MEMO PLEASE CIRCULATE
DATE: January 31, 2002
TO: All Staff
FROM: Cameron D. McKeel, President and CEO
RE: Tender Offer for HCB Bancshares, Inc.'s Common Stock
- --------------------------------------------------------------------------------
At HCB Bancshares Inc.'s Board of Directors meeting on Thursday, January
24, 2002, the Board approved the purchase of 377,866 Shares of our common stock,
$0.01 par vale per share (the "Shares") by means of what is termed a "modified
dutch auction tender." It is more fully described in the attached news release.
We have made every effort to communicate this action to members of the community
as quickly as possible. Below you will find the answers to some questions that
are likely to arise from our public announcement. We will provide further
information if additional questions come up.
Question: Why is HCB Bancshares' offering to repurchase its stock?
Answer: HCB Bancshares' current capital base exceeds all applicable
regulatory standards and the amount of capital needed to support
our banking business. After evaluating a variety of alternatives
to utilize more effectively our capital base and to attempt to
maximize stockholder value, HCB Bancshares' management and its
Board of Directors believe that the purchase of its stock
pursuant to the tender Offer is a positive action that is
intended to improve returns to our stockholders. Our financial
projections indicate that the purchase of Shares will increase
earnings per Share and return on stockholders' equity.
Question: How should I respond to questions?
Answer: NO MEMBER OF HEARTLAND COMMUNITY BANK'S STAFF IS ALLOWED OR
-----------------------------------------------------------------
AUTHORIZED TO ANSWER ANY QUESTIONS OR GIVE ANY ADVICE REGARDING
-----------------------------------------------------------------
THE TENDER OFFER. HCB Bancshares has hired a special Information
----------------
Agent to handle all questions. The Information Agent is Keefe,
Bruyette & Woods and their toll-free telephone number is (877)
298-6520. Because HCB Bancshares is the purchaser of the Shares,
and because securities laws are involved, it is highly important
that all questions be referred to the Information Agent. We are
aware that many stockholders are customers of the Bank and have
ties or relationships with staff members. You should handle these
situations as diplomatically as possible, but in any event, all
questions must be referred either to the Information Agent or the
holder's broker or Investment Advisor.
Question: What do I say if a stockholder asks, "Should I sell (tender) my
stock?"
Answer: Members of the HEARTLAND Community Bank staff must NOT give any
---
investment advice to stockholders. The stockholder must make his
or her own investment decision. You should not express an opinion
as to whether you think the tender offer is a "good deal" or a
"bad deal." While the stockholder may call Keefe, Bruyette &
Woods, Inc., the Information
1
Agent and Dealer Manager, they will not receive investment advice
from them. They should be directed to contact their broker or
investment advisor.
Question: What do I do if someone brings a Letter of Transmittal to me or
my office?
Answer: Because tenders must be received by the Depositary, Registrar and
Transfer Company, within a limited amount of time, we cannot take
the responsibility for having any stockholder's tender delivered.
Stockholders must send tenders directly to Registrar and Transfer
Company at the address provided in the tender offer documents.
The stockholders will be provided with a pre-addressed envelope
to send all tender offer documents to Registrar and Transfer
Company.
Question: May employees of HEARTLAND Community Bank tender Shares in the
Offer?
Answer: Yes. Employees who own Shares of HCB Bancshares Common Stock are
eligible to tender their Shares. You will receive a complete copy
of the same documents that are being provided to other
stockholders.
Question: Where can stockholders obtain extra packets of material related
to the tender offer?
Answer: Stockholders must contact Keefe, Bruyette & Woods, Inc., the
Information Agent and Dealer Manager toll free at (877) 298-6520.
No packets will be available at HEARTLAND Community Bank.
2
[LOGO]
HCB BANCSHARES, INC.
QUESTIONS AND ANSWERS
ABOUT THE OFFER OF
HCB BANCSHARES, INC.
TO PURCHASE FOR CASH UP TO 377,866 SHARES
OF COMMON STOCK AT A PURCHASE PRICE OF
$12.75 TO $14.75 PER SHARE
January 31, 2002
QUESTIONS AND ANSWERS ABOUT THE OFFER OF
HCB BANCSHARES, INC.
TO PURCHASE ITS STOCK
The following information is designed to answer frequently asked questions
about the Offer by HCB Bancshares, Inc. to purchase Shares of its common stock.
Stockholders are referred to the Offer to Purchase and Letter of Transmittal
(together with the Offer to Purchase, the "Offer") for a detailed description of
the terms and conditions of the Offer.
Q. What Is This Offer To Purchase?
A. HCB Bancshares, Inc. is inviting its stockholders to tender Shares of its
Common Stock, $0.01 par value per share (the "Shares"), at prices not in
excess of $14.75 nor less than $12.75 per Share in cash, as specified by
stockholders tendering their Shares, upon the terms and subject to the
conditions set forth in its Offer to Purchase, dated January 31, 2002, and
in the enclosed Letter of Transmittal, which together constitute the
"Offer." HCB Bancshares will determine the single per Share price, not in
excess of $14.75 nor less than $12.75 per Share, net to the seller in cash,
that it will pay for Shares validly tendered pursuant to the Offer, taking
into account the number of Shares so tendered and the prices specified by
tendering stockholders. HCB Bancshares will select the lowest purchase
price that will allow it to buy 377,866 Shares, or the lesser number of
Shares that are tendered at prices not in excess of $14.75 nor less than
$12.75 per Share. This type of issuer tender offer is commonly referred to
as a "modified dutch auction."
Q. What Is A "Modified Dutch Auction?"
A. A modified dutch auction is a process whereby a company makes a direct
tender offer to its own stockholders to purchase a specified number of
Shares of its stock within a specified price range per Share, and pays the
highest price at which it accepts Shares to all stockholders whose Shares
are accepted. In this case, HCB Bancshares is making a direct Offer to all
of its stockholders to purchase in the aggregate 377,866 Shares of its
Common Stock at a price not in excess of $14.75 nor less than $12.75 per
Share. This process allows each stockholder to elect whether to sell stock,
and the price the stockholder is willing to sell at within the given price
range. After receiving tenders of Shares, at the termination of the Offer,
HCB Bancshares will choose the lowest price within the specified range that
will permit it to purchase the amount of securities sought and this price
will become the purchase price.
Q. What Will The Final Purchase Price Be?
A. All Shares acquired in the Offer will be acquired at the purchase price.
HCB Bancshares will select the lowest purchase price that will allow it to
buy up to 377,866 Shares. All stockholders tendering at or below the
purchase price will receive the price per Share. For example, if 200,000
Shares are tendered at $13.00 per Share, 190,000 Shares are tendered at
$13.25 per Share and 100,000 are tendered at $14.00 per Share, 377,866
Shares will be purchased at $13.25 per Share from the persons who tendered
at $13.00 and $13.25, and the 100,000 Shares tendered at $14.00 per Share
will be returned and not purchased.
1
Q: What is the Market Price for HCB Bancshares Common Stock in Relation to the
Purchase Price in this Offer?
A: The purchase price in this Offer will be between $12.75 per share and
$14.75 per share. On January 25, 2002, the closing price for the Shares on
the Nasdaq Small-Cap Market was $14.00 per share. We encourage you to
obtain current market quotations for HCB Bancshares common stock. At
December 31, 2001, the book value per Share of HCB Bancshares common stock
was $17.14.
Q. What Will Happen If More Than 377,866 Shares Are Tendered At Or Below The
Purchase Price?
A. In the event more than 377,866 Shares are tendered at or below the purchase
price, Shares tendered at or below the purchase price will be acquired by
HCB Bancshares (i) first from any stockholder who owned beneficially, as of
the close of business on January 25, 2002 and continues to own beneficially
as of the termination of the Offer, an aggregate of fewer than 100 Shares
and who validly tenders all of the Shares, and (ii) then from all other
tendering stockholder subject to proration.
Q. At What Price May I Tender My Shares?
A. Stockholders may elect to tender their Shares in increments of a quarter of
a dollar ($.25) starting at $12.75 per Share up to and including $14.75 per
Share. The election as to the number of Shares and the price a stockholder
is willing to tender are to be indicated on the Letter of Transmittal.
Q. How Do I Tender My Shares?
A. If you hold your Shares in certificate form, you must return a properly
completed Letter of Transmittal (the blue form) and any other documents
required by the Letter of Transmittal, together with the certificates for
the Shares being tendered, to the Depositary, Registrar and Transfer
Company, which must be received by them by 5:00 p.m. New York City time on
March 1, 2002.
Q. How Do I Tender My Shares If My Shares Are Held By My Broker?
A. If your Shares are registered in street name with a broker, dealer,
commercial bank, trust company or other nominee, you will need to contact
your broker, bank or other nominee and instruct the nominee to make the
tender of your Shares for you. You cannot tender your Shares using the
Letter of Transmittal even though you may have received one for your
information.
If you are a broker and are tendering Shares in book-entry form for your
customers, you must comply with the book-entry delivery procedure described
in Section 3 of the Offer to Purchase.
Q. What Do I Do If I Have Lost My Certificates, Or If They Have Been
Mutilated, Destroyed Or Stolen, But I Still Want To Tender Them?
A. Indicate that the certificates have been lost on the face of the Letter of
Transmittal, which should then be delivered to the Depositary after being
otherwise properly completed and duly executed. In addition, complete the
box captioned "Affidavit For Lost Stock Certificate(s)" on the Letter of
Transmittal. The Depositary will forward additional documentation necessary
to be completed in order to effectively replace such lost or destroyed
certificates.
2
Q. Do I Have To Sell My Stock To HCB Bancshares?
A. No. A stockholder is not required to tender any stock.
Q. What Happens If I Do Not Tender My Stock To HCB Bancshares To Purchase?
A. Nothing will happen if you do not tender any or all of your Shares. Your
Shares will remain outstanding without a change in the terms or ownership
rights. You will continue to own the same number of Shares without any
adjustment, and you will continue to receive the same dividend and voting
rights. However, since HCB Bancshares will purchase up to 377,866 of its
outstanding Shares, the percentage of the outstanding stock which you own
will increase because the number of outstanding Shares will be reduced.
Q. What If The Terms Of The Offer Change?
A. In the event the Expiration Date is extended or if the terms of the Offer
are materially changed, HCB Bancshares will generally give notice of the
change and for a period of at least 5 business days, and under certain
circumstances at least 10 business days, from the notice stockholders will
be able to change or withdraw their tender.
Q. Can I Tender Part Of My Stock At Different Prices?
A. Yes, you can elect to tender part of your stock at one price and an
additional amount at a second price. For example, if you owned 1,500
Shares, you could tender 500 Shares at $13.00, 500 Shares at $13.50 and
keep the remaining 500 Shares. However, you cannot tender the same stock at
different prices. In the prior example, the stockholder owning 1,500 Shares
cannot tender 1,500 at $13.00 and 1,500 at $13.50. If you tender some
Shares at one price and other Shares at a different price, you must use a
separate Letter of Transmittal for each price.
Q. Is There Any Brokerage Commission?
A. No. HCB Bancshares will purchase stock directly from each stockholder at
the purchase price without the use of a broker.
Q. Can I Change Or Cancel My Tender?
A. You may increase or decrease the number of Shares indicated in the Letter
of Transmittal or withdraw it entirely up until 5:00 p.m. on March 1, 2002.
Generally after March 1, 2002, you cannot withdraw your tender. If you
desire to change or withdraw your tender, you are responsible to make
certain that a valid withdrawal is received by the March 1, 2002 deadline.
Except as discussed in the Offer to Purchase, tenders are irrevocable after
the March 1, 2002 deadline.
3
Q. Can You Summarize The Process By Which Shares Are Validly Tendered?
A. Generally, for certificated Shares you must complete the Letter of
Transmittal (the blue form) as follows:
o List the certificates and the number of Shares that you are tendering
in the box captioned "Description of Shares Tendered".
o Check the box specifying the price at which you are tendering in the
box captioned "Price (in Dollars) Per Share at Which Shares are Being
Tendered".
o If you want to give us special payment instructions, complete the box
captioned "Special Payment Instructions".
o If you want to give us special delivery instructions, complete the box
captioned "Special Delivery Instructions".
o If you are an odd lot holder who is tendering all your Shares,
complete the box captioned "Odd Lots".
o If you want to make a conditional tender of Shares, complete the box
captioned "Conditional Tenders".
o If your Shares are being delivered by book-entry, complete the box
captioned "Box Below for Use By Eligible Institutions Only".
o Complete substitute Form W-9 to certify your tax identification
number.
o Sign the Letter of Transmittal in the box captioned "Sign Here" (in
certain circumstances, signatures must be guaranteed in this box).
You must deliver your Share certificates or comply with the book-entry
delivery requirements. See Section 3 of the Offer to Purchase. These documents
must be received by the Depositary, Registrar and Transfer Company, no later
than 5:00 p.m. on March 1, 2002.
If you are tendering Shares held by a broker, commercial bank, trust
company or other nominee, you must complete the Instruction Letter as follows:
o Indicate the number of Shares you want tendered by the broker,
commercial bank, trust company or other nominee.
o Check the box specifying the price at which you want your shares
tendered in the box captioned "Price (in Dollars) Per Share at Which
Shares are Being Tendered".
o If you are an odd lot holder who is tendering all your Shares,
complete the box captioned "Odd Lots".
o If you want to make a conditional tender of Shares, complete the box
captioned "Conditional Tenders".
4
o Sign the Instruction Form and complete the address, phone number, date
and tax identification number information.
o Complete substitute Form W-9 to certify your tax identification
number.
o Forward the Instruction Form and substitute Form W-9 to the broker,
commercial bank, trust company or other nominee in ample time to allow
a tender on your behalf on or before the Expiration Date of the Offer.
Please see Section 3 of the Offer to Purchase and the Letter of
Transmittal for more details about how to tender Shares.
If you want to tender your Shares but your share certificates are not
immediately available or cannot be delivered to the Depositary before the
Expiration Date, the procedure for book-entry transfer cannot be completed on a
timely basis, or if time will not permit all required documents to reach the
Depositary before the Expiration Date, you can still tender your Shares, if all
of the following conditions are satisfied:
(1) the tender is made by or through an Eligible Institution;
(2) the Depositary receives by hand, mail, overnight courier or facsimile
transmission, before the Expiration Date, a properly completed and
duly executed Notice of Guaranteed Delivery in the form provided with
Offer to Purchase, specifying the price at which Shares are being
tendered, including (where required) signature guarantees by an
Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery; and
(3) all of the following are received by the Depositary within three
NASDAQ trading days after the date of receipt by the Depositary of the
Notice of Guaranteed Delivery:
(i) one of (a) the certificates for the Shares or (b) a confirmation
of receipt of the Shares pursuant to the procedure for book-entry
transfer described above,
(ii) one of (a) a properly completed and executed Letter of
Transmittal or a manually executed facsimile of it, including any
required signature guarantees, or (b) an Agent's Message as described
above in the case of a book-entry transfer; and
(iii) any other documents required by the Letter of Transmittal.
Q. Is HCB Bancshares Making Any Recommendation As To Whether Shareholders
Should Tender Their Shares?
A. Neither HCB Bancshares nor its Board of Directors makes any recommendation
to any shareholder as to whether to tender all or any Shares. Directors,
officers and employees of HCB Bancshares who own Shares may participate in
this offer on the same basis as our other stockholders. We have been
advised that one director and one executive officer are tendering Shares
pursuant to this Offer; their tender of Shares is not intended to be a
reflection of their views of HCB Bancshares or its long term prospects. We
have also been advised that the respective trustees of the HCB Bancshares,
Inc. Employee Stock Ownership Plan Trust, the HCB Bancshares, Inc. 1998
Stock Option Plan Trust, the HCB Bancshares, Inc. Management Recognition
Plan Trust, the HEARTLAND Community Bank Executive Officers' Grantor Trust
and the HEARTLAND Community Bank Non-Employee Directors' Grantor Trust do
not intend
5
to tender any Shares pursuant to this Offer. Each shareholder must make his
or her own decision as to whether to tender Shares and, if so, how many to
tender and at what price.
Q. How Can I Get More Information?
A. If you have a question, please call our Information Agent/Dealer Manager,
Keefe, Bruyette & Woods at (877) 298-6520, from 8:30 a.m. - 5:30 p.m.,
eastern time, Monday through Friday.
This brochure is neither an Offer to Purchase nor a solicitation of an
offer to sell securities. The Offer to Purchase the stock of HCB Bancshares is
made only by the HCB Bancshares Offer to Purchase document dated January 31,
2002 and the accompanying Letter of Transmittal.
6
CONTACT: Cameron D. McKeel, President
and CEO of HCB Bancshares, Inc. Immediate
(870) 836-6841 January 31, 2002
HCB BANCSHARES, INC. OFFERS TO BUY
UP TO 377,866 SHARES OF ITS COMMON STOCK
CAMDEN, ARKANSAS: HCB Bancshares, Inc. (NASDAQSC: HCBB) announced today that its
Board of Directors has authorized the repurchase of up to 377,866 Shares of its
common stock, $0.01 par value per (the "Shares"), which represents 20 percent of
its 1,889,329 outstanding Shares. The repurchase will be made through a
"modified dutch auction tender." Under this procedure, HCB Bancshares
stockholders will be given the opportunity to sell part or all of their Shares
to HCB Bancshares at a price of not less than $12.75 per Share and not more than
$14.75 per Share. This price range represents a 10.2 percent discount to a 3.9
percent premium to the January 30, 2002 closing price of $14.20 per Share. Based
upon the minimum and maximum offering prices specified in the Offer, the
aggregate purchase price, if 377,866 Shares are purchased, would range from $4.8
million to $5.6 million. The Offer to Purchase Shares will expire at 5:00 p.m.
New York City time on March 1, 2002 unless extended by HCB Bancshares.
Under the procedures for a modified dutch auction tender, stockholders may
offer to sell all or a portion of the Shares they own at a price not more than
the maximum price ($14.75) nor less than the minimum price ($12.75) specified in
the tender. Upon the expiration of the Offer, HCB Bancshares will select the
lowest purchase price that will allow it to buy 377,866 Shares. All Shares
purchased in the Offer will receive the same price. If the number of Shares
tendered is equal to or less than 377,866 Shares, the purchase price will be the
highest price specified by tendering stockholders. If the number of Shares
tendered is greater than the number sought, HCB Bancshares will select the
lowest price that will allow it to buy the number of Shares it seeks.
Cameron D. McKeel, HCB Bancshares' President and Chief Executive Officer,
stated, "HCB Bancshares is making the tender Offer because its Board of
Directors believes that the purchase of Shares pursuant to the Offer should have
beneficial effects on stockholder value while maintaining a strong capital base
to support the needs of our business and our customers. After studying a number
of alternatives, we selected the modified dutch auction tender because it is a
positive action that has the potential for improving stockholder returns in an
expeditious manner. Based upon pro forma financial analyses, the purchase of
Shares should have the effect of increasing earnings per Share and raising the
return on stockholders' equity."
HCB Bancshares, Inc. is a savings institution holding company based in
Camden, Arkansas and has approximately $284.3 million in total assets. Its
subsidiary bank, HEARTLAND Community Bank has six full-service banking offices
located in Camden (2), Fordyce, Sheridan, Monticello, and Bryant, Arkansas.
Keefe, Bruyette & Woods, Inc. will act as the Dealer Manager and
Information Agent for the Offer, and Registrar and Transfer Company will be the
Depositary for the Shares tendered. Questions to or requests for assistance may
be directed to Keefe, Bruyette & Woods, Inc., toll free at (877) 298-6520.
HCB Bancshares does not undertake, and specifically disclaims any
obligation, to publicly release the result of any revisions which may be made to
any forward-looking statements to reflect events or circumstances after the date
of such statements or to reflect the occurrence of anticipated or unanticipated
events.
This announcement is neither an Offer to Purchase nor a solicitation of an offer
to sell Shares of HCB Bancshares, Inc. Common Stock. The Offer is made solely by
the Offer to Purchase, dated January 31, 2002, and the related Letter of
Transmittal, copies of which may be obtained from the Information Agent.
PRESS ANNOUNCEMENT
This announcement is neither an Offer to Purchase nor a solicitation of an offer
to sell Shares of HCB Bancshares, Inc. Common Stock. The Offer is made solely by
the Offer to Purchase, dated January 31, 2002, and the related Letter of
Transmittal, copies of which may be obtained from the Information Agent.
HCB BANCSHARES, INC.
Offers to
Purchase For Cash up to 377,866 Shares of its
Common Stock
At a Purchase Price Not Greater Than $14.75 Nor Less
Than $12.75 Per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON MARCH 1, 2002,
UNLESS THE OFFER IS EXTENDED.
The Information Agent and Dealer Manager for the Offer is:
KEEFE, BRUYETTE & WOODS, INC.
211 Bradenton Drive
Dublin, Ohio 43017-5034
(877) 298-6520 (toll free)