SoCal Bancorporation ("SoCal")(Pink Sheets: BLVE) announces that on May 3, 2010, Professional Business Bank ("PBB") received an investment of $12.6 million in new equity capital. As a result of the capital infusion, SoCal's ownership percentage in PBB decreased from 100% to 3.75%.
PBB RENEWS COMMITMENT TO SERVING LOCAL COMMUNITIES
PBB remains committed to serving customers in the Los Angeles and Orange County markets and continues to offer a full suite of loan and deposit products that can be tailored to meet the needs of customers. As of the May 3, 2010 capital investment, PBB's capital ratios were in compliance with PBB's regulatory orders and above regulatory "well-capitalized" thresholds.
"We are pleased to complete this capital raise and renew our focus on providing unmatched service to our customers," Mary Lynn Lenz, President and CEO of PBB said. "We remain committed to being an active banking partner in our communities and working closely with customers to provide the products and services they need."
SOCAL MAY NOT CONTINUE AS A GOING CONCERN
The year ended December 31, 2009 and the first quarter of 2010 were very difficult for SoCal. Notwithstanding the stabilizing national economy and improving equity markets, SoCal has continued to struggle as a result of a decline in the value of SoCal's assets and inability to raise additional capital.
SoCal has been trying to raise capital for over a year. Despite substantial investment of time and energy, this effort was unsuccessful due to investor concerns regarding SoCal's investment in PBB. SoCal has also presented proposals to its debt holders to convert their claims into SoCal equity without success.
With SoCal unable to attract outside capital, on May 3, 2010 Belvedere Capital Fund II L.P. (the "Fund") directly invested $12.6 million into PBB following an arms-length negotiation between the Fund and PBB. PBB was advised by independent third-party bank advisory valuation firms in guiding its share issuance price negotiation with the Fund. SoCal's audited financial statements as of December 31, 2009 and unaudited financial statements as of March 31, 2010 that are included at the end of this announcement do not include the effects of this investment.
SoCal's common stock is junior to over $34 million of debt and accrued interest. Based on recent valuation data, the fair value of SoCal's assets (primarily its 3.75% ownership in PBB) is significantly less than SoCal's debt obligations. Among the senior claims on SoCal's assets is a note that is secured by SoCal's equity investment in PBB. SoCal is in default on this note, lacks the financial resources to service or repay its debt obligations, and effectively has no ability to raise additional cash. If the senior secured lender forecloses on the equity SoCal holds in PBB then SoCal will have no operating assets. As a result of the foregoing, and as indicated by our auditors, we can provide no assurance that SoCal will be able to continue as a going concern. The ramifications of SoCal's inability to continue as a going concern are not expected to have any impact on PBB, its customers or its employees.
MORE INFORMATION
Although SoCal no longer files reports with the Securities and Exchange Commission, it does continue to file financial reports with the Federal Reserve Board which are available at http://www.ffiec.gov. PBB also files financial reports with its regulators, which can be found in the Investor Relations section of PBB's website at http://www.probizbank.com and on the FDIC's website at http://www.fdic.gov.
PARENT ONLY AUDITED BALANCE SHEET | ||||||||
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ASSETS | ||||||||
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Cash and cash equivalents | $ | 233,997 | ||||||
Investment in subsidiary | 21,498,749 | |||||||
Other assets | Â | 515,400 | Â | |||||
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Total assets | $ | 22,248,146 | Â | |||||
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LIABILITIES AND SHAREHOLDERS' DEFICIT | ||||||||
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Notes payable, net of fees | $ | 16,838,320 | ||||||
Junior subordinated debentures, net of issuance costs | 15,427,492 | |||||||
Accrued interest payable | 1,845,150 | |||||||
Other liabilities | Â | 84,152 | Â | |||||
 | ||||||||
Total liabilities | Â | 34,195,114 | Â | |||||
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Shareholders' deficit: | ||||||||
Preferred stock – non-cumulative, perpetual, no par value; | ||||||||
authorized 20,000,000 shares; no shares issued and outstanding | ||||||||
Common stock – no par value; authorized 20,000,000 shares; | ||||||||
7,677,045 shares issued and outstanding | 81,928,959 | |||||||
Accumulated deficit | (94,064,927 | ) | ||||||
Accumulated other comprehensive income | Â | 189,000 | Â | |||||
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Total shareholders' deficit | Â | (11,946,968 | ) | |||||
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Total liabilities and shareholders' deficit | $ | 22,248,146 | Â |
PARENT ONLY AUDITED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2009 | Â | Â | Â | Â | Â | Â | |||
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Dividend income from Trust | $ | 11,729 | Â | ||||||
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Expenses: | |||||||||
Interest | 2,725,165 | ||||||||
Professional fees | 468,174 | ||||||||
Salaries and employee benefits | 131,432 | ||||||||
Other | Â | 61,763 | Â | ||||||
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Total expenses | Â | 3,386,534 | Â | ||||||
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Loss before income tax provision and equity in | |||||||||
undistributed loss of subsidiary | (3,374,805 | ) | |||||||
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Income tax provision | Â | 458,209 | Â | ||||||
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Loss before equity in undistributed loss | |||||||||
of subsidiary | (3,833,014 | ) | |||||||
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Equity in undistributed loss of subsidiary | Â | (39,621,370 | ) | ||||||
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Net loss | $ | (43,454,384 | ) |
PARENT ONLY UNAUDITED BALANCE SHEET AS OF MARCH 31, 2010 | Â | Â | Â | Â | Â | |||
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ASSETS | ||||||||
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Cash and cash equivalents | $ | 137,797 | ||||||
Investment in subsidiary | 19,496,566 | |||||||
Other assets | Â | 501,455 | ||||||
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Total assets | $ | 20,135,818 | ||||||
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LIABILITIES AND SHAREHOLDERS' DEFICIT | ||||||||
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Notes payable, net of fees | $ | 16,839,420 | ||||||
Junior subordinated debentures, net of issuance costs | 17,118,300 | |||||||
Accrued interest payable | 727,054 | |||||||
Other liabilities | Â | 56,229 | ||||||
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Total liabilities | Â | 34,741,004 | Â | |||||
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Shareholders' deficit: | ||||||||
Preferred stock: - non-cumulative, perpetual, no par value; | ||||||||
authorized 20,000,000 shares; no shares issued and outstanding | ||||||||
Common stock - no par value; authorized 20,000,0000 shares; | ||||||||
7,677,045 shares issued and outstanding | 81,965,236 | |||||||
Accumulated deficit | (96,670,140 | ) | ||||||
Accumulated other comprehensive income | Â | 99,719 | ||||||
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Total shareholders' deficit | Â | (14,605,186 | ) | |||||
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Total liabilities and shareholders' deficit | $ | 20,135,818 |
PARENT ONLY UNAUDITED INCOME STATEMENT FOR THE QUARTER ENDED MARCH 31, 2010 | ||||
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Interest income | $ | 2,598 | Â | |
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Expenses: | ||||
Interest | 577,912 | |||
Salaries and employee benefits | 15,686 | |||
Other | Â | 68,069 | Â | |
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Total expenses | Â | 661,666 | Â | |
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Loss before income tax provision and equity in undistributed loss of subsidiary | Â | (659,068 | ) | |
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Income tax provision | Â | 428,925 | Â | |
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Loss before equity in undistributed loss | ||||
of subsidiary | (1,087,993 | ) | ||
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Equity in undistributed loss of subsidiary | Â | (1,256,229 | ) | |
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Net loss | $ | (2,344,222 | ) |
Contacts:
SoCal Bancorporation
Justin Evans, 415-434-1264