SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, For Use
of the Commission Only
(as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
ss. 240.14a-11(c) or ss. 240.14a-12
FOOTHILL INDEPENDENT BANCORP
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(Name of Registrant as Specified in its Charter)
BASSWOOD FINANCIAL PARTNERS, L.P.
BASSWOOD PARTNERS, L.L.C.
BASSWOOD CAPITAL MANAGEMENT, L.L.C.
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(Name of Person(s) Filing Proxy Statement if
Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PRELIMINARY COPY - SUBJECT TO COMPLETION, DATED APRIL 29, 1999
PROXY STATEMENT
OF
BASSWOOD FINANCIAL PARTNERS, L.P.,
BASSWOOD PARTNERS, L.L.C., AND
BASSWOOD CAPITAL MANAGEMENT, L.L.C.
-----------------------
1999 ANNUAL MEETING OF THE SHAREHOLDERS
OF
FOOTHILL INDEPENDENT BANCORP
-----------------------
To Our Fellow Shareholders of
Foothill Independent Bancorp:
This Proxy Statement and the White Proxy Card are furnished by Basswood
Financial Partners, L.P., a Delaware limited partnership (the "Partnership"),
Basswood Partners, L.L.C., a Delaware limited liability company ("Basswood
Partners") and Basswood Capital Management L.L.C., a Delaware limited liability
company ("Basswood Capital" and, together with the Partnership and Basswood
Partners, "Basswood") in connection with the solicitation by Basswood of proxies
from the holders of Common Stock, no par value (the "Common Stock"), of Foothill
Independent Bancorp, a California corporation (the "Company" or "Foothill"), to
vote at the Annual Meeting of the shareholders of the Company, including any
adjournments or postponements thereof and any special meeting called in lieu
thereof (the "Annual Meeting") scheduled to be held (according to Foothill's
Amended By-Laws) on or about the second Tuesday in May 1999. This Proxy
Statement and form of proxy will first be furnished to shareholders of the
Company on or about May 8, 1999. Shareholders of record at the close of business
on April 1, 1999 (the "Record Date") are entitled to notice of and to vote at
the Annual Meeting. The principal executive offices of the Company are located
at 510 South Grand Avenue, Glendora, California 91741.
Basswood is seeking your proxies in support of the following proposal:
The election of Mr. Matthew Lindenbaum as the nominee of Basswood (the
"Basswood Nominee") to the Company's Board of Directors (the "Board")
BASSWOOD RECOMMENDS THAT YOU CUMULATE YOUR VOTES AND VOTE IN FAVOR OF THE
BASSWOOD NOMINEE FOR ELECTION TO THE BOARD.
Shareholders of record of shares of Common Stock on the Record Date are
entitled to vote at the Annual Meeting. Each shareholder is entitled to one vote
for each share of Common
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Stock held as of the Record Date, except that in the election of directors each
shareholder may cumulate his or her votes and give any one nominee a number of
votes equal to the number of directors to be elected multiplied by the number of
shares which the shareholder is entitled to vote at the meeting, or to
distribute the votes among any number of candidates for election to the Board,
if (i) the name of the candidate for whom such votes are cast has been placed in
nomination prior to the voting and (ii) such shareholder or any other
shareholder has given notice at the meeting prior to the vote on election of
directors of that shareholder's intention to cumulate his or her votes.
The Company has been notified of Basswood's intention to solicit proxies on
its own behalf by the filing of this Proxy Statement, the filing of Schedule 13D
amendments by the Partnership, Mr. Matthew Lindenbaum and Mr. Bennett Lindenbaum
on April 9 and April 16, 1999, and by a letter addressed to the Board of
Directors of the Company dated April 15, 1999. In addition, Basswood informed
the Company by the filing of a Schedule 13D amendment by Basswood on November 2,
1998 and by letters addressed to the Board of Directors of the Company on
December 21, 1998 and January 27, 1999 of Basswood's intention to communicate
directly with the Company's shareholders. Basswood intends to deliver this Proxy
Statement and form of proxy to holders of a sufficient amount of the outstanding
shares of Common Stock to pass Basswood's proposals.
As of the Record Date, Basswood Partners, Mr. Matthew Lindenbaum and Mr.
Bennett Lindenbaum (the managing members of Basswood Partners) and the Accounts
(as defined below and including the Partnership) beneficially owned an aggregate
of 553,421 shares (or approximately 9.34%) of the Common Stock. Basswood
Partners is the general partner of the Partnership and Whitewood Financial
Partners, L.P., a Delaware limited partnership ("Whitewood"), and is the
investment general partner of Jet I, L.P., a Delaware limited partnership ("Jet
I"), each of which has from time to time acquired Common Stock. Basswood Capital
(of which Mr. Matthew Lindenbaum and Mr. Bennett Lindenbaum are managing
members) is the investment manager of Basswood International Fund, Inc., a
Cayman Islands exempted company ("Basswood International"), and acts as advisor
to several accounts. Prior to January 1, 1999, Basswood Partners and its
affiliates also advised the 1994 Garden State L.P., a Delaware limited
partnership ("Garden State") which from time to time acquired Common Stock. As
of January 1, 1999, however, Garden State contributed all shares of the
Company's Common Stock owned by it to the Partnership in return for a limited
partnership interest in the Partnership. The Partnership, Basswood
International, Whitewood and Jet I are referred to collectively as the
"Accounts." The 553,421 Shares beneficially owned by Basswood Partners are owned
of record as follows: the Partnership is the record owner of 431,778 Shares;
Whitewood is the record owner of 4,318 Shares; Jet I is the record owner of
22,292 Shares; Basswood International is the record owner of
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94,933 Shares; and, Mr. Bennett Lindenbaum is the record owner of 100 Shares.
Basswood Partners and Basswood Capital have discretionary authority to vote all
of the shares of Common Stock beneficially owned by Basswood Partners, the
Partnership, Messrs. Matthew and Bennett Lindenbaum and the Accounts.
Basswood and Messrs. Matthew and Bennett Lindenbaum intend to cause all of
such shares to be voted cumulatively "FOR" the Basswood Nominee. See "Voting
Securities and Principal Holders Thereof."
BY SIGNING, DATING AND MAILING THE ENCLOSED WHITE PROXY CARD, YOU WILL
REVOKE ANY PREVIOUSLY DATED PROXY. ONLY YOUR LATEST-DATED PROXY WILL COUNT AT
THE MEETING.
THIS SOLICITATION IS BEING MADE BY BASSWOOD AND NOT ON BEHALF OF THE BOARD
OF DIRECTORS OF THE COMPANY.
YOUR VOTE IS EXTREMELY IMPORTANT. If you agree with Basswood's efforts, we
ask for your support by immediately signing, dating and mailing the enclosed
White Proxy Card.
SHARES HELD IN YOUR NAME. No matter how many shares you own, vote "FOR" the
Basswood Nominee by signing, dating and mailing the enclosed White Proxy Card.
Sign the White Proxy Card exactly as your name appears on the stock certificate
regarding your shares.
SHARES HELD IN YOUR BROKER'S OR BANK'S NAME. If you own shares in the name
of a brokerage firm, bank or other nominee, your broker, bank or other nominee
cannot vote your shares for the Basswood Nominee unless it receives your
specific instructions to do so. Please sign, date and mail as soon as possible
the enclosed White Proxy Card in the envelope that has been provided by your
broker, bank or other nominee to be sure that your shares are voted, or contact
the person responsible for your account and instruct that person to execute a
White Proxy Card on your behalf.
QUESTIONS AND ASSISTANCE. If you have not received a White Proxy Card or
have any questions or need assistance in voting, please call:
BEACON HILL PARTNERS, INC.
90 BROAD STREET
NEW YORK, NEW YORK 10004
TOLL FREE: 1-800-755-5001
COLLECT: (212) 843-8500
ATTENTION: Rick Grubaugh
PLEASE REMEMBER TO DATE YOUR PROXY CARD, AS ONLY YOUR LATEST-DATED PROXY WILL
COUNT AT THE ANNUAL MEETING. IF YOU HAVE ANY DOUBTS AS TO WHETHER YOUR PROXY
WILL BE RECEIVED IN TIME TO BE
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CAST AT THE ANNUAL MEETING, PLEASE CALL BEACON HILL PARTNERS, TOLL FREE:
1-800-755-5001 OR COLLECT: (212) 843-8500 PROMPTLY.
If you have any questions about this solicitation in general, feel free to
call Matthew Lindenbaum at Basswood Partners collect at (212) 521-9500.
REASONS FOR THE SOLICITATION
Based on current publicly available information, Basswood currently
beneficially owns approximately 9.34% of the Company's outstanding Common Stock.
Basswood Partners, the Partnership, Basswood Capital and their affiliates have
been shareholders of the Company since October 2, 1996. Basswood is disappointed
with the financial performance of its investment in the Company relative to
relevant benchmark indices and returns of comparable companies in the banking
industry. The Company's efficiency ratio, average return on equity and average
return on assets are all significantly worse than the average performance of
other California banks with assets in the $250-$750 million dollar range
(comparable to the Company's approximately $468 million in assets), as derived
by Basswood from the SNL Securities Quarterly Bank Digest-March 1999. Also, in
Basswood's view, earnings per share growth has been unacceptably low. Moreover,
the Company has not made available to Basswood, through its public reports and
statements or otherwise, information indicating any reasonable prospect for a
material improvement in the Company's financial performance. Any effort to
improve earnings by an acquisition strategy would involve substantial, and
Basswood believes unacceptable, dilution to current shareholders.
Basswood believes that the underlying fundamentals of the Company have been
unacceptable compared to other comparable banks. Basswood has compiled from
published sources the following data on comparable banks to compare against the
Company's financial performance over the stated reference period:
OPERATING PERFORMANCE OF THE COMPANY AND COMPARABLE INSTITUTIONS
(In thousands, except for percentages)
California Banks
(with assets
of $250-$750
Foothill(1) million)(2)
----------- -----------
Twelve months
ended 12/31/98
- --------------
Net Income $5,064
Average Return on Assets 1.10% 1.28%
Average Return on Equity 11.36% 14.46%
Efficiency Ratio 69.04% 63.35%
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- ----------
(1) Unaudited; derived from a press release issued by the Company on January
28, 1999.
(2) Source: Derived by Basswood from SNL Securities Quarterly Bank Digest-March
1999.
Among the various means of maximizing value for all shareholders of the
Company is, in Basswood's opinion, exploring the sale of the Company. Basswood
believes that there are likely to be a number of larger institutions that would
have a serious interest in purchasing the Company. Recent transactions in the
banking industry, including several involving California banking institutions,
suggest that through a sale, the Company's shareholders would likely receive a
premium over the current market price of the Common Stock.
Basswood believes the shareholders cannot reasonably expect to achieve, on
a present value basis, the same premium if the Company continues its current
financial performance. In Basswood's view, the failure by the Board to consider
a sale of the Company among the various possible means of maximizing shareholder
value is inconsistent with its fiduciary obligations to the Company's
shareholders.
We believe that Foothill shareholders are in a position to take advantage
of the spectacular merger activity occurring in the banking industry. Now is the
time to act! This is an excellent opportunity for Foothill to actively explore
the possibilities of achieving a sale of the company in order to maximize
shareholder value. There is no assurance that we will continue to experience the
rapid pace of merger activity we have seen in recent years. Nor is there any
assurance that the value of Foothill stock will remain at or exceed its current
level if the opportunity to merge is missed. It is our opinion that Foothill
shareholders should be allowed to benefit from this current explosion of bank
acquisitions. Furthermore, if and when the pace of bank mergers slows, it is
likely that the stock prices of many financial institutions such as Foothill
will decline significantly. Indeed, recent proposed accounting changes could
have this effect.
A Board that includes Mr. Matthew Lindenbaum will, in Basswood's opinion,
better represent the interests of the Company and of all the Company's
shareholders than a Board composed entirely of incumbents and new nominees
nominated by the Company's existing management. Mr. Lindenbaum is independent of
Foothill's management and has not been previously tied to Foothill in any
manner. As a result, Mr. Lindenbaum will bring fresh ideas and insights to the
Company's management and the Board. Mr. Lindenbaum is a successful businessman
with expertise in the financial services industry who, Basswood believes, can
provide valuable insight and guidance in a time of rapid
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evolution of the banking industry. A brief summary of Mr. Lindenbaum's
professional biography is set forth in Annex I attached hereto.
Additionally, Mr. Lindenbaum is opposed to any programs, in general, which
may adversely affect shareholder value or serve to entrench management and has
indicated a clear desire to pursue steps, such as seeking buyers for Foothill,
intended to enhance shareholder value.
Finally, the rise in the price of the Company's Common Stock reflects, in
Basswood's opinion, speculation that the Company will be acquired based on the
premiums paid for comparable banking institutions as previously described.
Basswood believes such increase is not a realistic assessment of the Company's
value as an independent concern in light of the Company's financial performance
under current management.
BACKGROUND OF THE SOLICITATION
Requests for Shareholder List and Related Documentation
On December 21, 1998, Basswood Partners, L.P. (a predecessor entity to
Basswood Partners) requested in writing that the Company make available to it,
as required under applicable California statutory law, the right to inspect and
copy the records of the Company pertaining to the names, addresses and
shareholdings of the Company's shareholders. Basswood Partners, L.P. also
requested that the Company provide Basswood Partners, L.P. with certain other
information (set forth on an annex to the December 21, 1998 letter) relating to
the shareholders, including, among other things, all information in, or which
comes into, the possession or control of the Company or its transfer agent, or
which can reasonably be obtained from brokers, dealers, banks, clearing agencies
or voting trustees or their nominees, relating to the names of the Non-Objecting
Beneficial Owners of shares ("NOBO's"). While the Company's transfer agent
provided Basswood Partners, L.P. with a list of record shareholders, their
addresses and shareholdings as of June 15, 1998, the Company failed to provide
Basswood Partners, L.P. with any additional information requested in the
December 21st letter. The NOBO list is particularly important because it
discloses the identities of those shareholders who do not object to their
identities being disclosed, even though such shares are held in "street name."
Foothill subsequently admitted in the course of the litigation described below
that it has possession of the NOBO list. Thus, while the Company is able to
communicate directly with those Foothill shareholders on the NOBO list,
Basswood, until and unless it obtains the NOBO list, is prevented from doing so.
Upon determining from independent sources that the Company had in fact
obtained a NOBO list subsequent to its receipt of the December 21st letter,
Basswood Partners, L.P. submitted a second request on January 27, 1999 for the
information requested in the
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December 21st letter. The Company responded to this second request on February
8, 1999 by again rejecting Basswood Partners, L.P.'s request for access to
additional information and records. The Company also failed to return repeated
telephone calls made by Basswood to the Company's principal executive offices
during January and February 1999.
As discussed in further detail below, on March 17, 1999 the Partnership
submitted a request in writing to the Company for the information requested by
Basswood Partners, L.P. in the December 21st and January 27th letters. On March
23, 1999, the Company responded to the March 17 request and again made available
only a list of record shareholders. The Company again declined to provide the
materials requested, originally by Basswood Partners, L.P. and now by the
Partnership, in their entirety, including the NOBO list.
The Partnership commenced litigation arising from the Company's failure to
provide the information in the December 21st, January 27 and March 17, 1999
letters. (See "Commencement of Litigation by Basswood to Compel Production of
Shareholder, Corporate and Accounting Records" below).
Inaccurate Public Disclosures
In a press release issued by the Company on January 28, 1999 and in the
accompanying quarterly financial data for the quarter ended December 31, 1998,
the Company stated that its efficiency ratio(1) for the fourth quarter of 1998
was 63.88%. In response to Basswood Partners' request for Foothill's accounting
records, Foothill, in its Surreply, Memorandum of Points and Authorities in
Opposition to Petition for Preemptory Writ of Mandate, dated March 11, 1999,
stated that Basswood did not require the accounting records because the
efficiency ratio could be computed from publicly available financial information
provided by Foothill. However, when Basswood used the information contained in
Foothill's press releases to calculate Foothill's efficiency ratio for the
fourth quarter of 1998, it arrived at a different efficiency ratio percentage
than that which Foothill had reported - 67.64%.
The following table reflects the different calculations of relevant
financial data made by Basswood and the Company with respect to each quarter of
1998 (all calculations are based on numbers derived from a press release issued
by the Company on January 28, 1999):
- ----------
(1) The efficiency ratio is calculated by dividing non-interest expenses by the
sum of the net interest income fully taxable equivalent and other income.
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(In thousands, except for percentages)
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
1998 1998 1998 1998
---- ---- ---- ----
Non Interest Expenses
(5,540) (5,708) (5,699) (5,626)
Net Interest Income +
Fed. Tax Adjustment
6,252 6,578 6,977 7,051
Other Income 1,235 1,300 1,284 1,267
-------------------------------------------------------------------
Efficiency Ratio - Per
Basswood 73.99% 72.45% 68.99% 67.64%
====== ====== ====== ======
Efficiency Ratio - Per
Foothill
73.54% 71.25% 68.03% 63.88%
====== ====== ====== ======
Improper By-Law Amendment Approved by the Board
On January 26, 1999, at a meeting of the Board, the Board amended the
Company's By-Laws to, among other things, delete in its entirety Section 11 of
Article II of the By-Laws which required shareholders of the Company to abide by
specific procedures when nominating candidates for election to the Board. This
provision of the By-Laws was amended by the Board without shareholder approval,
notwithstanding the requirement in the By-Laws that By-Law amendments require
the affirmative vote of a majority of the outstanding shares of Common Stock
entitled to vote. Article VI, Section 1 of the Company's By-Laws provides that
new by-laws may be adopted, or by-laws may be amended or repealed, by the
affirmative vote of a majority of the outstanding shares entitled to vote, or by
the written assent of shareholders entitled to vote such shares, except as
otherwise provided by law or the Company's Articles of Incorporation. Article
VI, Section 2 of the Company's By-Laws provides that, subject to the right of
shareholders provided in Section 1 of Article VI to adopt, amend or repeal
by-laws, bylaws (other than a by-law or amendment thereof changing the minimum
and maximum authorized number of directors) may be adopted, amended or repealed
by the Board.
Basswood believes that the foregoing By-Law amendment deleting Section 11
of Article II was intended to prevent or otherwise impair the right of
shareholders such as Basswood to nominate persons for election to the Board when
the election of such nominee(s) may be in the best interests of the Company and
its shareholders.
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Reconstitution of the Board
On October 19, 1998, the Company announced by a press release the
appointment of three new members to the Board (Richard Galich, Ph.D., George
Sellers and Donna Miltenberger). As a consequence of such appointments, the
Board was expanded by three members; neither the press release nor any other
disclosure by the Company thereafter indicated the class of directors to which
each of the three new members was appointed. In addition, each of the new
members was affiliated with the Company prior to such appointment: Messrs.
Galich and Sellers were original shareholders of the Company when it was founded
in 1973; and Ms. Miltenberger is the Executive Vice President of the Company and
the Executive Vice President and Chief Operating Officer of Foothill Independent
Bank, the bank subsidiary of the Company (the "Bank"). Basswood believes that
the Company expanded its Board by adding three affiliates as members in an
attempt to further entrench management and as a defensive mechanism against
potential third party interest in acquiring the Company.
Commencement of Litigation by Basswood to Compel Production of Shareholder,
Corporate and Accounting Records
On December 21, 1998 and January 27, 1999, Basswood Partners, L.P.
requested that Foothill make available its shareholder, corporate and accounting
records under California law. Basswood Partners informed Foothill that it
intended to use those materials to, among other things, communicate with
Foothill's other shareholders about Foothill's financial performance and methods
of maximizing shareholder value. Although Foothill produced a list of record
shareholders, it did not produce most of the records requested by Basswood
Partners, L.P., such as the NOBO list, a breakdown of shares held in the name of
Cede & Co., a magnetic computer tape of Foothill's shareholders and any transfer
sheets and stop lists reflecting changes in Foothill's shareholders
(collectively, "Ancillary Shareholder Records").
Foothill also failed to make available its corporate minutes and
accounting records, asserting that Basswood Partners, L.P. did not have a proper
purpose in seeking those records. Basswood is seeking the corporate records to,
among other things, determine the basis for the Company's recent By-Law
amendments and the reconstitution of the Board. As noted above, Basswood is
seeking the accounting records to, among other things, determine how the Company
arrived at its efficiency ratio -- an important indicator of the Company's
financial performance.
On February 17, 1999, Basswood Partners filed a petition for writ of
mandate seeking Foothill's shareholder, corporate and accounting records in the
Superior Court of California, County of Los Angeles. Foothill raised a myriad of
defenses to the petition, including the fact that Basswood Partners, did not
have standing because the shareholders of record were investment
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partnerships, other than Basswood Partners, L.L.C. and that Basswood Partners
L.P., rather than Basswood Partners, the petitioner, had made the request for
the records. Foothill also asserted that the Ancillary Shareholder Records were
not available under California law. On March 15, 1999, the Superior Court of
California, County of Los Angeles, denied "without prejudice" the petition for
writ of mandate.
In response to the court's decision, on March 17, 1999, the Partnership
made a request (the "March 17 Request") for shareholder, corporate and
accounting records from the Foothill board. Whitewood and Jet I joined in the
March 17 Request. The March 17 Request expressed the "hope that [Basswood] can
move forward without the need for further litigation and needless expense for
the Company, its shareholders and Basswood Financial Partners."
On March 23, 1999, the Company responded to the March 17 Request and
made available a list of record shareholders. However, the Company again
declined to provide the materials requested by Basswood in their entirety.
Accordingly, on March 31, 1999, the Partnership filed a petition for writ of
mandate seeking substantially the same shareholder and corporate records that
were sought by Basswood Partners in the petition for writ of mandate filed on
February 17, 1999.
On April 27, 1999, the Superior Court of California, County of Los
Angeles, granted the Partnership's request for corporate and accounting records
under Section 1601 of the California Corporations Code, but denied the request
for shareholder records under Section 1600 of the California Corporations Code.
On April 28, 1999, the Partnership demanded that the Company produce the
corporate and accounting records as ordered by the court.
The Company has not yet responded.
A Founding Director of the Company Provides Unsolicited Support to Basswood
On April 13, 1999, Mr. Wallace D. Gott of Upland, California, a
founding director, former chairman and current shareholder of the Company, wrote
to Mr. Matthew Lindenbaum. In his letter Mr. Gott indicated his dissatisfaction
with the current directors, management and performance of the Company, and
particularly his dissatisfaction with the Company's current chairman. The text
of the letter is reproduced in its entirety below:
4/13/99
Matthew Lindenbaum
[Address]
Dear Sir
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I have read the recent articles in the Daily Bulletin of your
involvement with Foothill Independent Bank expressing displeasure with
management and the performance of the bank.
I am writing to let you know that I support you in this endeavor. I
currently own about 50,000 shares of FIB stock and can influence about
100,000 more. I was a founding director of the bank and was chairman
for about 10 years. I was the one responsible for the hiring of J.T.
Waller from First Trust Bank of Ontario to replace Hub Stokely as CEO
of the bank. The bank did very well under Mr. Waller's leadership.
During my chairmanship, I faced many difficulties in trying to have a
cohesive board and to get a building for the branch in [U]pland. The
current chairman had aligned himself with the director who owned
property on Foothill Blvd. and unsuccessfully tried to force the bank
to build on that property. I feel that I was responsible for the
negotiation of one of the best leases the bank currently has, which is
the one of Mountain Ave. in Upland.
I feel that there are major problems that the directors are doing
nothing about. One being that several key employees have left the bank
and have [gone] to competitive banks. This problem started a few years
back and is still ongoing. I feel that the make up of the present board
is conducive to a rubber stamp of management and I would support your
efforts to correct this situation.
If I can assist you in any way, please let me know.
Sincerely
/s/ Wallace D. Gott
Wallace D. Gott
CONCLUSION
Based on Basswood's perceptions of the opportunities and challenges
confronting the Company, and the Company's failure to respond in full to
Basswood's requests and communications, Basswood believes that the shareholders
would benefit from the election of Mr. Matthew Lindenbaum to the Board. Basswood
believes that Mr. Lindenbaum will bring a wealth of experience, specialized
knowledge, enthusiasm and vigor that is essential to the Company. Accordingly,
Basswood is proposing Mr. Lindenbaum based on Basswood's belief that the Company
would prosper -- and shareholders would benefit -- with the addition of Mr.
Lindenbaum as a non-executive member of the Board. Mr. Lindenbaum will, at
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all times, act in accordance with his fiduciary obligations under California
Law.
If elected, Mr. Lindenbaum would be one of nine directors and could not
individually effectuate action by the Board. However, as more fully described
above, by electing Mr. Lindenbaum, Basswood believes that you will be sending a
message to the remaining Board members that you wish them to focus on enhancing
shareholder value.
None of the Participants (as hereinafter defined) knows of any
agreements or understandings concerning the possible acquisition of the Company
and there can be no assurance that an acquisition can be effected at prices
materially above the current market value for the Common Stock.
BASSWOOD PROPOSAL
ELECTION OF BASSWOOD NOMINEE AS DIRECTOR
Basswood is proposing that the shareholders of the Company elect the
Basswood Nominee (Mr. Matthew Lindenbaum) to the Board at the Annual Meeting.
Mr. Lindenbaum, who has consented to serve as a director, would serve if elected
until the next annual meeting of shareholders at which the class of directors of
the Company's Board on which Mr. Lindenbaum would serve is scheduled for
election and until his successor has been elected and qualified. Mr.
Lindenbaum's business address is c/o Basswood Partners, L.L.C., 645 Madison
Avenue, 10th Floor, New York, New York 10022. Mr. Lindenbaum is 36 years old. A
brief summary of Mr. Lindenbaum's professional biography is set forth in Annex I
attached hereto.
It is anticipated that Mr. Lindenbaum, upon election, will be entitled
to receive director's fees, consistent with the Company's past practice, for
services as a director of the Company. However, Mr. Lindenbaum will donate all
director's fees received by him, except for amounts sufficient to reimburse Mr.
Lindenbaum for travel expenses incurred in connection with his duties as a
director, to Foothill Presbyterian Hospital. Annex II sets forth certain
information with respect to the Common Stock beneficially owned by Mr.
Lindenbaum.
VOTE AND RECOMMENDATION
The shares of Common Stock constitute the only outstanding class of
voting securities of the Company. A majority of the outstanding shares of Common
Stock will constitute a quorum at the Annual Meeting. Shareholders who abstain
on any proposal or withhold authority to vote on the election of directors will
be counted in determining the presence of a quorum. Broker non-votes will not be
counted in determining the presence of a quorum. Each shareholder is entitled to
one vote for each share of Common Stock held as of the Record Date, except that
in the
14
election of directors each shareholder may cumulate his or her votes and give
any one nominee a number of votes equal to the number of directors to be elected
multiplied by the number of shares which the shareholder is entitled to vote at
the meeting, or to distribute the votes among any number of candidates for
election to the Board, if (i) the name of the candidate for whom such votes are
cast has been placed in nomination prior to the voting and (ii) such shareholder
or any other shareholder has given notice at the meeting prior to the vote on
election of directors of that shareholder's intention to cumulate his or her
votes. Basswood intends to cumulate the votes to which the shares of Common
Stock Basswood beneficially owns are entitled and hereby solicits authority to
cumulate those votes which are granted to it by proxy (and to give any required
notice thereof) voting in favor of the proposal relating to the election of the
Basswood Nominee to the Board. Unless instructed to the contrary, the shares
represented by the proxies will be voted "FOR" the election of Mr. Matthew
Lindenbaum.
BASSWOOD RECOMMENDS THAT EACH SHAREHOLDER CUMULATE
HIS OR HER VOTES AND VOTE "FOR" MR. MATTHEW LINDENBAUM
(THE BASSWOOD NOMINEE).
CERTAIN INFORMATION REGARDING BASSWOOD PARTNERS, THE PARTNERSHIP,
BASSWOOD CAPITAL, THE BASSWOOD NOMINEE, THE ACCOUNTS AND OTHER
PARTICIPANTS
Basswood Partners is a private investment limited liability company
organized under the laws of the State of Delaware. Basswood Partners' principal
business is overseeing and managing investments by affiliates of Basswood
Partners, including the Partnership, primarily in banks, bank holding companies
and thrift institutions and other financial services companies. The Partnership
is a limited partnership organized under the laws of the State of Delaware.
Basswood Capital is a limited liability company organized under the laws of
Delaware. Basswood Capital acts as investment manager to Basswood International
and as advisor to several accounts. The principal business address of each of
Basswood Partners, Messrs. Matthew and Bennett Lindenbaum, Basswood Capital and
each of the Accounts, including the Partnership, is 645 Madison Avenue, 10th
Floor, New York, New York 10022. As of the Record Date, 553,321 shares of Common
Stock were beneficially owned collectively by Basswood Partners and the
Accounts, including the Partnership, and 100 shares were owned of record by
Bennett Lindenbaum. Basswood or its predecessor entities has beneficially owned
shares of Common Stock since October 1996. From time to time, shares are and may
be sold between the Accounts in the ordinary course of investment business.
Messrs. Matthew and Bennett Lindenbaum also have investment discretion over
certain other accounts which do not currently own shares of Common Stock but
which may in the future buy and sell Common Stock from time to time.
Messrs. Matthew and Bennett Lindenbaum are the managing members of Basswood
Partners. As such, Messrs. Matthew and
15
Bennett Lindenbaum may be deemed to beneficially own the 553,421 shares of
Common Stock beneficially owned by Basswood Partners.
The Partnership, Basswood Partners, Basswood Capital, Messrs. Matthew and
Bennett Lindenbaum, and the Accounts are sometimes referred to herein as the
"Participants" in this solicitation. Additional information with respect to the
Participants is set forth below under "Voting Securities and Principal Holders
Thereof" and in Annex II.
During the last five years, none of the Participants has been (i) convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
or (ii) a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, United States federal or state securities
laws or finding any violations with respect to such laws. Each of Messrs.
Matthew and Bennett Lindenbaum is a citizen of the United States.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The shares of Common Stock constitute the only class of outstanding voting
securities of the Company. Accordingly, only holders of Common Stock are
entitled to vote at the Annual Meeting or execute proxies in connection
therewith. The Company stated in the 1998 Proxy Statement that as of April 3,
1998, there were 5,128,079 shares of Common Stock outstanding. In its Form 10-K
for the year ended December 31, 1998, the Company stated that the total number
of shares of Common Stock outstanding as of March 19, 1999 was 5,923,263 shares.
Each shareholder is entitled to one vote for each share of Common Stock held as
of the Record Date, except that in the election of directors each shareholder
may cumulate his or her votes and give any one nominee a number of votes equal
to the number of directors to be elected multiplied by the number of shares
which the shareholder is entitled to vote at the meeting, or to distribute the
votes among any number of candidates for election to the Board, if (i) the name
of the candidate for whom such votes are cast has been placed in nomination
prior to the voting and (ii) such shareholder or any other shareholder has given
notice at the meeting prior to the vote on election of directors of that
shareholder's intention to cumulate his or her votes.
The following table sets forth, as of April 3, 1998, the name of each
person who owned beneficially more than 5% of the shares of Common Stock
outstanding at such date, the number of shares owned by each such person, the
percentage of the outstanding shares represented thereby and certain information
with respect to such person. The information below (except with respect to
Basswood Partners and footnote (1)) is based on information reported by the
Company in the Company's 1998 Proxy Statement.
16
NUMBER OF
SHARES PERCENTAGE
NAME AND ADDRESS BENEFICIALLY OF
OF BENEFICIAL OWNER OWNED CLASS
- ------------------- ------------ -----
Basswood Partners, L.P. (1) 428,978 (2) 8.37%
645 Madison Avenue
New York, NY 10022
William V. Landecena (3) 314,319 (4) 6.05%
510 South Grand Avenue
Glendora, CA 91741
All Directors and Executive 1,270,100 (5) 22.45%
Officers of the Company
as a Group (10 in number)(6)
- ------------
(1) As of January 1, 1999, Basswood Partners and Basswood Capital replaced
Basswood Partners, L.P. as the general partner of the Partnership and
Whitewood and investment general partner of Jet I and investment manager of
Basswood International. As of the Record Date, the 553,421 Shares
beneficially owned by Basswood Partners are owned of record as follows: the
Partnership is the record owner of 431,778 Shares; Whitewood is the record
owner of 4,318 Shares; Jet I is the record owner of 22,292 Shares; Basswood
International is the record owner of 94,933 Shares; and, Mr. Bennett
Lindenbaum is the record owner of 100 Shares.
(2) As of March 19, 1999, Basswood Partners and Basswood Capital beneficially
owned 553,421 shares of Common Stock representing approximately 9.34% based
on the total number of shares of Common Stock outstanding as of December
31, 1998 of 5,923,263 (according to the Company's Form 10-K for the year
ended December 31, 1998).
(3) Mr. Landecena is the Chairman of the Board of Directors and is a director
of the Company and Foothill Independent Bank (the "Bank").
(4) Includes 67,122 shares of Common Stock subject to outstanding stock options
exercisable during the 60-day period ending June 3, 1998.
(5) Includes an aggregate of 530,737 shares of Common Stock subject to
outstanding stock options exercisable during the 60-day period ending June
3, 1998.
For information relating to the ownership of Common Stock by directors and
executive officers of the Company, see Annex III hereto.
INFORMATION CONCERNING THE COMPANY
The Company, whose principal executive offices are located at 510 S. Grand
Avenue, Glendora, California 91741, is subject to the informational requirements
of the Exchange Act and in accordance therewith files reports and other
information with the
17
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company with the Commission in accordance
with the Exchange Act may be inspected and copied at the public reference
facilities of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following regional offices of the
Commission: 7 World Trade Center, Suite 1300, New York, New York 10048 and Suite
1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661. Copies
of such material can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
In addition, such material concerning the Company can be inspected at the
offices of the Nasdaq National Market, 1735 K Street, N.W., Washington, D.C.
20006. Please call the Commission at 800-SEC-0330 for further information on the
operation of the public reference facilities. The Commission also maintains a
World Wide Web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.
SOLICITATION OF PROXIES
Solicitation of proxies may be made by Beacon Hill Partners and Basswood.
Beacon Hill Partners will employ approximately twenty-five persons to solicit
shareholders. Proxies will be solicited by mail, advertisement, telephone or
telecopier and in person. Other than Beacon Hill Partners, no person will
receive additional compensation for such solicitation.
Banks, brokers, custodians, nominees and fiduciaries may be requested to
forward solicitation material to beneficial owners of the shares of Common
Stock. Basswood will reimburse banks, brokers, custodians, nominees and
fiduciaries for their reasonable expenses for sending solicitation material to
the beneficial owners on behalf of Basswood.
In addition, Basswood has retained Beacon Hill Partners to assist and to
provide advisory services in connection with this proxy solicitation for which
Beacon Hill Partners will be paid a fee of not more than $20,000 and will be
reimbursed for reasonable out-of-pocket expenses. Basswood has also agreed to
indemnify Beacon Hill Partners against certain liabilities and expenses in
connection with this proxy solicitation.
The cost of the solicitation of proxies with respect to the election of the
Basswood Nominee will be borne by Basswood. Basswood reserves the right to
request the Board to reimburse Basswood for expenses incurred in connection with
the solicitation of proxies with respect to the election of the Basswood Nominee
and related expenses. Costs related to such solicitation of proxies include
expenditures for attorneys, accountants, financial advisers, the fees of Beacon
Hill Partners, public relations advisers, printing, advertising, postage, all
litigation and related expenses and filing fees.
18
Such fees and expenses are expected to aggregate approximately $200,000. To
date, Basswood has incurred approximately $155,000 of such total estimated
expenditures.
If you have any questions concerning this Proxy Statement or the procedures
to be followed to execute and deliver a proxy, please contact Beacon Hill
Partners at:
BEACON HILL PARTNERS, INC.
90 BROAD STREET
NEW YORK, NEW YORK 10004
Call Toll-Free: 1-800-755-5001
Call Collect: (212) 843-8500
Attention: Rick Grubaugh
If you have any questions concerning this solicitation in general, feel
free to call Matthew Lindenbaum at Basswood Partners collect at (212) 521-9500.
PROXY PROCEDURES
Unless contrary instructions are indicated on the proxy, all shares of
Common Stock represented by valid proxies received pursuant to this solicitation
(and not revoked before they are voted) will be voted "FOR" the election of Mr.
Matthew Lindenbaum, the Basswood Nominee, to the Board. A proxy executed by a
holder of shares may be revoked at any time before its exercise by sending a
written revocation (as provided below), by submitting another properly executed
proxy with a later date prior to the time of the Annual Meeting or by giving
notice of revocation at the Annual Meeting. The mere presence of any shareholder
at the Annual Meeting will not operate to revoke his or her proxy. The
revocation may be delivered to Basswood Financial Partners, L.P. c/o Beacon Hill
Partners, 90 Broad Street, New York, New York 10004 or the Company at 510 South
Grand Avenue, Glendora, California 91741 or at any other address provided by the
Company. Although a revocation or a later dated proxy delivered to the Company
but not to Basswood will be effective, Basswood requests that if a revocation or
a later dated proxy is delivered only to the Company, a photostatic copy of the
revocation or later dated proxy also be delivered to Beacon Hill Partners (FAX #
212-843-4384) so that it will be aware of such revocation or later dated proxy.
All revocations received by Basswood will be delivered by it to the Company, but
will be effective only upon their receipt by the Company. Basswood intends to
deliver any such revocations to the Company immediately prior to the convening
of the Annual Meeting. Shareholders who have executed and returned a proxy and
who then attend the Annual Meeting and desire to vote in person are requested to
so notify Basswood prior to the time of the Annual Meeting.
IF YOU WISH TO VOTE "FOR" THE ELECTION OF THE BASSWOOD NOMINEE TO THE
BOARD, PLEASE SIGN, DATE AND RETURN PROMPTLY THE
19
ENCLOSED WHITE PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED OR REGISTERED
HOLDERS MAY FAX BOTH SIDES OF THE ENCLOSED WHITE PROXY CARD TO BASSWOOD
FINANCIAL PARTNERS, L.P. C/O BEACON HILL PARTNERS AT 212-843-4384. BASSWOOD
RECOMMENDS THAT YOU CUMULATE YOUR VOTES AND VOTE "FOR" THE BASSWOOD NOMINEE.
SHAREHOLDER PROPOSAL FOR 1999 ANNUAL MEETING
According to the Company's 1998 Proxy Statement, any shareholder proposal
intended for inclusion in the proxy material for the 1999 Annual Meeting must
have been received in writing by the Company on or before December 15, 1998. The
inclusion of any proposal will be subject to applicable rules of the Commission.
OTHER MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
Neither Basswood nor any of the Participants is aware of any matter to be
considered by the Company's shareholders at the Annual Meeting other than the
election of directors to the Board. However, if any other matters come before
the Annual Meeting, including any motion to adjourn the Annual Meeting prior to
the taking of a vote on the election of directors, the proxies will vote in
their discretion all shares covered by White Proxy Cards with respect to such
matters unless such discretionary authority has been specifically withheld.
COMPANY INFORMATION
Except as otherwise noted herein, the information concerning the Company
and its shareholders (other than the Participants) contained in this Proxy
Statement has been taken from or is based upon documents and records on file
with the Commission and other publicly available information. Although the
Participants do not have any knowledge that would indicate that any statement
contained herein based upon such documents and records is untrue, the
Participants do not take any responsibility for the accuracy or completeness of
the information contained in such documents and records, or for any failure by
the Company to disclose events that may affect the significance or accuracy of
any such information. The proxy statement of Foothill's management, when
distributed to you, will contain additional information concerning the Common
Stock, beneficial ownership of the Common Stock by directors and officers and
other information concerning directors and officers, compensation paid to
executive officers, and the principal holders of Common Stock.
Only holders of record as of the close of business on the Record Date
will be entitled to vote at the Annual Meeting. Accordingly, it is important
that you vote the shares held by you on the Record Date or grant a proxy to vote
such shares even if you have sold such shares after such date.
If your shares are held in the name of a brokerage firm, bank,
custodian, fiduciary or other nominee on the Record Date,
20
only it can vote your shares, and only upon receipt of your specific
instructions. Accordingly, please sign, date and mail the enclosed white proxy
card in the envelope provided or contact the person responsible for your account
and give instructions for your shares to be voted.
As fellow shareholders with common interests, we thank you very much for
your consideration of our proposals.
BASSWOOD FINANCIAL PARTNERS, L.P.
BASSWOOD PARTNERS, L.L.C.
BASSWOOD CAPITAL MANAGEMENT, L.L.C.
Dated: _________, 1999
21
ANNEX I
BIOGRAPHICAL INFORMATION REGARDING THE BASSWOOD NOMINEE
Mr. Matthew Lindenbaum, the Basswood Nominee, graduated Phi Beta Kappa
and Summa Cum Laude from Brandeis University in 1986 with a B.A. in economics.
He also attended the Wharton Graduate School of Business at the University of
Pennsylvania.
In June of 1986, Mr. Lindenbaum joined the Mortgage Finance Group at
Merrill Lynch Capital Markets where he structured derivative mortgage securities
and helped advise banks on their financial strategies.
In 1987, Mr. Lindenbaum left Merrill Lynch and joined Reid Nagle in
founding SNL Securities, L.P. SNL Securities provides data and research on
publicly traded banks, savings and loans, real estate and financial services
companies to money managers, investment banks, and consultants. In addition, SNL
Securities provides consulting services to banks, savings & loans and investor
groups seeking to purchase banks. While at SNL Securities, Mr. Lindenbaum helped
advise the Robert M. Bass Group on their government assisted acquisition of
American Savings and Loan of California. In addition to other acquisition
related consulting assignments, Mr. Lindenbaum also functioned as a bank equity
analyst and advised investment managers throughout the country on banking
related issues. Mr. Lindenbaum was a general partner of SNL Securities and
remains a limited partner of the firm.
For the past ten years, Mr. Lindenbaum has been managing family
investments and the various Basswood accounts either individually or through
Basswood Partners, L.L.C., Basswood Capital Management, L.L.C. and Basswood
Partners, L.P.
Mr. Lindenbaum has been quoted in various publications including
Barrons, Forbes, Business Week, and the New York Times. He has also appeared on
CNN and the Financial News Network as a commentator on banking issues.
Mr. Lindenbaum served as a Director of Garden State Bancshares, Inc.
in Jackson, New Jersey from April 1994 to January 1996 and currently sits on the
board of Community State Bank in Teaneck, New Jersey where he has been a
director and organizer since March 1997.
I-1
ANNEX II
TRANSACTIONS BY BASSWOOD PARTNERS, L.L.C., BASSWOOD FINANCIAL
PARTNERS, L.P., MR. MATTHEW LINDENBAUM, MR. BENNETT LINDENBAUM
AND EACH ACCOUNT
Since April 29, 1997, the Partnership, Mr. Matthew Lindenbaum, Mr.
Bennett Lindenbaum and each Account have engaged in the following transactions
in securities of the Company (Basswood Partners and Basswood Capital do not own
of record any securities of the Company). In each such transaction, the
securities acquired or disposed of consisted of shares of the Common Stock. The
following table does not reflect the receipt of stock dividends periodically
declared by the Company since October 1996. Except as otherwise indicated below,
all transactions were effected on the Nasdaq National Market.
Basswood Financial Partners
- ---------------------------
Trade Date Quantity Cost ($)
- ---------- -------- --------
04-30-97 730 10,128.75
07-02-97 3,705 49,654.37
08-29-97 740 10,637.50
09-02-97 175 2,571.87
09-18-97 7,565 105,910.00
09-19-97 2,225 31,428.12
09-25-97 13,430 192,744.25
10-02-97 6,670 107,653.75
10-10-97 3,785 63,871.87
10-23-97 2,405 40,283.75
11-13-97 1,876 28,960.75
11-24-97 3,750 60,937.50
12-01-97 600 9,630.00
12-16-97 4,110 68,328.75
01-06-98 11,470 195,334.10
02-20-98 390 6,552.00
02-23-98 13,295 228,947.50
02-24-98 2,345 40,744.37
02-25-98 3,910 68,913.75
04-06-98 320 5,429.60
06-11-98 5,100 83,665.50
07-01-98(1) (4,080) 64,922.83
(1) Sales
II-1
10-06-98 1,000 10,112.50
12-31-98 1,185 17,846.10
01-06-99 15,065 223,903.56
02-03-99(1) (5,540) 83,512.70
04-06-99(1) (13,960) 204,751.46
1994 Garden State, L.P. (Subsequently
- -------------------------------------
contributed to Basswood
- -----------------------
Financial Partners)
- -------------------
Trade Date Quantity Cost ($)
04-30-97 80 1,110.00
07-02-97(1) (3,704) 49,452.71
08-29-97 70 1,006.25
09-18-97 690 9,660.00
09-19-97 205 2,895.62
09-25-97 1,235 17,724.12
10-02-97(1) (2,040) 32,832.70
10-10-97 319 5,383.12
10-23-97 200 3,350.00
11-13-97 159 2,454.56
11-24-97 320 5,200.00
12-01-97 50 802.50
12-16-97 345 5,735.62
01-06-98(1) (2,819) 47,853.80
02-20-98 30 504.00
02-23-98 960 16,531.25
02-24-98 170 2,953.75
02-25-98 280 4,935.00
04-06-98(1) (8,622) 145,981.07
07-01-98(1) (560) 8,907.90
12-31-98 52 783.12
- ------------
(1) Sales
II-2
Basswood International
- ----------------------
Fund, Inc.
- ----------
Trade Date Quantity Cost ($)
- ---------- -------- --------
04-30-97 180 2,497.50
08-29-97 180 2,587.50
09-18-97 1,835 25,690.00
09-19-97 540 7,627.50
09-25-97 3,260 46,787.49
10-02-97(1) (4,460) 71,781.30
10-10-97 850 14,343.75
10-23-97 540 9,045.00
11-13-97 443 6,838.81
11-24-97 885 14,381.25
12-01-97 145 2,327.25
12-16-97 995 16,541.87
01-06-98(1) (8,299) 140,846.29
02-20-98 75 1,260.00
02-23-98 2,600 44,773.75
02-24-98 460 7,992.50
02-25-98 765 13,483.12
04-06-98 8,140 138,115.45
06-11-98(1) (4,980) 81,395.38
07-01-98 4,860 77,556.25
10-06-98(1) (720) 7,208.75
12-31-98 251 3,780.06
01-06-99(1) (13,440) 198,407.99
02-03-99 5,620 85,283.50
04-06-99 14,250 209,581.87
- ------------
(1) Sales
II-3
Bennett
- -------
Lindenbaum
- ----------
Trade Date Quantity Cost ($)
- ---------- -------- --------
12-18-98 100 1,468.50
Whitewood Financial
- -------------------
Fund
- ----
Trade Date Quantity Cost ($)
- ---------- -------- --------
04-30-97 10 138.75
08-29-97 10 143.75
09-02-97(1) (175) 2,466.53
09-18-97 100 1,400.00
09-19-97 30 423.75
09-25-97 155 2,228.12
09-25-97 20 283.50
10-02-97(1) (170) 2,736.05
10-10-97 46 776.25
10-23-97 55 921.25
11-13-97 22 339.62
11-24-97 45 731.25
12-01-97 5 80.25
12-16-97 50 831.25
01-06-98(1) (350) 5,939.30
02-20-98 5 84.00
02-23-98 145 2,497.50
02-24-98 25 434.37
02-25-98 45 793.12
04-06-98 165 2,799.64
06-11-98(1) (120) 1,961.33
07-01-98(1) (220) 3,499.53
10-06-98(1) (280) 2,803.40
12-31-98 12 180.72
01-06-99 725 10,775.31
02-03-99(1) (80) 1,205.95
04-06-99(1) (290) 4,253.43
- ------------
(1) Sales
II-4
JET L.P I
- ---------
Trade Date Quantity Cost ($)
- ---------- -------- --------
08-19-97 8,689 116,615.37
08-22-97 9,000 123,075.00
11-02-98 4,300 48,912.50
01-06-99(1) (2,350) 34,691.87
- ------------
(1) Sales
Except as set forth in this Proxy Statement, none of the Partnership,
Basswood Partners, Mr. Matthew Lindenbaum, Mr. Bennett Lindenbaum or any of the
Accounts, nor any associate of the foregoing, directly or indirectly owns any
securities of the Company or any subsidiary of the Company, beneficially or of
record, has the right to acquire beneficial ownership within 60 days or has
purchased or sold such securities within the past two years.
To the knowledge of Basswood, except as set forth in this Proxy
Statement, none of the Partnership, Basswood Partners, Basswood Capital, Mr.
Matthew Lindenbaum, Mr. Bennett Lindenbaum or any of the Accounts, nor any
associate of the foregoing, has any substantial interest, direct or indirect, by
security holdings or otherwise, in any matter to be acted upon at the Annual
Meeting, except for the election of directors.
The shares of Common Stock beneficially owned by the Participants have
been purchased in open market transactions. The funds for the purchase of the
shares held by the Accounts and Mr. Bennett Lindenbaum have come from the
various Accounts' respective working capital. No leverage was used to purchase
any of such shares. However, one or more of the Accounts' working capital may
include the proceeds of margin loans entered into in the ordinary course of
business with Goldman, Sachs & Co., such loans being secured by the securities
owned by such Accounts.
None of the Partnership, Basswood Partners, Basswood Capital, Mr.
Matthew Lindenbaum, Mr. Bennett Lindenbaum, any of the Accounts, nor any
associate of the foregoing, is, or within the past year has been, a party to any
contract, arrangement or understanding with any person with respect to any
securities of the Company, except that Messrs. Matthew and Bennett Lindenbaum
are the managing members of Basswood Partners and of Basswood Capital. Pursuant
to the terms of the Basswood Limited Liability Company Agreement dated as of
January 1, 1999, Messrs. Matthew and Bennett Lindenbaum have the authority to
perform all acts necessary to carry out the purposes and business of Basswood
Partners and of Basswood Capital pursuant to such Limited Liability Company
Agreement.
II-5
None of the Partnership, Basswood Partners, Basswood Capital, Mr. Matthew
Lindenbaum, Mr. Bennett Lindenbaum, any of the Accounts, nor any associate of
the foregoing, has any arrangement or understanding with any person (A) with
respect to any future employment by the Company or its affiliates or (B) with
respect to any future transactions to which the Company or any of its affiliates
will or may be a party, nor has any of the above-referenced persons or entities
been indebted to the Company at any time.
Other than as described in this Proxy Statement, there are no pending legal
proceedings in which the Basswood Nominee or any of his associates is a party
adverse to the Company or any of its affiliates or in which the Basswood Nominee
or any of his associates has an interest adverse to the Company or any of its
affiliates. Basswood is currently engaged in the litigation described in
"Background of the Solicitation."
The Basswood Nominee does not hold any position or office with the Company
or any parent, subsidiary or affiliate of the Company, and has never served as a
director of the Company or any parent, subsidiary or affiliate of the Company.
The Basswood Nominee does not have any family relationship, by blood,
marriage or adoption, to any director, executive officer or person nominated or
chosen by the Company to become a director or executive officer of the Company.
During the last three fiscal years, no compensation was awarded to, earned by,
or paid to the Basswood Nominee by any person for any services rendered in any
capacity to the Company or its subsidiaries.
II-6
BENEFICIAL OWNERSHIP OF SHARES BY THE BASSWOOD NOMINEE, MR.
BENNETT LINDENBAUM, BASSWOOD PARTNERS, L.L.C., BASSWOOD FINANCIAL
PARTNERS, L.P., BASSWOOD CAPITAL MANAGEMENT, L.L.C. AND THE OTHER
PARTICIPANTS IN THE SOLICITATION
The following table sets forth the beneficial ownership of the Common Stock
as of the Record Date by Mr. Matthew Lindenbaum (the Basswood Nominee), Mr.
Bennett Lindenbaum, the Partnership, Basswood Partners, Basswood Capital, the
other Participants in the solicitation named below and those employees of
Basswood who will be involved in the solicitation (none of whom will receive any
additional compensation in connection therewith). Mr. Lindenbaum shares voting
and investment power with respect to such shares with the other Participants,
and all such shares were owned beneficially by Mr. Lindenbaum. The business
address of each person and entity named in the following table is c/o Basswood
Partners, L.L.C., 645 Madison Avenue, 10th Floor, New York, New York 10022:
Number of Shares Percent
Name/Title Beneficially Owned of Class (1)
Matthew Lindenbaum/Managing Member of 553,421 9.34%
Basswood Partners, L.L.C.
Bennett Lindenbaum /Managing Member of 553,421 9.34%
Basswood Partners, L.L.C.
Basswood Partners, L.L.C.(2) 553,421 9.34%
Basswood Financial Partners, L.P. 425,957 7.61%
Basswood International Fund, Inc.(2) 94,933 1.36%
Basswood Capital Management, L.L.C.(2) 94,933 1.36%
Whitewood Financial Partners, L.P. 4,318 *
Jet I, L.P. 22,292 *
Debbie Coticchio /Financial Reporting _ _
Marc Samit /Financial Reporting _ _
II-7
Brian Jackelow
/Financial Reporting _ _
David Verlander
/Analyst _ _
Claudine Blazina
/Analyst _ _
Stella Kourkoulakos
/Analyst _ _
* less than 1%
- ---------------
(1) Based on the total number of shares of Common Stock outstanding as of March
19, 1999 according to the Company's Form 10-K for the year ended December
31, 1998.
(2) As of January 1, 1999, Basswood Partners, L.L.C. and Basswood Capital
Management, L.L.C. replaced Basswood Partners, L.P. as the general partner
of the Partnership and Whitewood, and investment general partner of Jet I
and investment manager of Basswood International.
II-8
ANNEX III
SHARES HELD BY THE COMPANY'S DIRECTORS
AND EXECUTIVE OFFICERS
Based upon Basswood's review of the Company's 1998 Proxy Statement, to
Basswood's knowledge, the directors and five most highly compensated executive
officers of the Company (and the directors and executive officers as a group)
beneficially owned as of April 3, 1998 the following amounts of the outstanding
shares of Common Stock:
SHARES OF
DIRECTOR COMMON STOCK
OF THE BENEFICIALLY
COMPANY OWNED AS OF PERCENT
NAME AND POSITIONS AGE SINCE (1) APRIL 3, 1998 OF CLASS
- ------------------ --- --------- ------------- --------
CLASS I DIRECTORS
George E. Langley 57 1980 171,233(2) 3.29%
President, Chief Executive Officer
and a Director of the Company and
the Bank
Douglas F. Tessitor 53 1995 44,110(2) *
Director of the Company and the Bank
Max E. Williams 53 1995 57,057(2) 1.10%
Director of the Company and the Bank
CLASS II DIRECTORS
Richard H. Barker 62 1993 80,839(2) 1.56%
Director of the Company and the Bank
Charles G. Boone 75 1973 191,879(2) 3.70%
Director of the Company and the Bank
William V. Landecena 73 1973 314,319(2) 6.05%
Chairman of the Board of Directors
and a Director of the Company and
the Bank
O. L. Mestad 75 1973 222,231(2) 4.28%
Director of the Company and the Bank
EXECUTIVE OFFICERS (other than those who
are Directors listed above)
Tom Kramer N/A N/A 102,730 (2) 1.98%
Executive Vice President and
Secretary of the Company and the Bank
Donna Miltenberger N/A N/A 69,859 (2) 1.35%
Executive Vice President and Chief
III-1
SHARES OF
DIRECTOR COMMON STOCK
OF THE BENEFICIALLY
COMPANY OWNED AS OF PERCENT
NAME AND POSITIONS AGE SINCE (1) APRIL 3, 1998 OF CLASS
- ------------------ --- --------- ------------- --------
Operating Officer of the Company and
the Bank
ALL DIRECTORS AND EXECUTIVE OFFICERS OF ___ ___ 1,270,100 (3) 22.45%
THE COMPANY AS A GROUP (10 in
number) (4)
- ---------------------------
* Less than 1%
(1) All dates are the dates when the named individuals first became directors
of the Bank, the Company's predecessor and wholly owned subsidiary.
(2) Includes shares subject to outstanding options exercisable during the
60-day period ending June 3, 1998, as follows: Mr. Langley -- 75,971
shares; Mr. Tessitor -- 42,900 shares; Mr. Williams -- 51,975 shares; Mr.
Barker -- 59,969 shares; Mr. Boone -- 64,087 shares; Mr. Landecena --
67,122 shares; Mr. Mestad -- 69,917 shares; Mr. Kramer -- 51,262 shares;
and Ms. Miltenberger -- 46,554 shares.
(3) Includes an aggregate of 530,737 shares of Common Stock subject to
outstanding stock options exercisable during the 60-day period ending June
3, 1998.
(4) Based on the Company's Form 10-K for the year ended December 31, 1998,
Carol Ann Graf is the Senior Vice President, Chief Financial Officer and
Assistant Secretary of the Company and the Bank. The 1998 Proxy Statement
does not provide any information regarding Ms. Graf's share ownership.
III-2
Preliminary Copy--Subject to Completion [Form of Proxy Card]
WHITE PROXY CARD
ANNUAL MEETING OF SHAREHOLDERS OF FOOTHILL INDEPENDENT BANCORP
TO BE HELD ON OR ABOUT THE SECOND TUESDAY IN MAY 1999 (ACCORDING
TO FOOTHILL INDEPENDENT BANCORP'S AMENDED BY-LAWS) TO VOTE "FOR"
THE DIRECTOR NOMINEE SET FORTH BELOW
THIS PROXY IS SOLICITED BY BASSWOOD FINANCIAL PARTNERS, L.P.,
BASSWOOD PARTNERS, L.L.C. (COLLECTIVELY, "BASSWOOD")
AND BASSWOOD CAPITAL MANAGEMENT, L.L.C.
The undersigned hereby appoints Matthew Lindenbaum and Bennett Lindenbaum,
and each of them individually, each with full power of substitution, as proxy of
the undersigned, to attend the Annual Meeting of the shareholders of Foothill
Independent Bancorp (the "Company") to be held on or about the second Tuesday in
May 1999 (according to the Company's By-Laws) and at any and all adjournments or
postponements thereof and any special meeting called in lieu thereof, and to
vote all Common Stock of the Company, as designated on the reverse side of this
proxy, with all powers the undersigned would possess if personally present at
the meeting.
This Proxy will be voted or withheld from being voted in accordance with
the instructions specified. IF NO CHOICE IS SPECIFIED, THE PROXY WILL CONFER
DISCRETIONARY AUTHORITY AND WILL BE VOTED "FOR" THE BASSWOOD NOMINEE LISTED
BELOW. This Proxy confers authority for each of the aforementioned persons to
vote in his or her discretion with respect to amendments or variations to the
matters identified in the notice of meeting accompanying this Proxy and other
matters which may properly come before this meeting. Basswood intends to
cumulate the votes to which the shares of the Company's Common Stock it
beneficially owns are entitled and hereby solicits authority to cumulate those
votes which are granted to it by proxy (and to give any required notice thereof)
voting in favor of the Basswood Proposal (Proposal 1 below) relating to the
election of the Basswood Nominee to the Board.
(Please mark an "X" in the appropriate box)
BASSWOOD FINANCIAL PARTNERS, L.P., BASSWOOD PARTNERS, L.L.C.
AND BASSWOOD CAPITAL MANAGEMENT, L.L.C.
RECOMMEND A VOTE "FOR" THE FOLLOWING PROPOSALS
1. ELECTION OF DIRECTOR: To elect the Basswood Nominee listed below.
[ ] FOR NOMINEE LISTED [ ] WITHHOLD AUTHORITY TO
BELOW VOTE FOR NOMINEE LISTED BELOW
Mr. Matthew Lindenbaum
2. IN THEIR DISCRETION WITH RESPECT TO ANY OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE ANNUAL MEETING.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The undersigned hereby revokes any other proxy or proxies heretofore given to
vote or act with respect to the shares of the Company's Common Stock held by the
undersigned, and hereby ratifies and confirms all actions the herein named
proxies, their substitutes, or any of them may lawfully take by virtue hereof,
including but not limited to granting Basswood the authority to cumulate the
votes granted to it by this proxy and to give any required notice thereof.
Please date this Proxy and sign it exactly as your name or names appear on your
stock certificates or on a label affixed thereto. When shares are held jointly,
EACH joint owner should sign. When signing as attorney, executor, administrator,
trustee, guardian, corporate officer, etc., give full title as such. If shares
are held by a corporation, please sign in full corporate name by the President
or other authorized officer. If shares are held by a partnership, please sign in
partnership name by an authorized person.
Dated: __________________________
_________________________________
Signature
_________________________________
Signature, if held jointly
_________________________________
Title of Authority
If you have questions or need assistance in voting your shares, please contact
the firm assisting us in the solicitation of proxies:
BEACON HILL PARTNERS, INC.
90 BROAD STREET
NEW YORK, NEW YORK 10004
TOLL FREE: 1-800-755-5001
COLLECT: (212) 843-8500
ATTENTION: Rick Grubaugh
IN ORDER FOR YOUR PROXY TO BE VALID, IT MUST BE DATED.
PLEASE SIGN, DATE AND MAIL YOUR PROXY PROMPTLY TO
BEACON HILL PARTNERS, INC.
90 BROAD STREET
NEW YORK, NEW YORK 10004