ITEM 1. BUSINESS
BWC Financial Corp. ("Corporation") is a bank holding company registered under the Bank Holding Company Act of 1956, as amended. It is a holding company for Bank of Walnut Creek, which was incorporated under the laws of the State of California on November 26, 1979. Its principal office is located at 1400 Civic Drive, Walnut Creek, California 94596, and its telephone number is (510) 932-5353.
Bank of Walnut Creek has conducted the business of a commercial bank since December 12, 1980. The Bank's primary focus is to engage in wholesale commercial banking, serving small to middle-sized businesses, professionals, high net worth individuals and general retail banking business. Rather than concentrate on any specific industry, the Bank has solicited and attracted customers from a wide variety of light manufacturing, wholesaling, retailing, contracting, real estate development and service businesses, accountants, physicians and dentists.
The Bank offers a full range of commercial banking services emphasizing the banking needs of individuals, and the business and professional community in Walnut Creek, California and surrounding areas of Contra Costa County. The Bank accepts checking and savings deposits, makes construction loans, mortgage real estate loans, commercial loans, and installment loans, and offers safe deposit services, including oversize boxes for short-term storage. It sells travelers checks, issues drafts, and offers other customary banking services. The Bank offers its depositors a wide selection of deposit instruments including money market accounts, NOW accounts, and time certificates of deposit. Bank of Walnut Creek also offers an auto deposit pick-up service to its professional and business clients. Automatic teller machines are available at all bank locations, 24 hours a day, and are part of the EDS and Cirrus networks with ATM access at locations throughout the United States and Canada. The Bank offers its clients 24 hour telephone access to their accounts through a system called Telebanc, and PC banking access through a system called PCBanc.
The Bank operates an SBA (Small Business Administration) lending department, and also has a "Business Credit" department which provides asset based (factoring)loans with assignment of receivable. Both of these areas of the Bank add to the Corporations range of services to its clients.
The Corporation also operates, through its subsidiary, BWC Real Estate, a joint venture brokerage service called "BWC Mortgage Services". This brokerage division not only provides long term mortgage placement services for the Bank's construction loan clients but for non-clients seeking long term mortgage financing. The long term financing is placed through the most competitive mortgage investors available in the market.
The Bank is not at this time authorized to conduct trust business and has no present intention to apply to regulatory authorities to do so. Although the Bank does not directly offer international banking services, the Bank does make such services available to its customers through other financial institutions with which the Bank has correspondent banking relations.
Service Area
Contra Costa County represents the primary service area of Bank of Walnut Creek and its branches, however, the service area also extends into Alameda County and Solano County. Walnut Creek, California, is site of the Corporation's main office and the Bank also operates offices in the cities of Orinda, Danville, San Ramon and Pleasanton, California.
BWC Financial Corp. has no foreign or international activities or operations.
Competition
The banking business in the Bank's primary service area, consisting of Contra Costa County, Southern Solano County, and Northern Alameda County, is highly competitive with respect to both loans and deposits. The area is dominated by the major California banks, all of which have multiple branch offices throughout our defined service area. Additionally, there are many thrifts representing most of the major thrift institutions operating in the California market. There are also a number of other independent banks that are a source of competition due to the similarity of the market served.
Among the advantages of major banks are their abilities to finance wide- ranging advertising campaigns, to offer certain services (for example, trust services) which are not offered directly by the Bank and to have substantially higher legal lending limits due to their greater capitalizations. In addition to major banks, some of the nation's largest savings and loan associations are located in California and compete for mortgage business along with smaller savings and loan associations.
Bank of Walnut Creek is in direct competition with all these financial institutions. Management believes the Bank competes successfully with these institutions because of sound management techniques and the flexibility to adjust to changing economic situations. The dedication of founders, directors, and bank personnel has been instrumental in the Bank's ability to compete. The Bank is dedicated to providing personal attention to the financial needs of businesses, professionals, and individuals in its service area.
Employees
At December 31, 1996, Bank of Walnut Creek employed 77 people. At the present time there are no employees directly employed by BWC Financial Corp. or by its mortgage subsidiary BWC Real Estate. There are 19 persons employed by the joint venture BWC Mortgage Services either directly on as independent contractors.
Supervision and Regulation
As a California state-licensed bank, the Bank is subject to regulation, supervision and periodic examination by the California State Banking Department. The Bank is also subject to regulation, supervision, and periodic examination by the Federal Deposit Insurance Corporation (the "FDIC"). The Bank is not a member of the Federal Reserve System, but is nevertheless subject to certain regulations of the Board of Governors of the Federal Reserve System. As a state bank, the Bank's deposits are insured by the FDIC to the maximum amount permitted by law, which is currently $100,000.
The regulations of those state and federal bank regulatory agencies govern most aspects of the Bank's business and operations, including, but not limited to, requiring the maintenance of non-interest bearing reserves on deposits, limiting the nature and amount of investments and loans which may be made, regulating the issuance of securities, restricting the payment of dividends, regulating bank expansion and bank activities, including real estate development activities and determining characteristics of certain deposit accounts.
ITEM 2.
ITEM 2. PROPERTIES
The principal office of the Bank of Walnut Creek is located at 1400 Civic Drive, in the financial district of downtown Walnut Creek. The premises are located in a modern building of which the Bank has leased approximately 11,917 square feet.
BWC Financial Corp. shares common quarters with Bank of Walnut Creek in its principal office.
On September 24, 1982, a branch office was opened at 224 Brookwood Road, Orinda, California. The branch serves the Orinda area. The premises are located in a remodeled building of approximately 320 square feet.
On November 12, 1985, a branch office was opened at 3130 Crow Canyon Place, San Ramon, California. The branch serves the San Ramon area. The premises are located in a modern building of which the Bank has leased approximately 3,375 square feet.
On June 8, 1990, the Bank leased 2263 square feet of office space located at 424 Hartz Avenue, Danville, California, to house the Bank's Danville office, serving the community of Danville.
On January 6, 1994 the Bank leased 3880 square feet of office space located at 249 Main Street, Pleasanton, California to house the Bank's Pleasanton office, serving the community of Pleasanton.
On June 15, 1996 the Bank leased 2,240 square feet of office space located at 4030 Clipper Court, Fremont, California. A full service charter was approved, however, at this time the facility is being used for the development of loans to the surrounding business community.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
At this time there are no pending or threatened legal proceedings to which the Corporation is a party or to which any of the Corporation's properties are subject.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
None
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS.
The information required to be furnished pursuant to this item is set forth under the caption "Common Stock Prices" on page 27 of the Corporation's 1996 Annual Report to Shareholders and is incorporated herein by reference.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The information required to be furnished pursuant to this item is set forth under the caption "Management's Discussion and Analysis of Operations" on page 24 of the Corporation's 1996 Annual Report to Shareholders and is incorporated herein by reference.
Change in Interest and Expense Due to Volume Change and Rate Change
The following table provides pertinent information about interest income and expense between the years 1996 and 1995, and between the years 1995 and 1994. The change resulting primarily from growth in each asset or liability category is expressed as a volume change. The change resulting primarily from changes in rates is expressed as a rate change. The change attributed to both rate and volume is allocated equally between both rate and volume changes.
During 1996 total interest income increased $1,747,000 from 1995. All of this increase was related to the increase in the volume of average earning assets in 1996 as compared to 1995. Based on rates alone the increase in interest income would have been 10% less, given constant volume levels between the respective periods.
During 1996 total interest expense increased $354,000 from 1995. As with interest income the increase was attributed to the growth in interest bearing deposits between the respective periods. Based on rates alone the increase in interest expense would have been 32% less, given constant volume levels between the respective periods.
Based on a combination of the above factors affecting interest income and interest expense, net interest income increased $1,393,000 during 1996 as compared to 1995. Of this increase all was related to volume increases and was actually reduced by approximately 5% based on rates.
During 1995 total interest income increased $1,818,000 from 1994. Of this increase $618,000 or 34% was related to volume increases of interest earning assets and $1,200,000 or 66% was related to rate changes.
During 1995 total interest expense increased $863,000 from 1994. Of this increase $346,000 or 40% was related to volume increases in deposits and $517,000 or 60% was related to rate changes.
The result of the above is that net interest income increased $955,000 during 1995 as compared to 1994. Net volume increases accounted for an increase of $271,000 whereas net rate changes accounted for $684,000.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required to be furnished in this item is set forth in the Consolidated Financial Statements on pages 6 through 23 of the Corporation's 1996 Annual Report to Shareholders and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING 	 AND FINANCIAL DISCLOSURE
None
PART III
Pursuant to General Instruction G(3), the information in Items 10, 11, 12 and 13 of Part III is furnished by way of incorporation by reference to those sections of the Registrant's Proxy Statement for the 1997 Annual Meeting of Shareholders which contain the information required by Items 401, 402, 403, 404 and 405 of Regulation S-K. The Registrant intends to file a definitive copy of such Proxy Statement, pursuant to Regulation 14A, by March 24, 1997.
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(A)	Documents Filed as Part of this Report
	1. Financial Statements
	The consolidated financial statements of BWC Financial Corp. and subsidiary listed below and appearing at the indicated page number in BWC's 1996 Annual Report to Shareholders are incorporated by reference into this report.
BWC FINANCIAL CORP. AND SUBSIDIARIES					Page Number*
Independent Public Accountants' Report 23 Independent Public Accountants' Report for the years ended December 31, 1996 and 1995 is filed herewith 23
Consolidated Balance Sheets as of December 31, 1996 and 1995 6
Consolidated Statements of Income for the years ended December 31, 1996, 1995 and 1994 7
Consolidated Statements of Shareholders' Equity for the years ended December 31, 1996, 1995 and 1994 8
Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 9
Notes to Consolidated Financial Statements 10 - 22
	2. Financial Statement Schedules
	All financial statement schedules have been omitted, as they are inapplicable or the required information is included in the consolidated financial statements or notes thereto.
(B)	Reports on Form 8-K
No reports on form 8-K were filed by BWC Financial Corp. during the fourth quarter of 1996.
(C)	Exhibits Filed:
See Index to Exhibits at page 17 of this Form 10-K.
*Refers to page number in the 1996 Annual Report to Shareholders.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BWC FINANCIAL CORP.
By Leland E. Wines Executive Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
Signature Title Date
Chairman of the Board ________________ James L. Ryan and Director
Executive Vice President and ________________ Leland E. Wines Chief Financial Officer 	
Director ________________ Tom Mantor
Director ________________ Richard G. Hill
Director ________________ Reynold C. Johnson III
Director ________________ Craig Lazzareschi
Director ________________ John F. Nohr
Director ________________ John L. Winther
INDEX TO EXHIBITS
EXHIBIT EXHIBIT NUMBER
Articles of Incorporation and Amendments Refer to 10K filing of March, 1994.
By-Laws Refer to 10K filing of March, 1994.
1996 Annual Report to Shareholders 13.1
Consents of Auditors:
Arthur Andersen LLP Consent dated March 3, 1997 24.1
Report of Independent Public Accountants:
Arthur Andersen LLP Report dated March 3, 1997 25.1
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required to be furnished in this item is set forth in the Consolidated Financial Statements on pages 6 through 23 of the Corporation's 1996 Annual Report to Shareholders and is incorporated herein by reference.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING 	 AND FINANCIAL DISCLOSURE
None
PART III
Pursuant to General Instruction G(3), the information in Items 10, 11, 12 and 13 of Part III is furnished by way of incorporation by reference to those sections of the Registrant's Proxy Statement for the 1997 Annual Meeting of Shareholders which contain the information required by Items 401, 402, 403, 404 and 405 of Regulation S-K. The Registrant intends to file a definitive copy of such Proxy Statement, pursuant to Regulation 14A, by March 24, 1997.
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(A)	Documents Filed as Part of this Report
	1. Financial Statements
	The consolidated financial statements of BWC Financial Corp. and subsidiary listed below and appearing at the indicated page number in BWC's 1996 Annual Report to Shareholders are incorporated by reference into this report.
BWC FINANCIAL CORP. AND SUBSIDIARIES					Page Number*
Independent Public Accountants' Report 23 Independent Public Accountants' Report for the years ended December 31, 1996 and 1995 is filed herewith 23
Consolidated Balance Sheets as of December 31, 1996 and 1995 6
Consolidated Statements of Income for the years ended December 31, 1996, 1995 and 1994 7
Consolidated Statements of Shareholders' Equity for the years ended December 31, 1996, 1995 and 1994 8
Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 9
Notes to Consolidated Financial Statements 10 - 22
	2. Financial Statement Schedules
	All financial statement schedules have been omitted, as they are inapplicable or the required information is included in the consolidated financial statements or notes thereto.
(B)	Reports on Form 8-K
No reports on form 8-K were filed by BWC Financial Corp. during the fourth quarter of 1996.
(C)	Exhibits Filed:
See Index to Exhibits at page 17 of this Form 10-K.
*Refers to page number in the 1996 Annual Report to Shareholders.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BWC FINANCIAL CORP.
By Leland E. Wines Executive Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
Signature Title Date
Chairman of the Board ________________ James L. Ryan and Director
Executive Vice President and ________________ Leland E. Wines Chief Financial Officer 	
Director ________________ Tom Mantor
Director ________________ Richard G. Hill
Director ________________ Reynold C. Johnson III
Director ________________ Craig Lazzareschi
Director ________________ John F. Nohr
Director ________________ John L. Winther
INDEX TO EXHIBITS
EXHIBIT EXHIBIT NUMBER
Articles of Incorporation and Amendments Refer to 10K filing of March, 1994.
By-Laws Refer to 10K filing of March, 1994.
1996 Annual Report to Shareholders 13.1
Consents of Auditors:
Arthur Andersen LLP Consent dated March 3, 1997 24.1
Report of Independent Public Accountants:
Arthur Andersen LLP Report dated March 3, 1997 25.1
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(A)	Documents Filed as Part of this Report
	1. Financial Statements
	The consolidated financial statements of BWC Financial Corp. and subsidiary listed below and appearing at the indicated page number in BWC's 1996 Annual Report to Shareholders are incorporated by reference into this report.
BWC FINANCIAL CORP. AND SUBSIDIARIES					Page Number*
Independent Public Accountants' Report 23 Independent Public Accountants' Report for the years ended December 31, 1996 and 1995 is filed herewith 23
Consolidated Balance Sheets as of December 31, 1996 and 1995 6
Consolidated Statements of Income for the years ended December 31, 1996, 1995 and 1994 7
Consolidated Statements of Shareholders' Equity for the years ended December 31, 1996, 1995 and 1994 8
Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 9
Notes to Consolidated Financial Statements 10 - 22
	2. Financial Statement Schedules
	All financial statement schedules have been omitted, as they are inapplicable or the required information is included in the consolidated financial statements or notes thereto.
(B)	Reports on Form 8-K
No reports on form 8-K were filed by BWC Financial Corp. during the fourth quarter of 1996.
(C)	Exhibits Filed:
See Index to Exhibits at page 17 of this Form 10-K.
*Refers to page number in the 1996 Annual Report to Shareholders.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BWC FINANCIAL CORP.
By Leland E. Wines Executive Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
Signature Title Date
Chairman of the Board ________________ James L. Ryan and Director
Executive Vice President and ________________ Leland E. Wines Chief Financial Officer 	
Director ________________ Tom Mantor
Director ________________ Richard G. Hill
Director ________________ Reynold C. Johnson III
Director ________________ Craig Lazzareschi
Director ________________ John F. Nohr
Director ________________ John L. Winther
INDEX TO EXHIBITS
EXHIBIT EXHIBIT NUMBER
Articles of Incorporation and Amendments Refer to 10K filing of March, 1994.
By-Laws Refer to 10K filing of March, 1994.
1996 Annual Report to Shareholders 13.1
Consents of Auditors:
Arthur Andersen LLP Consent dated March 3, 1997 24.1
Report of Independent Public Accountants:
Arthur Andersen LLP Report dated March 3, 1997 25.1