<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
[_] Definitive Proxy Statement COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
CIVIC BANCORP
(Name of Registrant as Specified In Its Charter)
CIVIC BANCORP
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 30, 1996
To the Shareholders of Civic BanCorp:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Civic
BanCorp will be held at 2101 Webster Street, 18th Floor, Oakland, California on
May 30, 1996 at 4:00 pm., for the following purposes:
1. Electing directors to serve for the ensuing year.
2. Ratifying and approving the Civic BanCorp quasi-reorganization.
3. Retaining the Board of Directors' selection of KPMG Peat Marwick LLP as
independent accountants for the year 1996; and
4. Transacting such other business that may properly come before the
meeting or any adjournment thereof.
The close of business on March 14, 1996 has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
meeting or any adjournment thereof.
Whether or not you plan to attend the meeting, you may vote by completing,
signing and returning the enclosed proxy card promptly. Your proxy card may be
revoked at any time prior to the time it is voted.
By Order of the Board of Directors
Herbert C. Foster
President and Chief Executive Officer
April 26, 1996
(Approximate mailing date of proxy materials)
Place and Time of Annual Meeting
2101 Webster Street, 18th Floor
Oakland, California 94612
4:00 p.m.
<PAGE>
PROXY STATEMENT
OF
CIVIC BANCORP
2101 WEBSTER STREET
OAKLAND, CALIFORNIA 94612
ANNUAL MEETING OF SHAREHOLDERS
MAY 30, 1996
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Civic BanCorp ("the Company"), a
California corporation, for use at the Annual Meeting of Shareholders to be
held on May 30, 1996 at 4:00 p.m. at 2101 Webster Street, 14th floor, Oakland,
California, and any adjournment thereof. These proxy materials were mailed to
shareholders on or about April 26, 1996.
PURPOSE OF THE MEETING
The meeting is to be held for the purpose of:
1. Electing eleven (11) directors (the entire Board of Directors) to serve
until the next annual meeting of shareholders and until their successors
are elected and have qualified.
2. Ratifying and approving the Civic BanCorp quasi-reorganization.
3. Ratifying the selection of KPMG Peat Marwick LLP as independent public
accountants for the year 1996.
4. Acting upon such other business as may properly come before the meeting
or any adjournment thereof.
GENERAL PROXY STATEMENT INFORMATION
REVOCABILITY OF PROXIES
Any shareholder giving the enclosed proxy has the right to revoke it at any
time before it is exercised by filing with the Company's Secretary, Carolyn
Lashbrook, a written notice of revocation or by presenting at the meeting a
duly executed proxy bearing a later date. A shareholder may also revoke the
proxy by attending the meeting and electing to vote in person before any vote
is taken.
SOLICITATION OF PROXIES
This proxy solicitation is made by the Board of Directors of the Company and
the cost of the solicitation is being borne by the Company. Solicitation is
being made by this Proxy Statement and may also be made by employees of the
Company who may communicate with shareholders or their representatives in
person, by telephone or by additional mailings in connection with proxies,
although no employee will be specifically engaged for that purpose.
OUTSTANDING SECURITIES AND VOTING RIGHTS
As of March 14, 1996, the Company had 4,509,827 shares of common stock, no
par value, issued and outstanding, held by approximately 1,100 shareholders.
Only those shareholders of record of the Company's common stock as of the
record date, March 14, 1996 will be entitled to notice of and to vote in
person or by proxy at the meeting or any adjournment thereof, unless a new
record date is set for an adjourned meeting.
1
<PAGE>
Each share of common stock is entitled to one vote at the annual meeting,
except with respect to the election of directors. In elections for directors,
California law provides that a shareholder, or his or her proxy, may cumulate
votes; that is, each shareholder has a number of votes equal to the number of
shares owned, multiplied by the number of directors to be elected, and the
shareholder may cumulate such votes for a single candidate, or distribute such
votes among as many candidates as he or she deems appropriate. However, a
shareholder may cumulate votes only for a candidate or candidates whose names
have been properly placed in nomination prior to the voting, and only if the
shareholder has given notice at the meeting, prior to the voting, of his or
her intention to cumulate votes for the candidates in nomination. The proxy
holders are given, under the terms of the proxy, discretionary authority to
cumulate votes represented by shares for which they are named proxy.
In the election of directors, the eleven (11) candidates receiving the
highest number of votes will be elected. Ratification and approval of the
quasi-reorganization requires the affirmative vote of a majority of the issued
and outstanding shares as of the record date. Ratification of the selection of
KPMG Peat Marwick LLP as independent public accountants requires the
affirmative vote of a majority of the issued and outstanding shares of common
stock represented and voting at the meeting. Broker non-votes and abstentions
will not be counted, except for quorum purposes, and will have no effect on
the election of directors. In determining whether the requisite shareholder
approval has been received on the ratification and approval of the quasi-
reorganization, broker non-votes and abstentions will have the same effect as
a vote against the matter. In determining whether the requisite shareholder
approval has been received on the ratification of the selection of
accountants, broker non-votes will not be counted, while abstentions will be
counted and will therefore have the same effect as a vote against the matter.
If the enclosed proxy is completed in the appropriate spaces, signed, dated
and returned, the proxy will be voted as specified in the proxy. If no
specification is made, it will be voted FOR the election of directors
nominated by management, FOR ratification and approval of the quasi-
reorganization, FOR ratification of KPMG Peat Marwick LLP as independent
public accountants, and will be voted on such other matters as may come before
the meeting at the discretion of the proxy holders.
Management of the Company is not aware of any other matters to come before
the meeting, and recommends that the shareholders vote FOR the election of the
directors nominated by management, FOR ratification and approval of the quasi-
reorganization and FOR ratification of KPMG Peat Marwick LLP as independent
public accountants.
PRINCIPAL SHAREHOLDERS
No persons are known to management to have, directly or indirectly, more
than 5% of the Company's issued and outstanding shares of common stock as of
March 14, 1996 other than as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------- -------------------- ----------
<S> <C> <C>
C. Donald Carr............................ 582,667 12.9%
1001 Dry Creek Road
Napa, CA 94558
Heine Securities Corporation.............. 395,866 8.8%
51 JFK Parkway
Short Hills, NJ 07078
Paul R. Handlery.......................... 345,683 7.7%
C/O Handlery Hotels
180 Geary Street
San Francisco, CA 94108
Westchester Capital Management, Inc....... 285,800 6.4%
100 Summit Lake Drive
Valhalla, NY 10595
</TABLE>
2
<PAGE>
PROPOSALS OF SHAREHOLDERS
Under certain circumstances, shareholders are entitled to present proposals
at shareholders' meetings, provided that the proposal is submitted in a timely
manner and in a form that complies with applicable regulations. For any such
shareholder proposal to be included in the proxy statement to be prepared for
next year's annual meeting, the shareholder must submit the proposal prior to
December 4, 1996 in a form that complies with applicable regulations.
Submission of a proposal does not guarantee its inclusion in a proxy statement
or its presentation at a shareholder meeting. Shareholder proposals are
subject to regulation under federal securities laws.
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
directors and executive officers, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the
Company. 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 Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the year ended December 31, 1995 all Section
16(a) filing requirements applicable to its officers, directors and greater
than ten percent beneficial owners were complied with.
3
<PAGE>
1. ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of directors shall be not
less than eleven (11) nor more than twenty (20). By resolution the Board of
Directors has fixed the number of directors at eleven (11).
NOMINEES TO THE BOARD OF DIRECTORS
Each of management's nominees to the Board of Directors of the Company has
served as a director of the Company and its subsidiary CivicBank of Commerce
("Bank") since 1984 except Herbert C. Foster who was appointed in March, 1993.
The term of each will expire at the annual meeting upon the election and
qualification of his successor for the same respective periods.
Each of the directors is to be elected to serve for the ensuing year and until
his or her successor is elected and qualified. The nominees for director as
proposed by management, their ages and their principal occupations during the
past five years are:
C. DONALD CARR, 63, owner of the Carr Company, a real estate brokerage and
development business.
DAVID L. CUTTER, 67, former Chairman of Cutter Laboratories, Inc.; director
of CHAD Therapeutics, Inc.; member of American Institute of Certified Public
Accountants.
HERBERT C. FOSTER, 56, President and Chief Executive Officer of the Company
and Chairman and Chief Executive Officer of the Bank since March, 1993,
President and Chief Executive Officer of Pacific Bay Bank, San Pablo, CA
during 1992 and President of University National Bank & Trust Company, Palo
Alto, CA from 1983 to 1991.
JOHN W. GLENN, 67, founder and President of John W. Glenn Adjustors and
Administrators; former director and president of Bay Area Rapid Transit
District (BART); past president of East Bay Claims Association and the
California Association of Independent Insurance Adjusters.
PAUL R. HANDLERY, 75, Chairman and Chief Executive Officer of Handlery
Hotels, Inc., of San Francisco, California, a hotel, real estate and
investment management firm.
JAMES C. JOHNSON, 62, President of JAE Properties, Inc., a real estate
broker, property manager, developer and syndicatior.
PAUL C. KEPLER, 52, President of The Kepler Co., a private investment firm;
former Chief Executive Officer of LINC Capital Corporation from 1986 to 1993,
an equipment leasing and real estate financing company; owner of the Seascape
Sports Club.
EDWARD G. MEIN, 66, owner of Mein Investment Co., a real estate management,
development and lending company.
DALE D. REED, 64, Chairman and Chief Executive Officer of Buran & Reed,
Inc., a diversified investment company; trustee of San Leandro Hospital since
1993; chairman of the San Leandro Planning Commission, and past president and
trustee of the San Leandro Scholarship Foundation.
EDWARD G. ROACH, 57, President of ER Development, a real estate development
firm.
BARCLAY SIMPSON, 74, Chairman of Simpson Manufacturing Co., Inc, a
manufacturer of construction products; owner of Barclay Simpson Fine Arts
Gallery in Lafayette; director of McFarland Energy, Inc.; former director and
president of the Bay Area Rapid Transit District (BART); trustee of the
California College of Arts and Crafts and the University Art Museum, Berkeley.
There are no family relationships among any of the nominees for director or
any of the executive officers of the Company.
4
<PAGE>
The enclosed proxy will be voted in favor of the election of the above-named
nominees as directors, unless authority to vote for directors is withheld. If
any of the nominees should be unable or decline to serve, which is not
anticipated, discretionary authority is reserved for the proxy holders to vote
for a substitute, to be designated by the present Board of Directors. In the
event that additional persons are nominated as directors, the proxy holders
intend to vote all the proxies received by them in such manner in accordance
with cumulative voting as will assure the election of as many of the nominees
listed above as possible and, in that event, the specific nominees to be voted
for will be determined by the proxy holders in their sole discretion.
CERTAIN COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has an Audit Committee, composed of
John W. Glenn (Chairman), David L. Cutter, Paul R. Handlerly and James C.
Johnson. The Audit Committee met 6 times in 1995 for the purpose of reviewing
overall operations of the Company. As part of its duties, the Audit Committee
examines the results of the financial statements and reports prepared by the
Company's independent auditors and makes recommendations thereon to the Board
of Directors.
The Board of Directors of the Company has a Personnel Committee whose
members in 1995 were Barclay Simpson (Chairman), David L. Cutter, James C.
Johnson, and Paul C. Kepler. The Personnel Committee met two times in 1995 to
consider the hiring and compensation of officers and employees of the Company
and the Bank. The Personnel Committee acted as Stock Option Committee under
the Stock Option Plan and in this capacity granted stock options under the
Stock Option Plan to officers and other employees. The Personnel Committee
also functions as the compensation committee and as the nominating committee
in connection with the election of directors. The Personnel Committee will
consider nominees recommended by shareholders if such recommendations are
accompanied by a complete biographical and financial statement of the nominee
in such form as the Personnel Committee shall require and, for a
recommendation made in connection with an annual meeting of shareholders, the
recommendation is submitted by November 30 of the preceding year.
The Board of Directors of the Bank has an Audit Committee and Personnel
Committee. These committees consist of the same members as indicated above for
the Company and met the same number of times. Each committee had duties at the
Bank level similar to those for committees of the Company.
In addition, the Board of Directors of the Bank has a Directors' Loan
Committee composed of Paul C. Kepler (Chairman), C. Donald Carr, Herbert C.
Foster, Paul R. Handlery, Edward G. Mein, Dale D. Reed and Edward G. Roach.
This committee met 27 times in 1995. The function of the Directors' Loan
Committee is to review certain loans and recommend ratification, when
appropriate, to the Board of Directors, and in certain cases to review and
approve or disapprove loan applications when the amount requested is above
certain thresholds or the applicant is affiliated with the Company or the
Bank.
Neither the Company nor the Bank has a separate compensation committee or
nominating committee; the Personnel Committee of each serves these functions.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Bank met in 1995 in regular meetings for a
total of 10 meetings. The Board of Directors of the Company held 10 regular
meetings during 1995. No nominee for director, while serving as a director of
the Bank and the Company during 1995, attended fewer than 75% of the total
number of meetings of the Board and of the committees of which he was a
member.
DIRECTOR FEES
In 1995 the Bank paid fees to non-employee directors for their services as
directors. The payment schedule provides for non-employee directors to be paid
a quarterly retainer of $2,250 with the Chairman to receive $3,000. per
quarter. Chairmen of the Audit, Loan and Personnel Committees were paid an
additional $350 per committee meeting attended. Committee members were paid
$250 per meeting attended. Directors who were executive officers were not paid
director fees in 1995. Total director fees paid in 1995 were $113,950.
5
<PAGE>
EXECUTIVE OFFICERS
The following are the names of the principal executive officers of the
Company and the Bank and certain information concerning each of them:
<TABLE>
<CAPTION>
NAME AND AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS
------------ ------------------------------------------
<C> <S>
Herbert C. Foster, 56... President and Chief Executive Officer of the Company
and Chairman and Chief Executive Officer of the Bank
since March, 1993; President and Chief Executive
Officer of Pacific Bay Bank, San Pablo, CA during
1992 and President of University National Bank &
Trust Company, Palo Alto, CA from 1983 to 1991.
John E. Lindstedt, 62... President of the Bank since February, 1994; formerly
with Wells Fargo Bank, N.A., San Francisco since
1965; Executive Vice President in capacity of senior
loan officer of Corporate Banking Group since 1988.
Paul A. Grossberg, 45... Executive Vice President of the Bank since 1994,
Senior Vice President, Branch Office Administrator of
the Bank since 1991, Vice President of the Bank since
1985.
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of the Company's common shares
owned, as of March 14, 1996, by the present directors who are also
management's nominees for reelection, and by the directors and officers of the
Company as a group:
SHARES OF COMMON STOCK BENEFICIALLY OWNED
<TABLE>
<CAPTION>
PERCENT
NAME OF BENEFICIAL OWNER NUMBER (1) OF CLASS
------------------------ ---------- --------
<S> <C> <C>
C. Donald Carr.................................... 586,667 (2) 12.63%
David L. Cutter................................... 16,750 .36
Herbert C. Foster................................. 80,001 1.72
John W. Glenn..................................... 29,706 (3) .64
Paul R. Handlery.................................. 349,683 (4) 7.53
James C. Johnson.................................. 28,958 (5) .62
Paul C. Kepler.................................... 28,280 .61
Edward G. Mein.................................... 57,114 (6) 1.23
Dale D. Reed...................................... 58,233 (7) 1.25
Edward G. Roach................................... 25,104 (8) .54
Barclay Simpson................................... 79,114 (9) 1.70
All directors and officers as a group (17
persons)......................................... 1,396,749 30.06%
</TABLE>
- --------
(1) Includes all shares beneficially owned, whether directly or indirectly,
individually or together with associates. Includes any shares owned,
whether jointly or as community property with a spouse and any shares of
which beneficial ownership may be acquired within 60 days of March 14,
1996 by the exercise of stock options.
(2) Includes 582,667 shares held by Mr. Carr jointly with his spouse.
(3) Includes 21,817 shares held by Mr. Glenn jointly with his spouse, and
3,889 shares held in trust, John W. Glenn, Trustee.
(4) Includes 259,262 shares held by Handlery Hotels, Inc.
(5) Includes 15,544 shares held by Mr. Johnson jointly with his spouse, 2,786
shares held by his spouse of which 144 are held by her as custodian under
the California Uniform Gift to Minors Act.
6
<PAGE>
(6) Includes 53,114 shares held by Mr. Mein jointly with his spouse.
(7) Includes 43,556 shares held by Mr. Reed jointly with his spouse and 10,677
shares as to which Mr. Reed has shared voting power
(8) Includes 6,076 shares held in trust, Edward G. Roach, Trustee.
(9) Includes 58,150 shares held by Mr. Simpson jointly with his spouse.
CHANGE IN CONTROL
Management is not aware of any arrangements, including the pledge by any
person of shares of the Company, the operation of which may at a subsequent
date result in a change in control of the Company.
EXECUTIVE COMPENSATION
The following table sets forth the compensation of the named executive
officers for each of the registrant's last three fiscal years whose total cash
compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM
NAME AND PRINCIPAL --------------------------- COMPENSATION ALL OTHER
POSITION YEAR SALARY BONUS (1) OPTIONS COMPENSATION (2)
------------------ ---- ----------- ---------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Herbert C. Foster...... 1995 $190,000.00 $25,000.00 None $7,661.70
President and Chief 1994 175,000.00 25,000.00 50,000 shs. 4,863.60
Executive Officer of
the Company and 1993 175,000.00 None 50,000 shs. 1,663.20
Chairman and Chief
Executive Officer of
the Bank
John M. Lindstedt...... 1995 160,000.00 6,000.00 None 6,078.10
President of the Bank 1994 160,000.00 6,000.00 25,000 shs. 2,710.35
Paul A. Grossberg...... 1995 103,000.00 6,000.00 2,500 shs. 5,643.70
Executive Vice
President of the Bank 1994 99,166.67 6,000.00 25,000 shs. 3,301.50
1993 95,000.00 8,000.00 None 2,843.84
</TABLE>
- --------
(1) Represents cash bonus in year earned.
(2) Represents Company contributions to the Profit Sharing Retirement Plan,
Company matching contributions under the 401(k) Plan and imputed value of
life insurance premiums paid by the Company.
The Company pays the cost of premiums on life insurance policies insuring
all employees, including executive officers, in amounts approximating two
times their annual salaries. The policies are payable to the officers'
designated beneficiaries. A portion of the premium paid by the Bank is imputed
as income for tax purposes for the executive officers. Such amounts are
included in the compensation table above.
Effective February 1, 1994 the Board appointed John E. Lindstedt as
President of the Bank, subject to approval by the regulatory authorities, at
an annual salary of $160,000. In connection with this appointment, Mr.
Lindstedt was awarded a grant of 25,000 incentive stock options.
Messrs. Foster, Lindstedt and Grossberg receive automobile allowances in
connection with the performance of their duties. Mr. Foster also had a club
membership paid by the Bank in connection with the performance of his duties.
Management is unable to determine, without unreasonable effort and expense the
extent or value of the personal benefit, if any, which might be derived from
these payments, and the value of any such benefits is not included in the
amounts set forth above. It is management's opinion that such benefits have
not been material in amount and did not exceed 10% of salary and bonus for Mr.
Foster.
7
<PAGE>
The following table summarizes all stock options granted executive officers
in 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE
APPRECIATION
FOR OPTION
INDIVIDUAL GRANTS TERM
(A) (B) (C) (D) (E) (F) (G)
% OF TOTAL
OPTIONS
GRANTED EXERCISE
TO EMPLOYEES OR BASE
OPTIONS IN FISCAL PRICE EXPIRATION
NAME GRANTED YEAR ($/SH) DATE 5% ($) 10% ($)
---- ------- ------------ -------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Paul A. Grossberg....... 2,500 3.5% 6.63 2000 21,000 27,000
</TABLE>
Paul Grossberg was the only executive officers to exercise stock options in
1995. All executive officers had stock options with a market value in excess
of the exercise price at December 31, 1995. The following table summarizes the
number of exercisable and unexercisable options held by the named executive
officers at December 31, 1995.
AGGREGATED OPTIONS/EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTIONS
VALUES
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
12-31-95 12-31-95
------------- ----------------
SHARES
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- ------------ ------------ ------------- ----------------
<S> <C> <C> <C> <C>
Herbert C. Foster..... None None 65,000/30,000 $101,250/$61,250
John E. Lindstedt..... None None 25,000/ 0 31,250/ 0
Paul A. Grossberg..... 850 $850.00 16,431/15,280 21,481/ 28,718
</TABLE>
INCENTIVE RESERVE/BONUS PLAN
The Bank has an Incentive Reserve/Bonus Plan for its vice presidents and
higher ranking officers (30 persons as of December 31, 1995), including
Messrs. Foster, Lindstedt and Grossberg. The Bank paid bonus of $193,000 under
this plan for 1995.
PROFIT SHARING RETIREMENT PLAN
The Board of Directors of the Bank has adopted a Profit Sharing Retirement
Plan ("PSRP") available to all employees. The PSRP is intended to provide a
tax-deferred compensation and savings vehicle to its participants, and has
been ruled by the Internal Revenue Service to comply with requirements for the
deductibility of contributions for tax purposes. The PSRP provides for three
types of contributions: voluntary contributions by employees; partial matching
contributions on a percentage basis determined by the Bank (set at 33% for
1995); and profit-sharing contributions by the Bank at the discretion of its
Board of Directors based on earnings of the Bank. The Board did allocate a
profit sharing contribution of 2.00% to the PSRP for 1995.
Employee contributions are fully vested at all times. Employees become
vested in profit-sharing contributions and Bank matching contributions at a
rate of 20 percent per year beginning two years after employment.
Contributions are paid to a trustee which receives and pays funds, safeguards
and values trust
8
<PAGE>
assets, invests trust funds and carries out the directions of the
Administrative Committee. The trustees under the PSRP are Dale D. Reed,
Barclay Simpson, and Herbert C. Foster. The Administrative Committee consists
of members appointed by the Board of Directors and acts as administrator of
the PSRR The committee may retain an investment manager or other advisors as
it considers necessary to discharge its duties.
The trustees and the Administrative Committee are subject to fiduciary
duties imposed on them by the Employee Retirement Income Security Act of 1974
(ERISA) and the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA).
Participants may begin receiving benefits under the PRSP upon reaching 59-1/2,
or earlier upon a showing of hardship. A participant may elect to receive
benefits in a lump sum, in installments, as an annuity providing for
guaranteed income for a period certain or in any combination of the foregoing
methods.
TRANSACTIONS WITH DIRECTORS AND OFFICERS
The Bank has had in the ordinary course of business, and expects to have in
the future, banking transactions with certain of its directors, officers,
shareholders, and their associates, including transactions with corporations
of which such persons are directors, officers or controlling shareholders.
In the opinion of management, such transactions involving loans have been and
will be entered into with such persons in accordance with applicable laws and
(1) in the ordinary course of business (2) on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and (3) on terms not involving
more than the normal risk or collectability or presenting other unfavorable
features. For additional reference see Note 11 to the Consolidated Financial
Statements for the year ended December 31, 1995 attached to and a part of
Civic BanCorp Form 10-K for fiscal year ended December 31, 1995, and included
in the Company's Annual Report to Shareholders.
COMPENSATION COMMITTEE REPORT
The Compensation Committee in accordance with applicable requirements has
provided the following report to the Board of Directors of the Company.
To the Board of Directors of Civic BanCorp
The compensation policy of the Company is designed to attract and retain
highly qualified personnel and also provide meaningful incentives for
measurable performance. The components of executive compensation include base
salary, an incentive bonus plan and stock options.
The Company has had an annual incentive bonus plan which is based on the
overall performance of the Company. Bonuses under this plan are paid only upon
the companys achieving certain earnings goals and a return on assets standard.
Due to the performance of the Company in 1993 and 1994 no bonuses were paid
for those years. Bonuses were paid for 1995.
The Personnel Committee determined that additional compensation in the form
of individual bonuses would be awarded to Mr. Grossberg for 1993, 1994. and
Messrs. Foster and Lindstedt for 1994. These non-plan awards reflect the
individual contributions each made to the Company in 1993 and 1994
particularly in implementing the Restructuring Plan as described in the
Companys Annual Report on From 10-K.
Long term incentive awards consisting of stock options are considered to be
a substantial portion of the compensation package of the executive officers.
In 1994, following completion of the common stock Rights Offering, Messrs.
Foster and Grossberg were awarded stock options. In 1995, Mr. Grossberg was
awarded stock options. Both 1994 and 1995s stock option awards were to
recognize their contributions to the Company and as an incentive to support
the Companys commitment to provide shareholder value.
Compensation Committee
Barclay Simpson, Chairman
David L. Cutter
Paul C. Kepler
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Committee is a former or current officer or employee of the
Company or its subsidiaries.
PERFORMANCE GRAPH
The following graph compares the stock performance of the Company to the
performance of a specific industry index, the Montgomery Securities "WESTERN
BANK MONITOR" Northern California Proxy and to the Standard & Poor's 500 index
over the past five calendar year period.
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
Civic Bancorp 100 82.22 70.04 65.47 66.99 91.35
S&P 500 100 130.37 140.30 154.46 156.50 215.32
less than $1 Billion
Independent Bank Proxy 100 99.93 104.50 134.32 127.17 176.06
2. APPROVAL OF CIVIC BANCORP QUASI-REORGANIZATION
The Board of Directors is submitting to the shareholders for approval a
corporate restructuring plan that would involve a quasi-reorganization
effective July 1, 1996. A quasi-reorganization is an accounting procedure that
allows the Company to restructure its capital accounts to remove a deficit in
retained earnings without undergoing a legal reorganization. At December 31,
1995, the Company had deficit earnings of ($7,411,000) and common stock of
$36,771,000 with a resulting shareholders equity of $29,360,000. Pursuant to
the quasi-reorganization, the deficit earnings account will be increased to 0,
the carrying value of assets and liabilities will be adjusted to fair value
and the common stock account will be reduced as appropriate.
Shareholders equity, which consists of the sum of common stock and retained
earnings, is not expected to change significantly. An earnings deficit limits
the flexibility of the Company in considering or taking certain actions that
may be in the best interests of the Company and its shareholders, and this
proposal is intended to remove those limitations.
The Company is a California corporation. Under the California Corporations
Code, a corporation may make a distribution to shareholders only (i) from
retained earnings or (ii) from others sources if, after giving effect to the
distribution, the corporations assets are equal to at least 125% of
liabilities (or, expressly another way, its shareholders equity equals at
least 25% of liabilities) and it meets certain current assets tests. For this
purpose, a distribution means any transfer of cash or property by a
corporation to its shareholders without consideration, including a cash
dividend and the purchase or redemption of its shares for cash or property.
Bank holding companies rarely have a shareholders equity ratio of 25% or
above. For all practical purposes, the Company will be able to make a
distribution to shareholders, if at all, only if it has positive retained
earnings. Its deficit retained earnings currently preclude it from considering
a distribution to shareholders.
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Management of the Company believes that the Company is currently
overcapitalized in two respects. First, it has capital well in excess of the
requirements of bank regulatory agencies. The following is a chart
demonstrating the Companys risk-based capital levels, the risk-based capital
levels required by regulatory guidelines and the resulting excess.
<TABLE>
<CAPTION>
RISK-BASED CAPITAL
RATIOS
-----------------------
(DOLLARS IN THOUSANDS)
AMOUNT RATIO
------------ ----------
<S> <C> <C>
Tier 1 Capital.................................... $ 28,102 16.04%
Tier 1 minimum requirement........................ 7,008 4.00
------------ ---------
Excess............................................ $ 21,094 12.04%
============ =========
Total Capital..................................... $ 30,292 17.29%
Total Capital minimum requirement................. 14,016 8.00
------------ ---------
Excess............................................ $ 16,276 9.29%
============ =========
Risk-adjusted assets.............................. $ 175,194
============
Leverage ratio.................................... 10.99%
Leverage ratio minimum requirement................ 4.00
---------
Excess............................................ 6.99%
=========
</TABLE>
In addition, management believes that the Company has more capital that it
can profitably invest in loans and investments in the ordinary course of its
banking business and that shareholders may have opportunities for greater
returns on their investment than are currently reflected in the market price
of the Companys stock. A distribution may also serve to increase the earnings
per share of shareholders of the Company. Accordingly. management would like
to find a means, as one of its strategic alternatives, to return some of the
excess capital to shareholders in the event that no superior investment
opportunities for the Company arise. Because of the Companys deficit retained
earnings position, the California Corporations Code prohibits a dividend,
repurchase or redemption of shares for cash. The quasi-reorganization will
eliminate the Companys retained earnings deficit. As a result, the Company
would be legally permitted to make one or more distributions to shareholders
in the future out of future retained earnings, if any.
Generally accepted accounting principles permit a quasi-reorganization of
this type only if certain requirements and conditions are met. These
requirements and conditions are as follows: an accumulated deficit must be
eliminated by a reduction of paid-in capital; the Company must obtain the
approval of its shareholders; the Company must obtain the approval of its
regulator; all of the Companys assets and liabilities must be restated at fair
value, but without any increase in net capital; the future tax benefit of pre-
existing operating losses or tax credits must be reported as a direct addition
to paid-in capital, rather than as an element of future earnings; and no
change in accounting methods as permitted within 12 months after the quasi-
reorganization, In addition, generally accepted accounting principles may
require that the Company demonstrate other characteristics consistent with a
fresh start in accounting. These include substantial changes in ownership and
management since the deficit was incurred; current profitable operation;
reasonable prospects for continued profitable operation; and an adequate level
of capital.
The Company believes it and the proposed quasi-reorganization meet all of
these requirements. Its accumulated deficit would be eliminated. The Company
has consulted with representatives of the Federal Reserve Bank of San
Francisco, which regulates bank holding companies in California; the
representatives have indicated that they have no objection to the proposed
quasi-reorganization. The quasi-reorganization requires a restatement of
assets and liabilities at fair value, without an increase in net capital; the
Company has conducted a preliminary evaluation of its assets and liabilities
and determined that the overall difference between their book
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<PAGE>
values and fair values are not significant. The Company is prepared to realize
future tax benefits of pre-existing operating losses and tax credits as direct
additions to paid-in capital rather than as earnings. The Companys deficit
earnings were incurred primarily as a result of a substantial writedown of
real estate loans and foreclosed assets in 1992 and 1993, and the conditions
giving rise to those losses have substantially changed. A substantial change
in ownership took place as a result of the $10 million public offering of
common stock in 1993. The Company has replaced its chief executive officer,
president, chief lending officer and chief financial officer since those
losses were incurred. The Company has operated at a profit for nine
consecutive quarters and has reasonable prospects for a continued profitable
operation. It is considered well capitalized under bank regulatory guidelines,
and management believes that its capital level is more than adequate. The
Company does not anticipate that it will adopt any change in accounting
methods within the 12 months following the proposed quasi-reorganization.
If the quasi-reorganization is approved by the shareholders, the Company
proposes that the effective date of the quasi-reorganization will be July 1,
1996.
The quasi-reorganization would affect only the financial statements of Civic
BanCorp. It would not affect the financial statements of CivicBank of
Commerce. If the quasi-reorganization is approved, the Company would be
legally permitted to make distributions to shareholders out of future earnings
from the effective date of the quasi-reorganization. Without a quasi-
reorganization, at current earning levels, the Company would not eliminate its
earnings deficit for approximately 22 months. No assurance can be given that
the Company will continue to operate at the level of earnings that it is
currently experiencing or that it will operate profitably at all.
The right to make a distribution to shareholders, in the form of cash
dividends or a repurchase of shares, gives the Board of Directors more
flexibility in creating or preserving value for shareholders. The Board if
Directors may determine that a selective repurchase of its own shares is the
most profitable use to which the Companys excess capital might be put. If the
Board of Directors determines that the current market price of the Companys
common stock does not adequately reflects its level of earnings, the Board of
Directors may determine to repurchase shares in the market. A repurchase of
shares reduces the number of shares of common stock outstanding and may have
the effect of increasing the earnings per share of the Company. The Company
can give no assurance, however, that it will repurchase any shares even if the
quasi-reorganization is approved and adopted.
If the Company is able to continue operating profitably, it expects to
realize a future tax benefit (forecast to be between $2.1 million to $2.5
million at June 30, 1996) on account of pre-existing operating losses and tax
credits. Without a quasi-reorganization, these tax benefits (if and when
realized) would reduce the tax provision. As a result of the quasi-
reorganization, these tax benefits (if and when realized) would be reported in
the future as a direct addition to paid-in capital but not as a reduction of
the tax provision. As a result, the amount of such tax benefits would have no
effect on the amount available for any future distribution to shareholders.
Adopting the quasi-reorganization will not permit the Company to repurchase
the shares unless and until the Company accumulates positive retained
earnings. A repurchase can be effected only out of retained earnings.
The Board of Directors believes that adopting the quasi-reorganization will
be in the best interest of the Company and its shareholders. Therefore, it
recommends a vote FOR the quasi-reorganization.
RESOLVED, that the quasi-reorganization of Civic BanCorp is hereby
ratified.
3. RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP has served as the Company's independent certified
public accountants since 1994. Deloitte & Touche LLP or its predecessor,
Touche Ross & Co., served as the Company's independent certified public
accountants from 1984 to April, 1994. On April 28, 1994 Deloitte & Touche LLP
advised the Company that the auditor-client relationship between Deloitte &
Touche LLP and the Company had ceased and the firm declined to stand for re-
election.
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<PAGE>
The Company engaged KPMG Peat Marwick LLP as its independent public
accountants by letter dated June 14, 1994 between KPMG Peat Marwick LLP and
the Audit Committee of the Board of Directors. The Company, has had no
disagreements with its accountants with respect to accounting principles or
practices of financial statement disclosure.
At the 1996 Annual Meeting of Shareholders the following resolution will be
subject to ratification by a simple majority vote of shares represented at the
meeting:
RESOLVED, that the selection of KPMG Peat Marwick LLP as the independent
certified public accountants of Civic BanCorp and its subsidiary, CivicBank
of Commerce, for the fiscal year ending December 31, 1996 is hereby
ratified.
If ratification is not achieved, the selection of an independent certified
public accountant will be reconsidered and made by the Board of Directors.
Even if selection is ratified, the Board of Directors reserves the right and,
in its discretion, may direct the appointment of any other independent
certified public accounting firm at any time if the Board decides that such a
change would be in the best interests of the Company and its shareholders.
The services provided by KPMG Peat Marwick LLP include the examination and
reporting of the financial status of the Company and Bank. These services have
been furnished at customary rates and terms. There are no existing direct or
indirect agreements or understandings that fix a limit on current or future
fees for these audit services.
A representative of KPMG Peat Marwick LLP is expected to attend the 1996
Annual Meeting of Shareholders with the opportunity to make a statement, if
desired, and is expected to be available to respond to shareholders'
inquiries.
4. OTHER BUSINESS
If any other matters come before the meeting, not referred to in this Proxy
Statement, including matters incident to the conduct of the meeting, the proxy
holders will vote the shares represented by proxies in accordance with their
best judgment. Management is not aware of any other business to come before
the meeting and, as of the date of the preparation of this Proxy Statement, no
shareholder has submitted to management any proposal to be acted upon at the
meeting.
ADDITIONAL INFORMATION AND DOCUMENTS INCORPORATED BY REFERENCE.
Each shareholder has received the Company's 1995 Form 10-K as filed with the
Securities and Exchange Commission containing financial statements, including
the report of its independent public accountants.
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