SECURITIES & 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): November 26, 2003
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CENTRAL COAST BANCORP
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(Exact name of registrant as specified in its charter)
STATE OF CALIFORNIA 0-25418 77-0367061
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(State or other jurisdiction) (Commission file (I.R.S. Employer
of incorporation or organization) number) Identification No.)
301 Main Street, Salinas, California 93901
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(Address of Principal Executive Offices) (Zip Code)
Registrants telephone number including area code: (831) 422-6642
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Not Applicable
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(Former name or former address, if changed since last report).
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Item 5. Other Events
Community Bank of Central California (the "Bank"), a subsidiary of
the Registrant, reports that a hearing was held in the Monterey
County Superior Court on November 14, 2003, to consider
post-judgment motions filed by the Bank in the Bank's dispute with
the City of King related to a Certificate of Deposit in the
approximate amount of $4.4 million dollars. At the hearing, among
other matters, the Bank's motion for a new trial was denied by the
Court. The Bank therefore filed an appeal on November 17, 2003
with the Sixth District Court of Appeal, regarding the Judgment
issued on September 15, 2003 by the Monterey County Superior Court
as described in greater detail below.
On November 21, 2003, the Bank and the City of King entered into a
Stipulation to stay the Judgment pending appeal which included in
its provisions an agreement to permit the Bank to retain the
Certificate of Deposit during the appeal process and prior to a
final determination, subject, however, to the payment by the Bank
to the City of King of interest thereon at the rate of six percent
(6%) per annum at specified times. The Bank's payment of interest
and the City's acceptance of interest payments, as well as the
stipulations of the parties, does not prejudice the Bank's right to
contest the obligation to pay interest and recover amounts paid
pursuant to the Stipulation or the City's right to contend that it
is entitled to recover post-judgment interest at the higher legal
rate of ten percent (10%) per annum.
As previously reported in the Registrant's filings on Forms 8-K
filed with the Securities and Exchange Commission on April 11,
2003, June 12, 2003 and October 9, 2003, and Form 10-Q for the
quarterly periods ended June 30, 2003 and September 30, 2003, filed
with the Securities and Exchange Commission on August 13, 2003 and
November 12, 2003, respectively, the Bank was served with an
Application for a Writ of Mandate by the City of King which sought
the return from the Bank of an approximate $4.4 million certificate
of deposit assigned to the Bank as collateral security for an
approximate $4.4 million loan made by the Bank to a private real
estate developer (a limited liability company). The loan to the
developer was made in conjunction with a redevelopment project with
the City of King and/or its Community Development Agency. The City
of King alleged the certificate of deposit was general fund monies
it deposited with the Bank and was not intended as a pledge for a
loan. The certificate of deposit matured on March 30, 2003 and the
$4.4 million loan became due on April 3, 2003. The Bank advised
the City of King of its intention to apply the proceeds of the
certificate of deposit to payment of the loan. Another loan made
by the Bank to the developer of this project is secured by a first
deed of trust on the project in the approximate amount of $4.6
million. A notice of default on this loan was filed on April 21,
2003. Because the loans were not paid on the due dates, the Bank
considers the loans impaired under applicable accounting standards.
The aggregate amount of the two loans currently outstanding and
past due in respect of this redevelopment project is approximately
$9.0 million.
On June 11, 2003, a hearing on the Application for Writ of Mandate
by the City of King was held in the Monterey County Superior
Court. At the hearing, the Superior Court Judge made a preliminary
ruling that there was insufficient evidence of a legislative act by
the City of King and that the Mayor of the City of King therefore
lacked authority to pledge or assign the certificate of deposit to
the Bank.
On September 15, 2003, the Monterey County Superior Court issued a
Judgment confirming its preliminary ruling in the Writ of Mandate
proceeding which was held on June 11, 2003. The Judgment ordered
that a Peremptory Writ of Mandate issue requiring the Bank to
return to the City of King the principal balance of the Certificate
of Deposit in the approximate amount of $4.4 million dollars
together with interest accrued at the rate of 6% per annum from
March 1, 2003 through the date of the Judgment.
On September 30, 2003, Bank counsel filed pleadings requesting,
among other matters, to stay enforcement of the Judgment pending a
motion for new trial and to vacate and set aside the Judgment,
Statement of Decision contained therein, and the Writ of Mandate,
or to stay enforcement thereof pending the Bank's appeal of the
Judgment.
As stated above, the Bank has filed an appeal of the Judgment. If
the Judgment remains in effect despite the appeal by the Bank and
therefore becomes final, the Bank could sustain the loss of the
certificate of deposit as collateral security for the loan. In
such event, the entire amount of approximately $4.4 million as
specified in the Judgment would likely become a charge to the
Bank's allowance for loan losses because the nature and extent of
other sources of recovery available to the Bank are uncertain at
present.
The outcome of this dispute continues to be uncertain at the
present time; however, the Bank intends to vigorously defend its
rights in respect of the certificate of deposit on appeal of the
Judgment.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
CENTRAL COAST BANCORP
Date: November 26, 2003 By: /s/ ROBERT M. STANBERRY
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Robert M. Stanberry, CFO
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