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As Filed with the Securities and Exchange Commission on May 11, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
REGENCY BANCORP
(Exact name of registrant as specified in its charter)
CALIFORNIA 77-0378956
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
7060 N. FRESNO STREET, FRESNO, CALIFORNIA 93720
(209) 438-2600
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Steven F. Hertel Copies of communications to:
Chief Executive Officer Glenn T. Dodd, Esq.
Regency Bancorp John W. Carr, Esq.
7060 N. Fresno Street Coudert Brothers
Fresno, California 93720 Ten Almaden Blvd., Suite 1250
(209) 438-2600 San Jose, California 95113
(Name, address, including zip (408) 297-9982
code and telephone number,
including area code, of agent
for service)
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Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / _______________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _______________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
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<CAPTION>
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Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered registered offering price aggregate offering registration
per share(1) price(1) fee(1)
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<S> <C> <C> <C> <C>
Common Stock, no par value 926,211 Shares $14.25 $13,198,507 $3,893.56
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</TABLE>
(1) Calculated pursuant to Rule 457(c) and based on the average of the high and
low prices of the Company's Common Stock on May 8, 1998 as reported on The
Nasdaq Stock Market.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
May 11, 1998
<PAGE>
REGENCY BANCORP
Cross-Reference Sheet Pursuant to Item 501 of Regulation S-K
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<CAPTION>
Item of Form S-3 Caption in Prospectus/Proxy Statement
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PART I - INFORMATION REQUIRED IN THE PROSPECTUS
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Item 1. Forepart of Registration Statement and Outside Facing page of Registration Statement;
Front Cover Page of Prospectus Cross-Reference Sheet; Outside Front
Cover Page of Prospectus
Item 2. Inside Front and Outside Back Cover Pages of Inside Front Cover Page of Prospectus
Prospectus
Item 3. Summary Information, Risk Factors and Ratio of Risk Factors
Earnings to Fixed Charges
Item 4. Use of Proceeds Use of Proceeds
Item 5. Determination of Offering Price Not Applicable
Item 6. Dilution Not Applicable
Item 7. Selling Security Holders Selling Shareholders
Item 8. Plan of Distribution Plan of Distribution
Item 9. Description of Securities to be Registered Description of Common Stock
Item 10. Interests of Named Experts and Counsel Not Applicable
Item 11. Material Changes Not Applicable
Item 12. Incorporation of Certain Information by Incorporation of Certain Information by
Reference Reference
Item 13. Disclosure of Commission Position on Indemnification
Indemnification for Securities Act Liabilities
</TABLE>
<PAGE>
REGENCY BANCORP
926,211 SHARES OF COMMON STOCK
This Prospectus relates to an aggregate of 926,211 shares of Common
Stock, no par value per share (the "Common Stock"), of Regency Bancorp, a
California corporation ("Regency" or the "Company"). All of the Common
Stock offered hereby may be sold from time to time by and for the account of
the Selling Shareholders named in this Prospectus (the "Selling
Shareholders"), or for the account of pledgees, donees, transferees or other
successors in interest of the Selling Shareholders. See "SELLING
SHAREHOLDERS" herein.
The methods of sale of the Common Stock offered hereby are described
under the heading "PLAN OF DISTRIBUTION." The Company will receive none of
the proceeds from such sales. Except as set forth below, the Company will
pay all expenses (other than underwriting and brokerage expenses, fees,
discounts, and commissions, all of which will be paid by the Selling
Shareholders) incurred in connection with the offering described in this
Prospectus, estimated at approximately $63,000 (including SEC filing fees).
See "SELLING SHAREHOLDERS" herein.
The Selling Shareholders and any broker-dealers that participate in the
distribution of the Common Stock offered hereby may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"1933 Act"), and any commission or profit on the resale of shares received by
such broker-dealers may be deemed to be underwriting commissions and discounts
under the 1933 Act. Upon the Company's being notified by the Selling
Shareholders that any material arrangement has been entered into with a broker
or dealer for the sale of the shares through a secondary distribution, or a
purchase by a broker or dealer, a supplemented Prospectus will be filed, if
required, disclosing among other things the names of such brokers and dealers,
the number of shares involved, the price at which such shares are being sold and
the commissions paid or the discounts or concessions allowed to such
broker-dealers.
THE COMMON STOCK OFFERED HEREBY INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 5 OF THIS PROSPECTUS.
Sales of the Common Stock may also be made for the account of the
Selling Shareholders, or for the account of donees, transferees or other
successors in interest of the Selling Shareholders, pursuant to Rule 144
under the 1933 Act. The Common Stock of the Company is listed on The Nasdaq
Stock Market's National Market System (Symbol: REFN). On May 8, 1998, the
closing price of the Common Stock was $14.25 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MAY 11, 1998.
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TABLE OF CONTENTS
AVAILABLE INFORMATION 3
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE 3
THE COMPANY 4
RISK FACTORS 5
Results of Operations 5
Real Estate Development 6
Administrative Orders 7
Capital Requirements 8
Potential Enforcement Actions 11
Dividend Restrictions 11
Common Stock Price Fluctuations and Trading Volume 12
USE OF PROCEEDS 12
SELLING SHAREHOLDERS 12
PLAN OF DISTRIBUTION 14
INDEMNIFICATION 14
LEGAL MATTERS 16
EXPERTS 16
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Reports,
proxy statements and other information filed by the Company may be inspected
and copied at the public reference facilities maintained by the Commission,
450 Fifth Street, N.W., Judiciary Plaza, Room 1024, Washington, D.C. 20549;
and at regional offices of the Commission at the Citicorp Center, 500 West
Madison, Suite 1400, Chicago, Illinois 60661 and at 7 World Trade Center, New
York, New York 10048. Copies of such material may be obtained by mail from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Such material may also be
inspected and copied at the offices of The Nasdaq Stock Market, 1735 K
Street, Washington, D.C. 20006-1500, on which the Company's Common Stock is
listed. In addition, the Commission maintains a site on the World Wide Web
portion of the Internet that contains reports, proxy and information
statements and other information regarding registrants that file
electronically with the Commission. The address of such site is
http://www.sec.gov.
As permitted by the rules and regulations of the Commission, this
Prospectus omits certain information contained in the Registration Statement
on Form S-3, as amended (the "Registration Statement"), of which this
Prospectus is a part. For further information with respect to the Company
and the Common Stock, reference is made to the Registration Statement and the
exhibits thereto. Statements made in this Prospectus as to the contents of
any contract, agreement or other document are not necessarily complete; and
while the Company believes the descriptions of the material provisions of
such contracts, agreements and other documents contained in this Prospectus
are accurate summaries of such material provisions, reference is made to such
contract, agreement or other document filed as an exhibit to the Registration
Statement for a more complete description of the matter involved, and each
such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company hereby incorporates by reference in this Prospectus the
following documents previously filed with the Commission pursuant to the
Exchange Act: (i) Annual Report of the Company on Form 10-K for the year
ended December 31, 1997; (ii) Quarterly Report of the Company on Form 10-Q
for the quarter ended March 31, 1998; (iii) Definitive Proxy Statement dated
April 21, 1998, as filed with the Securities and Exchange Commission; (iv)
Current Reports of the Company on Form 8-K dated January 8, February 12,
April 14 and April 16, 1998; and (v) the description of the Company's Common
Stock contained in the Company's registration statement filed under Section
12 of the Exchange Act effected by the filing of Form 8-A, including any
amendment or report filed for the purpose of updating such description.
Each document filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Common Stock pursuant hereto
shall be deemed to be incorporated by reference in this Prospectus and to be
a part of this Prospectus from the date of filing of such document. Any
statement contained in this Prospectus or in a document incorporated or
deemed to be incorporated by reference in this Prospectus shall be deemed to
be modified or superseded for purposes of the Registration Statement and this
Prospectus to the extent that a statement contained in this Prospectus or in
any subsequently filed document that also is or is deemed to be incorporated
by reference in this Prospectus modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of the Registration Statement or
this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of any such person,
a copy of any or all of the documents that are incorporated by reference in
this Prospectus, other than exhibits to such documents (unless such exhibits
are specifically incorporated by reference into such documents). Requests
should be directed to Regency Bancorp, Attn: Steven F. Hertel, 7060 N. Fresno
Street, Fresno, California 93720, telephone (209) 438-2600.
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THE COMPANY
Regency Bancorp (the "Company") is a California corporation organized to
act as the holding company for Regency Bank (the "Bank"), and Regency
Investment Advisors, Inc. ("RIA"), a SEC registered investment advisor. The
Company and the Bank maintain their administrative headquarters and banking
offices in Fresno, California. The Bank also maintains a full service
banking office in Madera, California and a loan production office in Modesto,
California. In 1995, upon its formation, the Company acquired all of the
outstanding common stock of the Bank. Other than its investment in the Bank
and RIA, the Company currently conducts no other significant business
activities, although it is authorized to engage in a variety of activities
which are deemed closely related to the business of banking upon prior
approval of the Board of Governors of the Federal Reserve System (the "Board
of Governors"), the Company's principal regulator.
The Bank is a California banking corporation which has served small and
medium-sized businesses, professionals, merchants and individuals located in
and adjacent to Fresno, California since 1980. The Company and Bank operate
through the administrative headquarters office and Herndon Branch banking
office located at 7060 N. Fresno St., Fresno, California, and offer a full
range of commercial banking services, including the acceptance of demand,
savings and time deposits, and the making of commercial, real estate
(including real estate construction and residential mortgage), Small Business
Administration, personal, home improvement, automobile and other installment
and term loans. It also offers Visa credit cards, traveler's checks, safe
deposit boxes, notary public, courier service and other customary bank
services. The Bank's principal regulators are the California Department of
Financial Institutions ("DFI") and the Federal Deposit Insurance Corporation
("FDIC").
RIA was formed in August 1993 through the acquisition by the Bank of the
assets, including client list, of a fee-only investment management and
consulting firm. RIA provides investment management and consulting services,
including comprehensive financial planning, retirement planning and
investment advice to individuals and corporate clients for an annual fee that
varies depending upon the size of a client's account.
The Bank has one subsidiary, Regency Service Corporation, a California
corporation ("RSC"), which engages in the business of real estate development
primarily in the Fresno/Clovis area. The Bank, through RSC and pursuant to
California Financial Code Section 751.3, has engaged in real estate
development activities since 1986. RSC's real estate development activities,
which typically involve the acquisition, development and sale of the
properties (but which sometimes involve the sale of properties prior to their
development), historically have been structured as limited partnerships in
which RSC is the limited partner and a local developer is the general
partner. The Bank from time to time makes loans in accordance with internal
policies and restrictions which limit the amount of such loans to
partnerships and other parties involved in RSC's real estate projects. In
exchange for its investment in the partnerships, RSC typically receives 50%
of the income generated from the sale of the partnership assets, as well as
interest on invested capital.
Under FDIC regulations, banks were required to divest their real estate
development investments as quickly as prudently possible, but in no event
later than December 19, 1996, and submit a plan to the FDIC regarding
divestiture of such investments. Such regulations also permitted banks to
apply for the FDIC's consent to continue, on a limited basis, certain real
estate development activities.
In 1994, the Bank and RSC submitted a divestiture plan (the "Divestiture
Plan") to the FDIC. The Divestiture Plan provided for RSC to divest itself
of all real estate development investments by year-end 1996; however, since
RSC was a limited partner in the majority of its real estate development
projects and, thus, did not control the operation of such projects, there was
no assurance that such divestiture would occur by year-end 1996. In December
1995, the Bank and RSC submitted a request to extend the mandatory time
period in which it must divest its real estate development interests. In
December 1996, the FDIC, responding to the Bank's request, granted the Bank
and RSC a two year extension, until December 31, 1998, to continue its
divestiture activities. For more information regarding RSC and its financial
performance, see "RISK FACTORS" below and additionally see notes 4 and 11 of
the Company's audited
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<PAGE>
financial statements included with the Company's Annual Report on Form 10-K
for the year ended December 31, 1997, for additional information regarding
RSC and real estate development activities.
RISK FACTORS
CERTAIN MATTERS DISCUSSED IN THIS PROSPECTUS ARE FORWARD-LOOKING
STATEMENTS THAT ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED. SUCH RISKS AND
UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DESCRIBED IN "RISK
FACTORS," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS" AND "BUSINESS." CHANGES TO SUCH RISKS AND
UNCERTAINTIES, WHICH COULD IMPACT FUTURE FINANCIAL PERFORMANCE, INCLUDE,
AMONG OTHERS, (1) COMPETITIVE PRESSURES IN THE BANKING INDUSTRY; (2) CHANGES
IN THE INTEREST RATE ENVIRONMENT; (3) GENERAL ECONOMIC CONDITIONS, EITHER
NATIONALLY OR REGIONALLY; (4) CHANGES IN THE REGULATORY ENVIRONMENT; (5)
CHANGES IN BUSINESS CONDITIONS AND INFLATION; AND (6) CHANGES IN SECURITIES
MARKETS. THEREFORE, THE INFORMATION SET FORTH HEREIN SHOULD BE CAREFULLY
CONSIDERED WHEN EVALUATING THE BUSINESS PROSPECTS OF THE COMPANY AND THE BANK.
In addition to the other information in this Prospectus, the following
risk factors should be considered carefully in evaluating an investment in
the Common Stock offered hereby.
RESULTS OF OPERATIONS
The 1997 fiscal year was a year of significant changes for Regency
Bancorp. Highlights included overall asset growth of 9.5% which allowed the
Company to reach nearly $200 million in total assets, substantial progress in
reducing RSC's real estate holdings, growth in interest earning assets of
more than 20%, a private placement capital offering of 750,000 shares which
netted the Company $5.9 million in new capital and an overall loss for the
year caused by significant losses in RSC related to the divestiture of its
holdings. Additionally, during the fourth quarter the board consented to
administrative orders imposed by the FDIC and DFI (see "Administrative
Orders" below).
For the year ended December 31, 1997, total assets increased by
$17,183,000 or 9.5%, to $198,241,000 from $181,058,000 at December 31, 1996.
During 1996, total assets increased $17,376,000 or 10.6% from $163,682,000 at
December 31, 1995. For 1997, total loans increased $27,332,000 or 26.7% as a
result of the Company's decision to hold newly originated SBA loans rather
than sell the guaranteed portion in the secondary market. In 1996, total
loans increased 5.3% or $5,166,000 to $102,303,000 from $97,137,000 at
December 31, 1995.
During 1997, the Company significantly reduced its investments in real
estate, reducing its holdings by 73.7% or $12,151,000 to $4,338,000 from
$16,489,000 at December 31, 1996 and from $17,954,000 at December 31, 1995.
With the reduction in real estate at December 31, 1997, the Company was able
to increase its interest earning assets by $29,662,000 or 21.1% to
$168,909,000 from $139,793,000 at December 31, 1996 and from $128,108,000 at
December 31, 1995.
For the fiscal year ended December 31, 1997, the Company recorded a net
loss of $1,274,000 representing a decrease of $2,282,000 from 1996's net
income of $1,008,000. For the fiscal year ended December 31, 1996, the
Company had a net income of $1,008,000 representing an increase of
$2,775,000 from 1995's net loss of $1,767,000. On a basic earnings (loss)
per common share basis, the net loss for 1997 was $(.68) compared to net
income of $.55 per share in 1996 and a net loss of $(.98) per share in 1995.
The net loss in 1997 was primarily the result of losses totaling $5.7 million
related to the dissolution of RSC's real estate development activities. The
net income recorded in 1996 was primarily a result of lower losses related to
RSC's real estate development activities, as well as, an increase of income
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from the sale of loans. 1995's loss was also primarily attributable to
losses from RSC's real estate development activities of $3.4 million.
Common shareholders' equity increased by $5,264,000 during 1997 to
$18,734,000, primarily as a result of the Private Offering completed by the
Company in December 1997. In 1996, shareholders' equity increased by
$528,000 to $13,470,000, primarily as a result of the retention of earnings
net of four cash dividends totaling $437,000. In 1995, shareholders' equity
declined by $1,385,000 to $12,942,000 primarily as a result of losses
experienced by RSC. During 1997, the Company paid no cash dividends. During
1996, the Company declared and paid four quarterly cash dividends of $.06 per
common share. The Company paid four cash dividends of $.05 in 1995. It is
the objective of management to maintain adequate capital for future growth
through the retention of earnings. Additionally, the Bank and Company have
agreed to administrative orders which require the approval of the FDIC and
DFI prior to declaration and payment of additional cash dividends.
Therefore, there can be no assurance that the Company will pay dividends in
the future. See "Dividend Restrictions" below for discussion of further
legal restrictions upon dividends applicable to the Company and Bank. The
Company's ratio of common shareholders' equity to total assets was 9.45% at
December 31, 1997 compared to 7.44% at December 31, 1996 and 7.91% at
December 31, 1995. In addition to the cash dividends paid in 1996 and 1995,
the Company distributed a five percent stock dividend during 1995.
REAL ESTATE DEVELOPMENT
The Bank's wholly owned subsidiary, Regency Service Corporation ("RSC"),
has engaged in real estate development activities since 1986. Such
activities, which typically involve the acquisition, development and sale of
residential real properties (but which sometimes involve the sale of
properties prior to development), historically have been structured as
limited partnerships in which RSC is the limited partner and local developers
are the general partners. Partnerships are accounted for under the equity
method.
Under FDIC Regulations, banks were required to divest their real estate
development investments as quickly as prudently possible but in no event
later than December 19, 1996, and submit a plan to the FDIC regarding
divestiture of such investments. Such FDIC Regulations also permitted banks
to apply for the FDIC's consent to continue, on a limited basis, certain real
estate development activities.
In 1994, the Bank and RSC submitted a divestiture plan (the "Divestiture
Plan") to the FDIC. The Divestiture Plan provided for RSC to divest itself
of all real estate development investments by year-end 1996; however, since
RSC was a limited partner in the majority of its real estate development
projects and, thus, did not control the operation of such projects, there was
no assurance that such divestiture would occur by year-end 1996. In December
1995, the Bank and RSC submitted a request to extend the mandatory time
period in which it must divest of its real estate development interests. In
December 1996, the FDIC, responding to the Bank's request, granted the Bank
and RSC a two year extension, until December 31, 1998, to continue its
divestiture activities.
For the year ended December 31, 1997, RSC experienced a loss from
investments in real estate in the amount of $3,973,000 compared to a loss of
$351,000 for the year ended December 31, 1996, an increase of $3,622,000. The
increased loss resulted from the sale of properties at discounted prices, as
well as, the writedown of several properties to reflect RSC's anticipated
sales proceeds. During the year ended December 31, 1995, losses from
investments in real estate were $3,441,000 primarily as a result of the
establishment of a reserve for future losses. For the year ended December 31,
1997, on a stand alone basis, RSC's activities (including losses from the
sale of properties, additions to RSC's provision for real estate losses and
provision for credit losses, plus operating expenses), reduced the Company's
overall pre-tax income by $5,720,000 compared to $1,499,000 in 1996, and
$4,014,000 in 1995, respectively.
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ADMINISTRATIVE ORDERS
As a result of an examination of the Bank as of June 30, 1997, the FDIC
determined that the Company required special supervisory attention. The Bank
consented to an FDIC Order on October 28, 1997. The FDIC Order is a
"cease-and-desist order" for the purposes of Section 8 of the Federal Deposit
Insurance Act, and violation of the FDIC Order by the Bank can give rise to
enforcement proceedings under Section 8 of the Federal Deposit Insurance Act.
The FDIC Order provides that the Bank must: (a) retain qualified
management; (b) increase on or before December 31, 1997 and thereafter
maintain Tier 1 capital equal to the greater of $14,000,000 or the equivalent
of a Tier 1 capital to average assets ratio of at least 7.0%; (c) eliminate
from its books classified assets not previously collected or charged off; (d)
not extend additional credit to borrowers with previous classified or charged
off credits which are uncollected; (e) not engage in any activities not
permissible for a national bank subsidiary, except that the Bank and RSC may
continue real estate activities as permitted by the FDIC's letter of November
29, 1996, to the Bank requiring, among other things, that RSC divest all
properties held by it not later than December 31, 1998; (f) review the
adequacy of the Bank's allowance for loan and lease losses and establish a
comprehensive policy for determining its adequacy on a quarterly basis; (g)
develop a plan to control overhead and other expenses and restore the Bank to
profitability; (h) prepare a business/strategic plan for the operation of the
Bank acceptable to the FDIC; (i) not pay cash dividends in any amount except
with the prior written consent of the FDIC and the Commissioner; and (j)
furnish quarterly written progress reports to the FDIC and the Commissioner
detailing the form and manner of any actions taken to comply with the
Administrative Orders.
As a result of an examination of the Bank as of June 30, 1997, the
Department of Financial Institutions and the Bank have stipulated to the
issuance of the State Order by the California Department of Financial
Institutions ("CDFI") which State Order is a final order pursuant to Section
1913 of the California Financial Code.
The State Order provides that the Bank must: (a) retain management and
maintain a Board of Directors for the Bank and RSC acceptable to the
Commissioner and FDIC; (b) increase and maintain tangible shareholders'
equity (shareholders' equity less intangible assets) to an amount not less
than the greater of (i) 7% of its tangible assets (total assets less
intangible assets) or (ii) $14,000,000; (c) maintain an adequate allowance
for loan and lease losses; (d) cause RSC to maintain an adequate reserve for
losses on its real estate investments; (e) cause RSC to reduce the assets
classified as substandard so that the amount of such assets shall not exceed
$10,115,000 by December 31, 1997, $8,750,000 by March 31, 1998, $7,100,000 by
June 30, 1998 and $4,900,000 by September 30, 1998; (f) develop, adopt and
implement a plan acceptable to the Commissioner for divestiture of RSC and
all of RSC's real estate investments by not later than December 31, 1998; (g)
not make any distribution to shareholders except with the prior written
approval of the Commissioner; and (h) furnish written progress reports within
thirty (30) days after the end of each quarter to the Commissioner and the
FDIC describing actions to comply with the State Order.
In regard to the two most significant issues raised in each order,
specifically the mandate to (1) increase on or before December 31, 1997 and
thereafter maintain Tier 1 capital equal to the greater of $14,000,000 or the
equivalent of a Tier 1 capital to average assets ratio of at least 7.0%; and
(2) cause RSC to reduce the assets classified as substandard so that the
amount of such assets shall not exceed $10,115,000 by December 31, 1997,
$8,750,000 by March 31, 1998, $7,100,000 by June 30, 1998 and $4,900,000 by
September 30, 1998: On December 31, 1997, the Company completed its private
placement capital offering of approximately $5.7 million allowing the Bank to
reflect Tier 1 capital of $14.3 million and a capital to assets ratio of
7.46% at year-end. Both measurements are above required levels and are
considered "Well Capitalized" under FDICIA standards. Additionally,
approximately $2.4 million of capital remained at the Bank's parent company,
Regency Bancorp, which could be contributed to further augment the Bank's
capital if required. In January 1998, the Company filed a progress report
with the FDIC and DFI indicating the Bank's progress to date in complying
with the Administrative Orders. The progress report indicated that at
December 31, 1997, RSC had reduced total classified assets to $4,831,000,
well below levels required at year-end. Subsequent to year end 1997, RSC
completed the sale of several additional units and at January 15, 1998 had
further reduced its level of classified assets to $3,826,000. The remainder
of the items specified in the Administrative Orders are more subjective
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<PAGE>
in nature and "compliance" can only be defined by the appropriate regulatory
agency, however, management believes they are in full compliance with both
orders.
The FDIC Order is enforceable against the Bank and
institution-affiliated parties, including directors, officers, employees,
controlling shareholders and others who participate in the conduct of the
affairs of the Company and Bank. The FDIC Order is a "cease-and-desist order"
for the purposes of Section 8 of the FDI Act, and violation of the FDIC Order
by the Company or Bank can give rise to enforcement proceedings under Section
8 of the FDI Act. Possible sanctions could include the imposition of civil
money penalties against the Bank and/or institution-affiliated parties,
removal and prohibition orders against institution-affiliated parties,
revocation of FDIC insurance or appointment of a conservator or receiver for
the Bank. If the Bank's FDIC insurance is revoked or a conservator or
receiver is appointed for the Bank, such events could result in a total loss
of investment by shareholders of the Company. Additionally, violations of
the State Order permit the DFI to take possession of the Bank. As of the
date hereof, neither the FDIC nor the DFI has taken any actions against the
Company or Bank as a result of any failure to comply with the requirements of
the Administrative Orders.
CAPITAL REQUIREMENTS
As is the case with all state chartered, non-member banks, the Bank is
required to meet certain minimum risk-based and leverage capital standards
promulgated by the FDIC. Under FDIC Regulations, the Bank is currently
required to maintain a minimum ratio of total qualifying capital to
risk-weighted assets of 8.0%, of which at least 4.0% must consist of Tier 1
capital (consisting primarily of common stock and retained earnings, less
intangibles). The FDIC's capital guidelines further require state chartered
non-member banks to maintain a minimum leverage capital ratio of Tier 1
capital to average assets for the immediately preceding calendar quarter
("leverage capital ratio"). Although the FDIC has established 3.0% as the
minimum leverage capital ratio applicable to the highest rated institutions,
institutions experiencing or anticipating significant growth or those with
other than minimum risk profiles are expected to maintain capital well above
the minimum level.
Under the prompt corrective action provisions of the Federal Deposit
Insurance Corporation Improvement Act of 1991 (the "FDICIA") and the
regulations promulgated thereunder, insured institutions, such as the Bank,
are classified into five different capital categories based upon their
capital levels: "well capitalized" (having a total risk-based capital ratio
of 10.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a
leverage capital ratio of 5.0% or greater and not being subject to any
regulatory directive to meet and maintain a specific capital level);
"adequately capitalized" (having a total risk-based capital ratio of 8% or
greater, a Tier 1 risk-based capital ratio of 4.0% or greater and a leverage
capital ratio of 4.0% or greater (or a leverage capital ratio of 3.0% or
greater if rated a Composite 1 under the CAMELS rating system);
"undercapitalized" (failing to meet any of the capital ratios required to be
adequately capitalized); "significantly undercapitalized" (having a total
risk-based capital ratio of less than 6.0%, a Tier 1 risk-based ratio of less
than 3.0% or a leverage capital ratio of less than 3.0%); and "critically
undercapitalized" (having a ratio of tangible equity to total assets of less
than 2.0%). At each successive lower capital category, an insured depository
institution is subject to more restrictions and federal banking agencies are
given less flexibility in deciding how to deal with it. For example, an
undercapitalized institution will be closely monitored by the appropriate
federal banking agency, subjected to asset growth restrictions and required
to obtain prior regulatory approval for acquisitions, branching and engaging
in new lines of business. In addition, all undercapitalized institutions
will be required to submit an acceptable capital restoration plan within 45
days after becoming undercapitalized, and this plan must be guaranteed, in
part, by each institution controlling the undercapitalized institution. An
insured depository institution that is significantly undercapitalized is
subject to additional restrictions or sanctions that could include a forced
sale of voting shares, a forced merger, restrictions on transactions with
affiliates and restrictions on rates paid on deposits. Finally, further
restrictions and sanctions are imposed on institutions that are critically
undercapitalized. Most importantly, except under limited circumstances, the
appropriate federal banking agency, not later than 90 days after an insured
depository institution becomes critically undercapitalized, is required to
appoint a conservator or receiver for the institution.
-8-
<PAGE>
The Company and Bank's Board of Directors, in consenting to the
Administrative Orders issued by the FDIC and DFI have agreed that the Bank
will maintain Tier 1 capital equal to the greater of $14,000,000 or the
equivalent of a Tier 1 capital to average assets ratio of at least 7.0%.
-9-
<PAGE>
The Company and Bank's actual capital amounts (in thousands) and ratios are
also presented in the following table:
<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Adequacy Prompt Corrective
(In Thousands, except percentages) Actual Purposes Action Provisions
- -----------------------------------------------------------------------------------------------------------------------------------
AS OF DECEMBER 31, 1997 AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to Risk Weighted Assets):
Company $18,779 13.87% GREATER GREATER N/A N/A
THAN =$10,828 THAN =8.00%
Regency Bank $16,003 11.79% GREATER GREATER GREATER GREATER
THAN =$10,860 THAN =8.00% THAN =$13,576 THAN =10.00%
Tier I Capital (to Risk Weighted Assets):
Company $17,081 12.62% GREATER GREATER N/A N/A
THAN =$5,414 THAN =4.00%
Regency Bank $14,300 10.53% GREATER GREATER GREATER GREATER
THAN =$5,430 THAN =4.00% THAN =$8,145 THAN =6.00%
Tier I Capital (to Average Assets):
Company $17,081 8.89% GREATER GREATER N/A N/A
THAN =$7,686 THAN =4.00%
Regency Bank $14,300 7.46% GREATER GREATER GREATER
THAN =$7,663 THAN =4.00% $9,579 THAN =5.00%
</TABLE>
<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Adequacy Prompt Corrective
(In Thousands, except percentages) Actual Purposes Action Provisions
- -----------------------------------------------------------------------------------------------------------------------------------
AS OF DECEMBER 31, 1996 AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
- -----------------------------------------------------------------------------------------------------------------------------------
Total Capital (to Risk Weighted Assets):
<S> <C> <C> <C> <C> <C> <C>
Company $14,306 10.21% GREATER GREATER N/A N/A
THAN =$11,207 THAN =8.00%
Regency Bank $13,944 9.97% GREATER GREATER GREATER GREATER
THAN =$11,193 THAN =8.00% THAN =$13,991 THAN =10.00%
Tier I Capital (to Risk Weighted Assets):
Company $12,691 9.06% GREATER GREATER N/A N/A
THAN =$5,604 THAN =4.00%
Regency Bank $12,329 8.81% GREATER GREATER GREATER GREATER
THAN =$5,596 THAN =4.00% THAN =$8,394 THAN =6.00%
Tier I Capital (to Average Assets):
Company $12,691 7.66% GREATER GREATER N/A N/A
THAN =$6,630 THAN =4.00%
Regency Bank $12,329 7.12% GREATER GREATER GREATER
THAN =$6,923 THAN =4.00% $8,654 THAN =5.00%
</TABLE>
-10-
<PAGE>
POTENTIAL ENFORCEMENT ACTIONS
Commercial banking organizations, such as the Bank, and their
institution-affiliated parties, may be subject to potential enforcement
actions by the federal and state banking agencies for unsafe or unsound
practices in conducting their businesses or violations of any law, rule or
regulation or any condition imposed in writing by the agency or any written
agreement with the agency (such as the Administrative Orders). Enforcement
actions may include the imposition of a conservator or receiver, the issuance
of a cease and desist order that can be judicially enforced, the termination
of insurance of deposits, the imposition of civil money penalties, the
issuance of directives to increase capital, the issuance of formal and
informal agreements, the issuance of removal and prohibition orders against
institution-affiliated parties and the imposition of restrictions and
sanctions under the prompt corrective action provisions of the FDICIA. See
"RISK FACTORS - Administrative Orders."
DIVIDEND RESTRICTIONS
The Administrative Orders prohibit the Bank from paying any cash
dividends without the written consent of the FDIC and the California
Commissioner of Financial Institutions (the "Commissioner"). The following
paragraphs summarize laws and regulations which would also affect the payment
of dividends by the Company and the Bank in the absence of the Administrative
Orders. The Company does not anticipate payment of any dividends in the near
future even if permitted by law or by the Bank's or Company's regulators.
The Company's shareholders are entitled to receive dividends when and as
declared by its Board of Directors, out of funds legally available therefor,
subject to the restrictions set forth in the California General Corporation
Law (the "GCL"). The GCL provides that a corporation may make a distribution
to its shareholders if the corporation's retained earnings equal at least the
amount of the proposed distribution. The GCL further provides that, in the
event that sufficient retained earnings are not available for the proposed
distribution, a corporation may nevertheless make a distribution to its
shareholders if it meets two conditions, which generally stated are as
follows: (1) the corporation's assets equal at least 1-1/4 times its
liabilities; and (2) the corporation's current assets equal at least its
current liabilities or, if the average of the corporation's earnings before
taxes on income and before interest expenses for the two preceding fiscal
years was less than the average of the corporation's interest expenses for
such fiscal years, then the corporation's current assets must equal at least
1-1/4 times its current liabilities.
Funds for payment of any cash dividends by the Company would be obtained
from its investments as well as dividends and/or management fees from the
Bank. The payment of cash dividends by the Bank is subject to restrictions
set forth in the California Financial Code (the "Financial Code"). The
Financial Code provides that a bank may not make a cash distribution to its
shareholders in excess of the lesser of (a) the bank's retained earnings; or
(b) the bank's net income for its last three fiscal years, less the amount of
any distributions made by the bank or by any majority-owned subsidiary of the
bank to the shareholders of the bank during such period. However, a bank
may, with the approval of the Commissioner of Financial Institutions (the
"Commissioner"), make a distribution to its shareholders in an amount not
exceeding the greater of (a) its retained earnings; (b) its net income for
its last fiscal year; or (c) its net income for its current fiscal year. In
the event that the Commissioner determines that the shareholder's equity of a
bank is inadequate or that the making of a distribution by the bank would be
unsafe or unsound, the Commissioner may order the bank to refrain from making
a proposed distribution.
The FDIC may also restrict the payment of dividends if such payment
would be deemed unsafe or unsound or if after the payment of such dividends,
the Bank would be included in one of the "undercapitalized" categories for
capital adequacy purposes pursuant to the FDICIA. Additionally, while the
Board of Governors has no general restriction with respect to the payment of
cash dividends by an adequately capitalized bank to its parent holding
company, the Board of Governors might, under certain circumstances, place
restrictions on the ability of a particular bank to pay dividends based upon
peer group averages and the performance and maturity of the particular bank,
or object to management fees on the basis that such fees cannot be supported
by the value of the services rendered or are not the result of an arm's
length transaction.
11-
<PAGE>
During 1996, the Company paid four quarterly cash dividends of $.06 per
common share. During 1995, the Company paid four cash dividends of $.05 per
common share as well as a 5% stock dividend to shareholders of record on May
12, 1995. There can be no assurance that the Company will pay dividends in
the future. In addition to restrictions under the Administrative Orders, the
determination to pay dividends is subject to regulatory restrictions
applicable to the Bank and the Company, the financial condition of the Bank
and the Company and such other factors as the Board of Directors of the
Company may consider.
COMMON STOCK PRICE FLUCTUATIONS AND TRADING VOLUME
A number of factors may adversely influence the price of the Company's
Common Stock in public markets, many of which are beyond the control of the
Company. In particular, an increase in market interest rates will result in
higher yields on other financial instruments and may lead purchasers of
shares of Common Stock to demand a higher annual distribution rate on the
price paid for shares from distributions by the Company, which could
adversely affect the market price of the shares of Common Stock. Although
the Company's Common stock is listed on The Nasdaq Stock Market as a National
market System ("NMS") security, the daily trading volume of financial
institution stocks in general and the Company's shares in particular may be
lower than the trading volume of certain other industries. As a result,
investors in the Company who desire to liquidate substantial holdings at a
single point in time may find that they are unable to dispose of such shares
in the market without causing a substantial decline in the market value of
such shares.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Common Stock offered by the Selling Shareholders.
SELLING SHAREHOLDERS
The Regency Bancorp Common Stock to which this Prospectus relates is
being offered by shareholders (the "Selling Shareholders") of Regency Bancorp
who acquired their shares of Common Stock (and/or warrants to purchase such
common stock) in the Private Offering or by subsequent purchase from
purchasers in the Private Offering. The Private Offering involved the offer
and sale of 750,000 shares of Common Stock at the price of $8.25 per share,
and the distribution (without charge) of warrants (the "Warrants") to
purchase 150,000 shares of Common Stock at the price of $10.00 per share and
26,211 shares of Common Stock at the price of $9.90 per share. The Warrants
are exercisable for a period of five years ending January 1, 2003. The
Company agreed, in connection with the sale of the Common Stock and
distribution of the Warrants, to register for public resale the shares of
Common Stock sold in the Private Offering (including the shares of Common
Stock issuable upon exercise of the Warrants).
The following table states the number of shares of Common Stock of the
Company beneficially owned by the Selling Shareholders as of the date of this
Prospectus, and the number of such shares which may be sold for the account
of the Selling Shareholders.
-12-
<PAGE>
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
NAME OF PRIOR TO THE NUMBER OF AFTER THE OFFERING(2)
SELLING SHAREHOLDER OFFERING(1) SHARES ---------------------
- ----------------------------- ----------- -------
SHARES PERCENTAGE OFFERED SHARES PERCENTAGE
------ ---------- ------- ------ ----------
<S> <C> <C> <C> <C> <C>
Castle Creek Capital Partners 460,000 17.53 460,000 0 0
Fund-I,L.P. 46,000(3) 1.75 46,000 0 0
William J. Ruh(4) 20,000 * 20,000 0 0
9,800(3) * 9,800 0 0
Mutual Financial Services 100,000 3.81 100,000 0 0
Fund, a Series of Franklin 10,000(3) * 10,000 0 0
Mutual Series Fund, Inc.
Trustees, Parklane Properties 20,000 * 20,000 0 0
Inc., Profit Sharing Plan(5) 2,000(3) * 2,000 0 0
Belle Plaine Financial, L.L.C. 15,000(3) * 15,000 0 0
John M. Eggemeyer(6) 31,200(3) 1.19 31,200 0 0
Castle Creek Investors, L.L.C. 2,940(3) * 2,940 0 0
HCM Castle Creek, Inc. 5,940(3) * 5,940 0 0
Peter C. Cook, Trustee 1,800(3) * 1,800 0 0
Castle Creek Financial 6,120(3) * 6,120 0 0
Investors, Inc.
Robert Haveman 4,200(3) * 4,200 0 0
Bay Pond Partners, L.P. 150,000 5.72 150,000 0 0
15,000(3) * 15,000 0 0
Alan P. Carruthers 26,211(3) * 26,211 0 0
</TABLE>
- -----------------------------
(1) Percentage is the percentage of outstanding shares of Common Stock
beneficially owned as of May 8, 1998, including shares issuable upon the
exercise of Warrants (less than one percent is indicated by an asterisk
(*)). As of such date, 2,624,374 shares of Common Stock were outstanding.
(2) Assumes all offered securities will be sold.
(3) Indicates shares which may be acquired by the exercise of Warrants.
(4) Mr. Ruh is a director of the Company and a principal of Castle Creek
Capital Partners Fund-I, L.P.
(5) These shares are beneficially owned by Company director William J. Allesini
and his spouse.
(6) Mr. Eggemeyer is a principal of Castle Creek Capital Partners Fund-I, L.P.
-13-
<PAGE>
PLAN OF DISTRIBUTION
The shares covered hereby may be offered and sold from time to time by
the Selling Shareholders. The Selling Shareholders will act independently of
the Company in making decisions with respect to the timing, manner and size
of each sale. Such sales may be made on The Nasdaq Stock Market or
otherwise, at prices related to the then current market price or in
negotiated transactions, including one or more of the following methods: (a)
purchases by a broker-dealer as principal and resale by such broker or dealer
for its account pursuant to this Prospectus; (b) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and
(c) block trades in which the broker-dealer so engaged will attempt to sell
the Shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction. The Company has been advised by the
Selling Shareholders that they have not made any arrangements relating to the
distribution of the Shares covered by this Prospectus. In effecting sales,
broker-dealers engaged by the Selling Shareholders may arrange for other
broker-dealers to participate. Broker-dealers may receive commissions or
discounts from the Selling Shareholders in amounts to be negotiated.
In offering the Shares covered hereby, the Selling Shareholders and any
broker-dealers and any other participating broker-dealers who execute sales
for the Selling Shareholders may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales, and any profits
realized by the Selling Shareholders and the compensation of such
broker-dealer may be deemed to be underwriting discounts and commissions. In
addition, any Shares covered by this Prospectus which qualify for sale
pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this
Prospectus.
The Company has advised the Selling Shareholders that, during such time
as they may be engaged in a distribution of Shares covered hereby, they are
required to comply with Regulation M under the Exchange Act as described
below and, in connection therewith, that they (1) may not engage in any
stabilization activity in connection with the Company's Common Stock, (2) are
required to furnish copies of this Prospectus to each purchaser and/or
broker-dealer through which Shares covered hereby may be offered, and (3) may
not bid for or purchase any securities of the Company or attempt to induce
any person to purchase any securities of the Company except as permitted
under the Exchange Act. Each Selling Shareholder has been requested to
inform the Company when the distribution of his or her Shares is completed.
Regulation M under the Exchange Act also prohibits, with certain
exceptions, participants in a distribution from bidding for or purchasing,
for an account in which the participant has a beneficial interest, any of the
securities that are the subject of the distribution. Regulation M also
governs bids and purchases made in order to stabilize the price of a security
in connection with a distribution of the security.
This offering will terminate on the earlier of (1) the date on which all
Shares offered hereby have been sold by all of the Selling Shareholders, or
(2) January 1, 2005.
In order to comply with certain states' securities laws, if applicable,
the Shares offered hereby may be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, the Shares may not
be sold in certain states unless they have been registered or qualified for
sale in such states or an exemption from registration or qualification is
available and is complied with.
INDEMNIFICATION
The Company and Bank are subject to the California General Corporation
Law (the "GCL"), which provides a detailed statutory framework covering
limitation of liability of directors in certain instances and indemnification
of any officer, director or other agent of a corporation who is made or
threatened to be made a party to any legal proceeding by reason of his or her
service on behalf of such corporation.
-14-
<PAGE>
With respect to limitation of liability, the GCL permits a California
corporation to adopt a provision in its articles of incorporation reducing or
eliminating the liability of a director to the corporation or its
shareholders for monetary damages for breach of the fiduciary duty of care,
provided that such liability does not arise from certain proscribed conduct
(including intentional misconduct and breach of the duty of loyalty). The
GCL in this regard relates only to actions brought by shareholders on behalf
of the corporation (i.e., "derivative actions") and does not apply to claims
brought by outside parties.
With respect to indemnification, the GCL provides that to the extent any
officer, director or other agent of a corporation is successful "on the
merits" in defense of any legal proceeding to which such person is a party or
is threatened to be made a party by reason of his or her service on behalf of
such corporation or in defense of any claim, issue, or matter therein, such
agent shall be indemnified against expenses actually and reasonably incurred
by the agent in connection therewith, but does not require indemnification in
any other circumstance. The GCL also provides that a corporation may
indemnify any agent of the corporation, including officers and directors,
against expenses, judgments, fines, settlements and other amounts actually
and reasonably incurred in a third party proceeding against such person by
reason of his or her services on behalf of the corporation, provided the
person acted in good faith and in a manner he or she reasonably believed to
be in the best interests of such corporation. The GCL further provides that
in derivative suits a corporation may indemnify such a person against
expenses incurred in such a proceeding, provided such person acted in good
faith and in a manner he or she reasonably believed to be in the best
interests of the corporation and its shareholders. Indemnification is not
available in derivative actions (i) for amounts paid or expenses incurred in
connection with a matter that is settled or otherwise disposed of without
court approval or (ii) with respect to matters for which the agent shall have
been adjudged to be liable to the corporation unless the court shall
determine that such person is entitled to indemnification.
The GCL permits the advancing of expenses incurred in defending any
proceeding against a corporate agent by reason of his or her service on
behalf of the corporation upon the giving of a promise to repay any such sums
in the event it is later determined that such person is not entitled to be
indemnified. Finally, the GCL provides that the indemnification provided by
the statute is not exclusive of other rights to which those seeking
indemnification may be entitled, by bylaw, agreement or otherwise, to the
extent additional rights are authorized in a corporation's articles of
incorporation. The law further permits a corporation to procure insurance on
behalf of its directors, officers and agents against any liability incurred
by any such individual, even if a corporation would not otherwise have the
power under applicable law to indemnify the director, officer or agent for
such expenses.
The Articles of Incorporation and Bylaws of the Company and Bank
implement the applicable statutory framework by limiting the personal
liability of directors for monetary damages for a breach of a director's
fiduciary duty of care and allowing the Company and Bank to expand the scope
of their indemnification of directors, officers and other agents to the
fullest extent permitted by California law. The Articles of the Company and
Bank, pursuant to the applicable provisions of the GCL, also include a
provision allowing the Company and Bank to include in their Bylaws, and in
agreements between the Company and Bank and their directors, officers and
other agents, provisions expanding the scope of indemnification beyond that
specifically provided under California Law.
Indemnification Agreements entered into between the Company and its
directors and executive officers individually attempt to provide to such
directors and executive officers, and such other agents of the Company as the
directors may designate, the maximum indemnification allowed under applicable
law and under the Company's Articles of Incorporation and bylaws. The
Indemnification Agreements provide indemnification which expands the scope of
indemnification provided by Section 317 of the GCL ("Section 317"). It has
not yet been determined, however, to what extent the indemnification
expressly permitted by Section 317 may be expanded, and therefore the
validity and scope of indemnification provided by the Indemnification
Agreements may be subject to future judicial interpretation.
The Indemnification Agreements set forth a number of procedural and
substantive matters which are not addressed or are addressed in less detail
in the GCL, including the following:
-15-
<PAGE>
1. In the event the Company does not pay a requested indemnification
amount, the Indemnification Agreements allow the indemnified party to contest
this determination by petitioning a court or arbitrator to make an
independent determination of whether such party is entitled to
indemnification under the Indemnification Agreements. If a "change of
control" of the Company shall have occurred on or after the commencement of a
proceeding, the burden of proving that the indemnified party is not entitled
to indemnification or advancement of expenses will be on the Company.
Section 317 does not set forth any procedure for contesting a corporation's
determination of a party's right to indemnification or for establishing which
party bears the burden of proof with respect to a challenge to such a
determination.
2. The Indemnification Agreements explicitly provide for partial
indemnification of costs and expenses in the event that an indemnified party
is not entitled to full indemnification under the terms of the
Indemnification Agreements. Section 317 does not specifically address this
issue. It does, however, provide that to the extent that an indemnified
party has been successful on the merits, he shall be entitled to such
indemnification.
3. The Indemnification Agreements automatically incorporate future
changes in the laws which increase the protection available to the
indemnitee. Such changes will apply to the Company without further
shareholder approval and may further impair shareholders' rights or subject
the Company's assets to risk of loss in the event of large indemnification
claims. Each Indemnification Agreement constitutes a binding, legal
obligation of the Company, and may not be amended without the consent of the
individual who is protected by such Indemnification Agreement.
4. The Indemnification Agreements explicitly provide that actions by
an indemnified party serving at the request of the Company as a director,
officer or agent of any employee benefit plan, corporation, partnership,
joint venture or other enterprise, owned or controlled by the Company, shall
be covered by the indemnification. Section 317 provides that a corporation
may so indemnify such parties. By agreeing by contract to indemnify such
parties, the Company may be exposed to liability for actions of an entity
over which it may not exercise control, which liability could adversely
affect the Company's financial position.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "1933 Act"), may be permitted to directors,
officers or persons controlling the Company pursuant to the foregoing
provision of the GCL and the Company's Articles of Incorporation and Bylaws,
the Company has been informed that indemnification is considered by the
Securities and Exchange Commission to be against public policy and therefore
unenforceable.
LEGAL MATTERS
Certain legal matters in connection with the Common Stock covered by
this Prospectus are being passed upon by Coudert Brothers, San Jose,
California.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference from the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
-16-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below is an estimate of the fees and expenses to be incurred in
connection with the issuance and distribution of the shares of Common Stock, no
par value per share, offered hereby.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee. . . . . . . $ 3,893.56
Blue Sky Fees and Expenses . . . . . . . . . . . . . . . . . . . 1,000.00
Legal Fees and Expenses. . . . . . . . . . . . . . . . . . . . . 50,000.00
Accounting Fees. . . . . . . . . . . . . . . . . . . . . . . . . 5,000.00
Transfer Agent's Fee . . . . . . . . . . . . . . . . . . . . . . 500.00
Printing, third party filers and related costs . . . . . . . . . 2,500.00
TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $62,893.56
----------
----------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The information set forth in the prospectus under the heading
"Indemnification" is incorporated here by reference.
ITEM 16. EXHIBITS
The exhibits listed on the List of Exhibits are incorporated here by
reference.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities,
a post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) Of the
Securities Act;
(ii) Reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or together, represent
a fundamental change in the information in the registration statement.
Notwithstanding the forgoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in the volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement;
(iii) Include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraph (1)(i) and (1)(ii) above do not apply if the
information required in a post-effective amendment is incorporated by reference
from periodic reports filed by the registrant under the Exchange Act that are
incorporated by reference in the registration statement.
II-1
<PAGE>
(2) For determining liability under the Securities Act, that each
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered, and the offering of the securities at
that time shall be deemed to be the initial bona fide offering thereof.
(3) To file a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Fresno, State of California on
April 23, 1998.
REGENCY BANCORP
By: /s/ Steven F. Hertel
-------------------------
Steven F. Hertel, President and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Steven F. Hertel and Steven R. Canfield and
each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place, and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any
of them, or their or his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ Steven F. Hertel April 23, 1998
- -----------------------------------------
Steven F. Hertel, Director and
Principal Executive Officer
/s/ Steven R. Canfield April 23, 1998
- -----------------------------------------
Steven R. Canfield, Principal Financial
Officer and Principal Accounting Officer
/s/ William J. Allesini April 23, 1998
- -----------------------------------------
William J. Allesini, Director
/s/ Joseph L. Castanos April 23, 1998
- -----------------------------------------
Joseph L. Castanos, Director
/s/ Roy Jura April 23, 1998
- -----------------------------------------
Roy Jura, Director
/s/ Barbara Palmquist April 23, 1998
- -----------------------------------------
Barbara Palmquist, Director
II-3
<PAGE>
/s/ David N. Price April 27, 1998
- -----------------------------------------
David N. Price, Director
/s/ Daniel Ray April 23, 1998
- -----------------------------------------
Daniel Ray, Director
/s/ William J. Ruh April 23, 1998
- -----------------------------------------
William J. Ruh, Director
/s/ Daniel R. Suchy April 23, 1998
- -----------------------------------------
Daniel R. Suchy, Director
/s/ Waymon E. Watts April 23, 1998
- -----------------------------------------
Waymon E. Watts, Director
II-4
<PAGE>
LIST OF EXHIBITS
<TABLE>
<CAPTION>
No. Exhibit
- --- -------
<S> <C>
4.1+ Form of Subscription Agreement Executed by Certain Selling Shareholders
4.2+ Form of Warrant Agreement Executed by All Selling Shareholders
4.3+ Form of Warrant Certificate
5* Opinion of Coudert Brothers re Legality of the Common Stock
23.1* Consent of Coudert Brothers (see Exhibit 5)
23.2* Consent of Deloitte & Touche LLP
24* Power of Attorney (see Signature Page)
</TABLE>
+ Incorporated by reference from the Company's Annual Report on Form
10-K for the Year Ended December 31, 1997 filed with the Commission.
* Filed herewith.
<PAGE>
Exhibit 5
May 8, 1998
Board of Directors
Regency Bancorp
7060 N. Fresno, Street
Fresno, CA 93720
RE: FORM S-3 REGISTRATION STATEMENT
Lady and Gentlemen:
We have acted as your counsel in connection with the preparation of the
Registration Statement on Form S-3 (the "Registration Statement") filed by
Regency Bancorp, a California corporation (the "Company"), with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"Act"). This Registration Statement relates to an offer by certain selling
shareholders named therein of up to 926,211 shares of the Company's Common
Stock, no par value (the "Shares").
In acting as counsel to you, we have examined and relied upon such
corporate records, documents, certificates and other instruments and examined
such questions of law as we have considered necessary or appropriate for the
purposes of this opinion. Based upon and subject to the foregoing, we advise
you that in our opinion the Shares are legally issued, fully paid and
non-assessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and the reference to this firm under the caption "Legal Matters"
contained therein and elsewhere in the Registration Statement. This consent is
not to be construed as an admission that we are a party whose consent is
required to be filed with the Registration Statement under the provisions of the
Act.
Sincerely,
COUDERT BROTHERS
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Regency Bancorp on Form S-3 of our report dated February 4, 1998, appearing
in the Annual Report on Form 10-K of Regency Bancorp for the year ended
December 31, 1997, and to the reference to us under the heading "Experts" in
the Prospectus which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Fresno, California
May 8, 1998
