Filed by Catawba Valley Bancshares, Inc.
Pursuant to Rule 425 under the Securities Act of
1933 and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: First Gaston Bank of North
Carolina
FDIC Certificate No. 34041-3
Date: May 31, 2001
This filing contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Such statements include
but are not limited to, (1) statements about the benefits of the combination of
Catawba Valley Bancshares, Inc., its wholly-owned subsidiary, Catawba Valley
Bank, and First Gaston Bank of North Carolina, including future financial and
operating results, cost savings, and enhanced revenues, (2) statements with
respect to Catawba Valley Bancshares, Inc.'s and First Gaston Bank of North
Carolina's plans, objectives, expectations and intentions and other statements
that are not historical facts; and (3) other statements identified by words such
as "believes", "expects", "anticipates", "estimates", "intends", "plans",
"targets", "projects", and similar expressions. These statements are based upon
the current beliefs and expectations of Catawba Valley Bancshares, Inc.'s and
First Gaston Bank of North Carolina's management and are subject to significant
risks and uncertainties. Actual results may differ from those set forth in the
forward-looking statements.
The following factors, among others, could cause actual results to
differ materially from the anticipated results or other expectations expressed
in the forward-looking statements: (1) expected revenue synergies and cost
savings from the combination may not be fully realized or realized within the
expected time frame; (2) revenues following the combination may be lower than
expected; (3) the ability to obtain governmental approvals of the combination on
the proposed terms and schedule; (4) the failure of Catawba Valley Bancshares,
Inc.'s and First Gaston Bank of North Carolina's stockholders to approve the
combination; (5) competitive pressures among depository and other financial
institutions may increase significantly and have an effect on pricing, spending,
third-party relationships and revenues; (6) the strength of the United States
economy in general and the strength of the local economies in which the combined
company will conduct operations may be different than expected resulting in,
among other things, a deterioration in the credit quality or a reduced demand
for credit, including the resultant effect on the combined company's loan
portfolio and allowance for loan losses; (7) changes in the U.S. legal and
regulatory framework; and (8) adverse conditions in the stock market, the public
debt market and other capital markets (including changes in interest rate
conditions) and the impact of such conditions on the combined company.
Additional factors that could cause Catawba Valley Bancshares, Inc.'s and First
Gaston Bank of North Carolina's results to differ materially from those
described in the forward-looking statements can be found in Catawba Valley
Bancshares, Inc.'s and First Gaston Bank of North Carolina's reports (such as
Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB and Current
Reports on Form 8-K) filed with the Securities and Exchange Commission and
available at the SEC's Internet site (http://www.sec.gov) or filed with the
Federal Deposit Insurance Corporation. All subsequent written and oral
forward-looking statements concerning the proposed transaction or other matters
attributable to Catawba Valley Bancshares, Inc. and First Gaston Bank of North
Carolina or any person acting on their behalf are expressly qualified in their
entirety by the cautionary statements above. Catawba Valley Bancshares, Inc. and
First Gaston Bank of North Carolina do not
undertake any obligation to update any forward-looking statement to reflect
circumstances or events that occur after the date the forward-looking statements
are made.
The proposed transaction will be submitted to Catawba Valley
Bancshares, Inc.'s and First Gaston Bank of North Carolina's stockholders for
their consideration, and Catawba Valley Bancshares, Inc. and First Gaston Bank
of North Carolina will file a registration statement, a joint proxy
statement/prospectus and other relevant documents concerning the proposed
transaction with the SEC and FDIC. Stockholders are urged to read the
registration statement and the joint proxy statement/prospectus, as will as
other filings containing information about Catawba Valley Bancshares, Inc. and
First Gaston Bank of North Carolina, at the SEC's Internet site
(http://www.sec.gov). Copies of the joint proxy statement/prospectus and the SEC
filings that will be incorporated by reference in the joint proxy
statement/prospectus can also be obtained, without charge, by directing a
request to R. Steve Aaron, President and CEO, Catawba Valley Bancshares, Inc.,
Post Office Box 2328, Hickory, North Carolina 28603-2328 (828-431-2300), or to
W. Alex Hall, President and CEO, First Gaston Bank of North Carolina, Post
Office Box 1478, Gastonia, North Carolina 28053-1478 (704-865-4202).
Catawba Valley Bancshares, Inc. and First Gaston Bank of North
Carolina, and their respective directors and executive officers may be deemed to
be participants in the solicitation of proxies from the stockholders of Catawba
Valley Bancshares, Inc. and First Gaston Bank of North Carolina in connection
with the combination. Information about the directors and executive officers of
Catawba Valley Bancshares, Inc. and their ownership of Catawba Valley
Bancshares, Inc. common stock is set forth in the proxy statement, dated March
9, 2001, for Catawba Valley Bancshares, Inc.'s 2001 annual meeting of
stockholders, as filed with the SEC on Schedule 14A. Information about the
directors and executive officers of First Gaston Bank of North Carolina and
their ownership of First Gaston Bank of North Carolina common stock is set forth
in the proxy statement, dated April 3, 2001, for the First Gaston Bank of North
Carolina's 2001 annual meeting of stockholders, as filed with the FDIC.
Additional information regarding the interests of those participants may be
obtained by reading the joint proxy statement/prospectus regarding the proposed
transaction when it becomes available.
THE FOLLOWING IS A JOINT PRESS RELEASE ISSUED BY CATAWBA VALLEY
BANCSHARES, INC. AND FIRST GASTON BANK OF NORTH CAROLINA ON MAY 31, 2001
[Catawba Valley Bank letter head appears here]
PRESS RELEASE
For Immediate Release
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For Further Information Contact:
R. Steve Aaron, President
Catawba Valley Bancshares, Inc.
(828) 431-2300
W. Alex Hall, President
First Gaston Bank of North Carolina
(704) 865-8302
CATAWBA VALLEY BANK AND FIRST GASTON BANK ANNOUNCE
MERGER OF EQUALS
The Boards of Directors of Catawba Valley Bank, Hickory, North Carolina (OTC
Bulletin Board CTVB) and First Gaston Bank of North Carolina, Gastonia, North
Carolina (OTC Bulletin Board FGBN) announced today a "merger of equals"
reorganization into a holding company. The new organization will use the
existing holding company of Catawba Valley Bank, Catawba Valley Bancshares, Inc.
In the transaction, the holding company will be renamed to reflect the broader
geographic reach of both banks. Until that time First Gaston Bank and Catawba
Valley Bank will be wholley-owned subsidiaries of Catawba Valley Bancshares,
Inc. Shareholders of First Gaston Bank will exchange their shares of common
stock for shares of the common stock of Catawba Valley Bancshares on the basis
of .8934 shares of Catawba Valley for each share of First Gaston. This exchange
is based on the book value of each bank as of December 31, 2001. The Board of
Directors of the holding company will have an equal number of representatives
from both Catawba Valley Bank and First Gaston Bank. R. Steve Aaron, President
of Catawba Valley Bank will serve as President of the holding company and W.
Alex Hall, President of First Gaston Bank will serve as Executive Vice President
of the holding company. As of March 31, 2001, the combined holding company's
total assets would have been $294.3 million, total deposits of $239.2 million
and shareholders' equity of $29.9 million. Both Catawba Valley Bank and First
Gaston Bank will continue to operate in their respective market areas under
their current boards of directors, management and name. The transaction is
subject to a definitive agreement, approval by the shareholders of both
organizations and federal and state regulatory approval. It is expected to be
effective by December 31, 2001.
R. Steve Aaron, President of Catawba Valley Bank and W. Alex Hall, President of
First Gaston Bank issued the following joint statement: "We are excited about
putting two high performing community banks together in one organization. We
expect to recognize certain efficiencies as we combine our back room operations
and consolidate some management functions. All of our branch operations will
remain in tact and no change will be experienced from a customer service
perspective. We are two community banks that are looking into the future and
seeing that a combination of forces is in the best interests of our
shareholders, customers and communities served. We believe that together we can
take better advantage of the capital markets to help fund our continued growth
and profitability. The recently enacted Financial Modernization Act as well as
the continued consolidation of financial services under one umbrella company
caused each of us to look into the future with a more critical eye. We believe
consolidation of this type is best whereby we retain our local image and high
level of customer service while effecting economies in areas that do not detract
from customer service. We each remain committed to our local communities and
believe that combining forces will provide for a stronger overall organization
that can better serve those communities while opening up new markets and new
products and services for our customers."
***END***
THE FOLLOWING IS THE LETTER OF INTENT SIGNED ON MAY 31, 2001.
May 31, 2001
R. Steve Aaron
President and CEO
Catawba Valley Bank
Catawba Valley Bancshares, Inc.
Post Office Box 2328
Hickory, North Carolina 28603-2328
W. Alex Hall
President and CEO
First Gaston Bank of North Carolina
Post Office Box 1478
Gastonia, North Carolina 28053-1478
This Letter of Intent, when countersigned by each of the Presidents named above,
will confirm our tentative agreement as set forth below. This Letter of Intent
supersedes all previous written and oral proposals made by either of us to each
other.
Structure of the proposed transaction
Catawba Valley Bancshares, Inc. ("CVB"), the parent company of Catawba Valley
Bank ("Catawba"), will be the resulting bank holding company from the proposed
transaction. In the transaction, the shareholders of CVB will approve a name
change to a name more generically recognized and mutually agreed to by the
undersigned. First Gaston Bank of North Carolina ("First Gaston") will, together
with Catawba, become wholly-owned subsidiaries of CVB.
To effect the reorganization as described above, the shareholders of First
Gaston will exchange their shares of common stock for shares of common stock of
CVB. Shareholders of CVB will retain their issued and outstanding shares. The
exchange ratio of the shares of First Gaston for shares of the common stock of
CVB will be .8934 shares of CVB common stock for each share of First Gaston
common stock.
Directors
The Board of Directors of CVB will consist of four (4) representatives from each
of CVB and First Gaston which will include Messrs. Aaron and Hall. The existing
Boards of Directors of CVB and First Gaston will remain unchanged. The names of
Catawba and First Gaston will remain unchanged.
Officers
The officers of CVB will consist of the following:
President Steve Aaron
Executive Vice President Alex Hall
Chief Financial Officer Susan Mikels
Corporate Secretary G. Marvin Lowder
Assistant Secretary One or more to be appointed in Gastonia
and Hickory, NC
Messrs. Aaron and Hall will remain as President respectively, of Catawba and
First Gaston. All other officer positions within each of the subsidiary banks
will be determined by the respective boards of directors of each bank.
DEFINITIVE AGREEMENT
We mutually agree to proceed in good faith toward negotiation and execution of a
definitive agreement (the "Agreement") which shall provide for the
reorganization as described above and contain representations, covenants and
conditions as are typical for transactions of this type. Such Agreement must be
finalized and executed by the parties hereto by the close of business on June
29, 2001 or the proposal as set forth herein shall expire. Conditions to the
closing of the reoganization, to be more fully set forth in the Agreement, will
include, without limitation, the following:
1. Requisite approval of the reorganization by the Boards of Directors and
shareholders of each of CVB, Catawba and First Gaston;
2. Approval of such federal, state and other regulatory agencies and
authorities as necessary or advisable to effect the reorganization;
3. Receipt of an opinion of a tax advisor mutually acceptable to the
parties hereto, in form and substance that is satisfactory to each of
the parties hereto, that the reorganization constitutes a tax free
reorganization pursuant to the appropriate provisions of the Internal
Revenue Code;
4. The accuracy of various representations and warranties and the
performance of covenants of each of the parties hereto as set forth in
the Agreement;
5. The receipt by each of the parties hereto of an opinion from its
financial advisor that the reorganization is fair, from a financial
point of view, to its shareholders;
6. The effectiveness of a registration statement filed with the Securities
and Exchange Commission for the shares of CVB to be exchanged for the
shares of common stock of First Gaston; and
7. The exercise of dissenters rights pursuant to Article 13 of Chapter 55
of the North Carolina General Statutes by the holders of no more than
10% of the shares of common stock of either CVB or First Gaston.
DUE DILIGENCE
This Letter of Intent is, and the Agreement will be, subject to a satisfactory
due diligence by the parties hereto of their respective books, records, business
and affairs of the other party hereto. To that end, both parties shall provide
to the other and their employees, accountants, counsel or other representatives,
access to all of their books, records, files and other information (whether
maintained electronically or otherwise), to all of their business properties and
facilities, as well as to all of their employees, accountants, counsel and
consultants as is necessary and appropriate for proper due diligence
investigation. Both of the parties hereto mutually agree to maintain the
confidentiality of information received from the other in such due diligence
investigation and shall not use any such information except in furtherance of
the proposed reorganization. If either of the parties hereto notifies the other
party in writing that it does not wish to continue with discussions leading to
the reorganization, the other party shall promptly return or destroy all
documents, copies and work papers containing confidential information received
from the other party.
NO SOLICITATION
Until the earlier of (i) the execution of the Agreement; (ii) written notice
from the other that it does not intend to continue discussions outlined herein;
or (iii) June 29, 2001, the parties hereto shall deal exclusively with each
other in connection with any merger or sale and neither party hereto nor any of
their officers, employees, agents or representatives will, directly or
indirectly, without the prior written consent of each of the other, solicit,
encourage or initiate any offer or proposal from, or engage in any discussion or
negotiation with, or provide any information to, any party or entity other than
the other party hereto and their representatives, regarding the sale or merger
of their institution. If any party hereto receives any unsolicited proposal with
respect to the foregoing, he will immediately communicate to the other party
hereto the terms of such proposal.
PUBLIC ANNOUNCEMENT
Each of the parties hereto agrees that it will not issue any press release or
otherwise disclose the fact that negotiations are taking place between the
parties hereto without approval of the other party hereto unless, in the good
faith opinion of securities counsel for the disclosing party, such disclosure is
required by law.
Except for the confidentiality provisions stated above, the nonsolicitation
provisions stated above, and the provisions relating to public announcements,
this Letter of Intent represents only our current good faith intention to
negotiate and enter into the Agreement pursuant to the terms
discussed herein and is not intended to be a binding agreement between either of
the parties hereto.
CATAWBA VALLEY BANCSHARES, INC.
By: /s/ R. Steve Aaron
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R. Steve Aaron, President and CEO
CATAWBA VALLEY BANK
By: /s/ R. Steve Aaron
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R. Steve Aaron, President and CEO
FIRST GASTON BANK OF NORTH CAROLINA
By: /s/ W. Alex Hall
----------------
W. Alex Hall, President and CEO