Exhibit 99.1 LETTERHEAD
NEWS RELEASE
Contact: For Immediate Release
James B. Jaqua March 1, 2002
(909) 784-5771 Ext. 101
HEMET BANCORP
ANNOUNCES ITS INTENTION TO QUALIFY
HEMET BANCORP AS AN S CORPORATION
RIVERSIDE, Calif. (March 1, 2002)-Hemet Bancorp (OTCBB: HMET) announced today
its intention to qualify Hemet Bancorp to become an S corporation for income tax
purposes. As an S corporation, substantially all of Hemet Bancorp's tax
liability would be assumed by its shareholders, thus eliminating the
double-taxation of dividends. For Hemet Bancorp to meet the Internal Revenue
Service eligibility requirements to become an S corporation, it will need to
reduce the number of its shareholders to no more than 75, from its current
number of approximately 400. Reducing the number of shareholders will involve
the merger of Hemet Bancorp with Hemet Financial Group, a corporation soon to be
formed. Immediately prior to the merger of Hemet Financial Group and Hemet
Bancorp, certain shareholders of Hemet Bancorp will exchange their shares of
Hemet Bancorp common stock for an equivalent number of shares of common stock of
Hemet Financial Group. It is proposed that Hemet Financial Group will have as
its shareholders those shareholders of Hemet Bancorp, including directors and
officers of Hemet Bancorp and The Bank of Hemet, whose form of ownership is
eligible to be a shareholder of an S corporation and who currently are among the
74 largest shareholders of Hemet Bancorp.
The selection of such eligible shareholders will be made based on the
shareholder records maintained by Hemet Bancorp. Only those Hemet Bancorp
shareholders who provide a written commitment to maintaining their eligibility
to be a shareholder of Hemet Financial Group will be included in the exchange
and the proposed merger of Hemet Bancorp with Hemet Financial Group. All of the
remaining shareholders of Hemet Bancorp will be cashed out in the proposed
merger. Hemet Bancorp will base the cash out price for Hemet Bancorp common
stock upon an appraisal and an independent fairness opinion report obtained from
its investment banking firm. The proposed merger will be contingent upon Hemet
Financial Group owning in excess of 90% of the outstanding shares of Hemet
Bancorp prior to the merger and the receipt by Hemet Financial Group of the
necessary regulatory approvals of the Federal Reserve Board and the California
Department of Financial Institutions. Hemet Bancorp's shareholder records as of
December 31, 2001 indicate that the 74 largest shareholders currently own
approximately 90% of the outstanding shares of common stock, with the remaining
10% of outstanding shares owned by approximately 325 other shareholders.
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Shareholders who think they may qualify as a proposed shareholder of Hemet
Financial Group should contact Jim Jaqua at (909) 784-5771, Extension 101, for
further information.
In the event that any of the proposed shareholders of Hemet Financial Group
prove to be ineligible to become an S corporation shareholder, certain eligible
shareholders, including officers and directors of Hemet Bancorp may be
purchasing additional shares of Hemet Bancorp common stock in the open market
and in private transactions prior to the proposed merger to insure that the
aggregate ownership of the proposed shareholders of Hemet Financial Group will
be in excess of 90%. It is expected that the proposed merger will occur in late
2002.
Hemet Bancorp, a one-Bank Holding Company, was incorporated in January 2001 in
the State of California for the purpose of acquiring and holding all of the
outstanding stock of its wholly-owned subsidiary, The Bank of Hemet. Hemet
Bancorp acquired all of the outstanding stock of The Bank of Hemet on November
21, 2001. The Bank of Hemet was incorporated in the State of California in 1974
and operates five branches in communities located in the Inland Empire areas of
Southern California.
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