[HCB BANCSHARES, INC. LETTERHEAD]
SUPPLEMENT NO. 1 DATED MARCH 13, 2002
TO
OFFER TO PURCHASE DATED JANUARY 31, 2002,
AS AMENDED BY AMENDMENTS NO. 1 AND NO. 2 FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION ON
FEBRUARY 19, 2002 AND FEBRUARY 25, 2002, RESPECTIVELY
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The Offer to Purchase, pro ration period and withdrawal rights
expire at 5:00 p.m., New York City Time, on April 5, 2002,
unless the Offer to Purchase is extended
- --------------------------------------------------------------------------------
To the Holders of Shares of Common Stock of HCB Bancshares, Inc.:
This Supplement No. 1 amends and supplements the Offer to Purchase of HCB
Bancshares, Inc. ("HCB Bancshares") to purchase up to 377,866 shares of its
common stock, par value $0.01 per share (the "Shares"), at a price not greater
than $14.75 nor less than $12.75 per Share, as amended by Amendment No. 1 filed
with the Securities and Exchange Commission ("SEC") on February 9, 2002 and
Amendment No. 2 filed with the SEC on February 25, 2002 (the "Offer to
Purchase"). Pursuant to this Supplement No. 1 we are
(1) extending the expiration date of the Offer to Purchase from 5:00 p.m.
New York City time on March 29, 2002 to 5:00 p.m. New York City time on April 5,
2002 and
(2) providing information regarding a recent business development that
changes the pro forma financial information in the Offer to Purchase.
Except to the extent expressly set forth, this Supplement No. 1 does not
alter the terms and conditions previously set forth in the Offer to Purchase and
should be read in conjunction with the Offer to Purchase and the related Letter
of Transmittal. Terms used but not defined herein have the meaning set forth in
the Offer to Purchase.
Questions or requests for assistance or for additional copies of this
Supplement No. 1, the Offer to Purchase, the Letter of Transmittal or other
tender offer materials may be directed to the Information Agent/Dealer Manager
at the address and telephone number set forth below, and such copies will be
furnished promptly at HCB Bancshares' expense. Stockholders may also contact
their local broker, dealer, commercial bank or trust company for assistance
concerning this offer.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF HCB
BANCSHARES AS TO WHETHER STOCKHOLDERS SHOULD TENDER SHARES PURSUANT TO THE
OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN,
IN THE OFFER TO PURCHASE OR IN THE RELATED LETTER OF TRANSMITTAL. IF GIVEN OR
MADE, THE RECOMMENDATION AND THE OTHER INFORMATION AND REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY HCB BANCSHARES.
SHAREHOLDERS ARE URGED TO READ THE OFFER TO PURCHASE, THIS SUPPLEMENT NO. 1
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO
TENDER THEIR SHARES.
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1. Extension of Expiration Date.
We are extending the expiration date of the Offer from 5:00 p.m. New York
City time on March 29, 2002 to 5:00 p.m. New York City time on April 5, 2002.
The new expiration date of 5:00 p.m. New York City time on April 5, 2002
replaces each reference in the Offer to Purchase to an expiration date of 5:00
p.m. New York City time on March 1, 2002, which subsequently was extended to
March 29, 2002.
If the offer is further extended, we will make a public announcement of the
extension no later than 9:00 a.m. New York City time, on the next business day
following the previously scheduled expiration of the offer period.
2. Recent Development
HEARTLAND Community Bank (the "Bank"), a wholly owned subsidiary of HCB
Bancshares, has entered into a Branch Purchase and Assumption Agreement with
Simmons First Bank of South Arkansas ("Buyer"), dated March 7, 2002 (the
"Agreement"), pursuant to which the Bank will sell its Monticello, Arkansas
branch office to Buyer (the "Branch Sale"). Under the terms of the Agreement,
Buyer will assume approximately $12.8 million in deposits and purchase
approximately $9.2 million in loans, and the Bank will receive a premium
currently estimated to be $899,000. The Branch Sale is anticipated to close in
the quarter ending September 30, 2002.
The Bank is selling its Monticello branch because its growth has not met
expectations since the time it was purchased in May 1996. As a result, the
Monticello branch has not provided the contribution to earnings that was
anticipated. The Branch Sale better positions the Bank to focus on its core
market and other operating divisions, thereby providing a better growth
opportunity for future income. To achieve this growth, the Bank may consider
opening new branches or acquiring existing branch offices within its core
market.
The Branch Sale is expected to decrease total assets by approximately $12.4
million, decrease deposits by approximately $12.8 million and increase
stockholders' equity by approximately $471,000. The Branch Sale is expected to
result in a modest decrease in HCB Bancshares' operating net income on an
ongoing basis. However, during the quarter in which the Branch Sale is
consummated, the Bank will record a one-time gain on branch sale currently
estimated to be $899,000, which will be offset in part by the associated tax
charge of approximately $265,000 and the write-off of intangible goodwill
associated with the Monticello branch of approximately $163,000 based on
December 31, 2001 financial information.
The following Summary Unaudited Historical Consolidated Financial Data and
Summary Unaudited Pro Forma Consolidated Financial Data replace the Summary
Unaudited Historical Consolidated Financial Data and Summary Unaudited Pro Forma
Consolidated Financial Data appearing on pages 17 and 18 of the Offer to
Purchase.
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Summary Unaudited Historical Consolidated Financial Data and
Summary Unaudited Pro Forma Consolidated Financial Data
The following summary unaudited historical consolidated financial data has
been derived from the consolidated financial statements of HCB Bancshares. The
data should be read in conjunction with the consolidated financial statements
and notes thereto included in HCB Bancshares' Quarterly Report on Form 10-Q for
the quarter ended December 31, 2001. Copies of this report may be obtained as
described in Section 18 of this offer. The income statement data for the six
months ended December 31, 2000 and 2001 and the balance sheet data as of
December 31, 2001 have been derived from the unaudited condensed consolidated
financial statements of HCB Bancshares which, in the opinion of management,
include all adjustments, consisting of normal recurring adjustments, necessary
for a fair presentation of financial position and results of operations for such
periods. Operating results for the six months ended December 31, 2001 are not
necessarily indicative of the results that may be expected for the entire year
ending June 30, 2002.
Balance Sheet Data:
Pro Forma as of
December 31, 2001 Assuming
Branch Sale and Repurchase of
Pro Forma -----------------------------
Including 377,866 377,866
Historical Branch Sale Shares at Shares at
As of as of $12.75 $14.75
12/31/01 12/31/01 per Share per Share
-------- -------- --------- ---------
(In thousands except per share data)
ASSETS
Cash and cash equivalents $ 17,079 $ 15,896 $ 11,078 $ 10,322
Investment securities 116,547 116,547 116,547 116,547
Loans receivable, net 133,078 123,911 123,911 123,911
Other assets 17,568 15,540 15,540 15,540
----------- ----------- ----------- -----------
Total assets $ 284,272 $ 271,894 $ 267,076 $ 266,320
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 165,248 $ 152,399 $ 152,399 $ 152,399
Federal Home Loan Bank advances 86,381 86,381 86,381 86,381
Other liabilities 2,151 2,151 2,151 2,151
----------- ----------- ----------- -----------
Total liabilities 253,780 240,931 240,931 240,931
----------- ----------- ----------- -----------
Stockholders equity:
Common stock, $.01 par value, 10,000,000 shares
authorized, 2,645,000 shares issued, 1,779,329
shares outstanding at December 31, 2001 26 26 26 26
Additional paid-in capital 25,894 25,894 25,894 25,894
Unearned ESOP shares (952) (952) (952) (952)
Unearned MRP shares (135) (135) (135) (135)
Accumulated other comprehensive income 73 73 73 73
Retained earnings 14,562 15,033 15,033 15,033
Treasury stock, at cost 865,671 shares
at December 31, 2001 (8,976) (8,976) (13,794) (14,550)
----------- ----------- ----------- -----------
Total stockholders' equity 30,492 30,963 26,145 25,389
----------- ----------- ----------- -----------
Total liabilities and stockholders equity $ 284,272 $ 271,894 $ 267,076 $ 266,320
=========== =========== =========== ===========
Shares outstanding 1,889,329 1,889,329 1,511,463 1,511,463
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Income Statement Data:
Pro Forma for the
Six Months Ended
December 31,
Pro Forma Assuming Assuming Branch Sale
Historical for the Branch Sale for the and Repurchase of
Six Months Ended Six Months Ended -------------------------------
December 31, December 31, 377,866 Shares 377,866 Shares
------------------------ ---------------------------- at $12.75 per at $14.75 per
2001 2000 2001 2000 Share Share
----------- ----------- ----------- ---------- ----------- ------------
(In thousands except share data)
Interest income $ 9,210 $ 10,230 $ 8,831 $ 9,851 $ 8,783 $ 8,775
Interest expense 5,835 7,338 5,599 7,102 5,599 5,599
----------- ----------- ----------- ----------- ----------- -----------
Net interest income 3,375 2,892 3,232 2,749 3,184 3,176
Provision for loan and
investment losses 159 176 159 176 159 159
----------- ----------- ----------- ----------- ----------- -----------
Net interest income after
provision for loan and
investment losses 3,216 2,716 3,073 2,573 3,025 3,017
Noninterest income 804 655 673 524 673 673
Noninterest expense 3,514 3,436 3,273 3,195 3,273 3,273
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before
income taxes 506 (65) 473 (98) 425 417
Income tax benefit (33) (241) (45) (253) (62) (65)
----------- ----------- ----------- ----------- ----------- -----------
Operating net income 539 176 518 155 487 482
Gain on branch sale -- -- 899 899 899 899
Write-off intangible -- -- 163 163 163 163
Income tax expense -- -- 265 265 265 265
----------- ----------- ----------- ----------- ----------- -----------
Net income $ 539 $ 176 $ 989 $ 626 $ 958 $ 953
=========== =========== =========== =========== =========== ===========
Selected Financial Ratios:
Operating earnings per share -
basic $ 0.31 $ 0.09 $ 0.30 $ 0.08 $ 0.36 $ 0.36
Operating earnings per share -
diluted 0.30 0.09 0.29 0.08 0.34 0.34
Reported earnings per share -
basic 0.31 0.09 0.57 0.33 0.71 0.70
Reported earnings per share -
diluted 0.30 0.09 0.55 0.33 0.67 0.67
Operating return on average equity 3.36% 1.20% 3.18% 1.04% 3.51% 3.57%
Reported earnings on average equity 3.36% 1.20% 6.07% 4.20% 6.90% 7.06%
Book value per share $ 17.14 $ 15.63 $ 17.40 $ 15.87 $ 18.66 $ 18.12
Weighted average shares outstanding
Basic 1,730,008 1,890,871 1,730,008 1,890,871 1,352,142 1,352,142
Diluted 1,802,986 1,890,871 1,802,986 1,890,871 1,425,120 1,425,120
Notes to Summary Unaudited Pro Forma Consolidated Financial Data
(1) The pro forma financial information reflects the repurchase of 377,866
Shares at $12.75 and $14.75 per share as appropriate.
(2) The balance sheet data gives effect to the branch sale and purchase of
Shares as of the balance sheet date. The income statement data give effect
to the branch sale and purchase of Shares as of the beginning of each
period presented.
(3) No effect has been given to the cost incurred in connection with this
offer. These costs are not expected to be material and will be capitalized
as part of the cost of the Shares purchased.
(4) The book value per share calculation is based on the number of shares
disclosed in the balance sheet information (1,779,329 shares as of December
31, 2001, which treats 110,000 shares held in the Stock Option Trust as
treasury shares on the balance sheet date).
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* * *
Neither HCB Bancshares nor our Board of Directors make any recommendation
whether to tender Shares to us. You should make your decision independently
after consulting with your advisors.
To assist us with this offer, we have engaged Keefe, Bruyette & Woods, Inc.
to serve as the Dealer Manager and Information Agent. Representatives from this
firm may contact you by phone to make sure you have received the Offer to
Purchase and related materials and to answer any questions you may have. If you
need information or additional forms, please call the Information Agent/Dealer
Manager toll free at (877) 298-6520.
Unless otherwise extended, the Offer will expire at 5:00 p.m. New York City
time on April 5, 2002. We again encourage you to read carefully the enclosed
material.
As always, we appreciate your interest in HCB Bancshares, Inc.
HCB BANCSHARES, INC.
March 13, 2002
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