ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF THE COMPANY
GENERAL
Capital Corp of the West (the "Company" or "Capital Corp") is a bank holding company incorporated under the laws of the State of California on April 26, 1995. On November 1, 1995, the Company became registered as a bank holding company and is the holder of all of the capital stock of County Bank (the "Bank"). During 1999, Town and Country Finance and Thrift (the "Thrift) was merged into County Bank. The Company's primary asset is the Bank and the Bank is the Company's primary source of income. As of December 31, 2000, the Company's securities consist of 4,552,042 shares of Common Stock, no par value, and no shares of Preferred Stock. As of March 15, 2001 there were 4,592,890 common shares outstanding, held by approximately 3,000 shareholders. There were no preferred shares outstanding at March 15, 2001. The Company has one wholly owned inactive nonbank subsidiary, Capital West Group ("CWG") at December 31, 2000. The Bank has two wholly owned subsidiaries, Merced Area Investment & Development, Inc. ("MAID") and County Asset Advisors ("CAA"). CAA is currently inactive. All references herein to the "Company" include the Bank and the Bank's subsidiaries, unless the context otherwise requires.
INFORMATION ABOUT COMMERCIAL BANKING & GENERAL BUSINESS OF THE COMPANY AND ITS SUBSIDIARIES
The Bank was organized on August 1, 1977, as County Bank of Merced, a California state banking corporation. The Bank commenced operations in 1977. In November 1992, the Bank changed its legal name to County Bank. The Bank's deposits are insured by the Federal Deposit Insurance Corporation ("FDIC"), up to applicable limits. The Bank is a member of the Federal Reserve System.
INDUSTRY & MARKET AREA
The Bank engages in general commercial banking business primarily in Fresno, Madera, Mariposa, Merced, Stanislaus, Tulare and Tuolomne counties and operates a loan production office in San Francisco. The Bank has sixteen full service branch offices and one loan production office; two of which are located in Merced with the branch located in downtown Merced currently serving as both a branch and as administrative headquarters. There are offices in Atwater, Hilmar, Los Banos, Sonora, two offices in Modesto, two offices in Turlock and one office in Visalia. In 1997, the Bank also opened an office in Madera and purchased three branch offices from Bank of America in Livingston, Dos Palos and Mariposa. During 1999, the Bank opened its first office in Fresno, and in 2000 expanded our presence in Fresno by adding an additional office. On January 18, 2001 the Bank opened a loan production office in San Francisco. The Bank's administrative headquarters also provides accommodations for the activities of MAID, the Bank's wholly owned real estate development subsidiary. (See "ITEM 2.
ITEM 2. PROPERTIES
THE BANK
(1) NORTH MERCED OFFICE The Bank's north Merced office is located at 490 West Olive Avenue in Merced with approximately 5,600 square feet of interior floor space. This building was constructed in 1978 at a cost of approximately $400,000 and is situated on a lot of approximately 47,000 square feet, which the Bank purchased in 1977 for approximately $186,000. Management believes that this facility will be adequate to accommodate the operations of this branch for the foreseeable future.
(2) DOWNTOWN MERCED BRANCH AND ADMINISTRATIVE HEADQUARTERS On September 2, 1997, the Bank relocated its downtown Merced branch to 550 West Main Street in Merced where it serves as the main branch of the Bank. The facility is a three story facility with a two story attached parking facility and is approximately 29,000 square feet. Approximately 19,800 square feet is occupied by the administrative and central support functions. The facility cost was approximately $5.1 million. Management believes that this facility will be adequate to accommodate the operations of Company for the foreseeable future.
(3) ATWATER BRANCH On October 5, 1981, the Bank opened a branch office at 735 Bellevue Road, Atwater. The building contains approximately 6,000 square feet of interior floor space, and was built at a total cost of approximately $500,000. In 1994, the Bank purchased the lot at a cost of $316,000. Management of the Bank believes that this facility will be adequate to accommodate the operations of this branch for the foreseeable future. The data processing and central service support personnel and related equipment were relocated to the new facility in downtown Merced, as discussed above in late 1997.
(4) LOS BANOS BRANCH In October of 1994, the Bank opened a full service banking facility relocated at 953 W. Pacheco Boulevard, Los Banos. The Bank entered into a ten-year lease with a non-affiliated third party on the facility. The new facility contains 4,928 square feet of interior floor space. Remodeling and redecorating expenses were approximately $355,000. Management believes that this facility will be adequate to accommodate the operation of the branch for the foreseeable future.
(5) HILMAR BRANCH On November 15, 1993, the Bank opened a branch office at 8019 N. Lander Avenue, Hilmar. The building was purchased at a cost of $328,000 and consists of a single story building of approximately 4,456 square feet of interior floor space. Remodeling and redecorating expenses were approximately $53,000. Management believes that this facility will be adequate to accommodate the operation of this branch for the foreseeable future.
(6) SONORA BRANCH On January 12, 1996, the Bank received approval to open a full service banking facility at the Crossroads Shopping Center and entered into a five-year lease with a non-affiliated third party on January 12, 1996 for a 2,500 square foot facility. The branch opened April 1, 1996. On August 28, 1998, the Bank relocated from the Crossroads Shopping Center to a larger facility of 3,131 square feet in a nearby shopping center. As part of the move the Bank entered into a ten-year lease with a non-affiliated third party. Management believes that this facility will be adequate to accommodate the operation of this branch for the foreseeable future.
(7) TURLOCK BRANCHES On September 1, 1995, the Bank opened a branch in Turlock, California. In May 1995 the Bank acquired 2 lots for $297,000 at 2001 Geer Road, Turlock. The Bank completed the construction of a permanent facility in February 1997 at a cost of approximately $694,000 and the facility is approximately 3,300 square feet. Management believes that this facility will be adequate to accommodate the operation of this branch for the foreseeable future.
In November, 1999, the Bank received approval to convert the Turlock Town and Country branch into a full service County Bank branch. The current lease on this facility covers a two year term with a non-affiliated third party, was entered into on February 12, 2000, and is for an approximate 2,160 square feet located at 410 East Olive Avenue in Turlock. Management believes that this facility will be adequate to accommodate the operation of this branch for the foreseeable future.
(8) MODESTO BRANCHES On January 24, 1996, the Bank received approval to open a full service banking facility in Modesto and entered into a ten-year lease with a non-affiliated third party on December 2, 1996 for an approximately 5,413 square foot building at 3508 McHenry Avenue, Modesto. The branch opened for business on December 10, 1996. Management believes that this facility will be adequate to accommodate the branch for the foreseeable future.
On September 26, 1996, the Bank renewed the lease on the branch in downtown Modesto and entered into a four-year lease with a non-affiliated third party on December 1, 1996 for an approximately 8,208 square foot building at 1003 12th Street, Modesto. The branch opened for business on December 31, 1996. Management believes that this facility will be adequate to accommodate the banking operation for the foreseeable future.
(9) ACQUIRED BRANCHES - DOS PALOS, LIVINGSTON, AND MARIPOSA On December 11, 1997, the Bank purchased the sites of three former branches of Bank of America. These facilities are located at 640 Main Street, Livingston, 1507 Center Street, Dos Palos and 5121 Hwy 140, Mariposa. The branch in Livingston was purchased at a cost of $251,000 and is a 5,699 square feet facility. The Dos Palos branch was purchased at a cost of $296,000 and is an 8,274 square feet facility. The Mariposa branch was purchased for a cost of $313,000 and is a 4,200 square feet facility. Management believes that these facilities will be adequate to accommodate the banking operation for the foreseeable future.
(10) MADERA BRANCH In October, 1999, the Bank entered into a 3 year lease with a nonaffiliated third party for an approximate 4,000 square foot facility located at 413 Yosemite Avenue, Suite 101, Madera, California. The branch relocated to this larger facility on October 29, 1999 from a temporary facility that was rented on a month to month basis. Management believes the new facility will be adequate to accommodate the banking operation for the foreseeable future.
(11) FRESNO BRANCHES In November, 1999, the Bank received approval to convert the Fresno Town and County branch into a full service County Bank office. The Bank relocated the previous Thrift office to a larger facility, entering into a 4 year lease with a nonaffiliated party for an approximate 5,200 square foot facility located at 2150 West Shaw Avenue, Fresno, California. The new lease agreement was entered into in August, 1999. Management believes the facility will be adequate to accommodate the banking operation for the foreseeable future.
In September, 2000, the Bank opened a second full service office. The Bank entered into a 10 year lease with a nonaffiliated party for approximately a 4,755 square foot facility located at 1330 Ease Shaw Avenue, Fresno, California. The new lease became effective July 1, 2000. Management believes the facility will be adequate to accommodate the banking operation for the foreseeable future.
(12) VISALIA BRANCH In November, 1999, the Bank received approval to convert the Visalia Town and Country branch into a full service County Bank office. The Town and Country lease signed in May, 1998 covered a five year term and was assumed by County Bank. The facility encompasses approximately 1,275 square feet located at 725 West Main Street, Visalia, California. During 2001, an application to close this branch was approved and the branch was closed effective March, 2001. The Bank is obligated to continue making lease payments on this building during the remainder of the lease term.
(13) SAN FRANCISCO BRANCH In January, 2001, the Bank opened a loan production office in San Francisco, California. The current facility is located at 130 Battery Street in San Francisco. Effective March 1, 2001, the Bank entered into a 5 year lease with a nonaffiliated party for approximately 2,880 square feet of office space. Management believes the facility will be adequate to accommodate the loan production operations in San Francisco for the foreseeable future.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
As of December 31, 2000, the Company, is not a party to, nor is any of it's property the subject of, any material pending legal proceedings, nor are any such proceedings known to be contemplated by government authorities.
The Company is, however, exposed to certain potential claims encountered in the normal course of business. In the opinion of Management, the resolution of these matters will not have a material adverse effect on the Company's consolidated financial position or results of operations in the foreseeable future.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matters to a vote of security holders in the quarter ended December 31, 2000.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
For information concerning the market for the Company's common stock and related shareholder matters, see page 19 of the Company's 2000 Annual Report to Shareholders incorporated herein by reference.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
For selected consolidated financial data concerning the Company, see page 9 of the Company's 2000 Annual Report to Shareholders incorporated herein by reference.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For management's discussion and analysis of financial condition and results of operations, see pages 10 through 20 of the Company's 2000 Annual Report to Shareholders incorporated herein by reference.
ITEM 7A.
ITEM 7A. MARKET RISK
For management's discussion and analysis of market risk and interest rate risk management, see pages 17 through 18 of the Company's 2000 Annual Report to Shareholders incorporated herein by reference.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Audited Consolidated Balance Sheets as of December 31, 2000 and 1999 and Audited Consolidated Statements of Income and Comprehensive Income, Shareholders' Equity and Cash Flows for the fiscal years ending December 31, 2000, 1999, and 1998 appear on pages 22 through 25 of the Company's 2000 Annual Report to Shareholders incorporated herein by reference. Notes to the Consolidated Financial Statements appear on pages 26 through 44 of the Company's 2000 Annual Report to Shareholders incorporated herein by reference. The Independent Auditors' Report appears on page 21 of the Company's 2000 Annual Report to Shareholders incorporated herein by reference.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There were no changes in and there were no disagreements with accountants on accounting and financial disclosure. PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
As permitted by Securities and Exchange Commission's rules relating to Form 10-K, the information called for by this item is incorporated by reference from the section of the Company's 2000 Proxy Statement titled "Election of Directors," which is to be filed on or about March 15, 2001.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
As permitted by Securities and Exchange Commission, the information called for by this item is incorporated by reference from the section of the Company's 2000 Proxy Statement titled "Information Pertaining to Election of Directors," which is to be filed on or about March 15, 2001.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As permitted by Securities and Exchange Commission's rules relating to Form 10-K, the information called for by this item is incorporated by reference from the Company's Proxy Statement, which is to be filed on or about March 15, 2001.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As permitted by Securities and Exchange Commission's rules relating to Form 10-K, the information called for by this item is incorporated by reference from the Company's Proxy Statement, which was filed on or about March 15, 2001.
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) FINANCIAL STATEMENTS AND SCHEDULES An index of all financial statements and schedules filed as part of this Form 10-K appears below and the material which begins on the pages of the Company's Annual Report to Shareholders for the year ended December 31, 2000 listed, are incorporated herein by reference in response to Item 8 of this report.
(b) REPORTS ON FORM 8-K There were no reports on Form 8-K filed in the quarter ending December 31, 2000.
(c) EXHIBITS The following is a list of all exhibits required by Item 601 of Regulation S-K to be filed as part of this Form 10-K:
(d) FINANCIAL STATEMENT SCHEDULES All other supporting schedules are omitted because they are not applicable, not required, or the information required to be set forth therein is included in the financial statements or notes thereto incorporated herein by reference.
Consent of accountant (for incorporation by reference of report of accountants into form S-8 registration statement.)
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 15th day of March, 2001.
CAPITAL CORP OF THE WEST
By: /S/ THOMAS T. HAWKER ------------------------------ THOMAS T. HAWKER (President and Chief Executive Officer of Capital Corp of the West)
By: /S/ R. DALE MCKINNEY ----------------------------------- R. DALE MCKINNEY (Executive Vice President and Chief Financial Officer of Capital Corp of the West)
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.