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EX-10.1 - Santa Lucia Bancorp | ex10-1.htm |
EX-99.1 - Santa Lucia Bancorp | v206680_ex99-1.htm |
UNITED
STATES
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) December 23,
2010
Santa Lucia
Bancorp
(Exact
name of Registrant as specified in its charter)
California
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000-51901
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35-2267934
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(State or other jurisdiction
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(File number)
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(I.R.S. Employer
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of incorporation)
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Identification No.)
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7480 El Camino Real, Atascadero,
CA
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93422
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(Address
of principal executive office)
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(Zip
Code)
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Registrant’s
telephone number, including area code (805) 466-7087
Not
Applicable
(Former
name or former address, if changes since last report)
Check the
appropriate box below if the Form 8-K filing is to simultaneously satisfy the
filing obligation of the registrant under any of the following
provisions:
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c)) under the Exchange Act (17 CFR
240.13e-4(c))
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SECTION
1 - REGISTRANT’S BUSINESS AND OPERATIONS
Item 1.01.
Entry into Material Definitive Agreement
Written
Agreement with the Federal Reserve Bank of San Francisco
On
December 23, 2010, Santa Lucia Bancorp (the “Company”) (OTCBB: SLBA.OB) and
Santa Lucia Bank (the “Bank”), the wholly owned subsidiary of Company, and the
Federal Reserve Bank of San Francisco (“FRBSF”) entered into a Written Agreement
(the “Written Agreement”), effective December 23, 2010, addressing, among other
items, management, operations, lending, asset quality and increased capital for
the Bank and the Company, as appropriate.
As
previously disclosed, the Written Agreement was the result of a recent
examination of the Bank and the Company by the FRBSF that resulted in certain
criticisms of the Bank, particularly related to the overall quality of the
Bank’s loan portfolio. Many of the requirements of the Written
Agreement reflect recommendations or requirements from the Report of Examination
that the Bank has been working on since the date of the
examination. Subsequent to the examination and in order to enhance
the Bank’s ability to remedy many of the noted criticisms, the Bank made
numerous changes in the executive structure to include a newly appointed Chief
Credit Officer (CCO) and Chief Financial Officer. In addition, Stanley R.
Cherry, Director and former President/CEO has rejoined the Bank as SVP
- credit administration and will be working closely with the CCO to
manage the day-to-day credit functions. The Company and Bank will continue their
efforts to comply with all provisions of the Written Agreement, and believe they
are taking the appropriate steps necessary to comply in a timely
fashion.
Among
other things, the Written Agreement requires that:
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·
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The
Company serve as a source of strength for the
Bank;
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·
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The
board of directors of the Bank submit a plan to strengthen board oversight
of the management and operations of the
Bank;
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·
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The
Bank submit to the FRBSF a plan to strengthen credit risk management
practices;
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·
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The
Bank submit to the FRBSF revised written lending and credit administration
policies and procedures;
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·
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The
Bank submit to FRBSF a revised policy for the effective grading of the
Bank’s loan portfolio;
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·
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The
Bank submit to the FRBSF a written program for the effective, ongoing
third party review of the Bank’s loan portfolio, and that the board of
directors take appropriate steps to ensure that the findings of such
reviews are addressed by
management;
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2
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·
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The
Bank not extend, renew, or restructure any credit to any borrower (or
related interest) whose loans or other extensions of credit are criticized
in the FRBSF’s most recent report of examination (the “Report of
Examination”), or in any subsequent examination, without the prior
approval of a majority of the full board of directors or a designated
committee thereof;
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·
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The
Bank submit an acceptable written program to the FRBSF that is designed to
improve the Bank’s position through repayment, amortization, liquidation,
additional collateral, or other means on certain past due or problem loans
and other real estate owned (“OREO”) identified at the date of the Written
Agreement, and to develop a similar plan for any such loans or OREO
identified in the future. The Bank also must submit quarterly
progress reports to the FRBSF on such loans and
OREO;
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·
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The
Bank eliminate from its books, by charge-off or collection, all assets or
portions of assets classified “loss” in the Report of Examination that
have not been previously charged
off;
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·
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The
Bank review and revise its ALLL methodology consistent with relevant
supervisory guidance and the findings and recommendations regarding the
ALLL in the Report of Examination, and submit to the FRBSF a plan for
maintenance of an adequate ALLL;
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·
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The
Company and the Bank submit to the FRBSF an acceptable joint written plan
to maintain sufficient capital at the Bank, and notify the FRBSF following
any calendar quarter in which the Bank’s capital ratios fall below
minimums set forth in such plan, including in such notice steps the Bank
or Company intend to take to increase capital
ratios;
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·
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The
Bank submit to the FRBSF an acceptable written contingency funding
plan;
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·
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The
Bank submit to the FRBSF a written business plan for 2011 to improve the
Bank’s earnings and overall
condition;
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·
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The
Company and the Bank not declare or pay any dividends without the prior
written approval of the FRBSF and the Director of the Division of Banking
Supervision and Regulation of the Board of Governors of the Federal
Reserve System (the “Director”);
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·
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The
Company not take any other form of payment representing a reduction in
capital from the Bank without the prior written approval of the
FRBSF;
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3
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·
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The
Company and its nonbank subsidiary not make any distributions of interest,
principal, or other sums on subordinated debentures or trust preferred
securities without the prior written approval of the FRBSF and the
Director;
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·
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The
Company and its nonbank subsidiary not, directly or indirectly, incur,
increase, or guarantee any debt without prior written approval of the
FRBSF;
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·
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The
Company not, directly or indirectly, purchase or redeem any shares of its
stock without the prior written approval of the
FRBSF;
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·
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The
Bank immediately take all necessary steps to correct all violations of law
and regulation cited in the Report of
Examination;
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·
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The
Company and the Bank submit any new officer or director, or change in any
existing officer’s or director’s duties, to the FRBSF for prior approval
or non-objection;
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·
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The
Company and the Bank seek prior approval or non-objection from the FRBSF
before making any indemnification or severance payment to an officer or
director;
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·
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The
Company and the Bank submit to the FRBSF joint quarterly written progress
reports on efforts to comply with the Written
Agreement;
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The
Written Agreement will remain effective and enforceable until stayed, modified,
terminated or suspended in writing by the FRBSF. The foregoing description of
the Written Agreement is a summary and does not purport to be a complete
description of all of its terms, and is qualified in its entirety by reference
to a copy of the Written Agreement, attached hereto as Exhibit
10.1.
As
previously disclosed, the Written Agreement was the result of a recent
examination of the Bank and the Company by the FRBSF that resulted in certain
criticisms of the Bank, particularly related to the overall quality of the
Bank’s loan portfolio. Many of the requirements of the Written
Agreement reflect recommendations or requirements from the Report of Examination
that the Bank has been working on since the date of the
examination. The Company and Bank will continue their efforts to
comply with all provisions of the Written Agreement, and believe they are taking
the appropriate steps necessary to comply in a timely fashion.
While the Company and Bank are moving
diligently to comply with the Written Agreement, there can be no assurance that
full compliance will be achieved. As a result, the Company and the
Bank could become subject to further regulatory restrictions or
penalties. Full satisfaction of the Written Agreement will depend in
part on raising a significant amount of additional capital. The
Company’s ability to raise capital will depend on market conditions, which are
outside the Company’s control, and also on the Bank’s financial performance and
condition. Should the Bank’s asset quality continue to erode and
require significant additional provision for loan losses, resulting in
additional future net operating losses at the Bank, the Company’s ability to
raise capital may be impaired. In addition, further operating losses
would cause the Bank’s capital levels to decline further, requiring the raising
of more capital.
4
For 25
years, the Bank has provided its customers with friendly, hometown services and
state of the art banking products. The Bank expects to continue to serve its
customers in all areas including making loans, establishing lines of credit,
accepting deposits and processing banking transactions.
A press
release was issued by the Company on December 29, 2010, discussing the above
Written Agreement and is attached hereto as Exhibit 99.1, and is incorporated
herein by reference.
5
SECTION
9 - FINANCIAL STATEMENTS AND EXHIBITS
Item 9.01.
Exhibits
(d)
Exhibits. The following exhibits are being filed herewith:
Exhibit No.
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Description
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10.1
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Written
Agreement with the Federal Reserve Bank of San Francisco, dated December
23, 2010
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99.1
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Press
Release from Santa Lucia Bancorp dated December 29,
2010
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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.
Dated: December 29, 2010
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SANTA LUCIA BANCORP
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By:
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/s/
John C. Hansen
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John C. Hansen
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Its:
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President & CEO
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(Principal Executive Officer)
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6