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Filed by: Pacific Capital Bancorp
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: San Benito Bank
Commission File No.: 0-11113
February 22, 2000
Dear Shareholders,
As you undoubtedly have learned by now, on February 3, 2000, Pacific
Capital Bancorp and San Benito Bank announced the signing of an acquisition
agreement. Pacific Capital Bancorp is a $2.8 billion multibank holding
company which owns Santa Barbara Bank & Trust and First National Bank of
Central California, including its affiliate South Valley National Bank.
As was stated in our recent press release, I will remain President of
San Benito Bank, which will become an affiliate of First National Bank of
Central California. One member of the San Benito Bank board will be nominated
for election to the Pacific Capital Bancorp Board of Directors at the
company's annual shareholders' meeting in 2001, and additional members of the
current board of San Benito Bank will join the board of First National Bank
of Central California following the close of the transaction.
This acquisition, of course, is subject to regulatory approval and the
vote of shareholders holding a majority the shares of San Benito Bank's
stock. Your Board of Directors approved the acquisition by Pacific Capital
Bancorp only after very careful consideration, and after determining that the
decision was in the best interest of San Benito Bank's shareholders. The
acquisition is to be structured as a tax-free exchange of stock, with a fixed
exchange ratio of .605 shares of Pacific Capital Bancorp for each share of
San Benito Bank. Based on the current bid price of Pacific Capital Bancorp
stock (Nasdaq: SABB), this exchange ratio results in a deal value of
approximately $18.00 per share of San Benito Bank stock. Because it is a
fixed exchange ratio, the deal value will fluctuate in direct relation to
the market value of Pacific Capital Bancorp stock.
While the deal price is lower than the quoted price of San Benito Bank
stock prior to the announcement of the acquisition, the market for the Bank's
stock has never been very active, with very few shares being offered for
sale. San Benito Bank has been blessed with an extremely loyal shareholder
group, most of whom have been very happy to retain their shares.
Consequently, an imbalance between supply and demand has driven up the market
price of the available supply of shares, particularly over the past year.
In evaluating the acquisition, your Board of Directors solicited and
carefully considered competing offers from other financial institutions and,
with the advice of an experienced independent investment banker specializing
in financial institutions and our legal counsel, determined that Pacific
Capital Bancorp's offer was in the best interest of San Benito Bank's
shareholders for a number of reasons. In exchange for their San Benito Bank
shares, the Bank's shareholders will receive shares of a company with
greater market liquidity and better dividend performance. Additionally,
Pacific Capital Bancorp and its subsidiaries offer a range of products and
services broader than are feasible for San Benito Bank to offer on its own,
including cash management services, personal trust services, internet
banking, other technology-based products, plus increased capacity for larger
credit relationships.
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Before being asked to vote on the acquisition, you will receive a proxy
statement/prospectus containing detailed information about Pacific Capital
Bancorp, San Benito Bank, and the acquisition. The proxy statement/prospectus
will also include an opinion from San Benito Bank's investment advisor
regarding the fairness, from a financial point of view, of the consideration
to be received by San Benito Bank shareholders in the acquisition. It is
anticipated that the proxy statement/prospectus, which will announce the date
of the shareholders meeting soliciting approval of the acquisition, will be
mailed to you early in the second quarter.
If you have any questions about the acquisition, please feel free to
contact me or any director of the Bank and we will be pleased to discuss the
situation with you.
As always, your loyalty and support for your Bank are very much
appreciated.
Sincerely,
/s/ Edward T. Stephenson
Edward T. Stephenson
President
THIS LETTER CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS ABOUT THE PROPOSED
ACQUISITION OF SAN BENITO BANK BY PACIFIC CAPITAL BANCORP. THESE STATEMENTS
INCLUDE STATEMENTS ABOUT THE OPERATIONS OF PACIFIC CAPITAL BANCORP AND SAN
BENITO BANK AFTER THE ACQUISITION, AND THE MARKET LIQUIDITY AND DIVIDEND
PERFORMANCE OF PACIFIC CAPITAL BANCORP. BECAUSE SUCH FORWARD-LOOKING
STATEMENTS INVOLVE RISKS AND UNCERTAINTIES, THERE ARE IMPORTANT FACTORS THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR
IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS, INCLUDING, WITHOUT LIMITATION,
DELAYS IN COMPLETING THE TRANSACTION, DIFFICULTIES IN INTEGRATING THE
OPERATION OF SAN BENITO BANK WITH THOSE OF PACIFIC CAPITAL BANCORP,
DIFFICULTIES IN ACHIEVING ANTICIPATED COST SAVINGS FROM THE ACQUISITION OR IN
ACHIEVING SUCH COST SAVINGS WITHIN THE EXPECTED TIME FRAME, INCREASED
COMPETITIVE PRESSURES, CHANGES IN THE INTEREST RATE ENVIRONMENT, CHANGES IN
GENERAL ECONOMIC CONDITIONS, LEGISLATIVE AND REGULATORY CHANGES THAT
ADVERSELY AFFECT THE BUSINESS IN WHICH PACIFIC CAPITAL BANCORP AND SAN BENITO
BANK ARE ENGAGED, AND CHANGES IN THE SECURITIES MARKETS.
PACIFIC CAPITAL BANCORP WILL FILE A REGISTRATION STATEMENT ON FORM S-4 WITH
THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") IN CONNECTION WITH THE
PROPOSED MERGER TRANSACTION. THE REGISTRATION STATEMENT WILL INCLUDE A
PROSPECTUS OF PACIFIC CAPITAL BANCORP, WHICH RELATES TO THE SHARES OF PACIFIC
CAPITAL BANCORP COMMON STOCK TO BE ISSUED TO SHAREHOLDERS OF SAN BENITO BANK
IN THE PROPOSED TRANSACTION, AND A PROXY STATEMENT OF SAN BENITO BANK, WHICH
WILL BE SENT TO SHAREHOLDERS OF SAN BENITO BANK SEEKING THEIR APPROVAL OF THE
PROPOSED MERGER TRANSACTION. SHAREHOLDERS OF SAN BENITO BANK ARE URGED TO
READ THE PROSPECTUS/PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS TO BE
FILED WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. IN
ADDITION SAN BENITO BANK AND THE DIRECTORS AND OFFICERS OF SAN BENITO BANK
MAY PARTICIPATE IN THE SOLICITATION OF SAN BENITO BANK SHAREHOLDERS IN
CONNECTION WITH THE PROPOSED ACQUISITION , AND A DESCRIPTION OF THEIR
INTERESTS, IS AVAILABLE IN A FILING MADE BY SAN BENITO BANK WITH THE BOARD
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (THE "FRB") ON FEBRUARY 22, 2000
UNDER SCHEDULE 14A. WHEN FILED, THE REGISTRATION STATEMENT CAN BE OBTAINED
FREE OF CHARGE AT THE INTERNET WORLD WIDE WEB SITE MAINTAINED BY THE SEC AT
"http://www.sec.gov." IN ADDITION, (i) DOCUMENTS FILED WITH THE SEC BY
PACIFIC CAPITAL BANCORP WILL BE AVAILABLE FREE OF CHARGE FROM THE CORPORATE
SECRETARY OF PACIFIC CAPITAL BANCORP AT 200 EAST CARRILLO STREET, SANTA
BARBARA, CALIFORNIA 93101, TELEPHONE (805) 564-6310, AND (ii) DOCUMENTS FILED
WITH THE FRB BY SAN BENITO BANK WILL BE AVAILABLE FREE OF CHARGE FROM THE
SECRETARY OF SAN BENITO BANK AT 300 TRES PINOS ROAD, HOLLISTER, CALIFORNIA
95023, TELEPHONE (831) 637-2265.
