Valley Community Bank Investor Issues Open Letter to Shareholders
17 Oct, 2014, 07:41 ET
CHICAGO, Oct. 17, 2014 /PRNewswire/ -- Valley Community Bank's largest investor today issued an open letter to his fellow shareholders urging them to vote no on the proposed sale to FNB Bancorp. A copy of the letter can be found below.
"It has been encouraging to speak with numerous shareholders and receive overwhelming support against this deal," said Steve Taylor, Chairman of Taylor Asset Management.
"Shareholders have suffered under this management team and its poor performance for a number of years. It appears that they have had enough. Clearly, there is tremendous shareholder frustration here," said Taylor.
"I believe that the board ran a flawed process and may have put their own interests above the shareholders'," said Taylor. "And because of this, they have failed to realize the true value of this bank."
Taylor encourages fellow shareholders to contact him with their thoughts, comments and suggestions. He can be reached at 310-275-7947 or [email protected].
Stephen S. Taylor
1376 North Doheny Drive
Los Angeles, California 90069
October 17, 2014
Dear Valley Community Bank Shareholder,
I am writing to you to share my objections to the pending merger (the "Proposed Merger") of Valley Community Bank ("VCB") into First National Bank of Northern California, a subsidiary of FNB Bancorp (collectively, "FNB"). By this letter I hope to identify other concerned shareholders, and I encourage you to contact me to discuss this matter further.
In the Proposed Merger, VCB board of directors has failed the common shareholders by:
- Agreeing to a merger price of only $3.19 per share (based on recent trading in FNB), which equals only 56% of VCB's book value, when other recently announced merger transactions are closer to 120% of book value;
- Allowing FNB to negotiate with the TARP investors, at the great expense of the common shareholders (at auction, the TARP shares were sold for aggregate cash of $2.37 million, while the aggregate consideration FNB will pay to repurchase those shares is $4.33 million, for aggregate profit of $1.96 million, or an 83% return measured from the October 2013 TARP auction to October 2014);
- Accepting an all-stock deal with an OTCQB quoted company, leaving shareholders with a take-it-or-leave-it proposition – the Merger provides no cash to VCB shareholders, only the illiquid stock of FNB;
- Limiting themselves to FNB early in the process, not conducting a check of other potential buyers and agreeing to an egregious break-up fee;
- Protecting management's interests over shareholders by securing from FNB an assumption by FNB at full value of management's salary continuation agreements (paying salary after the executives no longer work for VCB), plus change in control payments to management aggregating $500,000 – cash taken directly out of the pockets of the common shareholders.
VCB's prospects are not so dim that the board of directors needed to agree to this deal. I believe alternatives were and are available that are better than the Proposed Merger. In fact, I proposed an alternative to the VCB board which would include a partial cash tender at a higher per share price than the Proposed Merger. This would have allowed shareholders the ability to cash out or to remain invested in VCB. This approach was designed to preserve the value of the bank's deferred tax asset and thus further enhancing book value. However, the Board concluded that proposal was not superior to the Proposed Merger. Since making this proposal, I have received an expression of interest from two other banks.
Please contact me if you share my concerns. I am considering and exploring alternatives to the Merger and would appreciate the opinions and ideas of other VCB shareholders.
Very truly yours,
Stephen S. Taylor, Jr.
SOURCE Taylor Asset Management
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