RUMSON, N.J., April 17, 2012 /PRNewswire/ --Rumson-Fair Haven Bank & Trust Company (OTCBB: RFHB) (the "Bank") announced today that it has mailed a letter to its stockholders in connection with the Bank's Annual Meeting of Stockholders scheduled for Wednesday, April 25, 2012. The Bank strongly urges stockholders to re-elect its experienced and highly qualified Board of Directors, including Chairman of the Board - William J. Barrett - by voting the WHITE proxy card today.
In the letter, the Bank noted, among other things, that:
- Under the leadership of Mr. Barrett, the Board has successfully navigated through difficult economic times to position the Bank for sustainable and profitable growth with consistent revenues in each of the past four years.
- Mr. Barrett has redirected the Bank's strategy to grow its loan portfolio without sacrificing credit quality. As a result, the Bank has seen an increase in its new loan originations in every quarter since March 31, 2011.
- The Bank believes the proxy contest by SBAV and George Hall is about SBAV and Mr. Hall pursuing their own, self-interested agenda while ignoring the best interests of all other stockholders.
The Bank strongly urges shareholders to reject SBAV and Mr. Hall and re-elect William J. Barrett by signing, dating and returning the Bank's WHITE proxy card today.
The full text of the letter is as follows:
RUMSON-FAIR HAVEN BANK & TRUST COMPANY
20 Bingham Avenue
Rumson, New Jersey 07760
April 16, 2012
Dear Fellow Stockholders:
PLEASE READ THIS LETTER CAREFULLY. IT PROVIDES IMPORTANT INFORMATION REGARDING THE 2012 ANNUAL MEETING AND YOUR VOTE.
VOTE THE WHITE CARD TODAY
By now many of you have received copies of our proxy materials (with the WHITE proxy card) for the 2012 Annual Meeting of Stockholders (the "Annual Meeting") of Rumson-Fair Haven Bank & Trust Company (the "Bank") scheduled to be held on Wednesday, April 25, 2012. Some of you may also have received proxy materials (with a Gold proxy card) from SBAV, LP (Special Bank Acquisition Vehicle, LP or "SBAV") and Mr. George Hall (a hedge fund manager) seeking to elect Mr. Hall to the Bank's Board of Directors (the "Board") in opposition to our Chairman of the Board, William J. Barrett. The Board and management of the Bank strongly urge you to re-elect William J. Barrett by signing, dating and returning the enclosed WHITE proxy card in the postage paid envelope provided. This may be the most important vote you ever make regarding the Bank and its future. We urge all stockholders to protect their investment and vote the WHITE card immediately and disregard any materials you may receive from SBAV.
We Believe this Proxy Contest Is About One Stockholder Attempting to Greenmail the Bank, While Ignoring the Best Interests of All Other Stockholders
We question whether Mr. Hall, through SBAV, is conducting this proxy contest to "greenmail" the Bank into effectuating his exit from the Bank at a time and through a transaction that would not be in the best interests of all stockholders. "Greenmail" generally refers to the practice of purchasing enough shares in a company to threaten a takeover, thereby forcing the target company to purchase those shares back at a premium in order to suspend the takeover. As recently as a few weeks ago, Mr. Hall indicated that he would not pursue a proxy contest if the Bank cashed out his 7.2% interest at a premium. Prior to that, Mr. Hall proposed buying the Bank or having the Bank sold. Your Board, however, no matter what Mr. Hall says or does, will pursue such strategies only if and when they are in the best interests of the Bank's stockholders as a whole – not just SBAV and Mr. Hall. The Bank will not stand for any overtures of greenmail. The Bank will not permit SBAV or Mr. Hall to take over your Bank without paying for it.
The Bank Has Made Every Effort to Negotiate a Fair Resolution With SBAV and Mr. Hall. Instead SBAV and Mr. Hall Have Decided to Pursue Their Own, Self-Interested Agenda
Consider the following sequence of events:
- In connection with last year's Annual Meeting of Stockholders, SBAV requested three Board seats. In an effort to avoid a costly and unnecessary proxy contest and to be responsive to the interests of its stockholders, the Bank agreed to appoint two SBAV nominees, Virginia S. Bauer and Jerold L. Zaro, in February 2011.
- Without serving a full term, both of SBAV's nominees resigned from the Board, citing personal reasons. Mr. Zaro resigned in September 2011 and Ms. Bauer resigned in December 2011.
- In March 2012, in connection with this year's Annual Meeting, SBAV sent letters to the Bank demanding the right to inspect the Bank's stockholder list, which the Bank viewed as an attempt to conduct a proxy contest. In response, the Board reached out to Mr. Hall, with a view towards avoiding an unnecessary and costly proxy contest, and offered Mr. Hall a seat on the Board. Mr. Hall rejected the offer but indicated that if he was bought out, he would not proceed with a proxy contest.
- In April 2012, the Board then proposed a settlement agreement that would have allowed two SBAV nominees to join the Board and to limit the size of the Board through the term of the agreement, if SBAV agreed to a customary standstill. The Board also proposed to add one of the SBAV nominees to its Loan Credit Committee and one of the SBAV nominees to its Asset Liability Committee. As part of the settlement, SBAV suggested the appointment of Mr. Hall's brother and a former professional hockey player. The Bank's Corporate Governance and Nominating Committee had reservations about the qualifications of each of these candidates but were open to meeting them in hopes of reaching a settlement.
- Throughout April 2012, settlement discussions continued between the parties until the receipt of SBAV's nomination letter on April 11, 2012, in which SBAV informed the Bank of its intention to nominate Mr. Hall for election at the Annual Meeting.
- Once again, on April 13, 2012, in an effort to avoid an unnecessary proxy contest, the Board offered to appoint Mr. Hall to the Board without conditions or to execute the settlement agreement. Rather than being appointed to the Board without wasting Bank funds, SBAV has determined to proceed with its proxy contest.
It is clear that this proxy contest is about SBAV and Mr. Hall pursuing their own self-interests rather than acting in the best interests of the Bank's stockholders. Why else would Mr. Hall pursue an expensive and disruptive proxy contest to obtain Board representation when he has already been offered a seat on the Board? Are these the actions of a director-fiduciary to whom you want to entrust your investment?
William J. Barrett Is a Highly Qualified Contributor to Your Board
Under Mr. Barrett's leadership, your Board has a proven record of navigating through difficult economic times to position the Bank for sustainable and profitable growth with the goal of enhancing value for all stockholders. Consider the following:
- The Bank recorded net income in each of the past four years, reporting earnings (inclusive of income from its investment securities) of $305,000 in 2008, $493,000 in 2009, $746,000 in 2010, and $452,000 in 2011.
- Historically, the common stock of the Bank has consistently traded at a premium to book value.
- Mr. Barrett has influenced the high credit quality of the Bank's loan portfolio, which has performed extraordinarily well in relation to its peers in a difficult economic period. The Bank's non-accrual loans have steadily declined and remain at levels below its peers. Management anticipates no material loss from any of its non-accrual loans.
- Mr. Barrett has over 40 years experience in financing small businesses and analyzing financial statements. His expertise has added tremendous value to the loan review process.
- Mr. Barrett should be commended in effectuating a change in strategy for the Bank in 2008, when opportunities in the corporate securities market were a safer and more attractive alternative than some of the marginal loan credits presented to the Bank. In 2010, as the corporate securities market rebalanced and such opportunities became less compelling, Mr. Barrett redirected the Bank's focus to expansion of the loan portfolio, with the addition of key senior management hires.
- The Bank added approximately $28 million in new loan originations in 2011, a 34% growth rate in new loans from 2010.
In addition, both Institutional Shareholder Services and Glass Lewis & Co., the two leading independent proxy voting advisory firms, have recommended that stockholders vote FOR our Chairman of the Board, William J. Barrett.
Do you really want a hedge fund manager to replace your experienced and highly qualified Chairman?
SBAV Proxy Statement Contains Allegations Which Are Inaccurate
The SBAV proxy statement cites "missed opportunities" and states that the "current approach of the [Bank] appears to emphasize using its cash deposits and cash to purchase government bonds and securities." It further states that the Bank "has been reluctant to make loans to local residents and businesses." These statements are more than inaccurate - they are flat out false.
Here are the facts - you be the judge:
- In 2008, during the height of the global financial crisis, your Board, under the leadership of Mr. Barrett, effected a change in strategy to generate revenues in light of tepid loan demand and in lieu of investing in substandard loans. As a result of this strategy, the Bank generated consistent revenues in each of the past four years. Clearly this strategy was successful in protecting stockholder value during one of the worst economic crisis' of our time.
- In 2010, when financial conditions began to improve, your Board, under the leadership of Mr. Barrett, redirected the Bank's strategy to focus more on the growth of its loan portfolio. In connection with this new strategy, the Bank restructured its loan department and hired two highly qualified and experienced loan officers.
- In every quarter since March 31, 2011, the Bank has seen an increase in its new loan originations, notwithstanding the challenges presented by the economy. Since redirecting the focus in 2010 to loan growth, the Bank recorded new loan originations of $3.6 million as of March 31, 2011, $7.0 million as of June 30, 2011, $9.0 million as of September 30, 2012 and $8.0 million as of December 31, 2011. The Board anticipates a similar increase for the quarter ended March 31, 2012.
- As of March 31, 2012 and December 31, 2011, the Bank's loan portfolio grew to approximately $94 million and $87 million, respectively.
Since 2010, the Bank has been aggressively pursuing commercial loans without sacrificing credit quality. The Bank welcomes and makes qualifying loans to local residents and businesses in its local communities on a regular and consistent basis. Moreover, contrary to the assertion by SBAV, under Mr. Barrett's leadership, the Bank is enhancing its commitment to the communities in which it serves. The Bank is entering the residential mortgage origination market and, as of April 23, 2012, the Bank will be originating residential first mortgages in its local communities.
The Bank regularly approves loans that meet its underwriting criteria set forth in its Loan Credit Policy, which policy was satisfactorily reviewed by its regulators. The Bank has declined loans that were substandard and will not approve loans that do not meet the Bank's underwriting guidelines. The Bank will not risk stockholder value by forcing loans or taking undue risks.
Under the leadership of Mr. Barrett, the Bank is well positioned to execute on its plans and continue its mission to build stockholder value. The Bank's focus has been, and will always be, to achieve sustained financial performance through steady and responsible growth for its stockholders. It will not waver from this mission, to seek the gratification and returns, and concomitant risks, usually associated with a hedge fund investment approach.
Our Commitment to Best Practices in Corporate Governance Is Reflected in the Significant Improvements Made to Our Governance Structures
This year, the Board made changes to the Bank's corporate governance policies to ensure the long-term benefit to all Bank stockholders and to respond to stockholder concerns. These changes included the following initiatives:
- Creation of a Corporate Governance and Nominating Committee comprised of independent directors;
- Disclosure of audit fees paid to the Bank's independent auditors in this year's Annual Meeting proxy statement; and
- Asking for stockholders to ratify the appointment of the Bank's independent auditors.
Your Board is committed to acting in your best interests. We believe SBAV and George Hall are NOT.
YOUR VOTE IS IMPORTANT
The Board urges you to DISCARD the Gold proxy card sent to you by SBAV. A "WITHHOLD AUTHORITY" vote on the Gold SBAV proxy card is not a vote for the Board's nominees. To vote FOR your Bank's nominees you MUST execute a WHITE proxy card. If you hold shares in multiple accounts, please vote each and every WHITE proxy card you receive.
If you voted on a Gold proxy card BUT WISH TO SUPPORT YOUR BANK'S NOMINEES, please sign, date and mail the enclosed WHITE proxy card in the postage-paid envelope provided as soon as possible.
Remember — only your latest dated proxy card will determine how your shares are to be voted at the meeting.
If any of your shares are held in the name of a bank, broker or other nominee, you can vote by telephone or Internet by following the enclosed instructions. Alternatively, please contact the party responsible for your account and direct them to vote your shares for your Bank's nominees on the WHITE proxy card.
For assistance in voting your shares, or for further information, please contact our proxy solicitor:
Morrow & Co., LLC
470 West Avenue
Stamford, CT 06902
Call Toll Free: 800-662-5200
Call Collect: 203-658-9400
President and Chief Executive Officer
SOURCE Rumson-Fair Haven Bank & Trust Company