SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 28, 1996
CAPITAL CORP OF THE WEST
------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 0-27384 77-0405791
- ---------------------- ------------------- ----------------------
State of Incorporation Commission File No. IRS Employer ID Number
1160 West Olive Avenue, Suite A, Merced, California 95348
-----------------------------------------------------------------------
Address, including zip code, of registrant's principal executive office
(209) 725-2200
--------------------------------------------------
Registrant's telephone number, including area code
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 28, 1996, Capital Corp of the West acquired control of Town
and Country Finance and Thrift Company, an industrial loan company
headquartered in Turlock. California. See the attached press release for
further information. Town and Country was previously held by approximately 80
individual shareholders. The consideration for the acquisition was
approximately $5.6 million, of which $1.6 to $1.8 million is cash and the
balance of which is common stock of Capital Corp of the West (approximately
267,000 to 282,000 shares at $14.05 per share). The exact amounts will
depend on the results of a cash/stock election now being made by former Town
and Country shareholders. The cash portion is funded in part from cash on
hand and in part from a loan from an unaffiliated commercial bank. Town and
Country will continue to operate its offices as a separate industrial loan
company subsidiary of Capital Corp of the West. No prior material
relationship existed between Capital Corp of the West and Town and Country or
any of their respective directors and officers or their associates.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
The audited financial statements of Town and Country, including a
balance sheet and income statement as of and for the years ended December
31, 1995 and 1994, are incorporated by reference from the financial
statement pages of the Company's registration statement on Form S-4,
Registration No. 333-03174, and the unaudited interim balance sheet and
income statement as of and for the three-month period ended March 31, 1996,
are included in this filing as a financial statement exhibit.
(b) PRO FORMA FINANCIAL INFORMATION.
The unaudited pro forma combined financial statements of Capital Corp
of the West and Town and Country, including the pro forma combined balance
sheet as of March 31, 1996, and the pro forma combined income statements
for the year ended December 31, 1995 and the three-month period ended
March 31, 1996, are included in this filing as a financial statement
exhibit.
(c) EXHIBITS.
No. Description
-- -----------
2. Agreement and Plan of Acquisition dated as of March 22, 1996
between Capital Corp of the West and Town and Country
(incorporated by reference from Annex A of the registration
statement on Form S-4, Registration No. 333-03174, filed with
the Commission on April 3, 1996)
24.1 Consent of KPMG Peat Marwick LLP
24.2 Consent of Atherton & Associates
2
99. Press release issued by the Company on July 1, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has caused this current report to be signed on its behalf by the
undersigned duly authorized person.
Date: July 15, 1996 Capital Corp of the West
By: /s/ Thomas T. Hawker
-----------------------------------
Its President and Chief Executive
Officer
3
EXHIBIT INDEX
No. Description Page
Historical and pro forma combined financial statements 6
24.1 Consent of KPMG Peat Marwick LLP 12
24.2 Consent of Atherton & Associates 13
99. Press release issued by the Company on July 1, 1996 14
4
HISTORICAL AND PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined balance sheet at
March 31, 1996, and pro forma condensed combined statements of income for the
year ended December 31, 1995, and for the three-month period ended March 31,
1996, combine the historical balance sheets of Capital Corp and Town & Country
as if the Merger had been been effective on March 31, 1996, and the income
statements of Capital Corp and Town & Country as if the Merger had been
effective on the beginning of each period presented. The pro forma information
also gives effect to the cancellation of 168,156 shares of Town & Country common
stock, no par value, outstanding at December 31, 1995, with an aggregate value
(Exchange Amount) equal to $33.05 per share in exchange for Capital Corp common
stock, no par value, and cash consideration. Share information was calculated
using an aggregate Cash Component of $1,600,000 and an Exchange Ratio of 1.675
shares, which corresponds to a Capital Corp per share Market Value of $14.05.
The pro forma adjustments are based upon available information and upon certain
assumptions that management believes are reasonable under the circumstances.
The Merger is accounted for under the purchase method of accounting, after
giving effect to the pro forma adjustments described in the accompanying notes.
Under this method of accounting, the purchase price has been allocated to the
assets and liabilities of Town & Country based on preliminary estimates of fair
values as of the date of acquisition. The actual fair values will be determined
following consummation of the Merger.
These unaudited pro forma combined financial statements should be read
in conjunction with the historical consolidated financial statements and the
related notes thereto of Capital Corp and the historical financial statements
and related notes thereto of Town & Country. The unaudited pro forma statements
of income are not necessarily indicative of operating results which would have
been achieved had the Merger been consummated as of the beginning of the first
period presented and should not be construed as representative of future
operations.
5
CAPITAL CORP AND TOWN & COUNTRY
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1996
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
ASSETS
PRO FORMA ADJUSTMENTS
--------------------------------------
TOWN & PRO FORMA
CAPITAL CORP COUNTRY DEBIT CREDIT COMBINED
------------ ------- ----- ------ --------
Assets
Cash and due from banks $ 18,784 $ 9,662 $ 1,725(c) $ 1,725(a) $ 28,446
Total cash and cash equivalents 18,784 9,662 1,725 1,725 28,446
Securities
Available for sale 44,199 -- 44,199
Total securities 44,199 -- 44,199
-------- -------- --------
Loans 140,658 17,432 185(b) 157,905
Allowance for loan losses 1,860 160 2,020
-------- -------- --------
Net loans 138,798 17,272 185 155,885
Premises and equipment, net 4,333 189 4,522
Interest receivable and other assets 8,398 272 8,670
Intangible assets -- -- 2,243(b) 2,243
-------- -------- -------- --------
Total assets 214,512 27,395 2,243 1,910 243,965
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing demand 34,999 -- 34,999
Savings and interest-bearing demand 128,588 7,723 136,311
Time certificates, $100,000 and over 8,153 2,411 10,564
Other time 22,759 13,716 36,475
-------- -------- --------
Total deposits 194,499 23,850 218,349
Other borrowed funds 3,506 -- 1,725(c) 5,231
Interest payable and other liabilities 1,264 59 1,323
-------- -------- --------
Total liabilities 199,269 23,909 224,903
Preferred stock -- --
Common stock 10,105 2,700 2,700(b) 3,957(a) 14,062
Capital surplus -- --
Retained earnings 5,188 786 924(b) 6,898
Net unrealized gain (loss) on available for
sale securities (50) -- (50)
--------
Total shareholders' equity 15,243 3,486 3,624 3,957 19,062
-------- -------- -------- -------- --------
Total liabilities and shareholders' equity 214,512 27,395 3,624 3,957 243,965
Shares outstanding 1,335,831 168,156 281,676(f) 168,156(f) 1,617,507
6
CAPITAL CORP AND TOWN & COUNTRY
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
ADJUSTMENTS
---------------------------
TOWN & PRO FORMA
CAPITAL CORP COUNTRY DEBIT CREDIT COMBINED
------------ ------- ----- ------ --------
Interest and fees on loans $12,969 $2,022 $ $ 63(d) $ 15,054
Interest on securities 2,546 -- 2,546
Other interest income 358 408 766
---------- ---------- ----------
Total interest income 15,873 2,430 63 18,366
Interest on deposits 5,706 1,010 6,716
Interest on other borrowed funds 11 -- 146(c) 157
---------- ---------- ---------- ---------- ----------
Total interest expense 5,717 1,010 146 6,873
Net interest income 10,156 1,420 146 63 11,493
Provision for loan losses 228 100 328
Net interest income after provision for loan losses 9,928 1,320 146 63 11,165
Service charges on deposit accts. 920 -- 920
Other operating income (2,144) 217 (1,927)
---------- ---------- ----------
Total noninterest income (1,224) 217 (1,007)
Salaries and employee benefits 4,161 676 4,837
Occupancy and equipment expense 1,401 148 1,549
Other operating expense 2,584 375 2,959
Amortization of intangibles -- -- 145(d) -- 145
---------- ---------- ---------- ---------- ----------
Total noninterest expense 8,146 1,199 145 9,490
Income before provision for taxes 558 338 291 63 668
Provision for taxes 223 107 91(e) 239
---------- ---------- ---------- ----------
Net Income 335 231 291 130 429
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Net Income per share .25 1.38 .27
Weighted average common shares outstanding 1,333,923 168,156 281,676 168,156 1,615,599
7
CAPITAL CORP AND TOWN & COUNTRY
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
THREE-MONTH PERIOD ENDED MARCH 31, 1996
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
ADJUSTMENTS
---------------------------
TOWN & PRO FORMA
CAPITAL CORP COUNTRY DEBIT CREDIT COMBINED
------------ ------- ----- ------ --------
Interest and fees on loans $3,419 $529 $ $ 15(d) $3,963
Interest on securities 775 -- 775
Other interest income 56 124 180
---------- ---------- ----------
Total interest income 4,250 653 15 4,918
Interest on deposits 1,500 289 1,789
Interest on other borrowed funds 12 -- 36(c) 48
---------- ---------- ---------- ----------
Total interest expense 1,512 289 36 1,837
Net interest income 2,738 364 36 15 3,081
Provision for loan losses 160 13 173
Net interest income after
provision for loan losses 2,578 351 36 15 2,908
Service charges on deposit accts. 474 -- 474
Other operating income 97 10 107
---------- ---------- ----------
Total noninterest income 571 10 581
Salaries and employee benefits 1,186 167 1,353
Occupancy and equipment expense 389 64 453
Other operating expense 758 77 835
Amortization of intangibles -- -- 36(d) 36
---------- ---------- ---------- ----------
Total noninterest expense 2,353 308 36 2,697
Income (loss) before provision for taxes 796 53 72 792
Provision (benefit) for taxes 295 22 23(e) 294
---------- ---------- ---------- ----------
Net Income 501 31 72 38 499
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Net Income per share .38 .18 .31
Weighted average common shares outstanding 1,335,177 168,156 281,676 168,156 1,616,853
8
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(a) The merger is accounted for using the purchase method of accounting. The
total purchase cost is allocated to the tangible and identifiable intangible
assets and liabilities of Town & Country based on their respective fair values
and the remainder will be allocated to goodwill, if any. The aggregate purchase
price was determined as follows:
Cash Component $1,600,000
Acquisition fees and expenses 125,000 (1)
Total cash purchase price 1,725,000
Add: Issuance of 281,676 shares of
Capital Corp Common Stock at a
Market Value of $14.05 per share 3,957,000
----------
$5,682,000
----------
----------
(1) Includes legal, accounting, printing and other direct
expenses to be incurred with the Merger.
(b) The following adjustments represent those necessary to allocate the
purchase price paid to the fair market value of the net assets acquired by
Capital Corp:
Equity of Town and County:
Common Stock $2,700,000
Retained Earnings 924,000
----------
$3,624,000
Fair value adjustments:
Loans receivable $ (185,000)
Core Deposit Intangible 460,000
----------
275,000
Fair Value of net assets acquired 3,899,000
Purchase price 5,682,000
----------
Excess of fair value of net assets
acquired over purchase cost- $1,783,000
goodwill ----------
----------
(c) A portion of the total cash purchase price of $1,725,000 will be financed
by a loan from another financial institution. Estimated interest expense has
been included on the pro forma combined statement of income.
(d) When applicable, fair value adjustments are amortized against (accreted to)
net income as follows:
Amortization
------------
Total Life First Year Per Quarter
----- ---- ---------- -----------
Goodwill $1,783,000 18 $99,000 $25,000
Core deposit intangible 460,000 10 46,000 11,500
Fair value adjustment-loans (185,000) 3 (63,000) (15,000)
Total $2,058,000 $84,000 $21,500
(e) Income tax expense has been adjusted in the pro forma computation to
reflect historical tax expense rate of 40%.
9
(f) Pro forma combined per share date for net income has been calculated using
Capital Corp's weighted average number of common shares outstanding increased by
281,676 shares to be issued using an Exchange Amount of $5,558,000, a Cash
Component of $1,600,000 and exchange ratio of 1.675 shares, which corresponds to
Capital Corp common stock per share Market Value of $14.05, and cancellation of
168,156 common stock shares of Town & Country.
10