of the cost of the work. There will be no
reduction in fee for decreased in work.
5.2 GUARANTEED MAXIMUM PRICE (IF APPLICABLE)
5.2.1 The sum of the Cost of the Work and the Contractor's Fee is guaranteed by
the Contractor not to exceed one million three hundred ninety six thousand nine
hundred twenty dollars*** Dollars ($1,396,920.00***), subject to additions and
deductions by Change Order as provided in the Contract Documents. Such maximum
sum is referred to in the Contract Documents as the Guaranteed Maximum Price.
Costs which would cause the Guaranteed Maximum Price to be exceeded shall be
paid by the Contractor without reimbursement by the Owner.
(Insert specific provisions if the Contractor is to participate in any savings.)
* The G.M.P. at the time of initiation of the contract does not reflect all
value engineering considerations but bids and allowances available at that
time.
1). See Attachment "A" to the construction contract describing the
provisions of the guaranteed maximum price (cost) and distribution of
savings.
2). Savings realized in the construction of the building and calculated as
noted in Attachment "A" will be distributed 75% to the Owner and 25% to the
Contractor.
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 . OWNER-CONTRACTOR AGREEMENT . TENTH EDITION . AIA(R) .
(c)1987 . THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006 A111-1987 3
<PAGE>
5.2.2 The Guaranteed Maximum Price is based upon the following alternates, if
any, which are described in the Contract Documents and are hereby accepted by
the Owner:
(State the numbers or other identification of accepted alternates, but only if a
Guaranteed Maximum Price is inserted in Subparagraph 5.2.1. If decisions on
other alternates are to be made by the Owner subsequent to the execution of this
Agreement, attach a schedule of such other alternates showing the amount for
each and the date until which that amount is valid.)
5.2.3 The amounts agreed to for allowances are as follows:
(State unit prices only if a Guaranteed Maximum Price is inserted in
Subparagraph 5.2.1)
The following amounts have been incorporated in the preliminary G.M.P.
pending final design considerations:
Earthwork (Sitework) $45,000
Concrete (Structural, Site, Offsite) 114,969
Masonry (including brick at columns) 147,003
Structural/Misc. Steel 69,370
Roofing 19,600
Entrances, Storefronts, Glazing 111,114
Lath, Plaster, Drywall 43,501
Carpet 35,320
Millwork 102,039
ARTICLE 6
CHANGES IN THE WORK
6.1 CONTRACTS WITH A GUARANTEED MAXIMUM PRICE
6.1.1 Adjustments to the Guaranteed Maximum Price on account of changes in the
Work may be determined by any of the methods listed in Subparagraph 7.3.3 of the
General Conditions.
6.1.2 In calculating adjustments to subcontracts (except those awarded with the
Owner's prior consent on the basis of cost plus a fee), the terms "cost" and
"fee" as used in Clause 7.3.3.3 of the General Conditions and the terms "costs"
and "a reasonable allowance for overhead and profit" as used in Subparagraph
7.3.6 of the General Conditions shall have the meanings assigned to them in the
General Conditions and shall not be modified by Articles 5, 7 and 8 of this
Agreement. Adjustments to subcontracts awarded with the Owner's prior consent on
the basis of cost plus a fee shall be calculated in accordance with the terms of
those subcontracts.
6.1.3 In calculating adjustments to this contract, the terms "cost" and "costs"
as used in the above-referenced provisions of the General Conditions shall mean
the Cost of the Work as defined in Article 7 of this Agreement and the terms
"fee" and "a reasonable allowance for overhead and profit" shall mean the
Contractor's Fee as defined in Paragraph 5.1 of this Agreement.
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 . OWNER-CONTRACTOR AGREEMENT . TENTH EDITION . AIA(R) .
(c)1987 . THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006 A111-1987 4
<PAGE>
6.2 CONTRACTS WITHOUT A GUARANTEED MAXIMUM PRICE
6.2.1 Increased costs for the items set forth In Article 7 which result from
changes in the Work shall become part of the Cost of the Work, and the
Contractor's Fee shall be adjusted as provided in Paragraph 5.1.
6.3 ALL CONTRACTS
6.3.1 If no specific provision is made in Paragraph 5.1 for adjustments of the
Contractor's Fee in the case of changes in the Work, or if the extent of such
changes is such, in the aggregate, that application of the adjustment provisions
of Paragraph 5.1 will cause substantial inequity to the Owner or Contractor, the
Contractor's Fee shall he equitably adjusted on the basis of the Fee established
for the original Work.
ARTICLE 7
COSTS TO BE REIMBURSED
7.1 The term Cost of the Work shall mean costs necessarily incurred by the
Contractor in the proper performance of the Work. Such costs shall be at rates
not higher than the standard paid at the place of the Project except with prior
consent of the Owner. The Cost of the Work shall include only the items set
forth in this Article 7.
7.1.1 LABOR COSTS
7.1.1.1 Wages of construction workers directly employed by the Contractor to
perform the construction of the Work at the site or, with the Owner's agreement,
at off-site workshops.
7.1.1.2 Wages or salaries of the Contractor's supervisory and administrative
personnel when stationed at the site with the Owner's agreement.
(If it intended that the wages or salaries of certain personnel stationed at the
Contractor's principal or other offices shall be included in the Cost of the
Work, identify in Article 14 the personnel to be included and whether for all or
only part of their time.)
7.1.1.3 Wages and salaries of the Contractor's supervisory or administrative
personnel engaged, at factories, workshops or on the road, in expediting the
production or transportation of materials or equipment required for the Work,
but only for that portion of their time required for the Work.
7.1.1.4 Costs paid or incurred by the Contractor for taxes, insurance,
contributions, assessments and benefits required by law or collective bargaining
agreements and, for personnel not covered by such agreements, customary benefits
such as sick leave, medical and health benefits, holidays. vacations and
pensions, provided such costs are based on wages and salaries included in the
Cost of the Work under Clauses 7.1.1.1 through 7.1.1.3.
7.1.2 SUBCONTRACT COSTS
Payments made by the Contractor to Subcontractors in accordance with the
requirements of the subcontracts.
7.1.3 COSTS OF MATERIALS AND EQUIPMENT INCORPORATED IN THE COMPLETED
CONSTRUCTION
7.1.3.1 Costs, including transportation, of materials and equipment incorporated
or to be incorporated in the completed construction.
7.1.3.2 Costs of materials described in the preceding Clause 7.1.3.1 in excess
of those actually installed but required to provide reasonable allowance for
waste and for spoilage. Unused excess materials, if any, shall be handed over to
the Owner at the completion of the Work or, at the Owner's option, shall be sold
by the Contractor; amounts realized, if any, from such sales shall be credited
to the Owner as a deduction from the Cost of the Work.
7.1.4 COSTS OF OTHER MATERIALS AND EQUIPMENT, TEMPORARY FACILITIES AND
RELATED ITEMS
7.1.4.1 Costs, including transportation, installation, maintenance, dismantling
and removal of materials, supplies, temporary facilities, machinery, equipment,
and hand tools not customarily owned by the construction workers, which are
provided by the Contractor at the site and fully consumed in the performance of
the Work; and cost less salvage value on such items if not fully consumed,
whether sold to others or retained by the Contractor. Cost for items previously
used by the Contractor shall mean fair market value.
7.1.4.2 Rental charges for temporary facilities, machinery, equipment, and hand
tools not customarily owned by the construction workers, which are provided by
the Contractor at the site, whether rented from the Contractor or others, and
costs of transportation, installation, minor repairs and replacements,
dismantling and removal thereof. Rates and quantities of equipment rented shall
be subject to the Owner's prior approval.
7.1.4.3 Costs of removal of debris from the site.
7.1.4.4 Costs of telegrams and long-distance telephone calls, postage and parcel
delivery charges, telephone service at the site and reasonable petty cash
expenses at the site office.
7.1.4.5 That portion of the reasonable travel and subsistence expenses of the
Contractor's personnel incurred while traveling in discharge of duties connected
with the Work.
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 . OWNER-CONTRACTOR AGREEMENT . TENTH EDITION . AIA(R) .
(c)1987 . THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006 A111-1987 5
<PAGE>
7.1.5 MISCELLANEOUS COSTS
7.1.5.1 That portion directly attributable to this Contract of premiums for
insurance and bonds.
7.1.5.2 Sales, use or similar taxes imposed by a governmental authority which
are related to the Work and for which the Contractor is liable.
7.1.5.3 Fees and assessments for the building permit and for other permits.
licenses and inspections for which the Contractor is required by the Contract
Documents to pay.
7.1.5.4 Fees of testing laboratories for tests required by the Contract
Documents, except those related to defective or nonconforming Work for which
reimbursement is excluded by Subparagraph 13.5.3 of the General Conditions or
other provisions of the Contract Documents and which do not fall within the
scope of Subparagraphs 7.2.2 through 7.2.4 below.
7.1.5.5 Royalties and license fees paid for the use of a particular design,
process or product required by the Contract Documents; the cost of defending
suits or claims for infringement of patent rights arising from such requirement
by the Contract Documents; payments made in accordance with legal judgments
against the Contractor resulting from such suits or claims and payments of
settlements made with the Owner's consent; provided, however, that such costs of
legal defenses, judgment and settlements shall not be included in the
calculation of the Contractor's Fee or of a Guaranteed Maximum Price, if any,
and provided that such royalties, fees and costs are not excluded by the last
sentence of Subparagraph 3.17.1 of the General Conditions or other provisions of
the Contract Documents.
7.1.5.6 Deposits lost for causes other than the Contractor's fault or
negligence.
7.1.6 OTHER COSTS
7.1.6.1 Other costs incurred in the performance of the Work if and to the extent
approved in advance in writing by the Owner.
7.2 EMERGENCIES: REPAIRS TO DAMAGED, DEFECTIVE OR NONCONFORMING WORK
The Cost of the Work shall also include costs described in Paragraph 7.1 which
are incurred by the Contractor:
7.2.1 In taking action to prevent threatened damage, injury or loss in case of
an emergency affecting the safety of persons and property, as provided in
Paragraph 10.3 of the General Conditions.
7.2.2 In repairing or correcting Work damaged or improperly executed by
construction workers in the employ of the Contractor, provided such damage or
improper execution did not result from the fault or negligence of the Contractor
or the Contractor's foremen, engineers or superintendents, or other supervisory,
administrative or managerial personnel of the Contractor.
7.2.3 In repairing damaged Work other than that described in Subparagraph 7.2.2,
provided such damage did not result from the fault or negligence of the
Contractor or the Contractor's personnel, and only to the extent that the cost
of such repairs is not recoverable by the Contractor from others and the
Contractor is not compensated therefor by insurance or otherwise.
7.2.4 In correcting defective or nonconforming Work performed or supplied by a
Subcontractor or material supplier and not corrected by them. provided such
defective or nonconforming Work did not result from the fault or neglect of the
Contractor or the Contractor's personnel adequately to supervise and direct the
Work of the Subcontractor or material supplier, and only to the extent that the
cost of correcting the defective or nonconforming Work is not recoverable by the
Contractor from the Subcontractor or material supplier.
ARTICLE 8
COSTS NOT TO BE REIMBURSED
8.1 The Cost of the Work shall not include:
8.1.1 Salaries and other compensation of the Contractor's personnel stationed at
the Contractor's principal office or offices other than the site office, except
as specifically provided in Clauses 7.1.1.2 and 7.1.1.3 or as may be provided in
Article 14.
8.1.2 Expenses of the Contractor's principal office and offices other than the
site office.
8.1.3 Overhead and general expenses, except as may be expressly included in
Article 7.
8.1.4 The Contractor's capital expenses, including interest on the Contractor's
capital employed for the Work.
8.1.5 Rental costs of machinery and equipment, except as specifically provided
in Clause 7.1.4.2.
8.1.6 Except as provided in Subparagraphs 7.2.2 through 7.2.4 and Paragraph 13.5
of this Agreement, costs due to the fault or negligence of the Contractor,
Subcontractors, anyone directly or indirectly employed by any of them, or for
whose acts any of them may be liable, including but not limited to costs for the
correction of damaged, defective or nonconforming Work, disposal and replacement
of materials and equipment incorrectly ordered or supplied, and making good
damage to property not forming part of the Work.
8.1.7 Any cost not specifically and expressly described in Article 7.
8.1.8 Costs which would cause the Guaranteed Maximum Price, if any, to be
exceeded.
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 . OWNER-CONTRACTOR AGREEMENT . TENTH EDITION . AIA(R) .
(c)1987 . THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006 A111-1987 6
<PAGE>
ARTICLE 9
DISCOUNTS, REBATES AND REFUNDS
9.1 cash discounts obtained on payments made by the contractor shall accrue to
the Owner if(1) before making the payment, the Contractor included them in an
Application for Payment and received payment therefor from the Owner, or (2) the
Owner has deposited funds with the Contractor with which to make payments:
otherwise, cash discounts shall accrue to the Contractor. Trade discounts,
rebates, refunds and amounts received from sales of surplus materials and
equipment shall accrue to the Owner, and the Contractor shall make provisions so
that they can be secured.
9.2 Amounts which accrue to the Owner in accordance with the provisions of
Paragraph 9.1 shall be credited to the Owner as 2 deduction from the Cost of the
Work.
ARTICLE 10
SUBCONTRACTS AND OTHER AGREEMENTS
10.1 Those portions of the Work that the Contractor does not customarily perform
with the Contractor's own personnel shall be performed under subcontracts or by
other appropriate agreements with the Contractor. The Contractor shall obtain
bids from Subcontractors and from suppliers of materials or equipment fabricated
especially for the Work and shall deliver such bids to the Architect. The Owner
will then determine, with the advice of the Contractor and subject to the
reasonable objection of the Architect, which bids will be accepted. The Owner
may designate specific persons or entities from whom the Contractor shall obtain
bids; however, if a Guaranteed Maximum Price has been established, the Owner may
not prohibit the Contractor from obtaining bids from others. The Contractor
shall not be required to contract with anyone to whom the Contractor has
reasonable objection.
10.2 If a Guaranteed Maximum Price has been established and a specific bidder
among those whose bids are delivered by the Contractor to the Architect (1) is
recommended to the Owner by the contractor; (2) is qualified to perform that
portion of the Work; and (3) has submitted a bid which conforms to the
requirements of the Contract Documents without reservations or exceptions, but
the Owner requires that another bid be accepted; then the Contractor may require
that a Change Order be issued to adjust the Guaranteed Maximum Price by the
difference between the bid of the person or entity recommended to the Owner by
the Contractor and the amount of the subcontract or other agreement actually
signed with the person or entity designated by the Owner.
10.3 Subcontracts or other agreements shall conform to the payment provisions of
Paragraphs 12.7 and 12.8, and shall not be awarded on the basis of cost plus a
fee without the prior consent of the Owner.
ARTICLE 11
ACCOUNTING RECORDS
11.1 The Contractor shall keep full and detailed accounts and exercise such
controls as may be necessary for proper financial management under this
Contract; the accounting and control systems shall be satisfactory to the Owner.
The Owner and the Owner's accountants shall be afforded access to the
Contractor's records, books, correspondence, instructions, drawings, receipts,
subcontracts, purchase orders, vouchers, memoranda and other data relating to
this Contract, and the Contractor shall preserve these for a period of three
years after final payment, or for such longer period as may be required by law.
ARTICLE 12
PROGRESS PAYMENTS
12.1 Based upon Applications for Payment submitted to the Architect by the
Contractor and Certificates for Payment issued by the Architect, the Owner
shall make progress payments on account of the Contract Sum to the Contractor as
provided below and elsewhere in the Contract Documents.
12.2 The period covered by each Application for Payment shall be one calendar
month ending on the last day of the month, or as follows:
12.3 Provided an Application for Payment is received by the Architect not later
than the first day of a month, the Owner shall make payment to the Contractor
not later than the fifteenth day of the month. If an Application for Payment is
received by the Architect after the application date fixed above, payment shall
be made by the Owner not later than fifteen days after the Architect receives
the Application for Payment.
12.4 With each Application for Payment the Contractor shall submit payrolls,
petty cash accounts, receipted invoices or invoices with check vouchers
attached, and any other evidence required by the Owner or Architect to
demonstrate that cash disbursements already made by the Contractor on account of
the Cost of the Work equal or exceed (1) progress payments already received by
the Contractor; less (2) that portion of those payments attributable to the
Contractor's Fee; plus (3) payrolls for the period covered by the present
Application for payment; plus (4) retainage provided in Subparagraph 12.5.4, if
any, applicable to prior progress payments.
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 . OWNER-CONTRACTOR AGREEMENT . TENTH EDITION . AIA(R) .
(c)1987 . THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006 A111-1987 7
<PAGE>
12.5 CONTRACTS WITH A GUARANTEED MAXIMUM PRICE
12.5.1 Each Application for Payment shall be based upon the most recent schedule
of values submitted by the Contractor in accordance with the Contract Documents.
The schedule of values shall allocate the entire Guaranteed Maximum Price among
the various portions of the Work, except that the Contractor's Fee shall be
shown as a single separate item. The schedule of values shall be prepared in
such form and supported by such data to substantiate its accuracy as the
Architect may require. This schedule, unless objected to by the Architect, shall
be used as a basis for reviewing the Contractor's Applications for Payment.
12.5.2 Applications for Payment shall show the percentage completion of each
portion of the Work as of the end of the period covered by the Application for
Payment. The percentage completion shall be the lesser of (1) the percentage of
that portion of the Work which has actually been completed or (2) the percentage
obtained by dividing (a) the expense which has actually been incurred by the
Contractor on account of that portion of the Work for which the Contractor has
made or intends to make actual payment prior to the next Application for Payment
by (b)the share of the Guaranteed Maximum Price allocated to that portion of the
Work in the schedule of values.
12.5.3 Subject to other provisions of the Contract Documents, the amount of each
progress payment shall be computed as follows:
12.5.3.1 Take that portion of the Guaranteed Maximum Price properly allocable to
completed Work as determined by multiplying the percentage completion of each
portion of the Work by the share of the Guaranteed Maximum Price allocated to
that portion of the Work in the schedule of values. Pending final determination
of cost to the Owner of changes in the Work, amounts not in dispute may be
included as provided in Subparagraph 7.3.7 of the General Conditions, even
though the Guaranteed Maximum Price has not yet been adjusted by Change Order.
12.5.3.2 Add that portion of the Guaranteed Maximum Price properly allocable to
materials and equipment delivered and suitably stored at the site for subsequent
incorporation in the Work or, if approved in advance by the Owner, suitably
stored off the site at a location agreed upon in writing.
12.5.3.3 Add the Contractor's Fee, less retainage of ten percent (10 %). The
Contractor's Fee shall be computed upon the Cost of the Work described in the
two preceding Clauses at the rate stated in Paragraph 5.1 or, if the
Contractor's Fee is stated as a fixed sum in that Paragraph, shall be an amount
which bears the same ratio to that fixed-sum Fee as the Cost of the Work in the
two preceding Clauses bears to a reasonable estimate of the probable Cost of the
Work upon its completion.
12,5.3.4 Subtract the aggregate of previous payments made by the Owner.
12.5.3.5 Subtract the shortfall, if any, indicated by the Contractor in the
documentation required by Paragraph 12.4 to substantiate prior Applications for
Payment, or resulting from errors subsequently discovered by the Owner's
accountants in such documentation.
12.5.3.6 Subtract amounts, if any, for which the Architect has withheld or
nullified a Certificate for Payment as provided in Paragraph 9.5 of the General
Conditions.
12.5.4 Additional retainage, if any, shall be as follows:
(If it is intended to retain additional amounts from progress payments to the
Contractor beyond (1) the retainage from the Contractor's Fee provided in Clause
12.5.3.3; (2) the retainage from Subcontractors provided in Paragraph 12.7
below; and (3) the retainage, if any, provided by other provisions of the
Contract, insert provision for such additional retainage here. Such provision,
if made, should also describe any arrangment for limiting or reducint the amount
retained after the Work reaches a certain state of completion.)
Additional Provisions: For those trades or activities which are completed
in the early phases of the project, and have performed in a manner
satisfactory to the Architect, shall be eligible for release of retention
upon Architect's approval.
12.6 CONTRACTS WITHOUT A GUARANTEED MAXIMUM PRICE
12.6.1 Applications for Payment shall show the Cost of the Work actually
incurred by the Contractor through the end of the period covered by the
Application for Payment and for which the Contractor has made or intends to make
actual payment prior to the next Application for Payment.
12.6.2 Subject to other provisions of the Contract Documents, the amount of each
progress payment shall be computed as follows:
12.6.2.1 Take the Cost of the Work as described in Subparagraph 12.6.1.
12.6.2.2 Add the Contractor's Fee, less retainage of percent ( %). The
Contractor's Fee shall be computed upon the Cost of the Work described in the
preceding Clause 12.6.2.1 at the rate stated in Paragraph 5.1 or, if the
Contractor's Fee is stated as a fixed sum in that Paragraph, an amount which
bears the same ratio to that fixed-sum Fee as the Cost of the Work in the
preceding Clause bears to a reasonable estimate of the probable Cost of the Work
upon its completion.
12.6.2.3 Subtract the aggregate of previous payments made by the Owner.
12.6.2.4 Subtract the shortfall, if any. indicated by the Contractor in the
documentation required by Paragraph 12.4 or to substantiate prior Applications
for Payment or resulting from errors subsequently discovered by the Owner's
accountants in such documentation.
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 . OWNER-CONTRACTOR AGREEMENT . TENTH EDITION . AIA(R) .
(c)1987 . THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006 A111-1987 8
<PAGE>
12.6.2.5 Subtract amounts, if any, for which the Architect has withheld or
withdrawn a Certificate for Payment as provided in the Contract Documents.
12.6.3 Additional retainage, if any, shall be as follows:
12.7 Except with the Owner's prior approval, payments to Subcontractors included
in the Contractor's Applications for Payment shall not exceed an amount for each
Subcontractor calculated as follows:
12.7.1 Take that portion of the Subcontract Sum properly allocable to completed
Work as determined by multiplying the percentage completion of each portion of
the Subcontractor's Work by the share of the total Subcontract Sum allocated to
that portion in the Subcontractor's schedule of values, less retainage of
percent ( %). Pending final determination of amounts to be paid to
the Subcontractor for changes in the Work, amounts not in dispute may be
included as provided in Subparagraph 7.3.7 of the General Conditions even though
the Subcontract Sum has not yet been adjusted by Change Order.
12.7.2 Add that portion of the Subcontract Sum properly allocable to materials
and equipment delivered and suitably stored at the site for subsequent
incorporation in the Work or, if approved in advance by the Owner, suitably
stored off the site at a location agreed upon in writing, less retainage of
percent ( %).
12.7.3 Subtract the aggregate of previous payments made by the Contractor to the
Subcontractor.
12.7.4 Subtract amounts, if any, for which the Architect has withheld or
nullified a Certificate for Payment by the Owner to the Contractor for reasons
which are the fault of the Subcontractor,
12.7.5 Add, upon Substantial Completion of the entire Work of the Contractor, a
sum sufficient to increase the total payments to the Subcontractor to
percent ( %) of the Subcontract Sum, less amounts, if any, for incomplete
Work and unsettled claims; and, if final completion of the entire Work is
thereafter materially delayed through no fault of the Subcontractor, add any
additional amounts payable on account of Work of the Subcontractor in accordance
with Subparagraph 9.10.3 of the General Conditions.
(If it is intended, prior to Substantial Completion of the entire Work of the
Contractor, to reduce or limit the retainage from Subcontractors resulting from
the percentages inserted in Subparagraphs 12.7.1 and 12.7.2 above, and this is
not explained elsewhere in the Contract Documents, insert here provisions for
such reduction or limitation.)
The Subcontract Sum is the total amount stipulated in the subcontract to be paid
by the Contractor to the Subcontractor for the Subcontractor's performance of
the subcontract.
12.8 Except with the Owner's prior approval, the Contractor shall not make
advance payments to suppliers for materials or equipment which have not been
delivered and stored at the site.
12.9 In taking action on the Contractor's Applications for Payment, the
Architect shall be entitled to rely on the accuracy and completeness of the
information furnished by the Contractor and shall not be deemed to represent
that the Architect has made a detailed examination, audit or arithmetic
verification of the documentation submitted in accordance with Paragraph 12.4 or
other supporting data; that the Architect has made exhaustive or continuous
on-site inspections or that the Architect has made examinations to ascertain how
or for what purposes the Contractor has used amounts previously paid on account
of the Contract. Such examinations, audits and verifications, if required by the
Owner, will be performed by the Owner's accountants acting in the sole interest
of the Owner.
ARTICLE 13
FINAL PAYMENT
13.1 Final payment shall be made by the Owner to the Contractor when (1) the
Contract has been fully performed by the Contractor except for the Contractor's
responsibility to correct defective or nonconforming Work, as provided in
Subparagraph 12.2.2 of the General Conditions, and to satisfy other
requirements, if any, which necessarily survive final payment; (2) a final
Application for Pay-
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 . OWNER-CONTRACTOR AGREEMENT . TENTH EDITION . AIA(R) .
(c)1987 . THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006 A111-1987 9
<PAGE>
ment and a final accounting for the Cost of the Work have been submitted by the
Contractor and reviewed by the Owner's accountants; and (3) a final Certificate
for Payment has then been issued by the Architect; such final payment shall be
made by the Owner not more than 30 days after the issuance of the Architect's
final Certificate for Payment, or as follows:
Final payment to the contractor, including release of retention, shall be made
upon completion of the project, and no later than 35 days following the filing
of the Notice of Substantial Completion, provided that applications for payment
are submitted by contractor pursuant to Article 12.3 and contractor has
completed all submitted work described in the documents, settled all claims, and
provided final lien releases.
13,,2 The amount of the final payment shall be calculated as follows:
13.2.1 Take the sum of the Cost of the Work substantiated by the Contractor's
final accounting and the Contractor's Fee; but not more than the Guaranteed
Maximum Price, if any.
13.2.2 Subtract amounts, if any. for which the Architect withholds, in whole or
in part, a final Certificate for Payment as provided in Subparagraph 9.5.1 of
the General Conditions or other provisions of the Contract Documents.
13.2.3 Subtract the aggregate of previous payments made by the Owner. If the
aggregate of previous payments made by the Owner exceeds the amount due the
Contractor, the Contractor shall reimburse the difference to the Owner.
13.3 The Owner's accountants will review and report in writing on the
Contractor's final accounting within 30 days after delivery of the final
accounting to the Architect by the Contractor. Based upon such Cost of the Work
as the Owner's accountants report to be substantiated by the Contractor's final
accounting, and provided the other conditions of Paragraph 13.1 have been met,
the Architect will, within seven days after receipt of the written report of the
Owner's accountants, either issue to the Owner a final Certificate for Payment
with a copy to the Contractor, or notify the Contractor and Owner in writing of
the Architect's reasons for withholding a certificate as provided in
Subparagraph 9.5.1 of the General Conditions. The time periods stated in this
Paragraph 13.3 supersede those stated in Subparagraph 9.4.1 of the General
Conditions.
13.4 If the Owner's accountants report the Cost of the Work as substantiated by
the Contractor's final accounting to be less than estimated by the Contractor,
the Contractor shall be entitled to demand arbitration of the disputed amount
without a further decision of the Architect. Such demand for arbitration shall
be made by the Contractor within 30 days after the Contractor's receipt of a
copy of the Architect's final Certificate for Payment; failure to demand
arbitration within this 30-day period shall result in the substantiated amount
reported by the Owner's accountants becoming binding on the Contractor. Pending
a final resolution by arbitration, the Owner shall pay the Contractor the amount
certified in the Architect's final Certificate for Payment.
13.5 If, subsequent to final payment and at the Owner's request, the Contractor
incurs costs described in Article 7 and not excluded by Article 8 to correct
defective or nonconforming Work, the Owner shall reimburse the Contractor such
costs and the Contractor's Fee applicable thereto on the same basis as if such
costs had been incurred prior to final payment, but not in excess of the
Guaranteed Maximum Price, if any. If the Contractor has participated in savings
as provided in Paragraph 5.2, the amount of such savings shall be recalculated
and appropriate credit given to the Owner in determining the net amount to be
paid by the Owner to the Contractor.
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 Where reference is made in this Agreement to a provision of the General
Conditions or another Contract Document, the reference refers to that provision
as amended or supplemented by other provisions of the Contract Documents.
14.2 Payments due and unpaid under the Contract shall bear interest from the
date payment is due at the rate stated below, or in the absence thereof, at the
legal rate prevailing from time to time at the place where the Project is
located.
(lnsert rate of interest agreed upon, if any.)
(Usury laws and requirements under the Federal Truth in Lending Act, similar
state and local consumer credit laws and other regulations at the Owner's and
Contractor's principal places of business, the location of the Project and
elsewhere may affect the validity of this provision. Legal advice should be
obtained with respect to deletions or modifications, and also regarding
requirements such as written disclosures or waivers.)
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 . OWNER-CONTRACTOR AGREEMENT . TENTH EDITION . AIA(R) .
(c)1987 . THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006 A111-1987 10
<PAGE>
14.3 Other provisions:
A. Items specifically excluded from the scope of the contract and the
responsibility of others are as follows:
1. The cost of building permit fees, plan check cost, city inspection
fees.
2. The cost of utility company fees including the re-location of power
poles/service at Romie Lane.
3. Landscaping & irrigation.
4. Exterior monument signage.
5. Window cover
6. Cost of testing, engineering or soils analysis.
ARTICLE 15
TERMINATION OR SUSPENSION
15.1 The Contract may be terminated by the Contractor as provided in Article 14
of the Genera! Conditions; however, the amount to be paid to the Contractor
under Subparagraph 14.1.2 of the General Conditions shall not exceed the amount
the Contractor would be entitled to receive under Paragraph 15.3 below, except
that the Contractor's Fee shall be calculated as if the Work had been fully
completed by the Contractor, including a reasonable estimate of the Cost of (he
Work for Work not actually completed.
15.2 If a Guaranteed Maximum Price is established in Article 5, the Contract may
be terminated by the Owner for cause as provided in Article 14 of the General
Conditions; however, the amount, if any, to be paid to the Contractor under
Subparagraph 14.2.4 of the General Conditions shall not cause the Guaranteed
Maximum Price to be exceeded, nor shall it exceed the amount the Contractor
would be entitled to receive under Paragraph 15.3 below.
15.3 If no Guaranteed Maximum Price is established in Article 5, the Contract
may be terminated by the Owner for cause as provided in Article 14 of the
General Conditions; however, the Owner shall then pay the Contractor an amount
calculated as follows:
15.3.1 Take the Cost of the Work incurred by the Contractor to the date of
termination.
15.3.2 Add the Contractor's Fee computed upon the Cost of the Work to the date
of termination at the rate stated in Paragraph 5.1 or, if the Contractor's Fee
is stated as a fixed sum in that Paragraph, an amount which bears the same ratio
to that fixed-sum Fee as the Cost of the Work at the time of termination bears
to a reasonable estimate of the probable Cost of the Work upon its completion.
15.3.3 Subtract the aggregate of previous payments made by the Owner.
The Owner shall also pay the Contractor fair compensation, either by purchase or
rental at the election of the Owner, for any equipment owned by the Contractor
which the Owner elects to retain and which is not otherwise included in the Cost
of the Work under Subparagraph 15.3.1. To the extent that the Owner elects to
take legal assignment of subcontracts and purchase orders (including rental
agreements), the Contractor shall, as a condition of receiving the payments
referred to in this Article 15, execute and deliver all such papers and take all
such steps, including the legal assignment of such subcontracts and other
contractual rights of the Contractor, as the Owner may require for the purpose
of fully vesting in the Owner the rights and benefits of the Contractor under
such subcontracts or purchase orders.
15.4 The Work may be suspended by the Owner as provided in Article 14 of the
General Conditions; in such case, the Guaranteed Maximum Price, if any, shall be
increased as provided in Subparagraph 14.3.2 of the General Conditions except
that the term "cost of performance of the Contract" in that Subparagraph shall
be understood to mean the Cost of the Work and the term "profit" shall be
understood to mean the Contractor's Fee as described in Paragraphs 5.1 and 6.3
of this Agreement.
ARTICLE 16
ENUMERATION OF CONTRACT DOCUMENTS
16.1 The Contract Documents, except for Modifications issued after execution of
this Agreement, are enumerated as follows:
16.1.1 The Agreement is this executed Standard Form of Agreement Between Owner
and Contractor, AIA Document A111, 1987 Edition.
16.1.2 The General Conditions are the General Conditions of the Contract for
Construction, AIA Document A201, 1987 Edition.
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 . OWNER-CONTRACTOR AGREEMENT . TENTH EDITION . AIA(R) .
(c)1987 . THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006 A111-1987 11
<PAGE>
16.1.3 The Supplementary and other Conditions of the Contract are those
contained in the Project Manual dated November 1, 1994, and are as follows:
Document Title Pages
See Attachment "C"
16.1.4 The Specifications are those contained in the Project Manual dated as in
Paragraph 16.1.3, and are as follows:
(Either list the Specifications here or refer to an exhibit attached to this
Agreement.)
Section Title Pages
See Attachment "C"
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 . OWNER-CONTRACTOR AGREEMENT . TENTH EDITION . AIA(R) .
(c)1987 . THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006 A111-1987 12
<PAGE>
16.1.5 The Drawings are as follows, and are dated
unless a different date is shown below:
(Either list the Drawings here or refer to an exhibit attached to this
Agreement.)
Number Title Date
G1.0 - 1.3 Various 8-15-94
* A2.1 - 10.2 Various as listed on G1.0
* S1 - S8 Various 8-15-94
M1 - M3 Various 8-15-94
P1 - P3 Various 8-15-94
E1 - E7 Various 8-15-94
Sheet 1 & 2 of 2 Improvement Plan by H.D. Peters 11-94
* S.2,3,5,6,7,8 Various Delta 1, 10-25-94
Delta 2, 4-11-95
**A Series Various Delta 1, 10-25-94
16.1.6 The Addenda, if any, are as follows:
Number Date Pages
1 12-21-94 11
2 3-3-95 4
3 4-13-95 3
4 4-25-95 2
5 5-8-95 1
6 6-5-95 9
Portions of Addenda relating to bidding requirements are not part of the
Contract Documents unless the bidding requirements are also enumerated in this
Article 16.
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 . OWNER-CONTRACTOR AGREEMENT . TENTH EDITION . AIA(R) .
(c)1987 . THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006 A111-1987 13
<PAGE>
16.1.7 Other Documents, if any, forming part of the Contract Documents are as
follows:
(List here any additional documents which are intended to form part of the
Contract Documents. The General Conditions provide that bidding requirements
such as advertisement or invitation to bid, Instructions to Bidders, sample
forms and the Contractor's bid are not part of the Contract Documents unless
enumerated in this Agreement. They should be listed here only if intended to be
part of the Contract Documents.)
Addendum to Geotechnical investigation for:
First National Bank
1001 South Main St.
Salinas, CA
Dated 3-6-95 by Reynolds & Associates
This Agreement is entered into as of the day and year first written above and is
executed in at least three original copies of which one is to be delivered to
the Contractor, one to the Architect for use in the administration of the
Contract, and the remainder to the Owner.
OWNER CONTRACTOR
/s/ DENNIS A. DECIUS /s/ NORM PETERSON
- -------------------------------- ----------------------------------
(Signature) (Signature)
/s/ DENNIS A. DECIUS EVP & CFO Norm Peterson, Vice President
- -------------------------------- ----------------------------------
(Printed name and title) (Printed name and title)
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 . OWNER-CONTRACTOR AGREEMENT . TENTH EDITION . AIA(R) .
(c)1987 . THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006 A111-1987 14
<PAGE>
ATTACHMENT "A"
<TABLE>
DANIELS & HOUSE CONST. CO. JUN 23, 1995 8:52:00
BD525 ESTIMATE SUMMARY REPORT PAGE 1
ESTIMATE: 95023- FIRST NATIONAL BANK SALINAS *ESTIMATE IS NOT COMPLETE*
ALTERNATE:
MARK UPS--/
<CAPTION>
SUMMARY CODE SUB-CONTRACTOR LABOR MATERIAL SUBCONTRCT EQUIPMENT OTHERS TOTAL
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
01100 GENERAL CONDITIONS 41,864 1,000 4,850 3,330 28,201 79,245
**SUBTOTAL** 41,864 1,000 4,850 3,330 28,201 79,245
02050 DEMOLITION GALAGHER 9,742 -- 18,775 -- 4,375 32,892
02100 SITE PREPARATION -- -- 0 -- -- 0
02200 EARTHWORK -- -- 45,000 -- -- 45,000
02350 PILES AND CAISSONS INCL IN SOUZA -- -- 0 -- -- 0
02500 PAVING AND SURFACING -- -- 0 -- -- 0
02510 WALKS, CURBS & CONCRETE PAVI -- -- 0 -- -- 0
02800 SITE IMPROVEMENTS -- -- 750 -- -- 750
**SUBTOTAL** 9,742 0 64,525 0 4,375 78,642
03200 CONCRETE REINFORCEMENT INCL IN SOUZA -- -- 0 -- -- 0
03300 CAST IN PLACE CONCRETE SOUZA -- -- 114,969 -- -- 114,969
**SUBTOTAL** 0 0 114,969 0 0 114,969
04200 UNIT MASONRY ROSSI -- -- 147,003 -- -- 147,003
04400 STONE MASONRY NAPA VAL. CAST STONE -- -- 30,665 -- -- 30,665
**SUBTOTAL** 0 0 177,668 0 0 177,668
05100 STRUCTURAL METAL FRAMING JENNELL -- -- 69,370 -- -- 69,370
05500 METAL FABRICATIONS INCL IN JENNELL 1,014 490 0 -- 491 1,995
**SUBTOTAL** 1,014 490 69,370 0 491 71,365
06050 FASTENERS AND ADHESIVES -- 890 -- -- -- 890
06100 ROUGH CARPENTRY 29,617 24,748 -- -- 14,446 68,811
06115 SHEATHING 5,984 7,043 1,850 0 2,912 17,789
06200 FINISH CARPENTRY INCL IN KNAPP 9,973 0 102,039 0 5,077 117,085
06400 ARCHITECTURAL WOODWORK INCL IN KNAPP? 12,828 0 3,400 0 6,530 22,758
06600 PLASTIC FABRICATIONS -- -- 300 -- -- 300
**SUBTOTAL** 58,402 32,681 107,589 0 28,965 227,637
07100 WATERPROOFING INCL IN SCUDDER -- -- 0 -- -- 0
07200 INSULATION COAST INSULATION -- -- 10,207 -- -- 10,207
07400 PREFORMED ROOFING & CLADDING SAWYER & MCCARTY -- -- 0 -- -- 0
07500 MEMBRANE ROOFING SCUDDER ROOFING -- -- 19,600 -- -- 19,600
07600 FLASHING & SHEET METAL INCL IN SAWYER & MC CA -- -- 0 -- -- 0
07600 SKYLIGHTS INCL IN CCG -- -- 0 -- -- 0
07900 JOINT SEALERS -- -- 0 -- -- 0
**SUBTOTAL** 0 0 29,807 0 0 29,807
08100 METAL DOORS & FRAMES INCL IN CCG -- -- 0 -- -- 0
08200 WOOD & PLASTIC DOORS INCL IN KNAPP 3,953 -- 0 -- 2,012 5,965
06300 SPECIAL DOORS INCL IN KNAPP -- -- 0 -- -- 0
06400 ENTRANCES & STOREFRONTS CCG -- -- 111,114 -- -- 111,114
08600 WOOD & PLASTIC WINDOWS INCL IN CCG 1,514 -- 0 -- 771 2,285
08700 HARDWARE INCL IN CCG 1,952 -- 0 -- 994 2,946
08800 GLAZING INCL IN CCG -- -- 0 -- -- 0
**SUBTOTAL** 7,419 0 111,114 0 3,777 122,310
09200 LATH & PLASTER SAN BENITO -- -- 43,501 -- -- 43,501
09250 GYPSUM BOARD INCL IN SAN BENITO -- -- 0 -- -- 0
</TABLE>
<PAGE>
<TABLE>
DANIELS & HOUSE CONST. CO. JUN 23, 1995 8:52:00
BD525 ESTIMATE SUMMARY REPORT PAGE 2
ESTIMATE: 95023- FIRST NATIONAL BANK SALINAS *ESTIMATE IS NOT COMPLETE*
ALTERNATE:
MARK UPS --/
<CAPTION>
SUMMARY CODE SUB-CONTRACTOR LABOR MATERIAL SUBCONTRCT EQUIPMENT OTHERS TOTAL
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
09300 TITLE RINALDI -- -- 29,385 -- -- 29,385
09500 ACOUSTICAL TREATMENT CALIF ACOUSTICS -- -- 14,700 -- -- 14,700
09650 RESILIENT FLOORING INCL IN FLOOR CENTER -- -- 35,320 -- -- 35,320
09680 CARPET INCL IN FLOOR CENTER -- -- 0 -- -- 0
09800 SPECIAL COATINGS LENEVE -- -- 4,197 -- -- 4,197
09900 PAINTING LENEVE -- -- 12,265 -- -- 12,265
**SUBTOTAL** 0 0 139,368 0 0 139,368
10150 COMPARTMENTS & CUBICLES INCL IN CCG -- -- 0 -- -- 0
10200 LOUVERS & VENTS -- -- 0 -- -- 0
10400 IDENTIFYING DEVICES -- -- 350 -- -- 350
10520 FIRE PROTECTION SPECIALTIES -- -- 450 -- -- 450
10800 TOILET & BATH ACCESSORIES INCL IN CCG 281 -- 0 -- 143 424
**SUBTOTAL** 281 0 800 0 143 1,224
11450 RESIDENTIAL EQUIPMENT MC PHAILS -- -- 430 -- -- 430
**SUBTOTAL** 0 0 430 0 0 430
12670 RUGS & MATS DICK JOYCE -- -- 600 -- -- 600
**SUBTOTAL** 0 0 600 0 0 600
15300 FIRE PROTECTION BAY FIRE -- -- 29,950 -- -- 29,950
15400 PLUMBING SAWYER & MC CARTY -- -- 93,625 -- -- 93,625
15500 H.V.A.C INCL IN SAWYER & MC CA -- -- 0 -- -- 0
**SUBTOTAL** 0 0 123,575 0 0 123,575
1600 ELECTRICAL SEIDEL -- -- 102,124 -- -- 102,124
**SUBTOTAL** 0 0 102,124 0 0 102,124
</TABLE>
<PAGE>
<TABLE>
DANIELS & HOUSE CONST. CO. JUN 23, 1995 8:52:00
BD525 ESTIMATE SUMMARY REPORT PAGE 3
ESTIMATE: 95023- FIRST NATIONAL BANK SALINAS *ESTIMATE IS NOT COMPLETE*
ALTERNATE:
MARK UPS--/
<CAPTION>
LABOR MATERIAL SUBCONTRCT EQUIPMENT BURDEN INDIRECTS TOTAL
--------------------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TOTALS 118,722 34,171 1,046,789 3,330 58,362 7,590 1,268,964
MARK UPS
MARKED UP TTLS 118,722 34,171 1,046,789 3,330 58,362 7,590 1,268,964
HOURS 5,037 1 5,037 4
- --------------------------------------------------------------------------------------------------------------
SUBTOTAL 1,268,964
</TABLE>
<TABLE>
<CAPTION>
ADD ON LINE/DESCRIPTION JC PHASE JC COST TP BASIS SOURCE METHOD B/A CONSTANT AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
402 SMALL TOOLS PER LABOR DOLLARS 01525-900- EQUIPMENT COST TYPE LABOR PERCENT B 2.50% 2,968
403 ROUGH HARDWARE, CARPENTRY 01525-950- MATERIAL COST TYPE MATERIAL PERCENT B 5.00% 1,709
- -----------------------------------------------------------------------------------------------------------------------------------
REGULAR ADD-ONS 4,677
GRAND TOTAL 1,273,641
6.50% GRAND TOTAL MARK UP 82,787
1,356,428
ADD ON LINE/DESCRIPTION JC PHASE JC COST TP BASIS SOURCE METHOD B/A CONSTANT AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
302 LIABILITY INSURANCE % GRAND TOTAL 00650-100- INDIRECTS GRAND TTL PERCENT A 0.78% 10,580
303 BUILDERS RISK % GRAND TOTAL 00650-140- INDIRECTS GRAND TTL PERCENT B 0.28% 3,596
- -----------------------------------------------------------------------------------------------------------------------------------
AFTER TOTAL ADD-ONS 14,176
----------
BID TOTAL*************** 1,370,604
--------ESTIMATE CHECKS--------
TOTAL MARK UPS TO NET LABOR: 69.73%
TOTAL MARK UPS TO NET EQUIPMENT: 2486.10%
NET LABOR TO BID TOTAL: 8.66%
TOTAL MARK UPS TO BID TOTAL: 6.04%
USER NUMERIC 1: 0
USER NUMERIC 2: 0
</TABLE>
<PAGE>
<TABLE>
DANIELS & HOUSE CONST. CO. JUN 23, 1995 8:52:00
BD525 ESTIMATE SUMMARY REPORT PAGE 4
ESTIMATE: 95023- FIRST NATIONAL BANK SALINAS ESTIMATE IS COMPLETE
ALTERNATE: 1 SITE WORK
MARK UPS--/
<CAPTION>
SUMMARY CODE SUB-CONTRACTOR LABOR MATERIAL SUBCONTRCT EQUIPMENT OTHERS TOTAL
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
02800 SITE IMPROVEMENTS 1,089 372 -- -- 493 1,954
**SUBTOTAL** 1,089 372 0 0 493 1,954
03100 CONCRETE FORMWORK -- -- -- -- -- 0
**SUBTOTAL** 0 0 0 0 0 0
05500 METAL FABRICATIONS 44 24 -- -- 21 89
**SUBTOTAL** 44 24 0 0 21 89
06100 ROUGH CARPENTRY 1,472 1,007 -- -- 709 3,188
06115 SHEATHING 238 248 -- -- 115 601
06200 FINISH CARPENTRY 3,373 2,345 -- -- 1,717 7,435
**SUBTOTAL** 5,083 3,600 0 0 2,541 11,224
00100 METAL DOORS & FRAMES 37 -- -- -- 19 56
08700 HARDWARE 49 -- -- -- 25 74
**SUBTOTAL** 86 0 0 0 44 130
10200 LOUVERS & VENTS 21 -- -- -- 10 31
**SUBTOTAL** 21 0 0 0 10 31
</TABLE>
<PAGE>
<TABLE>
DANIELS & HOUSE CONST. CO. JUN 23, 1995 8:52:00
BD525 ESTIMATE SUMMARY REPORT PAGE 5
ESTIMATE: 95023- FIRST NATIONAL BANK SALINAS ESTIMATE IS COMPLETE
ALTERNATE: 1 SITE WORK
MARK UPS--/
<CAPTION>
LABOR MATERIAL SUBCONTRCT EQUIPMENT BURDEN INDIRECTS TOTAL
--------------------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TOTAL 6,323 3,996 0 0 3,109 0 13,428
MARK UPS
MARKED UP TTLS 6,323 3,996 0 0 3,109 0 13,428
HOURS 266 0 266 0
- --------------------------------------------------------------------------------------------------------------
SUBTOTAL 13,428
</TABLE>
<TABLE>
<CAPTION>
ADD ON LINE/DESCRIPTION JC PHASE JC COST TP BASIS SOURCE METHOD B/A CONSTANT AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
402 SMALL TOOLS PER LABOR DOLLARS 01525-900- EQUIPMENT COST TYPE LABOR PERCENT B 2.50% 158
403 ROUGH HARDWARE, CARPENTRY 01525-950- MATERIAL COST TYPE MATERIAL PERCENT B 1.00% 40
1004 SALES TAX % OF MATERIAL COST 01060-220 INDIRECTS COST TYPE MATERIAL PERCENT B 7.50% 300
- -----------------------------------------------------------------------------------------------------------------------------------
REGULAR ADD-ONS 498
GRAND TOTAL 13,926
6.00% GRAND TOTAL MARK UP 836
14,762
ADD ON LINE/DESCRIPTION JC PHASE JC COST TP BASIS SOURCE METHOD B/A CONSTANT AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
302 LIABILITY INSURANCE % GRAND TOTAL 00650-100- INDIRECTS GRAND TTL PERCENT A 0.78% 115
303 BUILDERS RISK % GRAND TOTAL 00650-140- INDIRECTS GRAND TTL PERCENT B 0.28% 39
5002 BUILDING PERMIT BY TABLE METHOD 01060-100- INDIRECTS GRAND TTL TABLE A 9000 26
- -----------------------------------------------------------------------------------------------------------------------------------
AFTER TOTAL ADD-ONS 180
------
BID TOTAL ************* 14,942
--------ESTIMATE CHECKS-----------
TOTAL MARK UPS TO NET LABOR: 13.22%
NET LABOR TO BID TOTAL: 42.32%
TOTAL MARK UPS TO BID TOTAL: 5.59%
USER NUMERIC 1: 0
USER NUMERIC 2: 0
</TABLE>
<PAGE>
<TABLE>
DANIELS & HOUSE CONST. CO. JUN 23, 1995 8:52:00
BD525 ESTIMATE SUMMARY REPORT PAGE 6
ESTIMATE: 95023- FIRST NATIONAL BANK SALINAS ESITMATE IS COMPLETE
ALTERNATE: 3 CONC./FRAME @ EXISTING
MARK UPS--/
<CAPTION>
SUMMARY CODE SUB-CONTRACTOR LABOR MATERIAL SUBCONTRCT EQUIPMENT OTHERS TOTAL
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
06100 ROUGH CARPENTRY 4,644 3,114 -- -- 2,236 9,994
06200 FINISH CARPENTRY 146 -- -- -- 75 221
**SUBTOTAL** 4,790 3,114 0 0 2,311 10,215
</TABLE>
<PAGE>
<TABLE>
DANIELS & HOUSE CONST. CO. JUN 23, 1995 8:52:00
BD525 ESTIMATE SUMMARY REPORT PAGE 7
ESTIMATE: 95023- FIRST NATIONAL BANK SALINAS ESTIMATE IS COMPLETE
ALTERNATE: 3 CONC./FRAME @ EXISTING
MARK UPS--/
<CAPTION>
LABOR MATERIAL SUBCONTRCT EQUIPMENT BURDEN INDIRECTS TOTAL
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TOTALS 4,790 3,114 0 0 2,311 0 10,215
MARK UPS
MARKED UP TTLS 4,790 3,114 0 0 2,311 0 10,215
HOURS 207 0 207 0
- -----------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 10,215
</TABLE>
<TABLE>
<CAPTION>
ADD ON LINE/DESCRIPTION JC PHASE JC COST TP BASIS SOURCE METHOD B/A CONSTANT AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
402 SMALL TOOLS PER LABOR DOLLARS 01525-900- EQUIPMENT COST TYPE LABOR PERCENT B 2.50% 120
403 ROUGH HARDWARE, CARPENTRY 01525-950- MATERIAL COST TYPE MATERIAL PERCENT B 1.00% 31
1004 SALES TAX % OF MATERIAL COST 01060-220- INDIRECTS COST TYPE MATERIAL PERCENT B 7.50% 234
- -----------------------------------------------------------------------------------------------------------------------------------
REGULAR ADD-ONS 385
GRAND TOTAL 10,600
6.00% GRAND TOTAL MARK UP 636
11,236
ADD ON LINE/DESCRIPTION JC PHASE JC COST TP BASIS SOURCE METHOD B/A CONSTANT AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
302 LIABILITY INSURANCE % GRAND TOTAL 00650-100- INDIRECTS GRAND TTL PERCENT A 0.78% 88
303 BUILDERS RISK % GRAND TOTAL 00650-140- INDIRECTS GRAND TTL PERCENT B 0.28% 30
5002 BUILDING PERMIT BY TABLE METHOD 01060-100- INDIRECTS GRAND TTL TABLE A 9000 20
- -----------------------------------------------------------------------------------------------------------------------------------
AFTER TOTAL ADD-ONS 138
------
BID TOTAL ************* 11,374
-------ESTIMATE CHECKS---------
TOTAL MARK UPS TO NET LABOR: 13.28%
NET LABOR TO BID TOTAL: 42.11%
TOTAL MARK UPS TO BID TOTAL: 5.59%
USER NUMERIC 1: 0
USER NUMERIC 2: 0
</TABLE>
<PAGE>
CONSTRUCTION CONTRACT - ATTACHMENT "B"
FIRST NATIONAL BANK OF CENTRAL CALIFORNIA
1001 SOUTH MAIN STREET
SALINAS, CA 93901
- --------------------------------------------------------------------------------
PROVISIONS OF THE G.M.P.
It is understood between the Owner, First National Bank of Central California,
and the General Contractor, Daniels & House Construction Co., that the form of
this Contract is that of a Guaranteed Maximum Price (G.M.P.). No request by the
contractor for an increase to the G.M.P. shall be considered by the Owner unless
occasioned by substantiated increase in the Scope of the Work of this Contract,
the Contractor shall be required to actively participate in a value engineering
effort during the course of the Construction Phase and, in consultation with the
Architect, he shall be expected to offer proposals of possible cost savings to
the Owner for consideration. Any savings against the G.M.P. so developed,
agreed, and formalized by Change Order shall accrue 75% to the Owner and 25% to
the General Contractor.
COST SAVINGS REVERTING TO THE OWNER SHALL BE CALCULATED AS FOLLOWS:
INITIAL CONTRACT AMOUNT $1,396,920,00
ADJUSTMENTS BY CHANGE ORDER XXXXXXX
-------------
NEW CONTRACT AMOUNT $X,XXX,XXX.XX
LESS: CONTRACTOR'S FEE ADJUSTED FOR C.O. (XXXXXX)
-------------
CONTRACT COST $X,XXX,XXX.XX
LESS: ACTUAL COST AS CALCULATED IN (XXXXXX)
-------------
ACCORDANCED WITH SECTION 8.
SAVINGS $ XXX
<PAGE>
ATTACHMENT "C"
INDEX
LIST OF DIVISIONS
AND
SECTIONS
The separation of the specifications into the various sections as listed below
is only to facilitate the use of this document. Said separation shall not oblige
the Owner to establish the limits of any agreements subordinate to the contract
for the provision of all property improvements described herein.
PAGES
-----
INDEX 3
INSTRUCTIONS TO BIDDERS (AIA A701-1987) 5
SUPPLEMENTARY INSTRUCTIONS 1
BID FORM 3
STANDARD FORM OF AGREEMENT BETWEEN OWNER AND
CONTRACTOR (AIA A101-1987) 8
BID BOND 1
PERFORMANCE BOND 2
PAYMENT BOND 2
GENERAL CONDITIONS (AIA A201-1987) 24
SUPPLEMENTARY CONDITIONS 5
INDEX OF DRAWINGS 2
SECTION TITLE
- ------- -----
DIVISION 1 - GENERAL REQUIREMENTS
01010 SUMMARY OR WORK 1
01027 APPLICATIONS FOR PAYMENT 4
01040 PROJECT COORDINATION 2
01045 CUTTING AND PATCHING 4
01050 FIELD ENGINEERING 3
01095 DEFINITIONS AND STANDARDS 16
01300 SUBMITTALS 8
01400 QUALITY CONTROL SERVICES 3
01500 TEMPORARY FACILITIES 5
01600 MATERIALS AND EQUIPMENT 4
01631 PRODUCTS SUBSTITUTIONS 4
01700 PROJECT CLOSEOUT 5
01740 WARRANTIES AND BONDS 3
DIVISION 2 - SITE WORK
02060 BUILDING DEMOLITION 2
02070 SELECTIVE DEMOLITION 5
02110 SITE CLEARING 4
02200 EARTHWORK 33
02282 TERMITE CONTROL 3
02511 HOT-MIXED ASPHALT PAVING 6
02520 PORTLAND CEMENT CONCRETE PAVING 8
02830 CHAIN LINK FENCING AND GATES 2
<PAGE>
SECTION TITLE PAGES
- ------- ----- -----
DIVISION 3 - CONCRETE
03300 CAST-IN PLACE CONCRETE 11
DIVISION 4 - MASONRY
04200 UNIT MASONRY 9
04405 DIMENSION STONE 6
DIVISION 5 - METALS
05120 STRUCTURAL STEEL 6
05500 METAL FABRICATIONS 9
05521 PIPE AND TUBE RAILINGS 8
DIVISION 6 - WOOD AND PLASTICS
06100 ROUGH CARPENTRY 10
06185 STRUCTURAL GLUED LAMINATED TIMBER 4
06200 FINISH CARPENTRY 5
06402 INTERIOR ARCHITECTURAL WOODWORK 7
DIVISION 7 - THERMAL AND MOISTURE PROTECTION
07110 SHEET MEMBRANE WATERPROOFING 3
07210 BUILDING INSULATION 4
07410 MANUFACTURED ROOF AND WALL PANELS 4
07510 BUILT-UP ASPHALT ROOFING SYSTEM 11
07600 FLASHING AND SHEET METAL 5
07820 INSULATED SKYLIGHT SYSTEMS 7
07901 JOINT SEALERS 6
DIVISION 8 - DOORS AND WINDOWS
08111 STANDARD STEEL DOORS AND FRAMES 5
08211 FLUSH WOOD DOORS 5
08212 STILE AND RAIL WOOD DOORS 3
08312 WOOD SLIDING GLASS DOORS 6
08410 ALUMINUM ENTRANCES AND STOREFRONTS 7
08610 WOOD WINDOWS 6
08710 DOOR HARDWARE 12
08800 GLAZING 10
DIVISION 9 - FINISHES
09200 LATH AND PLASTER 8
09255 GYPSUM BOARD ASSEMBLIES 9
09300 TITLE 7
09511 ACOUSTICAL TILE CEILINGS 3
09666 SHEET VINYL FLOOR COVERINGS 5
09678 RESILIENT WALL BASE AND ACCESSORIES 3
09680 CARPETING 6
09800 SPECIAL COATINGS 4
09900 PAINTING 10
<PAGE>
SECTION TITLE PAGES
- ------- ----- -----
DIVISION 10 - SPECIALTIES
10155 TOILET COMPARTMENTS 4
10200 LOUVERS AND VENTS 3
10425 SIGNS 5
10522 FIRE EXTINGUISHERS, CABINETS, AND 3
ACCESSORIES
10800 TOILET AND BATH ACCESSORIES 4
DIVISION 11 - EQUIPMENT
11450 RESIDENTIAL EQUIPMENT 2
DIVISION 12 - FURNISHINGS
12690 FLOOR MATS AND FRAMES 3
DIVISION 13 AND 14 (OMITTED)
DIVISION 15 - MECHANICAL
15050 MECHANICAL GENERAL 12
15060 GENERAL ELECTRICAL REQUIREMENTS 2
15400 PLUMBING 4
15500 FIRE PROTECTION SYSTEM 4
15600 HEATING, VENTILATING AND 5
AIR CONDITIONING
DIVISION 16 - ELECTRICAL
16100 ELECTRICAL GENERAL 10
16200 MATERIALS 6
16300 INSTALLATION METHODS 6
16600 ELECTRICAL SYSTEMS 2
GREAT-WEST LIFE
CONTRACTS
<PAGE>
CALIFORNIA GUARANTY ASSOCIATION ACT - SUMMARY
CALIFORNIA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION ACT SUMMARY
DOCUMENT AND DISCLAIMER
Residents of California who purchase life and health insurance and annuities
should know that the insurance companies licensed in this state to write this
type of insurance are members of the California Life and Health Insurance
Guaranty Association (CLHIGA). The purpose of this Association is to assure that
policyholders will be protected, within limits, in the unlikely event that a
member insurer becomes financially unable to meet its obligations. If this
should happen, the Guaranty Association will assess its other member insurance
companies for the money to pay the claims of insured persons who live in this
state and, in some cases, to keep coverage in force. The valuable extra
protection provided by these insurers through the Guaranty Association is not
unlimited, however, as noted below, and is not a substitute for consumers' care
in selecting insurers.
- --------------------------------------------------------------------------------
The California Life and Health Insurance Guaranty Association may not provide
coverage for this policy. If coverage is provided, it may be subject to
substantial limitations or exclusions, and require continued residency in
California. You should not rely on coverage by the California Health Insurance
Guaranty Association in selecting an insurance company or in selecting an
insurance policy.
Coverage is NOT provided for your policy or any portion of it that is not
guaranteed by the insurer or for which you have assumed the risk, such as a
variable contract sold by prospectus.
Insurance companies or their agents are required by law to give or send you this
notice. However, insurance companies and their agents are prohibited by law from
using the existence of the Guaranty Association to induce you to purchase any
kind of insurance policy.
Policyholders with additional questions should first contact their insurer or
agent, and may then contact:
Executive Director
California Life and Health Insurance Guaranty Association
P.O. Box 70069
Los Angeles, CA 90070
Allegra Willison, Staff Counsel
California Department of Insurance
45 Fremont Street, 24th Floor
San Francisco, California 94105
- --------------------------------------------------------------------------------
Page 1
<PAGE>
CALIFORNIA GUARANTY ASSOCIATION ACT - SUMMARY (Continued)
The state law that provides for this safety-net coverage is called the
California Life and Health Insurance Guaranty Association Act. Below is a brief
summary of this law's coverages, exclusions and limits. This summary does not
cover all provisions of the law; nor does it in any way change anyone's rights
or obligations under the act or the right or obligations of the Association.
COVERAGE
Generall, individuals will be protected by the California Life and Health
Insurance Guaranty Association if they live in this state and hold a life or
health insurance contract, or an annuity, or if they are insured under a group
insurance contract, issued by a member insurer. The beneficiaries, payees or
assignees of insured persons are protected as well, even if they live in another
state.
EXCLUSIONS FROM COVERAGE
However, persons holding such policies are not protected by this Guaranty
Association if:
* Their insurer was not authorized to do business in this state when it
issued the policy or contract.
* Their policy was issued by a health care service plan (HMO, Blue
Cross, Blue Shield), a charitable organization, a fraternal benefit
society, a mandatory state pooling plan, a mutual assessment company,
an insurance exchange, or a grants and annuities society.
* They are eligible for protection under the laws of another state. This
may occur when the insolvent insurer was incorporated in another state
whose guaranty association protects insureds who live outside that
state.
The Guaranty Association also does not provide coverage for:
* Unallocated annuity contracts; that is, contracts which are not issued
to and owned by an individual and which guarantee rights to group
contract holders, not individuals.
* Employer and association plans, to the extent they are self-funded or
uninsured.
* Any policy or portion of a policy which is not guaranteed by the
insurer or for which the individual has assumed the risk, such as a
variable contract sold by prospectus.
* Any policy of reinsurance unless an assumption certificate was issued.
* Interest rate yields that exceed an average rate.
* Any portion of a contract that provides dividends or experience rating
credits.
Page 2
<PAGE>
CALIFORNIA GUARANTY ASSOCIATION ACT - SUMMARY (Continued)
LIMITS ON AMOUNTS OF COVERAGE
The Act limits the Association to pay benefits as follows:
* for Life and Annuity Benefits:
-- 80% of what the life insurance company would owe under a life
policy or annuity contract up to:
* $100,000 in cash surrender values;
* $100,000 in present value of annuities; or
* $250,000 in life insurance death benefits.
-- a maximum of $250,000 for any one insured life no matter how many
policies and contracts there were with the same company, even if the
policies provided different types of coverages.
* for Health Benefits, a maximum of $200,000 of the contractual
obligations that the health insurance company would owe were it not
insolvent. the maximum may increase or decrease annually based upon
changes in the health care cost component of the consumer price index.
PREMIUM SURCHARGE
Member insurers are required to recoup assessments paid to the Association by
way of a surcharge on premiums charged for insurance policies to which the Act
applies.
Page 3
<PAGE>
CALIFORNIA GUARANTY ASSOCIATION ACT - NOTICE OF NON-COVERAGE
any benefits self-funded by an Employer are NOT covered by
the California Life and Health Insurance Guaranty Association.
The following are not covered by the California Life and Health Insurance
Guaranty Association:
* Unallocated annuity contracts; that is, contracts which are not issued
to and owned by an individual and which guarantee rights to group
contract holders, not individuals.
* Employer and association plans, to the extent they are self-funded or
uninsured.
* Any policy or portion of a policy which is not guaranteed by the
insurer or for which the insured has assumed the risk, such as a
variable contract sold by prospectus.
* Any policy of reinsurance unless an assumption certificate was issued.
* Interest rate yields that exceed an average rate.
* Any portion of a contract that provides dividends or experience rating
credits.
A determination as to whether an insurance contract is covered under the
Guaranty Association or whether an annuity contract is allocated or unallocated
must be initially made by the insurer based on its knowledge of the specific
contract offered.
Also, you are not protected by this Association if:
* The insurer was not authorized to do business in this state when it
issued the policy or contract.
* The policy is issued by a health care service plan (HMO, Blue Cross,
Blue Shield), a charitable organization, a fraternal benefit society,
a mandatory state pooling plan, a mutual assessment company, an
insurance exchange, or a grants and annuities society.
* You are eligible for protection under the laws of another state. this
may occur when the insolvent insurer was incorporated in another state
whose guaranty association protects insureds who live outside that
state.
Insurance companies or their agents are required by law to give or send you this
notice. however, insurance companies and their agents are prohibited by law from
using the existence of the Guaranty Association to induce you to purchase any
kind of insurance policy.
If you have questions concerning this Notice, you may contact:
EXECUTIVE DIRECTOR
CALIFORNIA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION
P. 0. BOX 70069
LOS ANGELES, CA 90070
Page 4
<PAGE>
CALIFORNIA GUARANTY ASSOCIATION ACT - NOTICE OF NON-COVERAGE
(Continued)
Allegra Willison, Staff Counsel
California Department of Insurance
45 Fremont Street, 24th Floor
San Francisco, California 94105
Questions as to specific policies or annuities should be directed to the
insurance company offering the product.
Page 5
<PAGE>
Attached to and forming part of the Services Contract between
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
and
PACIFIC CAPITAL BANCORP
The Services Contract which was effective on JANUARY 1,1995 and is dated JANUARY
30, 1995 is hereby terminated as of DECEMBER 31, 1994 and replaced by the
attached Services Contract which is effective JANUARY 1, 1995.
Dated at Englewood, Colorado this 13th day of April, 1995.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
/s/ D.C. Lennox /s/ William McCallum
- ------------------------------ -------------------------------
Senior Vice-President, General President
Counsel and Secretary
/s/ Debe Hickman
------------------------
For the Actuary
The terms of this Contract are accepted by PACIFIC CAPITAL BANCORP this
day of , 19 .
BY /s/ Naomi Walling
-----------------------------------
TITLE VP Human Resources
---------------------------------
Page 1
<PAGE>
SERVICES CONTRACT
This CONTRACT entered into on JANUARY 1, 1995 (hereinafter referred to as the
Effective Date)
Between
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY,
hereinafter referred to as "Great-West"
-and-
PACIFIC CAPITAL BANCORP
hereinafter referred to as "the Contractholder."
The Contractholder has established a Health Care Payment Plan or Health Care
Payment Plan and Trust for the benefit of its Employees and Dependents
(hereinafter referred to as the "Plan").
The Plan is an Employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974 and the undersigned fiduciary
(hereinafter referred to as the "Fiduciary") of the Plan hereby retains
Great-West to provide services for the Plan in accordance with the following
terms and conditions contained herein.
Page 1
<PAGE>
ARTICLE 1 - DEFINITIONS
In this contract unless otherwise specifically provided:
(1) "Dependent" and "Employee" mean Dependent and Employee as defined by the
Plan;
(2) "Anniversary Date", "Contract Months" and "Contract Years" will be
calculated from JANUARY 1, 1995; JANUARY 1 of any year will be known as the
Anniversary Date;
(3) "Contract Year" means that period of 12 consecutive months which begins on
the ANNIVERSARY DATE.
(4) "Coverages" provided under the Plan and covered by this contract are:
Medical Coverage
Dentalcare Coverage
Visioncare Coverage
Prescription Drug Coverage
ARTICLE 2- ADMINISTRATIVE SERVICES AND FEES
Great-West agrees to perform such services involving the performance of
non-discretionary duties as are specified in the Schedule of Services marked
Schedule "A", which is attached hereto and forms part of this contract in
accordance with the terms and conditions of this contract.
To facilitate the performance of such duties:
(1) the Contractholder has advised its bank that Great-West is authorized to
demand moneys payable by the Contractholder for checks issued for benefit
payments made by Great-West under the Plan.
(2) Great-West will initiate transfers from the Contractholder's designated
bank account with the Transfer Frequency shown in Schedule C. The
Contractholder agrees to maintain funds in such account both before and
after termination of this Services Contract which are adequate to cover
checks issued for benefit payments made by Great-West under the Plan and
the Deficit Recoveries defined in the Article entitled Deficit Recovery of
the Stop-Loss Contract, if any, issued to the Contractholder by Great-West.
Page 2
<PAGE>
ARTICLE 2 - ADMINISTRATIVE SERVICES AND FEES (Continued)
The Contractholder and Fiduciary agree to pay Great-West the fees specified in
the Schedule of Fees marked Schedule "B" which is attached hereto and forms part
of this contract as reasonable compensation for services necessary for the
Plan's operation. The Contractholder and Fiduciary will be jointly and severally
liable for the payment of such fees. Such fees will be paid as described in the
attached Schedule B. A grace period of 31 days will be granted for each payment
of fees falling due after the first payment during which period this contract
will remain in force. If any payment is not made within the days of grace, this
contract will automatically terminate at the end of the grace period. No written
notice of such automatic termination is required. If this contract terminates
for any reason, the Contractholder and Fiduciary will be liable for all payments
due and unpaid, including a pro-rata payment for any time this contract is in
force during the grace period.
TERMINAL FEE
Subject to all provisions of this Article 2, a Terminal Fee is due and payable
on the date of termination of this contract. The method of determining this
Terminal Fee is shown in the attached Schedule B, SCHEDULE OF FEES.
ARTICLE 3- FURNISHING OF INFORMATION; ACCESS TO RECORDS
The Contractholder and Fiduciary will furnish Great-West, on request, with
correct and complete information required by Great-West to provide the services
which Great-West has agreed to perform under this contract, including, but not
limited to, a copy of the Plan `and any amendments thereto. The information will
be furnished at the times and in such manner as Great-West may request.
Great-West will assume that all such information is complete and accurate and
will be under no duty to question the accuracy of such information. Great-West,
at its discretion, may charge additional fees for its services where information
is not furnished, is incomplete or inaccurate or is not furnished at the time or
in the manner as requested. The Contractholder agrees to give Great-West the
right to inspect and copy the records of the Contractholder which are pertinent
to the operation of the Plan. Such right will continue for the 5 years
immediately following termination of this contract.
All communications sent to the Contractholder or Fiduciary from Great-West will
be transmitted to the Contractholder at the address appearing below or to such
other person and address as may from time to time be designated by the
Contractholder in writing. Notice transmitted to the Contractholder as aforesaid
will be considered received by the Contractholder and Fiduciary. Notice sent to
Great-West will be directed to the address shown below or to such other address
as Great-West may designate in writing from time to time.
Page 3
<PAGE>
ARTICLE 4 - AUTHORITY TO CONTROL AND MANAGE THE PLAN
The Contractholder and Fiduciary acknowledge that they have authority to control
and manage the operation of the Plan. It is expressly agreed that under no
circumstances will Great-West be designated as plan administrator or a fiduciary
of the Plan. Nothing herein will be deemed to constitute Great-West a party to
the Plan or to confer upon Great-West any authority or control respecting
management of the Plan, authority or responsibility in connection with
administration of the Plan or responsibility for the terms or validity of the
Plan. Great-West will not be responsible for any tax liability which may be
imposed upon the Contractholder, any fiduciary or any Employee or Dependent
under the Plan. The Contractholder and Fiduciary further agree that nothing
herein will be deemed to impose upon Great-West any obligation to any Employee
or Dependent under the Plan.
ARTICLE 5 - INDEMNIFICATION AND LIMITATION OF LIABILITY
The Contractholder and Fiduciary will indemnify, protect and hold Great-West
harmless from any loss, liability, claim or expense (including attorneys' fees,
court costs and expenses of litigation) arising out of any act or omission of
the Contractholder or Fiduciary in connection with the Plan. The Contractholder
and Fiduciary agree to indemnify Great-West and hold Great-West harmless against
any tax relating to this contract, including any accrued interest and penalties
levied on such tax, but excluding any tax based upon Great-West's net income.
The terms of this provision will survive the termination of this contract.
Great-West will not be liable for any act or failure to act, in the exercise of
its powers and performance of its duties hereunder, which act or failure to act
is performed by Great-West in good faith.
Great-West agrees to indemnify the Contractholder and hold the Contractholder
harmless against any and all loss, damage, and expense with respect to this
contract resulting from or arising out of the dishonest, fraudulent or criminal
acts of Great-West's employees, acting alone or in collusion with others.
ARTICLE 6 - CONTRACT TERMINATION
This contract may be terminated at any time by either the Contractholder and
Fiduciary or Great-West, provided written notice of such termination is given at
least 31 days in advance. In addition, this contract:
(1) may terminate immediately upon termination of the Stop-Loss Contract, if
any, between Great-West and the Contractholder, or
(2) may terminate upon amendment of the Plan in a manner deemed unsatisfactory
by Great-West, provided that Great-West gives 31 days written notice of
such termination to the Contractholder; or
Page 4
<PAGE>
ARTICLE 6 - CONTRACT TERMINATION (Continued)
(3) will terminate immediately upon failure of the Contractholder to comply
with any term or condition of this contract, such as but not limited to
failure to:
(A) pay the Administrative Fees as specified in the Article of this
contract entitled Administrative Services and Fees; or
(B) fund the bank account(s) (referred to in the Article of this
contract entitled Administrative Services and Fees) established to
handle payment of the benefits provided under the Plan.
If prior to the date of termination of this contract, the Contractholder had
elected Terminal Protection under the Stop-Loss Contract issued to the
Contractholder by Great-West and such Terminal Protection is in effect on the
date this contract terminates, then Great-West will continue to process claims
after the date of termination of this contract.
ARTICLE 7 - AMENDMENT OF SCHEDULE OF FEES
Unless otherwise indicated in the Schedule of Fees, the fees shown are for the
first Contract Year.
Great-West has the right to revise the Schedule of Fees:
(1) when the Contractholder's Plan is amended; and
(2) on or after the first anniversary of the Effective Date of this contract
but not more than once in any 12 month period, except as provided in (4)
below; and
(3) when the services described in the Schedule of Services are changed; and
(4) at any time during the first or subsequent Contract Years:
(A) if the Coverages under the Contractholder's Plan are changed;
(B) if the provisions of the Contractholder's Plan have to be changed
because of a change in law; or
(C) if there is a change in the number of Employees and/or Dependents
covered under the Contractholder's Plan for any Coverages provided
under the Contractholder's Plan which equals or exceeds:
(a) 10% in any Contract Month when compared to the prior Contract
Month; or
(b) 20% at any time within a Contract Year. In this case, the change
in the number of Employees and/or Dependents covered will be
determined by comparing the number of Employees and/or
Dependents covered for any Coverages under the Contractholders
Plan at the beginning of the first Contract Month of the
Contract Year in question with the number of Employees and/or
Dependents covered for any Coverages under the Contractholder's
Plan at the beginning of any subsequent Contract Month. The
Contractholder agrees to make available to Great-West all
information necessary to determine such change. If the change in
Page 5
<PAGE>
ARTICLE 7 - AMENDMENT OF SCHEDULE OF FEES (Continued)
the number of Employees and/or Dependents covered under the Plan
is such that a change in fees results, then Great-West will
advise the Contractholder of its intention to change the fees.
(D) upon addition or deletion of coverage for subsidiary or
affiliated companies or corporate divisions.
The effective date of the change in fees will be the effective date of the event
in (A), (B), (C) or (D) above that causes such change.
ARTICLE 8 - MISCELLANEOUS
(1) An Employee or Dependent under age 65 whose Medical Coverage under the Plan
ends due to:
(A) termination of employment;
(B) termination of employment in an eligible class;
(C) change in marital status (in the case of a Dependent);
(D) attainment of the limiting age specified in the Plan (in the case of
a Dependent child); or
(E) death of the Employee (in the case of a Dependent); OR
(F) termination of the Plan but only if the Plan is not replaced by
similar group medical coverage within 30 days and such Employee or
Dependent had been covered under the Plan for at least the 90 day
period prior to the date the Plan terminated;
will be entitled to purchase medical insurance from Great-West. This
medical insurance is referred to as Health Conversion Coverage. If such
Employee has Dependents who are also covered under the Plan, the Health
Conversion Coverage may also cover such Dependents.
NOTE: Employees and/or their eligible Dependents who are eligible for
the COBRA health continuation coverage provided under the Plan, will
only be able to apply for Health Conversion Coverage at the end of the
applicable 18 month or 36 month maximum period of continuation allowed
under COBRA. This will be the case unless:
(A) the Plan terminates in its entirety and isn't replaced by similar
group medical coverage within 30 days; or
(B) the Employee becomes ineligible for disability benefits under the
Social Security Act after 18 months but before the end of the 29
month maximum period of continuation allowed under COBRA if the
Employee is eligible for disability benefits under the Social
Security Act.
Issuance of the Health Conversion Coverage will be subject to all of the
following conditions:
Page 6
<PAGE>
ARTICLE 8 - MISCELLANEOUS (Continued)
(A) No evidence of insurability is required.
(B) The Employee or Dependent is not eligible for Medicare.
(C) The Employee or Dependent is not covered by or eligible for similar
benefits, as a result of termination of his Medical Coverage. Under
any policy, contract, or other arrangement for group insurance
benefits or services.
(D) Written application and the first premium for the Health Conversion
Coverage must be delivered or mailed to Great-West at its Executive
Offices in Englewood, Colorado within 31 days after the date on
which the covered Employee or Dependent's Medical Coverage under the
Plan terminates.
(E) The Health Conversion Coverage provides coverage customarily issued
by Great-West at the then current rates. Benefits provided under the
Health Conversion Coverage may not be the same as those provided by
the Plan.
(F) The Health Conversion Coverage is effective on the next day after
the date on which coverage under the Plan ceases.
(2) Great-West will have the sole right to make claims under the Subrogation and
Right of Recovery Provision contained in the Plan. In its sole discretion
Great-West may litigate, negotiate, settle, compromise, release or waive any
such claim. The Contractholder hereby assigns to Great-West all of its
rights to make, litigate, negotiate, settle, compromise, release or waive
any such claim.
All money recovered by Great-West under the Subrogation and Right of
Recovery Provision will be distributed as follows:
(A) first, to Great-West to be applied to reduce Great-West payment of
Specific Stop-Loss Benefits pursuant to the Article entitled
Specific Stop Loss Benefit, if any, of the Stop-Loss Contract, if
any, issued by Great-West to the Contractholder with regard to any
Employee or Dependent against whom the Subrogation and Right of
Recovery Provision is enforced; and
(B) secondly, to Great-West to be applied to reduce Great-West's payment
of Aggregate Stop-Loss Benefits pursuant to the Article entitled
Aggregate Stop Loss Benefit, if any, of the Stop-Loss Contract, if
any, issued by Great-West to the Contractholder; and
(C) thirdly, to the Contractholder.
All money recovered will be applied to the accounting for the Contract Year in
which the claim giving rise to subrogation or Right of Recovery was paid. If
claim expenses were paid in more than one Contract Year, the money will be
applied on a pro rata basis in accordance with the amount of claim expenses paid
in each of the Contract Years.
Action taken under the Subrogation and Right of Recovery Provision contained in
the Plan may result in the incurral of legal expenses. Such legal expenses will
be borne by Great-West and the Contractholder in the same proportion as any
money recovered under the Subrogation and Right of Recovery Provision is
distributed between Great-West and the Contractholder. If no money is recovered,
the legal expenses will be borne by Great-West and the Contractholder in the
same proportion that each party's share of claim payments bears to the total
amount of claim payments. Legal expenses will not be used when calculating the
Specific Stop-Loss Benefit pursuant to the Article entitled Specific Stop Loss
Benefit, if any, or the aggregate Stop-Loss Benefit pursuant to the Article
entitled Aggregate Stop Loss Benefit, if any, of the Stop-Loss Contract, if any,
issued by Great-West to the Contractholder.
Page 7
<PAGE>
ARTICLE 9 - ENTIRE CONTRACT
This contract contains the entire agreement between the parties and sets forth
in full the services to be rendered by Great-West. It may only be modified or
amended by written agreement of the parties hereto and any representation or
statement not expressly set forth hereunder will not be binding on any party
hereto in any respect.
PACIFIC CAPITAL BANCORP
By /s/ Naomi Walling VP Human Resources 4/13/95
-----------------------------------------------------------------------------
Signature Title Date
- -------------------------------------------------------------------------------
Fiduciary Signature Title Date
- -------------------------------------------------------------------------------
Mailing Address of Fiduciary
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By /s/ Debe Hickman Asst. Acct. Manager 4/13/95
-----------------------------------------------------------------------------
Signature Title Date
Tower 1, Great-West Life Center
8505 E. Orchard Road
Englewood, CO 80111
Page 8
<PAGE>
SERVICES CONTRACT
SCHEDULE A - SCHEDULE OF SERVICES
<TABLE>
The following services will be provided for the administration of the
Contractholder's Plan:
<CAPTION>
<S> <C>
Drafting Assistance Benefit determination in accordance with the
- - Booklet Plan
- - Booklet Amendments Benefit payments in accordance with the Plan
Standard Allowance for Booklet printing Monthly Individual Claims Listing
I.D. Card Preparation Issued Check Listing
Standard Allowance for I.D. Card printing Preparation of Physician payment reports
Preparation of enrollment procedures Actuarial cost estimates:
Assistance in plan enrollment - Open and Unreported claims liabilities
Late applicant underwriting - Review of Past Experience
Claim form preparation - Projection of future cost
Standard Allowance for Claim form printing - Legislated changes in benefits
Check preparation - Plan modifications
Standard Allowance for Check printing
</TABLE>
Expenses incurred by Great-West for services not covered or for covered services
beyond standard allowances will be charged as incurred.
Page 1
<PAGE>
SERVICES CONTRACT
SCHEDULE B - SCHEDULE OF FEES
The Fees for the Services provided under the terms of this contract will be as
set forth in the following paragraph.
The Contractholder will pay to Great-West an amount equal to the sum of the
items listed below:
(1) on the first day of each Contract Month, for each Employee covered under
the Plan during the Contract Month in question, an amount equal to
(A) for Medical Coverage, $24.74.
(B) for Dentalcare Coverage, $2.14.
(2) on the first day of each Contract Month, for one Dependent covered under
the Plan during the Contract Month in question an amount equal to
(A) for Medical and PCS Coverage, $23.72.
(B) for Dentalcare Coverage, $1.91.
(3) on the first day of each Contract Month, for two or more Dependents covered
under the Plan during the Contract Month in question an amount equal to
(A)for Medical and PCS Coverage, $32.12.
(B) for Dentalcare Coverage, $3.27.
(4) an amount equal to $500.00 for each Employee or Dependent who purchases the
Health Conversion Coverage referred to in Article 8 of this contract
during the Contract Month in question.
TERMINAL FEE
On the Date of termination of this contract, the Contractholder will pay to
Great-West,
(1) for each Employee covered under the Plan at the beginning of the Contract
Month immediately prior to the date of termination of this contract, an
amount equal to
(A) for Medical Coverage, $19.26.
(B) for Dentalcare Coverage, $3.14.
(2) for one Dependent covered under the Plan at the beginning of the Contract
Month immediately prior to the date of termination of this contract an
amount equal to
(A) for Medical Coverage, $22.32.
(B) for Dentalcare Coverage, $3.63.
Page 1
<PAGE>
SERVICES CONTRACT
SCHEDULE B SCHEDULE OF FEES (Continued)
(3) for two or more Dependents covered under the Plan at the beginning of the
Contract Month immediately prior to the date of termination of this
contract an amount equal to
(A) for Medical Coverage, $30.81.
(B) for Dentalcare Coverage, $5.01.
Page 2
<PAGE>
SERVICES CONTRACT SCHEDULE C
Transfer Frequency Weekly with one
week delay
Page 1
<PAGE>
Attached to and forming part of Group Contract No. 256374GSL
issued by
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
TO
PACIFIC CAPITAL BANCORP
The contract (the Deleted Contract) which was effective on January 1,1995 is
hereby deleted as of December 31, 1994 and replaced by the attached contract
(the Replacement Contract) which is effective January 1, 1995.
Notwithstanding anything to the contrary in the Replacement Contract,
(1) the terms "Contract Months" and "Contract Year" will be calculated from the
effective date of the Deleted Contract.
(2) any deficit which has accrued under the terms of the Deleted Contract prior
to January 1, 1995 will be carried toward and become a part of the
Experience Deficit under the Replacement Contract.
Dated at Englewood, Colorado this 13th day of April, 1995
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
/s/ D.C. Lennox /s/ William McCallum
- ------------------------------ -------------------------------
Senior Vice-President, General President
Counsel and Secretary
/s/ Debe Hickman
------------------------
For the Actuary
Accepted and attached to the Contract by PACIFIC CAPITAL BANCORP
this day of , 19 .
BY /s/ Naomi Walling
-----------------------------------
TITLE VP Human Resources
-------------------------------
Page 1
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
EXECUTIVE OFFICES - ENGLEWOOD, COLORADO
APPLICATION FOR GROUP CONTRACT
PACIFIC CAPITAL BANCORP
(the Applicant) hereby applies to Great-West Life & Annuity Insurance Company
for Group Contract No. 256374GSL in the form attached hereto. This Group
Contract has been approved and its terms accepted by the Applicant.
Dated at Salinas this 9th day of May, 1995
PACIFIC CAPITAL BANCORP
/s/ Naomi Walling /s/ Naomi Walling
- ------------------------------ -----------------------------
Witness BY
/s/ Jackson Booth VP Human Resources
- ----------------------------- -----------------------------
Licensed Resident Agent Title
Page 1
<PAGE>
STOP-LOSS CONTRACT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY (herein called Great-West) in
consideration of the application of
PACIFIC CAPITAL BANCORP
(herein called the Contractholder)
and in consideration of the payment of premiums as herein provided, hereby
agrees to pay to the Contractholder the benefits as provided herein.
This contract will be effective from JANUARY 1, 1995 (herein called the
Effective Date).
This contract is not in lieu of and does not affect any requirement for coverage
by Workers' Compensation insurance.
All provisions set forth on the following pages form a part of this contract as
fully as it the same were stated over the signatures hereto.
IN WITNESS WHEREOF Great-West has caused this contract to be executed at its
Executive Offices.
/s/ D.C. Lennox /s William McCallum
- ------------------------------ -------------------------------
Senior Vice-President, General President
Counsel and Secretary
/s/ Debe Hickman
------------------------
For the Actuary
Group Health Insurance
GSL-M2
Contract Form No. GSL-190 Group Contract No.
256374GSL
GSLl90
Page 1
<PAGE>
ARTICLE 1 - DEFINITIONS
(1) "Aggregate Limitation Factor" is as shown in Schedule "A".
(2) "Bank Account" means the bank account(s) established by the Contractholder
from which Great-West is authorized to demand moneys payable by the
Contractholder for Benefit Payments made under the Plan.
(3) "Benefit Payments" for a Contract Month means the sum of checks issued for
Claim Payments made for the Contract Month under the provisions of the
Plan, less payments made by Great-West under the Article of this contract
entitled Specific Stop-Loss Benefit.
(4) "Claim Payments" for a Contract Month means payments made by Great-West for
a Contract Month for benefits provided under the terms of the Plan, less
any benefit credits under the plan, such as but not limited to refunds and
voided checks. In no event will the amounts paid for investigation of or
defense against claims be included in determining Claim Payments for any
Contract Month.
If Great-West determines that a claim for benefits under the Plan for an
Employee or one of his eligible dependents:
(A) is not payable in whole or in part; but
(B) the Contractholder instructs Great-West to pay an amount greater than
that determined by Great-West;
then only the amount determined by Great-West will be considered as a claim
payment when Great-West calculates:
(A) the Specific Stop Loss Benefit for the Employee or Dependent pursuant
to the Article of this contract entitled Specific Stop-Loss Benefit;
(B) the Aggregate Stop Loss Benefit pursuant to the Article of this
contract entitled Aggregate Stop-Loss Benefit.
(5) "Contract Months" are consecutive periods of one month within a Contract
Year, except that the last Contract Month terminates at the end of the last
Contract Year. The first Contract Month begins on the Effective Date.
(6) "Contract Year" is any period of 12 months beginning on an anniversary of
the Effective Date, except that the last Contract Year will end upon
termination of this contract.
(7) "Coverages" provided under the Plan and covered by this Contract are:
Medical Coverage
Page 2
<PAGE>
ARTICLE 1 - DEFINITIONS (Continued)
Dentalcare Coverage
Visioncare Coverage
Prescription Drug Coverage
(8) "Cumulative Attachment Level" for a Contract Month in a Contract Year is
the sum of the Monthly Attachment Level for the Contract Month and the
Monthly Attachment Levels for all previous Contract Months in the Contract
Year.
(9) "Cumulative Benefit Payments" for a Contract Month in a Contract Year means
the sum of Benefit Payments for the Contract Month and the Benefit Payments
for all previous Contract Months in the Contract Year.
(10) "Dependent" and "Employee" and "Employee Class" are as defined in the Plan.
(11) "Experience Deficit" for the first Contract Month means any aggregate stop
loss benefits paid by Great-West for the first Contract Month pursuant to
the Article of this contract entitled aggregate Stop-Loss Benefit. For any
succeeding Contract Month, "Experience Deficit" means the excess of the sum
of (A) and (B) over (C) where:
(A) is the Experience Deficit for the Previous Contract Month;
(B) is any aggregate stop loss benefits paid by Great-West for the Contract
Month pursuant to the Article of this contract entitled Aggregate Stop
Loss Benefit;
and
(C) is any reimbursement made by the Contractholder to Great-West for the
Contract Month pursuant to the Article of this contract entitled
Deficit Recovery;
except that in no event will the Experience Deficit for the last Contract Month
in any Contract Year prior to the Contract Year in which this Contract
terminates exceed the sum of (D) and (E) where:
(D) is the Experience Deficit for the last Contract Month of the previous
Contract Year; and
(E) is the product of the Aggregate Limitation Factor and the Cumulative
Attachment Level for the Contract Year.
(12) "Exposure" for a Coverage and Contract Month and Employee Class is the
number of Employees in that Employee Class having that Coverage under the
Plan at the beginning of the second prior Contract Month. For the first
three Contract Months of the first Contract Year, exposure for a Coverage
and Employee Class is the number of Employees in that Employee Class having
that Coverage under the Plan at the beginning of the first Contract Month.
NOTE: The term "Employees" as used in this definition will include
Employees and/or eligible Dependents whose coverage under the Plan is being
continued under the COBRA HEALTH CONTINUATION provision which forms a part
of the Plan.
Page 3
<PAGE>
ARTICLE 1 - DEFINITIONS (Continued)
(13) "Monthly Attachment Factor" is as shown in Schedule "A".
(14) "Monthly Attachment Level" for a Contract Month before termination of this
contract, means the sum for all Coverages and Employee Classes of the
product of the Monthly Attachment Factor multiplied by the exposure.
(15) "Plan" means that part of the Contractholder's Employee benefit plan which
is:
(A) administered by Great-West; and
(B) listed in the definition of "Coverages"; and
(C) in effect on the Effective Date of this contract.
Any amendments accepted BY Great-West which are made to the Plan from time
to time while this contract is in effect are also included, provided they
are administered by Great-West and apply to the "Coverages" listed in the
definition of "Coverages" in this Article of the Contract.
(16) "Premium Factor" is as shown in Schedule "A".
(17) "Specific Stop-Loss Level" is as shown in Schedule "A."
(18) "Terminal Attachment Factor" is as shown in Schedule "A".
ARTICLE 2 - CONTRACT PAYMENTS
The Contractholder will make funds available in its Bank Account(s) which are
sufficient to honor all of the Contractholder's obligations under the Plan and
under this contract while it is in force and FOR 15 months after this contract's
termination.
ARTICLE 3 - SPECIFIC STOP-LOSS BENEFIT
On and after the date within any Contract Year prior to termination of this
contract that the Claim Payments made for all Contract Months in such Contract
Year for Medical Coverage provided under the Plan for each Employee or Dependent
reach the Specific Stop-Loss Level, Great-West will reimburse the Contractholder
for the remainder of that Contract Year for Claim Payments made on behalf of
that Employee or Dependent which are in excess of the Specific Stop-Loss Level.
Page 4
<PAGE>
ARTICLE 3 - SPECIFIC STOP-LOSS BENEFIT (Continued)
Only Claim Payments made for expenses incurred after the Effective Date of this
contract will be used when determining the Specific Stop-Loss Benefit for an
Employee or Dependent. Specific Stop Loss protection does not apply to
Dentalcare, Visioncare and Prescription Drug Coverage(s).
No Specific Stop-Loss Benefit reimbursements will BE made by Great-West for
Claim Payments made after the date of termination of this contract, regardless
of when the claim was incurred.
ARTICLE 4 - AGGREGATE STOP-LOSS BENEFIT
For each Contract Month, Great-West will reimburse the Contractholder in an
amount equal to the positive excess, if any, of the sum of (1) and (2) over the
sum of (3) and (4) where:
(1) is the Cumulative Benefit Payments for the Contract Month;
(2) is the sum of any reimbursements made by the Contractholder to Great-West
for any prior Contract Months in the Contract Year pursuant to the Article
of this contract entitled Deficit Recovery;
(3) is the Cumulative Attachment level for the Contract Month;
(4) is the sum of any Aggregate Stop-Loss Benefits paid by Great-West pursuant
to this Article for any prior Contract Months in the Contract Year.
ARTICLE 5 - DEFICIT RECOVERY
At the end of every Contract Month in a Contract Year, the Contractholder will
reimburse Great-West for the lesser of:
(1) the Experience Deficit for the previous Contract Month; and
(2) the excess, if any, of:
(A) the Monthly Attachment Level for the Contract Month; and
(B) the Benefit Payments for the Contract Month.
Page 5
<PAGE>
ARTICLE 6 - PREMIUMS
The premium for each Contract Month is equal to the sum for all Coverages and
Employee Classes under the Plan of the product of the Premium Factor shown in
Schedule "A", multiplied by the number of Employees covered during that Contract
Month.
The Contractholder will pay the premiums on or before the first day of Each
Contract Month. A grace period of 31 days will be granted for the payment of
each premium falling due after the first premium, during which period this
contract will remain in force. If:
(1) any premium is not paid by the Contractholder to Great-West within the
grace period, this contract will automatically terminate at the end of thE
grace period. no written notice of such automatic termination is required.
If this contract terminates for any reason, the Contractholder will be
liable FOR all premiums due and unpaid, including a pro rata premium for
any time this contract is in force during the grace period.
(2) a check in payment of the premium due is returned to Great-West because
there were not sufficient funds (NSF) in the Contractholder's Bank Account
to cover the check, then this contract will automatically terminate on the
date on which the grace period for such premium ends. No written notice of
such automatic termination is required. This will be the case even if the
check presented for payment by Great-West is found to be NSF after the end
of the grace period.
ARTICLE 7 - SUBSIDIARIES AND AFFILIATES
Great-West may approve the inclusion of Employees of subsidiary and affiliated
companies and their Dependents under this contract. The Contractholder will be
liable for the payment of all amounts due to Great-West and for the adequate
funding of the Contractholder's Bank Account(s) with regard to employees and
Dependents of subsidiary and affiliated companies.
ARTICLE 8 - ADMINISTRATION OF THE PLAN, ACCESS TO INFORMATION
The Contractholder or his agent will furnish monthly to Great-West and warrant
the accuracy of the number of Employees in each Employee Class and the types of
Coverage(s) they have under the Plan for such Contract Month.
Great-West will have the right to inspect and copy the records of the
Contractholder and its agent which are pertinent to the operation of the Plan
and this contract. Such right will continue for 5 years immediately following
termination of this contract.
Page 6
<PAGE>
ARTICLE 9 - AMENDMENTS AND ALTERATIONS
(1) Unless otherwise indicated, the factors shown in Schedule "A" are for the
first Contract Year.
(2) Great-West will have the right to modify the Specific Stop-Loss Level and
the factors shown in Schedule "A" on any premium due date, but not more
frequently than once in each Contract Year except as provided in (3) below.
(3) A change in factors shown in Schedule A can be made at any time during the
first or subsequent Contract Years:
(A) if the Coverages provided under the Contractholder's Plan are changed;
or
(B) if the provisions of the Contractholder's Plan have to be changed
because of a change in law; or
(C) if there is a change in the number of Employees and/or Dependents
covered for any of the Coverages provided under the Contractholder's
Plan which equals or exceeds:
(a) 10% in any Contract Month when compared to the prior Contract Month;
or
(b) 20% at any time within a Contract Year. In this case, the change in
the number of Employees and/or Dependents covered will be determined
by comparing the number of Employees and/or Dependents covered for
any Coverages under the Contractholder's Plan AT the beginning of
the first Contract Month OF the Contract Year in question with the
number of Employees and/or Dependents covered for any Coverages
under the Contractholder's Plan at the beginning OF any subsequent
Contract Month. The Contractholder agrees TO MAKE available to
Great-West all information necessary to determine such change.
(D) upon addition or deletion of coverage for subsidiary or affiliated
companies or corporate divisions.
The effective date of the change in factors will be the effective date of
the event in (A), (B), (C) or (D) above that causes such change.
ARTICLE 10 - CONTRACT TERMINATION
This contract may be terminated by either the Contractholder or Great-West by
providing 31 days written advance notice to the other party.
In addition, this contract will terminate:
(1) immediately upon termination of the Services Contract between Great-West
and the Contractholder; or
(2) upon amendment of the plan in a manner deemed unsatisfactory by Great-West,
provided Great-West gives 31 days written notice of such termination to the
Contractholder. Great-West will not be liable under this contract for any
Benefit Payments, Specific Stop-Loss Benefit reimbursements, Aggregate
Stop-Loss Benefit reimbursements or any other payment attributable to such
amendment.
(3) immediately upon failure of the Contractholder to comply with any term or
condition of this contract, such as but not limited to failure to:
Page 7
<PAGE>
ARTICLE 10 - CONTRACT TERMINATION (Continued)
(A) pay the premiums as specified in this contract; or
(B) fund the Bank Account(s) established to handle Benefit Payments under
the Plan.
If the contract terminates due to the failure of the Contractholder to comply
with (3)(A) or (3)(B) above, the Contractholder will be solely liable for all
unpaid Employee and Dependent claims, regardless of when incurred.
If any state or other jurisdiction enacts or amends a law or regulation which,
in the opinion of Great-West prohibits the continuance of this contract, the
contract will terminate in respect of that jurisdiction. Termination of the
contract will take place by the effective date of the law, regulation oR
amendment as determined by Great-West.
ARTICLE 11 - TERMINAL PROTECTION
The Contractholder may elect the Terminal Protection described below on:
(1) the Effective Date of this contract. If this is the case, the Terminal
Protection becomes effective on the Effective Date of this contract.
(2) any subsequent anniversary of the Effective Date. If this is the case, the
Terminal Protection will not become effective until 12 months after such
anniversary.
The Contractholder may request deletion of the Terminal Protection by sending a
request in writing to Great-West to delete the Terminal Protection. If he does
so, the deletion of the Terminal Protection will not become effective until the
date which is 12 months after the end of the Contract Year in which the request
To Delete the Terminal Protection was received by Great-West.
If the Terminal Attachment Factor shown in Schedule A is applicable on the date
of termination of this contract, then:
(1) the following modifications are hereby made to the terms listed below which
are defined in Article 1 - Definitions:
(A) the last Contract Year will also include any months after termination
of this contract in which any Claim Payments are made by Great-West.
(B) the monthly attachment level for each of the first two Contract Months
after termination of this contract is the Terminal Attachment Level
defined in (2) below.
(C) the Cumulative Attachment Level will be calculated as follows:
Page 8
<PAGE>
ARTICLE 11 - TERMINAL PROTECTION (Continued)
(a) for the first Contract month following termination of this contract,
it will be the sum of the Cumulative Attachment Level for the last
Contract Month before such termination and the Terminal Attachment
Level for the first Contract Month following termination of this
contract.
(b) for any other Contract Month following termination of this contract,
it will be the sum of the Cumulative Attachment Level for the
previous contract month and the Terminal Attachment Level for the
current Contract Month.
(D) Benefit payments will include the sum of all checks issued for claim
payments made after termination of this contract. The Contractholder
agrees to keep his Bank Account(s) open to facilitate the handling of
Claim Payments made after termination of this contract.
(2) the following definition is hereby added to this contract:
"Terminal Attachment Level" means:
(A) for each of the first two months just after termination of this
contract, the product of (a) and (b) below, where:
(a) is the Terminal Attachment Factor; and
(b) is the Exposure for the month.
(B) for each month after that, NIL.
(3) the Contractholder understands and agrees that:
(A) The Article of this contract entitled Deficit Recovery is applicable to
each Contract Month following termination of this contract.
(B) the Terminal Protection described in this Article is applicable to this
contract on its termination, even if there is a succeeding carrier or
claims administrator and the succeeding carrier or claims administrator
agrees to pay claims for expenses incurred by Employees and dependents
prior to the termination of this contract.
ARTICLE 12 - PARTIES TO THE CONTRACT
The parties to the contract will be the Contractholder and Great-West. This
contract will not create any rights or obligations whatsoever on the part of
Great-West with respect to the persons covered under the Plan, or their
beneficiaries.
ARTICLE 13 - MISCELLANEOUS
The Contractholder agrees to indemnify Great-West and hold Great-West harmless
against any tax relating to this contract, including any accrued interest and
penalties levied on such tax, but excluding any tax based upon Great-West net
income. The terms of this provision will survive the termination of this
contract.
Page 9
<PAGE>
ARTICLE 14 - ENTIRE CONTRACT
This contract contains the entire agreement between the parties and sets forth
in full the services to be rendered by Great-West. It may only be modified or
amended by written agreement of the parties hereto and any representation or
statement not expressly set forth hereunder will not be binding on any party
hereto in any respect.
Page 10
<PAGE>
STOP-LOSS CONTRACT
SCHEDULE A
The Level and Factor shown below apply to all Employees in all Employee Classes:
Specific Stop-Loss Level $35,000.00
Aggregate Limitation Factor 10.00%
The Coverages and Factors applicable to each Employee Class are shown below:
Employee Class Coverages Factors
GREAT-WEST CARE
- - For Employee Coverage
Monthly Attachment Factor for:
- Medical Coverage $103.63
- Dentalcare Coverage $16.87
Terminal Attachment Factor for:
- Medical Coverage $224.30
- Dentalcare Coverage $36.51
Premium Factor for:
- Medical Coverage $19.85
- Dentalcare Coverage $0.44
- - For One Dependent Coverage
Monthly Attachment Factor for:
- Medical Coverage $110.57
- Dentalcare Coverage $18.00
Terminal Attachment Factor for:
- Medical Coverage $259.64
- Dentalcare Coverage $42.27
Premium Factor for:
- Medical Coverage $34.75
Page 1
<PAGE>
STOP-LOSS CONTRACT
SCHEDULE A (Continued)
- Dentalcare Coverage $0.47
- - For Two or More Dependents
Coverage
Monthly Attachment Factor for:
- Medical Coverage $152.65
- Dentalcare Coverage $24.85
Terminal Attachment Factor for:
- Medical Coverage $358.47
- Dentalcare Coverage $58.36
Premium FACTOR FOR:
- Medical Coverage $47.99
- Dentalcare Coverage $0.65
NOTE: The amount applicable for an Employee covered for himself and his
Dependent(s) is the sum of the amount shown above for Employee Coverage and the
amount shown above for the applicable Dependent Coverage.
The following overrides anything to the contrary expressed or implied in this
contract.
Action taken under the Subrogation and Right of Recovery Provision contained in
the Plan may result in the incurral of legal expenses. Such legal expenses will
be borne by Great-West and the contractholder in the same proportion as any
money recovered under the Subrogation and Right of Recovery Provision is
distributed between Great-West and the Contractholder. If no money is recovered,
the legal expenses will be borne by Great-West and the Contractholder in the
same proportion that each party's share of Claim Payments bears to the total
amount of Claim Payments. Legal expenses will not be used when calculating the
Specific Stop-Loss Benefit pursuant to the Article of this contract entitled
Specific Stop-Loss Benefit or the Aggregate Stop-Loss Benefit pursuant to the
Article of this contract entitled Aggregate Stop-Loss Benefit.
All money recovered by Great-West under the Subrogation and Right of Recovery
Provision of the Plan will be distributed as follows:
(1) first, to Great-West to be applied to reduce Great-West's payment of
Specific Stop-Loss Benefits pursuant to the Article of this contract
entitled Specific Stop-Loss Benefit with regard to the Employee or
Dependent against whom the Subrogation and Right of Recovery Provision is
enforced; and
(2) secondly, to Great-West to be applied to reduce Great-West's payment of
Aggregate Stop-Loss Benefits pursuant to the Article of this contract
entitled Aggregate Stop-Loss Benefit; and
Page 2
<PAGE>
STOP-LOSS CONTRACT
SCHEDULE A (Continued)
(3) thirdly, to the Contractholder.
ALL money recovered will be applied to the accounting for the Contract Year in
which the claim giving rise to subrogation or right of recovery was paid. If
claim expenses were paid in more than one Contract Year, the money will be
applied on a pro rata basis in accordance with the amount of claim expenses paid
in each of the Contract Years.
Page 3
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
EXECUTIVE OFFICES - ENGLEWOOD, COLORADO
APPLICATION FOR GROUP POLICY
PACIFIC CAPITAL BANCORP
(the Applicant) hereby applies to Great-West Life & Annuity Insurance Company
for Group Policy No. 256374GL in the attached form. The Applicant has approved
this Group Policy and has accepted its terms.
Dated at Salinas this 9th day of May 1995
PACIFIC CAPITAL BANCORP
/s/ Naomi Walling /s/ Naomi Walling
- ------------------------------- ----------------------------------
Witness BY
/s/ Jackson Booth VP Human Resources
- ------------------------------- -------------------------------------
Licensed Resident Agent Title
Page 1
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
EXECUTIVE OFFICES - ENGLEWOOD, COLORADO
(the Company)
AGREES, under the application of
PACIFIC CAPITAL BANCORP
(the Group Policyholder)
to insure the lives of Employees (Insured Persons) according to the terms of
this policy.
This policy is issued in consideration of the payment of the required premiums.
The Life Insurance and Accidental Death, Dismemberment and Loss of Sight (AD&D)
benefits to which an Insured Person is entitled are described in the
Booklet/Certificate which is attached to and forms a part of this policy.
Group Policy Effective Date:
This policy will take effect on JANUARY 1, 1995 at 12:01 a.m., standard time at
the Group Policyholder's address.
Currency:
All money payable under this policy is payable in the lawful money of the United
States of America.
All provisions:
(1) on the following pages of this policy; and
(2) in the sections of the Booklet/Certificate that apply to Life Insurance and
AD&D Benefits;
form a part of this policy as fully as IF THEY were stated over the signatures
below and are referred to herein as the Group Policy.
This policy has been executed by the Company at its Executive Offices.
/s/ D.C. Lennox /s/ William McCallum
- ------------------------------ ------------------------------
Senior Vice-President, General President
Counsel and Secretary
/s/ Debe Hickman
------------------------
For the Actuary
Group Term Life Insurance
- - Contributory
- - Non-Participating
Policy Format No. GL 193 Group Policy No. 256374GL BPL1
Page 1
<PAGE>
MISCELLANEOUS PROVISIONS
(1) Insurance months and years start from the Group Policy Effective Date.
(2) The Group Policyholder's actions will bind the Employer. Notice given to
the Group Policyholder is considered to be notice given to an Employer.
(3) All requests, notices, proofs of claim and applications must be made in
writing to the Company at its Executive Offices.
(4) Words of the masculine gender include the feminine. BPL2
PREMIUMS
PAYMENT
The first premium is due on the effective date of this policy. After that,
premiums are due on the first day of each insurance month. Premiums must be paid
at the Company's Executive Offices. Any premium not paid on time will be in
default.
GRACE PERIOD
After the first premium has been paid, 31 days are allowed to pay a premium in
default. During this time, the policy will stay in force. If the premium is not
paid by the end of the days of grace, this policy will terminate. The Group
Policyholder is liable for a pro rata premium for the time this policy is in
force during the grace period and for all other unpaid premiums.
CALCULATION
The amount of each premium is the sum of the premiums for each insured Employee.
If a premium has been waived for an Employee under the DISABILITY BENEFIT
section, it will not be included in the calculation. Until the company changes
the rate, it will be:
(1) $0.22 for each $1,000 of Life Insurance then in force.
(2) $0.02 for each $1,000 of AD&D (Principal Sum) then in force.
(3) $1.85 for each Employee insured in respect of his Dependents for Dependent
Life Insurance.
Page 2
<PAGE>
PREMIUMS (Continued)
ADJUSTMENTS
The premiums will be adjusted retroactively to reflect changes in insurance
amounts. The Company must be notified promptly of a change. For a decrease in,
or termination of, insurance, a credit will be given only for the 4 month period
prior to receipt of such notice.
EXPERIENCE RATING
After the end of the first insurance year or at any time after that, this policy
may be experience rated by the Company. BPL3
RENEWAL CHANGES
After the end of the first insurance year, the Company may change the premium
rates. Changes can be made on the first day of any insurance month. Written
notice will be sent to the Group Policyholder 31 days before a change is made.
Once the change is made, the Company cannot make another change for 12 months.
However, a change can be made at any time if:
(1) the policy provisions are changed at the request of the Group Policyholder;
(2) there is a change in benefits required by a change in state or federal law;
or
(3) there is a change in the number of Employees insured under this policy which
equals or exceeds:
(A) 10% in any insurance month when compared to the previous insurance
month; or
(B) 20% at any time within an insurance year when compared to the number of
Employees insured in the first month of that insurance year;
except that no increase in premium rates will take effect before 31 days after
the date written notice of such increase is given to the Group Policyholder by
the Company. BPL34
Page 3
<PAGE>
GENERAL PROVISIONS
FURNISHING OF INFORMATION: ACCESS TO RECORDS
The Group Policyholder must forward to the Company:
(1) required information about the eligibility of Employees;
(2) any Employee applications; and
(3) details about changes in insurance.
The Company may inspect the Group Policyholder's records of Employees'
insurance. Such inspection can take place while this policy is in force and
during the first year after it terminates.
ENTIRE CONTRACT
The contract consists of:
(1) this policy;
(2) the attached application for this policy;
(3) any Employee applications; and
(4) any notices of Proof of Good Health.
Except for fraud, statements made by the Group Policyholder, or by an Employee,
are deemed representations and not warranties. Only statements contained in:
(1) the Group Policyholder's application for this policy;
(2) any Employee applications; or
(3) any notices of Proof of Good Health;
will void any insurance under this policy, or be used in defense to a claim
under it.
AUTHORITY
The provisions of this policy cannot be changed or waived except by written
agreement. Such agreement must be signed by:
(1) the President, or a Vice-President; and
(2) the Secretary, or Actuary;
Page 4
<PAGE>
GENERAL PROVISIONS (Continued)
of the Company. Only by such a signed agreement can:
(1) a premium in default be accepted;
(2) the time for a premium payment be extended;
(3) any of the Company's rights be waived;
(4) the Company be bound by any promise regarding benefits; or
(5) any applications be accepted. BPL4
INDIVIDUAL BOOKLET/CERTIFICATE
The Company will issue Booklet/Certificates to the Group Policyholder to give
each insured Employee. Such Booklet/Certificate will:
(1) describe the insurance to which an Employee is entitled;
(2) describe the CONVERSION PRIVILEGE;
(3) detail how an Employee's insurance can reduce or terminate; and
(4) state that the Employee may inspect this policy at the Group Policyholder's
office. BPL4a
TERMINATION OF THE POLICY
The Group Policyholder may terminate this policy by giving 31 days written
notice to the Company.
The Company may terminate this policy:
(1) if the Group Policyholder fails to:
(A) adhere to the terms and conditions set out in this policy; or
(B) pay the required premium as set out in the PREMIUMS section; or
(2) if the number of insured Employees is less than
(A) 25; or
(B) 75% of those eligible for insurance.
The Company must give written notice of termination to the Group Policyholder 31
days in advance. BPL5
Page 5
<PAGE>
To be attached to and made part of the Group Policy No. 256374GL
issued by
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
to
PACIFIC CAPITAL BANCORP
This Group Policy is hereby deleted as of January 31, 1995 and replaced with the
attached Group Policy.
Dated at Englewood, Colorado this 13th day of April, 1995
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
/s/ D.C. Lennox /s/ William McCallum
- ------------------------------ ------------------------------
Senior Vice-President, General President
Counsel and Secretary
/s/ Debe Hickman
------------------------
For the Actuary
Accepted and attached to the Contract by PACIFIC CAPITAL BANCORP
this day of , 19 .
BY /s/ Naomi Walling
-------------------------------------
TITLE VP Human Resources
----------------------------------
Page 1
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
EXECUTIVE OFFICES - ENGLEWOOD, COLORADO
(the Company)
AGREES, under the application of
PACIFIC CAPITAL BANCORP
(the Group Policyholder)
to insure the lives of Employees (Insured Persons) according to the terms of
this policy.
This policy is issued in consideration of the payment of the required premiums.
The Life Insurance and Accidental Death, Dismemberment and Loss of Sight (AD&D)
benefits to which an Insured Person is entitled are described in the
Booklet/Certificate which is attached to and forms a part of this policy.
Group Policy Effective Date:
This policy will take effect on FEBRUARY 1,1995 at 12:01 a.m., standard time at
the Group Policyholder's address.
Currency:
All money payable under this policy is payable in the lawful money of the United
States of America.
All provisions:
(1) on the following pages of this policy; and
(2) in the sections of the Booklet/Certificate that apply to Life Insurance and
AD&D Benefits;
form a part of this policy as fully as if they were stated over the signatures
below and are referred to herein as the Group Policy.
This policy has been executed by the Company at its Executive Offices.
/s/ D.C. Lennox /s/ William McCallum
- ------------------------------ ------------------------------
Senior Vice-President, General President
Counsel and Secretary
/s/ Debe Hickman
------------------------
For the Actuary
Group Term Life Insurance
- - Contributory
- - Non-Participating
Policy Format No. GL 193 Group Policy No. 256374GL BPL1
Page 1
<PAGE>
MISCELLANEOUS PROVISIONS
(1) Insurance months and years start from the Group Policy Effective Date.
(2) The Group Policyholder's actions will bind the Employer. Notice given to
the Group Policyholder is considered to be notice given to an Employer.
(3) All requests, notices, proofs of claim and applications must be made in
writing to the Company at its Executive Offices.
(4) Words of the masculine gender include the feminine. BPL2
PREMIUMS
PAYMENT
The first premium is due on the effective date of this policy. After that,
premiums are due on the first day of each insurance month. Premiums must be paid
at the Company's Executive Offices. Any premium not paid on time will be in
default.
GRACE PERIOD
After the first premium has been paid, 31 days are allowed to pay a premium in
default. During this time, the policy will stay in force. If the premium is not
paid by the end of the days of grace, this policy will terminate. The Group
Policyholder is liable for a pro rata premium for the time this policy is in
force during the grace period and for all other unpaid premiums.
Page 2
<PAGE>
PREMIUMS (Continued)
CALCULATION
The amount of each premium is the sum of the premiums for each insured Employee.
If a premium has been waived for an Employee under the DISABILITY BENEFIT
section, it will not be included in the calculation. Until the Company changes
the rate, it will be:
(1) $0.22 for each $1,000 of Life Insurance then in force.
(2) $0.02 for each $1,000 of AD&D (Principal Sum) then in force.
(3) $1.85 for each Employee insured in respect of his Dependents for Dependent
Life Insurance.
(4) for Optional Life Insurance, an amount determined in accordance with the
following schedule, based on the individual's age on the date on which the
premium is calculated.
<TABLE>
<CAPTION>
<S> <C> <C>
Age of individual on date of Premium Rate for each Premium Rate for each
calculation $1,000 of Optional Life $1,000 of Optional Life
Insurance, Non-Tobacco Insurance, Tobacco User
User Rates Rates
under age 20 $0.09 $0.14
at least 20 but under age 25 0.09 0.14
at least 25 but under age 30 0.10 0.15
at least 30 but under age 35 0.11 0.16
at least 35 but under age 40 0.12 0.23
at least 40 but under age 45 0.17 0.34
at least 45 but under age 50 0.27 0.54
at least 50 but under age 55 0.41 0.84
at least 55 but under age 60 0.65 1.34
at least 60 but under age 65 0.95 1.90
at least 65 but under age 70 1.39 2.70
at least 70 but under age 75 2.28 4.03
at least 75 but under age 80 3.89 5.75
at least 80 but under age 85 6.30 8.76
at least 85 9.58 13.56
</TABLE>
ADJUSTMENTS
The premiums will be adjusted retroactively to reflect changes in insurance
amounts. The Company must be notified promptly of a change. For a decrease in,
or termination of, insurance, a credit will be given only for the 4 month period
prior to receipt of such notice.
Page 3
<PAGE>
PREMIUMS (Continued)
EXPERIENCE RATING
After the end of the first insurance year or at any time after that, this policy
may be experience rated by the Company. BPL3
RENEWAL CHANGES
After the end of the first insurance year, the Company may change the premium
rates. Changes can be made on the first day of any insurance month. Written
notice will be sent to the Group Policyholder 31 days before a change is made.
Once the change is made, the Company cannot make another change for 12 months.
However, a change can be made at any time if:
(1) the policy provisions are changed at the request of the Group Policyholder;
(2) there is a change in benefits required by a change in state or federal law;
or
(3) there is a change in the number of Employees insured under this policy which
equals or exceeds:
(A) 10% in any insurance month when compared to the previous insurance
month; or
(B) 20% at any time within an insurance year when compared to the number of
Employees insured in the first month of that insurance year;
except that no increase in premium rates will take effect before 31 days after
the date written notice of such increase is given to the Group Policyholder by
the Company. BPL3a
GENERAL PROVISIONS
FURNISHING OF INFORMATION: ACCESS TO RECORDS
The Group Policyholder must forward to the Company:
(1) required information about the eligibility of Employees;
(2) any Employee applications; and
(3) details about changes in insurance.
The Company may inspect the Group Policyholder's records of Employees'
insurance. Such inspection can take place while this policy is in force and
during the first year after it terminates.
Page 4
<PAGE>
GENERAL PROVISIONS (Continued)
ENTIRE CONTRACT
The contract consists of:
(1) this policy;
(2) the attached application for this policy;
(3) any Employee applications; and
(4) any notices of Proof of Good Health.
Except for fraud, statements made by the Group Policyholder, or by an Employee,
are deemed representations and not warranties. Only statements contained in:
(1) the Group Policyholder's application for this policy;
(2) any Employee applications; or
(3) any notices of Proof of Good Health;
will void any insurance under this policy, or be used in defense to a claim
under it.
AUTHORITY
The provisions of this policy cannot be changed or waived except by written
agreement. Such agreement must be signed by:
(1) the President, or a Vice-President; and
(2) the Secretary, or Actuary;
of the Company. Only by such a signed agreement can:
(1) a premium in default be accepted;
(2) the time for a premium payment be extended;
(3) any of the Company's rights be waived;
(4) the Company be bound by any promise regarding benefits; or
(5) any applications be accepted. BPL4
Page 5
<PAGE>
GENERAL PROVISIONS (Continued)
INDIVIDUAL BOOKLET/CERTIFICATE
The Company will issue Booklet/Certificates to the Group Policyholder to give
each insured Employee. Such Booklet/Certificate will:
(1) describe the insurance to which an Employee is entitled;
(2) describe the CONVERSION PRIVILEGE;
(3) detail how an Employee's insurance can reduce or terminate; and
(4) state that the Employee may inspect this policy at the Group Policyholder's
office. BPL4a
TERMINATION OF THE POLICY
The Group Policyholder may terminate this policy by giving 31 days written
notice to the Company.
The Company may terminate this policy:
(1) if the Group Policyholder fails to:
(A) adhere to the terms and conditions set
(B) pay the required premium as set out in the PREMIUMS section; or
(2) if the number of insured Employees is less than
(A) 25; or
(B) 75% of those eligible for insurance.
The Company must give written notice of termination to the Group Policyholder 31
days in advance. BPL5
Page 6
<PAGE>
Attached to and forming part of the Services Agreement for
Flexible Benefits Account between
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
and
PACIFIC CAPITAL BANCORP
The Services Agreement for Flexible Benefits Account which was effective on
JANUARY 1, 1995 and is dated JANUARY 30, 1995 is hereby terminated as of
DECEMBER 31,1994 and replaced by the attached Services Agreement for Flexible
Benefits Account which is effective JANUARY 1, 1995.
Dated at Englewood, Colorado this 13th day of April 1995
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
/s/ D.C. Lennox /s/ William McCallum
- ------------------------------ ------------------------------
Senior Vice-President, General President
Counsel and Secretary
/s/ Debe Hickman
------------------------
For the Actuary
The terms of this Agreement are accepted by PACIFIC CAPITAL BANCORP
this day of , 19 .
BY /s/ Naomi Walling
--------------------------------
TITLE VP Human Resources
------------------------------
Page 1
<PAGE>
SERVICES AGREEMENT FOR FLEXIBLE BENEFITS ACCOUNT
AGREEMENT entered into on JANUARY 1,1995 between GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY, hereinafter referred to as "GREAT-WEST" and
PACIFIC CAPITAL BANCORP
(hereinafter referred to as "the Contractholder")
It is hereby provided that the Contractholder has established a Flexible
Benefits Account Plan for the benefit of its Employees and Dependents
(hereinafter referred to as the "Plan"). The purpose of that Plan is to offer
eligible Employees a choice of benefits under a plan that is designed to comply
with Sections 105, 106, 125 and 129 of the Internal Revenue Code and the
regulations issued thereunder. The Contractholder hereby retains GREAT-WEST to
provide certain services for the Plan in accordance with the following terms and
conditions.
DEFINITIONS
Unless specifically defined herein, the meaning of all terms used in this
Agreement will be the same as those used in the Plan and/or the group health
policy/plan sponsored by the Contractholder.
ADMINISTRATIVE SERVICES
Great-West agrees to perform services involving the performance of
non-discretionary duties as specified in the SCHEDULE OF SERVICES (Schedule A),
which is attached to and forms part of this Agreement.
To facilitate the performance of such duties, the Contractholder agrees to:
(1) establish a bank account for all deposits made under the Plan. The
Contractholder will inform Great-West of the appropriate bank account
number and transit number and will send to Great-West a copy of the
corresponding MICR Sheet/Specification Sheet and any other information
necessary to enable Great-West to produce benefit payment checks from that
account.
(2) provide Great-West with a monthly list of:
(A) Employees who have elected to participate under each of the options
described in the Plan; and
(B) the amounts deposited into the bank account in respect of each such
Employee.
Page 1
<PAGE>
SERVICES AGREEMENT FOR FLEXIBLE BENEFITS ACCOUNT (Continued)
FURNISHING OF INFORMATION; ACCESS TO RECORDS
The Contractholder will furnish Great-West, on request, with correct and
complete information required by Great-West to provide the services which
Great-West has agreed to perform under this Agreement. Great-West will have the
right to inspect the records of the Contractholder which are pertinent to the
operation of the Plan.
AUTHORITY TO CONTROL AND MANAGE THE PLAN
The Contractholder acknowledges that he has authority to control and manage the
operation of the Plan. It is expressly agreed that under no circumstances will
Great-West be designated as plan administrator or a fiduciary of the Plan.
INDEMNIFICATION AND LIMITATION OF LIABILITY
The Contractholder will indemnify, protect and hold Great-West harmless from any
loss, liability, claim or expense (including attorney's fees, court costs and
expenses of litigation) arising out of any act or omission of the Contractholder
in connection with the Plan. Any premium or other tax assessed against
Great-West in respect of the Plan will be borne by the Contractholder. In no
event will incorrect determination of any benefit be the responsibility of
Great-West.
AGREEMENT TERMINATION
This Agreement may be terminated at any time by either the Contractholder or
Great-West, provided written notice of such termination is given at least one
month in advance. In addition, Great-West may terminate this Agreement
immediately upon:
(1) the date Great-West no longer insures or provides administrative services
for any group life, health, dental or 401(k) plan sponsored by the
Contractholder.
(2) amendment of the Plan in a manner deemed unsatisfactory by Great-West,
provided that Great-West provides 31 days' written notice of such
termination to the Contractholder.
(3) failure of the Contractholder to comply with any term or condition of this
agreement.
In the event of termination of this Agreement, Great-West will have the right to
stop processing claims immediately on the effective date of such termination.
Page 2
<PAGE>
SERVICES AGREEMENT FOR FLEXIBLE BENEFITS ACCOUNT (Continued)
PACIFIC CAPITAL BANCORP
/s/ Naomi Walling VP Human Resources Mgr.
- -------------------------------------------------------------------------------
Authorized Signature, Title and Date
- -------------------------------------------------------------------------------
Mailing Address, City, State and Zip Code
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
/s/ Debe Hickman Asst. Acct. Manager 4/13/95
- -------------------------------------------------------------------------------
Authorized Signature, Title and Date
Great-West Life Center, Tower 1
8505 E. Orchard Road
Englewood, CO 80111
Page 3
<PAGE>
SCHEDULE A - SCHEDULE OF SERVICES
Description of Services Covered in this
Agreement (Yes/No)
Drafting Assistance Yes
Plan Document
Plan Amendments
Employee brochure and worksheet Yes
Enrollment forms Yes
Assistance in Plan enrollment Yes
Claim forms Yes
Benefit determination in accordance Yes
with the Plan
Benefit payments in accordance Yes
with the Plan
Direct payment of benefits to Plan Yes
participants
Claim reports Yes
Check register Yes
Discrimination Testing Yes
Page 4
<PAGE>
FLEXIBLE BENEFITS ACCOUNT PLAN DOCUMENT
Flexible Benefits Account Plan Document
For Employees of
PACIFIC CAPITAL BANCORP
Effective Date:
This FBA Plan Document will take effect on JANUARY 1, 1995 at 12:01 a.m.,
standard time at the Employer's address.
All provisions:
(1) on the following pages of this FBA Plan Document; and
(2) in the Flexible Benefits Account section of the Booklet;
form a part of this FBA Plan Document as fully as if they were stated over the
signatures below.
IN WITNESS WHEREOF, PACIFIC CAPITAL BANCORP has executed this Plan Document at
on this day of , 19 .
PACIFIC CAPITAL BANCORP
by /s/ NAOMI WALLING
--------------------------------
VP Human Resources Mgr.
--------------------------------
Title
Page 1
<PAGE>
PURPOSE
The purpose of this Plan is to otter eligible Employees of the Employer a choice
of benefits under a plan that is designed to comply with Sections 105, 106, 125
and 129 of the Internal Revenue Code and the regulations issued thereunder.
The following options are available to eligible Employees under this Plan:
(1) PREMIUM EXPENSE CONVERSION ACCOUNT.
(2) HEALTH CARE ACCOUNT.
(3) DEPENDENT CARE ACCOUNT.
The benefits provided under these options are described in the BENEFIT
PROVISIONS section of this Plan.
FORFEITURES
Any amount remaining in an Employee's Dependent Care Account and Health Care
Account after all claims have been processed for that Plan Year will be
forfeited. These amounts will be deposited into the Employer's benefit plan
surplus. When this happens, the Employee will have no further claim to such
amounts.
Page 2
<PAGE>
ADMINISTRATION
The operation of the Plan will be under the supervision of the Employer's Plan
Administrator. It will be a principal duty of the Plan Administrator to see that
the Plan is carried out in accordance with its terms, and for the exclusive
benefit of Employees entitled to participate in the Plan. The Plan Administrator
will have full power to administer the Plan in all of its details; subject,
however, to the pertinent provisions of the Internal Revenue Code. The Plan
Administrator's powers will include, but will not be limited to, the following
authority, in addition to all other powers provided by this Plan:
(1) to make and enforce such rules and regulations as the Plan Administrator
deems necessary or proper for the efficient administration of the Plan;
(2) to decide all questions concerning the Plan and the eligibility of any
person to participate in the Plan and to receive benefits provided under
the Plan;
(3) to interpret the Plan, the Plan Administrator's interpretations in good
faith to be final and conclusive on all persons claiming benefits under the
Plan;
(4) to review reimbursement requests and to authorize the payment of benefits;
and
(5) to appoint such agents. counsel, accountants, consultants and actuaries as
may be required to assist in administering the Plan.
AMENDMENT OR TERMINATION OF PLAN
The Employer, at any time or from time to time, may amend any or all of the
provisions of the Plan without the consent of any Employee. No amendment will
have the effect of reducing any benefit election of any Employee in effect at
the time of such amendment, unless such amendment is made to comply with federal
law or local statute or regulations.
The Employer reserves the right to terminate the Plan, in whole or in part, at
any time. In the event the Plan is terminated, no further additions will be made
to any Employee's accounts, but all benefits will continue to be paid according
to the elections in effect until:
(1) the end of the Plan Year in which the Plan termination occurs; or
(2) the balances of all accounts have been reduced to zero;
whichever occurs first.
Any amounts remaining at the end of the Plan Year (and after the processing of
all claims for such Plan Year) in which Plan termination occurs will be
forfeited and deposited in the benefit plan surplus of the Employer.
Page 3
<PAGE>
SEVERABILITY
If any provision of the Plan is held invalid or unenforceable, its invalidity or
unenforceability will not affect any other provisions of the Plan, and the Plan
will be construed and enforced as if such provision had not been included
herein.
Page 4
GROUPAMERICA INSURANCE COMPANY
P.O. BOX 1840, HARTFORD, CONNECTICUT 06144-1840
1-800-443-3221
GROUP POLICY NUMBER 908496-A
NAME OF POLICYHOLDER Pacific Capital Bancorp
TYPE OF COVERAGE Long Term Disability Insurance
EFFECTIVE DATE January 1, 1995
INITIAL POLICY TERM Two Years
PREMIUM DUE DATES January 1, 1995, and the first day of each
calendar month thereafter
POLICY DELIVERED IN California and governed by the laws of that
state.
GroupAmerica Insurance Company agrees to pay the benefits provided by this Group
Policy, in accordance with the provisions of this Group Policy.
The consideration for this Group Policy is the application of the Policyholder
and the payment by the Policyholder of premiums as provided herein.
The Group Policy is issued for the Initial Policy Term shown above, ending on
the first day after the end of such policy term at 12:01 A.M. Standard Time at
the Policyholder's address. This Group Policy may be renewed for successive
renewal periods by the payment of the premium on each renewal date, provided the
number of persons insured on each renewal date is neither less than the Minimum
Participation Number nor less than the Minimum Participation Percentage (shown
in the Policy Data). The length of each renewal period will be determined by us,
but will not be less than 12 months.
All provisions on this and the following pages are a part of this Group Policy.
The Certificate Of Insurance issued for delivery to each insured Member will
include Section One of this Group Policy. The definitions of terms in Section
One apply whenever the terms are used anywhere in this Group Policy. "You" and
"your" refer to the insured Member. "We", "us", and "our" refer to GroupAmerica
Insurance Company. Other defined terms are printed with an initial capital
letter.
GroupAmerica Insurance Company
By
Secretary President
Group Insurance Policy
GP292-LTD
<PAGE>
REQUIRED CALIFORNIA NOTICE
To Our California Policyholders and Certificate Holders:
We are here to serve you ...
As our policyholder or certificate holder, your satisfaction is very
important to us. Should you have a valid claim, we fully expect to provide
a fair settlement in a timely fashion. In the event you need to contact
someone about this policy for any reason, please contact your agent. If you
have additional questions, you may contact GroupAmerica Insurance Company
at the following address and toll-free telephone number:
GroupAmerica Insurance Company
P.O. Box 1840
Hartford, Connecticut 06144-1840
Telephone number: 1-800-443-3221
If you are not satisfied...
Should you feel you are not being treated fairly and you have been unable
to contact or obtain satisfaction from us or the agent, we want you to know
you may contact the California Department of Insurance with your complaint
and seek assistance from the governmental agency that regulates insurance.
To contact the Department, write or call:
Consumer Affairs Division
California Department of Insurance
300 South Spring Street
Los Angeles, CA 90013
Telephone number: 1-800-927-HELP
<PAGE>
- --------------------------------------------------------------------------------
California Life and Health Insurance
Guarantee Association Act
Summary Document and Disclaimer
- --------------------------------------------------------------------------------
Residents of California who purchase life and health insurance and annuities
should know that the insurance companies licensed in this state to write these
types of insurance are members of the California Life and Health Insurance
Guarantee Association ("CLHIGA"). The purpose of this Association is to assure
that policyholders will be protected, within limits, in the unlikely event that
a member insurer becomes financially unable to meet its obligations. If this
should happen, the Guarantee Association will assess its other member insurance
companies for the money to pay the claims of insured persons who live in this
state and, in some cases, to keep coverage in force. The valuable extra
protection provided through the Association is not unlimited, as noted in the
box below, and is not a substitute for consumers' care in selecting insurers.
- --------------------------------------------------------------------------------
The California Life and Health Insurance Guarantee Association may not provide
coverage for this policy. If coverage is provided, it may be subject to
substantial limitations or exclusions, and require continued residency in
California. You should not rely on coverage by the Association in selecting an
insurance company or in selecting an insurance policy.
Coverage is NOT provided for your policy or any portion of it that is not
guaranteed by the insurer or for which you have assumed the risk, such as a
variable contract sold by prospectus.
Insurance companies or their agents are required by law to give or send you this
notice. However, insurance companies and their agents are prohibited by law from
using the existence of the Guarantee Association to induce you to purchase any
kind of insurance policy.
Policyholders with additional questions should first contact their insurer or
agent or may then contact:
Executive Director or Allegra Willison, Staff Counsel
California Life and Health Insurance California Department of Insurance
Guarantee Association 45 Fremont Street, 24th Floor
P.O. Box 70069 San Francisco, CA 9410
Los Angeles, CA 90070
- --------------------------------------------------------------------------------
The state law that provides for this safety-net coverage is called the
California Life and Health Guarantee Association Act. Below is a brief summary
of this law's coverages, exclusions and limits. This summary does not cover all
provisions of the law; nor does it in any way change anyone's rights or
obligations under the Act or the rights or obligations of the Association.
COVERAGE
Generally, individuals will be protected by the California Life and Health
Insurance Guarantee Association if they live in this state and hold a life or
health insurance contract, or an annuity, or if they are insured under a group
insurance contract, issued by a member insurer. The beneficiaries, payees or
assignees of insured persons are protected as well, even if they live in another
state.
<PAGE>
EXCLUSIONS FROM COVERAGE
However, persons holding such policies are not protected by this Guarantee
Association if:
Their insurer was not authorized to do business in this state when it
issued the policy or contract; Their policy was issued by a health care
service plan (HMO, Blue Cross, Blue Shield), a charitable organization, a
fraternal benefit society, a mandatory state pooling plan, a mutual
assessment company, an insurance exchange, or a grants and annuities
society; They are eligible for protection under the laws of another state.
This may occur when the insolvent insurer was incorporated in another state
whose guarantee association protects insureds who live outside that state.
The Guarantee Association also does not provide coverage for:
Unallocated annuity contracts; that is, contracts which are not issued to
and owned by an individual and which guarantee rights to group contract
holders, not individuals; Employer and association plans, to the extent
they are self-funded or uninsured; Any policy or portion of a policy which
is not guaranteed by the insurer or for which the individual has assumed
the risk, such as a variable contract sold by prospectus; Any policy of
reinsurance unless an assumption certificate was issued; Interest rate
yields that exceed an average rate; Any portion of a contract that provides
dividends or experience rating credits.
LIMITS ON AMOUNT OF COVERAGE
The Act limits the Association to pay benefits as follows:
LIFE AND ANNUITY BENEFITS
80% of what the insurance company would owe under a life policy or annuity
contract up to $100,000 in cash surrender values, $100,000 in present value
of annuities, or $250,000 in life insurance death benefits. A maximum of
$250,000 for any one insured life no matter how many policies and contracts
there were with the same company, even if the policies provided different
types of coverages.
HEALTH BENEFITS
A maximum of $200,000 of the contractual obligations that the health
insurance company would owe were it not insolvent. The maximum may increase
or decrease annually based upon changes in the health care cost component
of the consumer price index.
PREMIUM SURCHARGE
Member insurers are required to recoup assessments paid to the Association by
way of a surcharge on premiums charged for health insurance policies to which
the Act applies.
<PAGE>
POLICY DATA
GROUP POLICY NUMBER 908496-A
INITIAL MONTHLY PREMIUM RATE:
LONG TERM DISABILITY 32% of the first $11,999 of the
INSURANCE Predisability Earnings of each insured
Member
MINIMUM PARTICIPATION NUMBER 10 insured Members
MINIMUM PARTICIPATION PERCENTAGE 100% of eligible Members
<PAGE>
TABLE OF CONTENTS
SECTION ONE - COVERAGE PROVISIONS ......................................... 1
Part 1 BECOMING INSURED ................................................. 1
Part 2 LONG TERM DISABILITY INSURING CLAUSE ............................. 2
Part 3 SCHEDULE OF LONG TERM DISABILITY INSURANCE ....................... 2
A. ELIMINATION PERIOD ............................................... 2
B MAXIMUM BENEFIT PERIOD ........................................... 2
C AMOUNT OF LTD BENEFIT............................................. 4
Part 4 EXCLUSIONS AND LIMITATIONS ....................................... 4
Part 5 DEFINITION OF DISABILITY.......................................... 5
Part 6 DEFINITION OF PREDISABILITY EARNINGS ............................ 7
Part 7 DEFINITION OF INCOME FROM OTHER SOURCES ......................... 7
Part 8 OTHER BENEFITS AND PROVISIONS ................................... 10
A RETURN TO WORK PROVISION ........................................ 10
B SURVIVORS BENEFIT ............................................... 10
C WAIVER OF PREMIUM ............................................... 10
D BENEFITS AFTER INSURANCE ENDS OR IS CHANGED ..................... 10
Part 9 WHEN INSURANCE ENDS ............................................. 11
Part 10. BECOMING INSURED AGAIN AFTER INSURANCE ENDS ..................... 11
Part 11. CLAIMS PROVISIONS AND PROCEDURES FOR LTD BENEFITS ............... 12
Part 12. TIME LIMITS ON LEGAL ACTIONS .................................... 14
Part 13. INCONTESTABLE CLAUSES ........................................... 14
Part 14. ALLOCATION OF AUTHORITY ......................................... 15
Part 15. ASSIGNMENT NOT PERMITTED ........................................ 15
Part 16. GENERAL DEFINITIONS ............................................. 15
<PAGE>
SECTION TWO - POLICYHOLDER PROVISIONS .................................... 17
Part 1. PREMIUMS ......................................................... 17
Part 2. CERTIFICATES ..................................................... 18
Part 3. RECORDS AND REPORTS .............................................. 18
Part 4. MISSTATEMENT OF AGE .............................................. 19
Part 5. ENTIRE CONTRACT; CHANGES ......................................... 19
Part 6. EFFECT ON WORKER'S COMPENSATION .................................. 19
<PAGE>
INDEX OF DEFINED TERMS
ACTIVE WORK ............................................................... 2
ACTIVELY AT WORK .......................................................... 2
CONTRIBUTORY .............................................................. 16
CPI-W ..................................................................... 7
DISABILITY ................................................................ 5
DISABLED .................................................................. 5
ELIMINATION PERIOD ........................................................ 2
EMPLOYER .................................................................. 15
EVIDENCE OF INSURABILITY .................................................. 15
GROUP POLICY .............................................................. 15
HOSPITAL .................................................................. 5
INCOME FROM OTHER SOURCES ................................................. 7
INDEXED PREDISABILITY EARNINGS ............................................ 6
INSURANCE ................................................................. 15
LONG TERM DISABILITY INSURANCE ............................................ 15
LTD BENEFIT ............................................................... 4,15
MAXIMUM BENEFIT PERIOD .................................................... 2
MAXIMUM LTD BENEFIT ....................................................... 4
MEMBER .................................................................... 1
MENTAL DISORDER ........................................................... 5
MINIMUM LTD BENEFIT ....................................................... 4
NONCONTRIBUTORY ........................................................... 16
PHYSICIAN ................................................................. 5
PREDISABILITY EARNINGS .................................................... 7
PREEXISTING CONDITION ..................................................... 4
PRIOR PLAN ................................................................ 15
RESIDUALLY DISABLED ....................................................... 6
TOTALLY DISABLED .......................................................... 6
WAR ....................................................................... 4
<PAGE>
SECTION ONE - COVERAGE PROVISIONS
Part 1. BECOMING INSURED
To become insured you must meet each of the requirements of A through E plus the
Active Work requirement.
A. DEFlNITION OF MEMBER
You must be a Member. You are a MEMBER if you are all of the following:
1. An active employee of the Employer, other than a temporary or seasonal
employee or a full time member of the armed forces of any country.
2. Regularly scheduled to work at least 21 hours each week.
3. A citizen or resident of the United States or Canada.
B. ELIGIBILITY FOR INSURANCE
1. For each Member with Predisability Earnings of $2,000 or more
You must be eligible for Insurance. You are eligible for Insurance on
the effective date of the Group Policy if you are a Member on that
date. Otherwise, you will become eligible for Insurance on the date you
become a Member.
2. For all other Members
You must be eligible for Insurance. You are eligible for Insurance on
the effective date of the Group Policy if you are a Member on that
date. Otherwise, you will become eligible for Insurance on the first
day after 90 consecutive days as a Member.
C. APPLICATION FOR INSURANCE
Your Insurance is Noncontributory. No application for Insurance is
required.
D. EVIDENCE OF INSURABILITY
Your Insurance is Noncontributory; Evidence Of Insurability is not
required to become insured.
E. EFFECTIVE DATE OF INSURANCE
Your Insurance will become effective on the date you become eligible,
if you meet the Active Work requirement on that date.
F. ACTIVE WORK REQUIREMENT
You must meet an Active Work requirement to become insured.
You automatically meet the Active Work requirement on the date your
Insurance is scheduled to become effective unless you were Disabled on
the day before that date. If you were Disabled on the day before the
scheduled effective date of your Insurance, the effective date of your
Insurance will be delayed until the first day after you complete one
full day of Active Work as a Member.
Printed -1- 908496-A
01/30/95 LTD Policy
<PAGE>
For purposes of this Active Work requirement, you are Disabled if you
are currently unable, as a result of your sickness, accidental bodily
injury, or pregnancy, to perform the substantial and material duties of
your own occupation.
ACTIVE WORK and ACTIVELY AT WORK mean performing the usual duties of
your job at the Employer's usual place of business.
This Active Work requirement also applies to any increase in your
Insurance.
Continuity of coverage provision for each Member insured under the
Prior Plan who fails to meet the Active Work requirement of the Group
Policy:
If you are a Member who was insured under the Prior Plan on the last
day before the effective date of the Group Policy, you can become
insured under the Group Policy on the effective date of the Group
Policy without meeting the Active Work requirement. However, the
benefits we pay for a new period of Disability beginning after you
become insured under the Group Policy, but before you meet the Active
Work requirement, will be the benefits payable under the Group Policy
or the benefits which would have been payable under the Prior Plan if
the Prior Plan had remained in force, whichever are less, reduced by
any benefits payable under the Prior Plan.
Part 2. LONG TERM DISABILITY INSURING CLAUSE
Subject to all the terms of the Group Policy, we will pay the LTD Benefit
described in Part 3 upon receipt of satisfactory written proof that you have
become Disabled while insured under the Group Policy.
Part 3. SCHEDULE OF LONG TERM DISABILITY INSURANCE
You must read each section to understand when LTD Benefits are payable and how
LTD Benefits are calculated.
A. ELIMINATION PERIOD
ELIMINATION PERIOD means the length of time you must be continuously
Disabled before LTD Benefits become payable.
Your Elimination Period is the first 90 days of each period of
continuous Disability.
Your Elimination Period begins on the date you become Disabled. No LTD
Benefits are ever payable for the Elimination Period.
Temporary Recovery during the Elimination Period:
For purposes of serving the Elimination Period, all separate periods of
Disability from the same cause or causes will be added together and
treated as one period of continuous Disability. However, you must serve
the full 90 day Elimination Period within a period of 105 consecutive
days.
For purposes of this provision, a period of Temporary Recovery means
any time when we do not consider you Disabled as defined in Part 5.
B. MAXIMUM BENEFIT PERIOD
MAXIMUM BENEFIT PERIOD means the longest period of time for which LTD
Benefits are payable for any one period of continuous Disability,
whether from one or more causes.
Printed -2- 908496-A
01/30/95 LTD Policy
<PAGE>
Your Maximum Benefit Period is equal to the period shown below or the period
which lasts until your Normal Retirement Age under the 1983 amendments to the
federal Social Security Act, whichever is longer.
Your Maximum Benefit Period is determined as follows:
Your Age When Your Maximum
Disability Begins Benefit Period
58 or younger .............. To age 65
59 ......................... To age 65 or 5 years, whichever is longer
60 ......................... 5 years
61 ......................... 4 years
62 ......................... 3 years 6 months
63 ......................... 3 years
64 ......................... 2 years 6 months
65 ......................... 2 years
66 ......................... 1 year 9 months
67 ......................... 1 year 6 months
68 ......................... 1 year 3 months
69 or older ................ 1 year
Your Normal Retirement Age under the 1983 amendments to the federal Social
Security Act is determined by the year of your birth, as follows
Year of Birth Normal Retirement Age
Before 1938 ................ Age 65
1938 ....................... Age 65 and 2 months
1939 ....................... Age 65 and 4 months
1940 ....................... Age 65 and 6 months
1941 ....................... Age 65 and 8 months
1942 ....................... Age 65 and 10 months
1943 through 1954 .......... Age 66
1955 ....................... Age 66 and 2 months
1956 ....................... Age 66 and 4 months
1957 ....................... Age 66 and 6 months
1958 ....................... Age 66 and 8 months
1959 ....................... Age 66 and 10 months
After 1959.................. Age 67
Your Maximum Benefit Period begins at the end of the Elimination Period. During
the Maximum Benefit Period, LTD Benefits are paid at the end of each monthly
period for which you qualify for LTD Benefits. LTD Benefits will stop at your
death or at any time during the Maximum Benefit Period when you no longer
qualify for LTD Benefits. LTD Benefits will stop at the end of the Maximum
Benefit Period even if you are still Disabled.
Temporary Recovery during the Maximum Benefit Period:
For purposes of continuing LTD Benefits during the Maximum Benefit Period, any
two periods of Disability from the same cause or causes will be added together
and treated as one period of continuous Disability if they are separated by a
period of Temporary Recovery of less than 180 days. Thus, a new Elimination
Period will not be required, the Predisability Earnings used to compute your LTD
Benefit will not change, and the Maximum Benefit Period will be the balance of
the Maximum Benefit Period remaining unused before the period of Temporary
Recovery.
Printed -3- 908496-A
01/30/95 LTD Policy
<PAGE>
No LTD Benefits will be payable under this provision after benefits
become payable to you under any other group long term disability
insurance policy. This rule prevents double coverage if you become
insured under another policy while you are working during a period of
Temporary Recovery.
For purposes of this provision, a period of Temporary Recovery means
any time when we do not consider you Disabled as defined in Part 5.
C. AMOUNT OF LTD BENEFIT
Your monthly LTD BENEFIT equals your Maximum LTD Benefit reduced by
your Income From Other Sources.
Your MAXIMUM LTD BENEFIT equals A or B, whichever is less, where:
A = 66 2/3% of your Predisability Earnings
B = $8,000
Your monthly LTD Benefit during a period of Disability will be
determined by your Maximum LTD Benefit in effect on your last day of
Active Work before you become Disabled.
The MINIMUM LTD BENEFIT is $100 or 10% of your Maximum LTD Benefit,
whichever is greater.
Predisability Earnings are defined in Part 6.
Income From Other Sources is defined in Part 7.
Part 4. EXCLUSIONS AND LIMITATIONS
A. RISKS NOT COVERED
1. WAR: You are not covered for a disability caused or contributed to
by war or any act of war
WAR means declared or undeclared war, whether civil or
international, and any substantial armed conflict between organized
forces of a military nature.
2. INTENTIONALLY SELF-INFLICTED INJURY: You are not covered for a
disability caused or contributed to by an intentionally self-
inflicted injury.
3. PREEXISTING CONDITION: You are not covered for a disability caused
or contributed to by a Preexisting Condition or medical or surgical
treatment of a Preexisting Condition unless, on the date you become
Disabled, you have been continuously insured under the Group Policy
for at least 12 months.
PREEXISTING CONDITION means a mental or physical condition for
which you have done any of the following at any time during the 90
day period just before the effective date of your Insurance under
the Group Policy:
a. Consulted a Physician.
b. Received medical treatment or services.
c. Taken prescribed drugs or medications.
Printed -4- 908496-A
01/30/95 LTD Policy
<PAGE>
Continuity of coverage provision for each Member insured under the
Prior Plan:
This Preexisting Condition exclusion will not apply to your
Disability from a Preexisting Condition if all of the following are
true:
a. You were insured under the Prior Plan on the last day before the
effective date of the Group Policy.
b. You were continuously insured under the Group Policy from the
effective date of the Group Policy through the date you became
Disabled from the Preexisting Condition.
c. Benefits would have been payable under the Prior Plan if the
Prior Plan had remained in force, taking into consideration the
preexisting condition exclusion or limitation, if any, of the
Prior Plan.
However, the LTD Benefit we pay will be the benefit payable under
the Group Policy or the benefit which would have been payable under
the Prior Plan if the Prior Plan had remained in force, whichever is
less.
B. LIMITATIONS
1. REGULAR CARE OF A PHYSICIAN: No LTD Benefits will be paid for any
period of Disability when you are not under the regular care of a
Physician.
PHYSICIAN means a licensed medical professional, other than
yourself, diagnosing and treating you within the scope of the
license.
2. MENTAL DISORDER: Payment of LTD Benefits is limited to 24 months
for each period of Disability caused or contributed to by a Mental
Disorder. However, if you are a resident patient in a Hospital at
the end of the 24 months, this limitation will not apply while you
remain continuously confined.
MENTAL DISORDER means a mental, emotional, or behavioral disorder.
HOSPITAL means a legally operated hospital providing full-time
medical care and treatment under the direction of a full-time staff
of licensed physicians (M.D. or D.O.). Rest homes, nursing homes,
convalescent homes, homes for the aged, and facilities primarily
affording custodial, educational, or rehabilitative care are not
Hospitals.
3. WORK EARNINGS: No LTD Benefits will be paid for any period when your
work earnings exceed 80% of your Indexed Predisability Earnings.
Part 5. DEFINITION OF DISABILITY
You will be considered DISABLED during the Elimination Period if you are Totally
Disabled as defined below, and you are not working at all.
Printed -5- 908496-A
01/30/95 LTD Policy
<PAGE>
You will be considered Disabled during the Maximum Benefit Period if you are
either Totally Disabled or Residually Disabled, as defined below:
TOTALLY DISABLED:
1. You are only required to be Totally Disabled from your own
occupation during the Elimination Period and the first 60 months of the
Maximum Benefit Period.
You are Totally Disabled from your own occupation if you are currently
unable, as a result of your sickness, accidental bodily injury, or
pregnancy, to perform the substantial and material duties of your own
occupation, and you are not working at all.
2. You must be Totally Disabled from all occupations after the first 60
months of the Maximum Benefit Period.
You are Totally Disabled from all occupations if you are currently
unable, as a result of your sickness, accidental bodily injury, or
pregnancy, to perform the substantial and material duties of any
occupation for which you are reasonably fitted by education, training,
and experience, and you are not working at all.
RESIDUALLY DISABLED:
1. You are Residually Disabled during the first 60 months of the Maximum
Benefit Period if you are currently unable, as a result of your
sickness, accidental bodily injury, or pregnancy to perform the
substantial and material duties of your own occupation, and you
satisfy one of the following conditions:
a. You are working in your own occupation, and you are currently
unable, as a result of your sickness, accidental bodily injury, or
pregnancy, to earn more than 80% of your Indexed Predisability
Earnings.
b. You are working in another occupation or specialty, and your actual
work earnings do not exceed 80% of your Indexed Predisability
Earnings.
2. You are Residually Disabled after the first 60 months of the Maximum
Benefit Period if you are working in your own occupation or any other
occupation or specialty, and you are currently unable, as a result of
your sickness, accidental bodily injury, or pregnancy, to earn more
than 80% of your Indexed Predisability Earnings from work in that
occupation or any other occupation for which you are reasonably
fitted by education, training, and experience.
The Return To Work Provision in Part 8A explains the effect your work earnings
will have on the amount of your LTD Benefit. No LTD Benefits will be paid for
any period when your earnings from work in your own occupation or another
specialty or occupation exceed 80% of your Indexed Predisability Earnings.
You will not be considered Disabled solely because of the loss or restriction of
your license to engage in your own occupation.
INDEXED PREDISABILITY EARNINGS used for purposes of the income protection
guarantee in the definition of Disability means an amount determined as follows:
Until you have been Disabled for one year, your Indexed Predisability Earnings
will equal your Predisability Earnings on your last full day of Active Work
before you became Disabled. Thereafter, we will increase the
Printed -6- 908496-A
01/30/95 LTD Policy
<PAGE>
amount of your Indexed Predisability Earnings on each anniversary of the date
you became Disabled. Increases are compounded, and there is no limit on the
number of increases. The amount of each increase to the amount of Indexed
Predisability Earnings in effect during the prior year of Disability will equal
A or B, whichever is less, where:
A = 10% of your Indexed Predisability Earnings during the prior year of
Disability
B = The rate of increase in the Consumer Price Index (CPI-W during the prior
calendar year multiplied by your Indexed Predisability Earning during
the prior year of Disability
There will never be a decrease in your Indexed Predisability Earnings, even if
there is a drop in the Consumer Price Index (CPI-W).
CPI-W means the Consumer Price Index for Urban Wage Earners and Clerical Workers
published by the United States Department of Labor. If the index is discontinued
or changed, we may use another nationally published index which is comparable to
the CPI-W.
Part 6. DEFINITION OF PREDISABILITY EARNINGS
PREDISABILITY EARNINGS means your monthly rate of earnings from the Employer
including commissions, bonuses, and tax deferred contributions you make to a
qualified plan sponsored by the Employer, but excluding overtime pay and any
other extra compensation. The following rules apply to the computation of your
monthly rate of earnings:
Commissions: Your monthly rate of earnings on any date includes the average
monthly commissions paid to you by the Employer during the prior calendar year
(or during the period you were a Member, if you were not a Member throughout the
prior calendar year).
Bonuses: Your monthly rate of earnings on any date includes the average monthly
bonus paid to you by the Employer during the prior three calendar years (or
during the period you were a Member, if you were not a Member throughout the
prior three calendar years).
Weekly Pay: Weekly earnings are multiplied by 4.333 to find your monthly rate of
earnings.
Hourly Pay: Your hourly pay rate is multiplied by the number of hours you are
regularly scheduled to work each month (but not more than 40 hours per week) to
find your monthly rate of earnings. If you do not have regular work hours, your
monthly rate of earrings on any date will be based on the average number of
hours you worked during the prior calendar year (or during the period you were a
Member, if you were not a Member throughout the prior calendar year), but not
more than 40 hours per week.
Part 7. DEFINITION OF INCOME FROM OTHER SOURCES
Income From Other Sources is used to reduce your LTD Benefit and is explained in
the following definition, exceptions, and rules.
A. DEFINITION OF INCOME FROM OTHER SOURCES
INCOME FROM OTHER SOURCES means:
1. Any sick pay or other salary continuation (other than vacation pay)
paid to you by the Employer which, when added to the amount of your
Maximum LTD Benefit, exceeds 100% of your Predisability Earnings.
Printed -7- 908496-A
01/30/95 LTD Policy
<PAGE>
2. The amount determined from the Return To Work Provision in Part 8A,
if you work while you are Disabled. Part 8A explains the effect your
work earnings will have on the amount of your LTD Benefit.
3. Any amount you receive or are eligible to receive as a result of
your disability under any worker's compensation law or similar law
including amounts for partial or total disability, whether
permanent, temporary, or vocational.
4. Any amount you, your spouse, or your children receive or are
eligible to receive because of your disability or retirement under
the Federal Social Security Act, the Canada Pension Plan, the
Quebec Pension Plan, or any similar plan or act. Early retirement
benefits payable prior to normal retirement age under the plan
or act will not be used to reduce the amount of your LTD Benefit
unless they are actually received.
Benefits your spouse or children receive or are eligible to receive
because of your disability will be considered Income From Other
Sources regardless of marital status, custody, or place of
residence.
5. The amount you receive or are eligible to receive because of your
disability under any group insurance coverage, other than group
credit insurance or group mortgage disability insurance.
6. The amount you receive or are eligible to receive because of your
disability under any state unemployment compensation disability
benefit law or state disability income benefit law.
7. Any disability or retirement benefits paid to you under the
Employer's defined benefit retirement plan, except:
a. Any lump sum distribution of your entire interest in the plan.
b. Any amount which is attributable to your contributions to the
plan.
c. Any amount which you could have received upon termination of
employment without being disabled or retired.
8. Any amount received by compromise, settlement, or other method
as a result of a claim for any of the above.
B. EXCEPTIONS TO INCOME FROM OTHER SOURCES
The following will not be used to reduce the amount of your LTD
Benefit:
1. Any cost of living increase in any Income From Other Sources,
provided that the increase becomes effective while you are
Disabled and whil you are eligible to receive the Income From Other
Sources. (This exception does not apply to any increase in your
earnings from any work.)
2. Any amount received as reimbursement for hospital, medical, or
surgical expense.
3. Any amount which represents reasonable attorney's fees incurred
in connection with the claim for Income From Other Sources.
4. Benefits from any individual disability insurance policy.
5. Any amount you receive from the following types of retirement plans:
A defined contribution (money purchase) retirement plan, a profit
sharing plan, a thrift or savings plan, a deferred compensation
plan, a 401(k) plan, an Individual Retirement Account (IRA), a Tax
Sheltered
Printed -8- 908496-A
01/30/95 LTD Policy
<PAGE>
Annuity (TSA), a stock ownership plan, a Keogh (HR-10) Plan, or a
retirement plan under a Professional Service Corporation with
respect to principals or shareholders.
6. Any benefits under the Federal Social Security Act received by, or
on behalf of, your dependent child age 18 or over.
C. RULES FOR INCOME FROM OTHER SOURCES
1. Monthly Equivalents
Each month your LTD Benefit will be reduced by the Income From Other
Sources for the same monthly period, even if you actually receive
the Income From Other Sources in another month.
If you receive any Income From Other Sources periodically other than
monthly, we will determine the monthly equivalent and use that
amount to reduce your LTD Benefit.
If you receive any Income From Other Sources in a lump sum, we will
prorate the lump sum over the period of time for which the lump sum
was paid and use that amount to reduce your LTD Benefit. If no
period of time is stated, we will determine the maximum period of
time to which the lump sum is fairly attributable and prorate the
lump sum over that period of time.
Each month we will determine the amount of your LTD Benefit using
the Income From Other Sources for the same monthly period, even if
you actually receive the Income From Other Sources in another month.
2. Your Duty To Pursue Income From Other Sources
You must pursue Income From Other Sources for which you may be
eligible. We may ask for written documentation of your pursuit of
Income From Other Sources. You must provide it within 60 days after
we mail you our request. Otherwise, we may reduce your LTD Benefits
by the amount we estimate you would be eligible to receive upon
proper pursuit of the Income From Other Sources.
3. Income From Other Sources Which Is Pending
If you are actively pursuing a claim for Income From Other Sources,
we will not deduct that Income From Other Sources until it becomes
payable. You must notify us of the amount of the Income From Other
Sources when it is received. You must repay us for any resulting
overpayment of your claim.
4. Overpayment Of Claim
We will notify you of the amount of any overpayment of your claim
under any group disability insurance policy issued by us. You must
immediately repay us the amount of the overpayment. You will not
receive any LTD Benefits until we have been repaid in full. In the
meantime, any LTD Benefits becoming payable, including the Minimum
LTD Benefit, will be applied to reduce the amount of the
overpayment. We may charge you interest at the legal rate for any
overpayment which is not repaid within 30 days after we first mail
you notice of the amount of the overpayment.
Printed -9- 908496-A
01/30/95 LTD Policy
<PAGE>
Part 8 OTHER BENEFITS AND PROVISIONS
A. RETURN TO WORK PROVISION
This provision is designed to give you an incentive to work to the
extent of your ability while you are Disabled.
If you work while you are Disabled, the amount of your LTD Benefit will
only be reduced as follows:
1. Income Protection Plus:
During the first 12 months of LTD Benefit payments while you are
working, the Income From Other Sources used to reduce the amount of
your LTD Benefit will include the amount, if any, by which the sum of
your Maximum LTD Benefit plus your earnings from work you perform while
you are Disabled exceeds 100% of your Indexed Predisability Earnings.
2. 50% Return To Work Benefit:
After the first 12 months of LTD Benefit payments while you are
working, the Income From Other Sources used to reduce the amount of
your LTD Benefit will include one-half the amount of your earnings from
work you perform while you are Disabled, but only if your work earnings
exceed 20% of your Indexed Predisability Earnings.
B. SURVIVORS BENEFIT
If you die while LTD Benefits are payable to you, we will pay a lump
sum Survivors Benefit. The following rules will apply:
1. The Survivors Benefit will equal three times the amount of your
Maximum LTD Benefit.
2. Any Survivors Benefit payable will first be applied to reduce the
amount of any outstanding overpayment of your claim for LTD
Benefits.
3. The Survivors Benefit will be paid to your surviving spouse. If you
are not survived by a spouse, the Survivors Benefit will be paid in
equal shares to your surviving children. If you are not survived by
a spouse or any children, the Survivors Benefit will be paid to your
estate.
C. WAIVER OF PREMIUM
Your Long Term Disability Insurance in effect when you become Disabled
will be continued without payment of premiums while LTD Benefits are
payable.
If a period of continuous Disability is extended by a new cause while
LTD Benefits are payable, LTD Benefits will continue while you remain
Disabled (subject to the terms of the Group Policy), but not beyond the
end of the original Maximum Benefit Period.
D. BENEFITS AFTER INSURANCE ENDS OR IS CHANGED
Your right to receive LTD Benefits for a period of continuous
Disability which begins while you are insured under the Group Policy
will not be affected by:
1. The termination of the Group Policy alter the date you become
Disabled.
2. The termination of your Insurance while the Group Policy remains in
force.
Printed -1O- 908496-A
01/30/95 LTD Policy
<PAGE>
3. The termination of this Insurance for your classification of
employees of the Employer.
4. Any amendment to the Group Policy approved after the date you become
Disabled.
Part 9. WHEN INSURANCE ENDS
Your Insurance will end automatically on the earliest of the following dates:
1. The date you cease to be a Member as defined in Part 1A.
2. The date you become a full time member of the armed forces of any
country.
3. The date the Group Policy terminates or is amended to terminate
coverage for your classification of employees.
4. The date you cease to be Actively At Work for the Employer on your
regular work days for any reason, including temporary layoff or the
elimination of your job. However, your Insurance will be continued
(unless it ends under any of the above items) during the following
periods while you are absent from Active Work:
a. While you are receiving full salary (including sick pay and vacation
pay) from the Employer, but not beyond the date you are laid off,
the date your job is eliminated, the effective date of a severance
agreement, or the date your job is terminated by you or the
Employer.
b. During the Elimination Period and while LTD Benefits are payable.
c. During the first 30 days of a leave of absence approved by the
Employer.
d. For up to 17 weeks during a period of family or medical leave
approved by the Employer in accordance with the Employer's uniform
family and medical leave policy patterned after the federal Family
and Medical Leave Act of 1993 or applicable state law.
Part 10. BECOMING INSURED AGAIN AFTER INSURANCE ENDS
You may become insured again under the Group Policy after your Insurance ends.
The general rule is that you may become insured again on the same basis as a new
Member, as provided in Part 1. However, the following special rules apply to
becoming insured again under the Group Policy after your Insurance ends:
1. If your Insurance ends because you cease to be a Member or because you
cease to be Actively At Work for the Employer on your regular work
days, you will not be required to satisfy the eligibility waiting
period shown in Part 1B again if you qualify as a Member and return to
Active Work for the Employer within 90 days after your Insurance ends.
2. If your Insurance ends because you become a full time member of the
armed forces of the United States, you will not be required to satisfy
the eligibility waiting period shown in Part 1B again if you qualify as
a Member and return to Active Work for the Employer within 90 days
after you leave active military service.
3. If you are immediately eligible for Insurance under rule 1 or 2 and you
apply for Insurance within 31 days after you become eligible, you will
not be required to provide satisfactory Evidence Of Insurability to
become insured again for a Maximum LTD Benefit up to the amount in
effect when your Insurance ended.
Printed -11- 908496-A
01/30/95 LTD Policy
<PAGE>
Your Insurance will become effective again on the date determined from Part 1,
and will not be retroactive to the date your Insurance ended. Your Insurance
will be subject to the Preexisting Condition exclusion or limitation in Part 4,
if any, as follows:
1. If you become insured again more than 90 days after your Insurance
ends, the Preexisting Condition provision will apply to any condition
which is a Preexisting Condition on the date you become insured again.
2. If you become insured again within 90 days after your Insurance ends,
the Preexisting Condition provision will apply to any condition which
was a Preexisting Condition at the start of the prior period of
Insurance. For this purpose only, the two periods of Insurance will be
treated as one period of continuous Insurance and the period when you
were not insured will be ignored. (The same principles will apply if
your Insurance ends two or more times and each time you become insured
again within 90 days. The three or more periods of Insurance will be
added together for purposes of the Preexisting Condition exclusion or
limitation).
Note: After LTD Benefits for a period of Disability end, your Insurance will
continue without any interruption if you are a Member and immediately return to
Active Work for the Employer. This Part 10 will not apply since your Insurance
continues while you are receiving LTD Benefits.
Part 11. CLAIMS PROVISIONS AND PROCEDURES FOR LTD BENEFITS
A. PAYMENT OF BENEFITS; TIME OF PAYMENT
LTD Benefits will be paid to you. Any LTD Benefit remaining unpaid at
your death will be paid to the person or persons receiving the
Survivors Benefit or to your estate.
All benefits payable under the Group Policy will be paid within 60 days
after we receive satisfactory written proof of loss in connection with
the claim for benefits. All accrued LTD Benefits payable under the
Group Policy will be paid not less frequently than monthly during the
continuance of the period for which benefits are payable. Any benefits
remaining unpaid at the end of that period will be paid as soon as
possible after the receipt of satisfactory written proof of loss in
connection with the claim for benefits.
B. TIME LIMITS FOR FILING A CLAIM
You must claim LTD Benefits within 120 days after the end of the
Elimination Period or as soon thereafter as reasonably possible and, in
any case, within one year after the end of that 120 day period. Claims
not filed within these time limits will be denied and no LTD Benefit
will be paid. These limits will not apply during any period when you
lacked the legal capacity to file a claim.
C. FILING A CLAIM
All claims for LTD Benefits should be submitted on our forms. You
should obtain claim forms from the Policyholder or the Plan
Administrator.
You may also request claim forms from us. If we fail to provide you
with claim forms within 15 days of your request, you may submit your
claim in a letter stating the occurrence, character, and extent of the
event for which the claim is made.
Printed -12- 908496-A
01/30/95 LTD Policy
<PAGE>
D. PROOF OF LOSS
No LTD Benefits will be paid unless you provide us with satisfactory
written proof of loss at your expense. If your claim is approved, no
LTD Benefits will be continued beyond the end of the period for which
you have provided us with satisfactory written proof of loss at your
expense.
You must submit the following documents at your expense:
1. A completed claim statement signed by you.
2. A completed claim statement signed by the Policyholder.
3. A completed claim statement signed by your treating Physician.
4. Your written authorization for us to obtain the records and
information (including tax returns) needed to determine your
eligibility for LTD Benefits.
5. Such other documents as we may reasonably require, including copies
of your tax returns.
We will require you to submit additional documentation of your claim at
your expense at reasonable intervals while you are receiving LTD
Benefits.
E. INVESTIGATION OF YOUR CLAIM
We have the right at any time to conduct an investigation of your
claim.
F. INDEPENDENT EXAMINATION
We have the right to have you examined at our expense at reasonable
intervals while you are claiming LTD Benefits. Any such examinations
will be conducted by one or more Physicians or vocational specialists
of our choice.
We have the right to defer or suspend payment of LTD Benefits if you
fail to attend an examination or fail to cooperate with the person
conducting the examination. In such a case LTD Benefits may be resumed,
provided that the required examination occurs within a reasonable time
and LTD Benefits are otherwise payable.
G. NOTICE OF DECISION ON CLAIM
You will receive a written decision on your claim within a reasonable
period of time after we receive your claim.
If we deny all or any part of your claim, you will receive a written
notice of denial containing:
1. The reasons for the denial.
2. Reference to the provisions of the Group Policy on which the denial
is based.
3. A description of any additional information or documentation you
must submit to obtain benefits and an explanation of why such
information or documentation is required.
4. Notice of your right to a review of the denial.
5. A description of the review procedure.
Printed -13- 908496-A
01/30/95 LTD Policy
<PAGE>
If you do not receive a written decision on your claim within 60 days
after your claim is received, you will have an immediate right to
request a review under the review procedure, as if your claim had been
denied.
H. REVIEW PROCEDURE
You have a right to a review of any denial by us of all or any part of
your claim. To obtain a review, you should send a written request for
review to us within 60 days alter you receive notice of the denial. No
special form is required.
As a part of your request for review, you may submit issues and
comments in writing and provide additional documentation in support of
your claim. You may review pertinent documents related to your request
for review.
We will review your claim promptly after receiving your request for
review. You will receive written notice of our decision within 60 days
alter your request for review is received, or within 120 days if
special circumstances require an extension. The written decision you
receive will include the reasons for the decision and reference to the
provisions of the Group Policy on which the decision is based.
You may authorize another person to act for you under this review
procedure.
Part 12. TIME LIMITS ON LEGAL ACTIONS
No action at law or in equity may be brought to recover under the Group Policy
until 60 days after written proof of loss has been provided to us.
Part 13. INCONTESTABLE CLAUSES
A. INCONTESTABLE CLAUSE FOR YOUR INSURANCE
Any statement you make to obtain Insurance is a representation and not
a warranty. No misrepresentation by you will be used to reduce or deny
your claim or to deny the validity of your Insurance unless all of the
following are true:
1. Your Insurance would not have been approved if we had known the
truth.
2. Your misrepresentation is contained in a written instrument signed
by you.
3. You have been given a copy of the written instrument containing
your misrepresentation.
After your Insurance has been in effect for two years, we will not use
a misrepresentation by you to reduce or deny your claim or to deny the
validity of your Insurance, unless it was a fraudulent
misrepresentation made with actual intent to deceive.
B. INCONTESTABLE CLAUSE FOR GROUP POLICY
Any statement made by the Policyholder to obtain the Group Policy is a
representation and not a warranty. No misrepresentation by the
Policyholder will be used to deny a claim or to deny the validity of
the Group Policy unless all of the following are true:
1. The Group Policy would not have been issued by us if we had known
the truth.
2. The misrepresentation is contained in a written instrument signed
by the Policyholder.
Printed -1~ 908496-A
01/30/95 LTD Policy
<PAGE>
3. A copy of the written instrument has been given to the
Policyholder.
The validity of the Group Policy will not be contested after it has
been in effect for two years, except for non-payment of premiums or a
fraudulent misrepresentation made with actual intent to deceive.
Part 14. ALLOCATION OF AUTHORITY
Except for those functions which the Group Policy specifically reserves to the
Employer, we have the full and exclusive authority to administer claims and to
interpret the Group Policy and resolve all questions arising in the
administration, interpretation, and application of the Group Policy.
Our authority includes, but is not limited to, the following:
1. The right to resolve all matters when a review has been requested.
2. The right to establish and enforce rules and procedures for the
administration of the Group Policy and any claim under it.
3. The right to determine (a) your eligibility for Insurance, (b) your
entitlement to benefits, and (c) the amount of the benefits payable to
you.
Part 15. ASSIGNMENT NOT PERMITTED
Your Certificate is not assignable. The Insurance provided and benefits payable
are not assignable.
Part 16. GENERAL DEFINITIONS
EMPLOYER means Pacific Capital Bancorp and First National Bank of Central
California.
GROUP POLICY means our group policy number 908496-A issued to the Policyholder.
PRIOR PLAN means the Employer's group long term disability insurance program in
effect on December 31, 1994 under Standard Insurance Company policy number
484382.
LONG TERM DISABILITY INSURANCE means your disability insurance under the Group
Policy.
INSURANCE means your Long Term Disability Insurance under the Group Policy.
LTD BENEFIT means the monthly Long Term Disability Insurance benefit payable to
you according to the terms of the Group Policy.
Providing EVIDENCE OF INSURABILITY, if required, means you must do all of the
following:
1. Complete and sign our health and medical history form.
2. Sign our form authorizing us to obtain information about your health
and other insurance coverage
3. Provide any additional information about your insurability reasonably
required by us and undergo a physical examination and testing, if
required by us.
Printed -15- 908496-A
01/30/95 LTD Policy
<PAGE>
All required information must be provided to us at your expense.
CONTRIBUTORY Insurance means you pay all or a part of the cost of your
Insurance. If your Insurance is Contributory, the Employer determines the amount
of your contribution toward the cost of your Insurance.
NONCONTRIBUTORY Insurance means the Employer pays the entire cost of your
Insurance.
Printed -16- 908496-A
01/30/95 LTD Policy
<PAGE>
SECTION TWO - POLICYHOLDER PROVISIONS
Part 1. PREMIUMS
A. PREMIUM CHARGES
The premium charge on each premium due date will be an aggregate amount
based on the sum of the premiums due for all Members then insured under
the Group Policy. The premium due with respect to each insured Member
is determined by multiplying the Member's applicable Predisability
Earnings by the premium rate then in effect, as noted on the Policy
Data page.
B. CONTRIBUTIONS FROM MEMBERS
Insurance is Noncontributory; the Policyholder pays the entire cost of
Insurance.
C. CHANGES IN PREMIUM RATES
1. Premium rates may be changed at any time upon mutual agreement
between the Policyholder and us.
2. If the number of insured Members changes by 25% or more, we may
change any one or more of the premium rates on any Premium Due
Date, but not more than once in any twelve month period.
3. We may change any one or more of the premium rates at any time when
a change in any law or governmental regulation affects the amount
payable by us under this Group Policy. Any such change in premium
rates will reflect only the change in our obligations under the
Group Policy.
4. Except as provided in 1, 2, and 3, above, we will not change the
premium rates during the Initial Policy Term or more than once in
any Contract Year thereafter. The Initial Policy Term is shown on
the cover of this Group Policy. Contract Years are successive
twelve month periods computed from the end of the Initial Policy
Term.
We will give the Policyholder prior written notice of any change in the
premium rates at least 31 days before the Premium Due Date on which the
change will be effective.
D. PAYMENT OF PREMIUMS
All premiums are due on the Premium Due Dates shown on the cover of the
Group Policy.
Each premium is payable by the Policyholder on or before the Premium
Due Date direct to us at our Home Office. The payment of each premium
as it becomes due will maintain this Group Policy in force through the
date immediately preceding the next Premium Due Date.
E. TERMINATION OF GROUP POLICY BY THE POLICYHOLDER
The Policyholder may terminate the Group Policy at any time by giving
prior written notice to us. The effective date of the termination will
be the later of (1) the date specified in the notice, and (2) the date
we receive the notice. No coverage under the Group Policy will continue
and no premium charges will accrue after the effective date of the
termination of the Group Policy.
Printed -17- 908496-A
01/30/95 LTD Policy
<PAGE>
F. TERMINATION OF GROUP POLICY BY US
We may terminate the Group Policy as follows:
1. On any Premium Due Date if the number of persons insured is less
than the Minimum Participation Number or less than the Minimum
Participation Percentage.
2. On any Premium Due Date if we, in our sole judgement, determine that
the Policyholder has:
a. Failed to promptly furnish any necessary information requested
by us; or
b. Failed to perform any other obligations relating to this Group
Policy.
We will give the Policyholder at least 31 days prior written notice of
any such termination of the Group Policy.
G. GRACE PERIOD
The Group Policy has a 31 day Grace Period for each premium due after
the first premium. If a premium is not paid on or before the Premium
Due Date, the premium may be paid during the following 31 day Grace
Period. The Group Policy will remain in force during the Grace Period,
and the Policyholder is liable to us for the payment of the premium for
that period.
H. TERMINATION OF GROUP POLICY FOR NONPAYMENT OF PREMIUMS
If the required premium is not paid during the Grace Period, the Group
Policy will terminate automatically at 12:01 AM. on the date following
the end of the Grace Period.
The Policyholder is liable for the payment of the premiums for the
coverage continued during the Grace Period.
I. PREMIUM ADJUSTMENTS
Premium adjustments involving a return of unearned premiums to the
Policyholder will be limited to the twelve month period immediately
preceding the date we receive a request for premium adjustment and
evidence that an adjustment should be made.
Part 2. CERTIFICATES
We will issue Certificates to the Policyholder showing the insured Member's
coverage under this Group Policy. The Policyholder will distribute a Certificate
to each insured Member.
Part 3. RECORDS AND REPORTS
The Policyholder must furnish on our forms all information reasonably necessary
to the administration of the Group Policy when required by us. We have the right
at all reasonable times to inspect the payrolls and other records of the
Policyholder which relate to Insurance under this Group Policy.
Clerical error by the Policyholder will not:
1. Cause a Member to become insured.
2. Invalidate Insurance otherwise validly in force.
Printed -18- 908496-A
01/30/95 LTD Policy
<PAGE>
3. Continue Insurance otherwise validly terminated.
Part 4. MISSTATEMENT OF AGE
If the age of a Member has been misstated, we will make an equitable adjustment
of the premiums or benefits, or both. The adjustment will be based on either or
both of the following factors:
1. The amount of the Member's Insurance based on the Member's correct age.
2. The difference between the premiums paid and the premiums which would
have been paid if the Member's age had been correctly stated.
Part 5. ENTIRE CONTRACT; CHANGES
The Group Policy and the application of the Policyholder, if any, constitute the
entire contract between the parties.
This Group Policy may be changed in whole or in part. No change in this Group
Policy will be valid unless it is approved in writing by one of our executive
officers and delivered to the Policyholder for attachment to the Group Policy.
No agent has authority to change this Group Policy or to waive any of its
provisions.
Part 6. EFFECT ON WORKER'S COMPENSATION
The coverage provided under the Group Policy is not a substitute for worker's
compensation insurance and does not relieve the Employer of any obligation to
provide worker's compensation insurance.
Printed -19- 908496-A
01/30/95 LTD Policy
EXHIBIT 25
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes D. Vernon
Horton or Clayton C. Larson, and either of them, as attorney-in-fact, to sign in
his or her behalf, individually and in each capacity stated below, and to file
this Annual Report on Form 10-K and all amendments and/or supplements to this
Annual Report on Form 10-K.
/S/ Clayton C. Larson
- -------------------------------------- Date: March 27, 1996
Charles E. Bancroft,
Director
/S/ Dennis A. DeCius
- -------------------------------------- Date: March 27, 1996
Dennis A. DeCius
Executive Vice President
and Chief Financial Officer
(principal financial officer and
principal accounting officer)
/S/ Gene DiCicco
- -------------------------------------- Date: March 25, 1996
Gene DiCicco,
Director
/S/ Lewis L. Fenton
- -------------------------------------- Date: March 13, 1996
Lewis L. Fenton,
Director
/S/ Gerald T. Fry
- -------------------------------------- Date: March 13, 1996
Gerald T. Fry,
Director
<PAGE>
/S/ James L. Gattis
- -------------------------------------- Date: March 27, 1996
James L. Gattis,
Director and Secretary
/S/ Hubert W. Hudson
- -------------------------------------- Date: March 21, 1996
Hubert W. Hudson,
Director
/S/ Stanley R. Haynes
- -------------------------------------- Date: March 27, 1996
Stanley R. Haynes,
Chairman of the Board
and Director
/S/ D. Vernon Horton
- -------------------------------------- Date: March 27, 1996
D. Vernon Horton,
Chief Executive officer
(principal executive
officer) and Director
/S/ William J. Keller
- -------------------------------------- Date: March 27, 1996
William J. Keller,
Director
/S/ Clayton C. Larson
- -------------------------------------- Date: March 13, 1996
Clayton C. Larson,
President and Director
/S/ William S. McAfee
- -------------------------------------- Date: March 27, 1996
William S. McAfee,
Director
<PAGE>
/S/ William H. Pope
- -------------------------------------- Date: March 27, 1996
William H. Pope,
Director
/S/ William K. Sambrailo
- -------------------------------------- Date: March 22, 1996
William K. Sambrailo,
Director
/S/ Robert B. Sheppard
- -------------------------------------- Date: March 14, 1996
Robert B. Sheppard,
Director
/S/ Clyn Smith, Jr.
- -------------------------------------- Date: March 14, 1996
Clyn Smith, Jr.,
Director
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 24,891
<INT-BEARING-DEPOSITS> 1,287
<FED-FUNDS-SOLD> 10,326
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 75,896
<INVESTMENTS-CARRYING> 8,596
<INVESTMENTS-MARKET> 8,662
<LOANS> 215,220
<ALLOWANCE> 2,397
<TOTAL-ASSETS> 353,579
<DEPOSITS> 307,819
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,784
<LONG-TERM> 0
<COMMON> 31,325
0
0
<OTHER-SE> 11,741
<TOTAL-LIABILITIES-AND-EQUITY> 353,579
<INTEREST-LOAN> 20,461
<INTEREST-INVEST> 5,305
<INTEREST-OTHER> 79
<INTEREST-TOTAL> 25,845
<INTEREST-DEPOSIT> 7,029
<INTEREST-EXPENSE> 7,029
<INTEREST-INCOME-NET> 18,816
<LOAN-LOSSES> 135
<SECURITIES-GAINS> (73)
<EXPENSE-OTHER> 10,394
<INCOME-PRETAX> 8,214
<INCOME-PRE-EXTRAORDINARY> 8,214
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,034
<EPS-PRIMARY> 2
<EPS-DILUTED> 2
<YIELD-ACTUAL> 9
<LOANS-NON> 993
<LOANS-PAST> 141
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,438
<CHARGE-OFFS> 321
<RECOVERIES> 145
<ALLOWANCE-CLOSE> 2,397
<ALLOWANCE-DOMESTIC> 2,397
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
