<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 1)
NAPA NATIONAL BANCORP
(Name of Subject Company)
NAPA NATIONAL BANCORP STOCK PARTICIPATION PLAN
MR. C. RICHARD LEMON
MR. GEORGE M. SCHOFIELD
(Bidders)
COMMON STOCK
(Title of Class of Securities)
630 35P 101
(CUSIP Number of Class of Securities)
C. Richard Lemon, Co-Trustee
Napa National Bancorp Stock Participation Plan
901 Main Street
Napa, California 94559
(707) 257-2440
(Name, Address and Telephone Numbers of Person Authorized to Receive Notices
and Communications on Behalf of Bidders)
With a copy to:
Jonathan D. Joseph, Esq.
Pillsbury Madison & Sutro LLP
P.O. Box 7880
San Francisco, CA 94120
(415) 983-1000
CALCULATION OF FILING FEE:
Transaction Valuation Amount of Filing Fee
$290,000 $58.00*
- ---------------
* The filing fee has been calculated in accordance with Rule
0-11(d) based on a maximum number of shares to be purchased of
20,000 and an offering price of $14.50 per share.
[x] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: $58.00
Form or Registration No.: Schedule 14D-1
Filing Party: Napa National Bancorp Stock Participation Plan,
Mr. C. Richard Lemon and Mr. George M. Schofield
Date Filed: July 25, 1996
<PAGE> 2
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NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS.
OF ABOVE PERSONS:
1 NAPA NATIONAL BANCORP STOCK PARTICIPATION PLAN I.R.S.
NUMBER: 94-2780134
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE
INSTRUCTIONS)
2 (a) / /
(b) /X/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (SEE INSTRUCTIONS) PF
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(e) OR 2(f) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES OF AMERICA
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY
EACH REPORTING PERSON 47,030 (see Item 6)
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8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) / /
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9 PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (7) 6.23%
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10 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) EP
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<PAGE> 3
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NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS.
1 OF ABOVE PERSONS:
C. RICHARD LEMON
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE
2 INSTRUCTIONS)
(a) / /
(b) /X/
- -------------------------------------------------------------------------------
3 SEC USE ONLY
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4 SOURCE OF FUNDS (SEE INSTRUCTIONS) PF
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(e) OR 2(f) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES OF AMERICA
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY
EACH REPORTING PERSON 58,330 (see Item 6)
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8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) / /
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9 PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (7) 7.73%
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10 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) IN
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<PAGE> 4
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NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF
ABOVE PERSONS:
1 GEORGE M. SCHOFIELD
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
2 (a) / /
(b) /X/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (SEE INSTRUCTIONS) PF
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(e) OR 2(f) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES OF AMERICA
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY
EACH REPORTING PERSON 57,230 (see Item 6)
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8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) / /
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9 PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (7) 7.59%
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10 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) IN
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<PAGE> 5
Item 1. Security and Subject Company.
(a) Name of Subject Company: Napa National Bancorp.
Address of Subject Company's principal executive offices: 901
Main Street, Napa, California 94559.
(b) The Napa National Bancorp Stock Participation Plan ("ESOP"),
pursuant to an Offer to Purchase 20,000 Shares of Napa
National Bancorp Common Stock at a Net Selling Price of $14.50
Per Share dated July 25, 1996 (the "Offer"), made a formal
offer to purchase 20,000 shares of the common stock without
par value ("Common Stock") of Napa National Bancorp ("Subject
Company"), on the terms stated therein. The Offer as
distributed to the Subject Company's shareholders is filed
herewith as Exhibit 20.3.
As of May 10, 1996, there were 754,500 shares of the Subject
Company's Common Stock outstanding. Of these shares, 525,989
shares, or 69.7%, were held of record by Mr. Clarke W.
Swanson, Jr., the Subject Company's Chairman of the Board and
Chief Executive Officer.
The Offer was made to all shareholders of the Subject Company,
including certain of the officers, directors and affiliates of
the Subject Company. The ESOP's purchase of shares tendered by
the Subject Company's officers, directors and affiliates was
made on terms identical to those made with respect to shares
tendered by other shareholders of the Subject Company.
The Offer expired according to its terms at 4:00 P.M.,
California time, on August 22, 1996. All Conditions to
Purchase described in the Offer were satisfied or waived prior
to this Expiration Date. 19,354 shares of Common Stock were
tendered pursuant to the Offer, and the ESOP purchased all of
the tendered shares.
(c) The Subject Company's Common Stock is not listed on any
exchange nor is it listed with the Nasdaq National Market
System, although the stock is traded over-the-counter and
privately. The following table indicates the range of high and
low sales prices for the Subject Company's Common Stock for
the periods shown, based upon information available to
management.
<TABLE>
<CAPTION>
High Low Quarter/Year
------ ------ -----------------
<S> <C> <C>
$10.00 $10.00 2nd Quarter, 1996
10.00 9.00 1st Quarter, 1996
9.00 8.00 4th Quarter, 1995
9.00 8.00 3rd Quarter, 1995
9.00 8.00 2nd Quarter, 1995
9.00 8.00 1st Quarter, 1995
8.00 8.00 4th Quarter, 1994
7.54 7.54 3rd Quarter, 1994
</TABLE>
For the period presented, the information indicated may not
include information on all shares which may have been traded
directly by shareholders.
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Item 2. Identity and Background.
(a) Name of Persons Filing Statement: Napa National Bancorp Stock
Participation Plan ("ESOP") and Messrs. C. Richard Lemon and
George M. Schofield, Co-Trustees of the ESOP.
(b) Business Address of Persons Filing Statement: Napa National
Bancorp Stock Participation Plan, Mr. C. Richard Lemon,
Co-Trustee, 809 Coombs Street, Napa, California 94559.
Mr. Lemon's principal business address is: Mr. C. Richard
Lemon, Dickenson, Peatman & Fogarty, 809 Coombs Street, Napa,
California 94559.
Mr. Schofield's principal business address is: Mr. George M.
Schofield, George Schofield Co., 1851 Vallejo Street, St.
Helena, California 94574.
(c) The ESOP is an employee benefit plan subject to the Employee
Retirement Income Security Act of 1934, as amended ("ERISA"),
and California law to the extent not preempted by ERISA.
Mr. C. Richard Lemon, Co-Trustee of the ESOP, is an attorney
and principal of Dickenson, Peatman & Fogarty, a director and
the Secretary of Napa National Bancorp and Napa National Bank.
Mr. George M. Schofield, Co-Trustee of the ESOP, is the
President of George Schofield Co., financial consultant, and a
director of Napa National Bancorp and Napa National Bank.
(d) See Item 2(c).
(e) Not applicable.
(f) Not applicable.
(g) United States of America.
Item 3. Past Contacts, Transactions or Negotiations With the Subject
Company.
(a) Not applicable.
(b) Not applicable.
Item 4. Source and Amount of Funds or Other Consideration.
(a) 19,354 shares of Common Stock were purchased pursuant to the
Offer at an aggregate purchase price of $280,633 (the
"Purchase Price"). The ESOP has made payment of the Purchase
Price from currently available funds, consisting of voluntary
contributions from employees of the Subject Company and
matching contributions made by the Subject Company. The ESOP
did not obtain any funds from outside sources for use in
connection with the Offer.
(b) Not applicable.
(c) Not applicable.
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<PAGE> 7
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidders.
The purpose of the Offer was for the ESOP to increase its shareholdings
by acquiring up to 20,000 outstanding shares of Common Stock of the
Subject Company. Pursuant to the Offer, the ESOP acquired 19,354 shares
of the Subject Company's Common Stock.
Item 6. Interest in Securities of the Subject Company.
(a) As of May 10, 1996, there were 754,500 shares of the Subject
Company's Common Stock outstanding. Of these shares, 525,989
shares, or 69.7%, were held of record by Mr. Clarke W.
Swanson, Jr., the Subject Company's Chairman of the Board and
Chief Executive Officer.
As of May 10, 1996, 27,676 shares, or 3.67%, of the Subject
Company's Common Stock was held in the ESOP (the "ESOP
Shares"), of which Messrs. Lemon and Schofield are Co-
Trustees. The ESOP acquired 19,354 additional shares pursuant
to the Offer. Thus, as of September 16, 47,030 shares, or
6.23%, of the Subject Company's Common Stock was held in the
ESOP.
As of May 10, 1996, Mr. Lemon reported beneficial ownership of
38,976 shares, or 5.1%, of the Subject Company's Common Stock,
including the ESOP Shares, 800 shares held in an individual
retirement account and 10,000 shares which may be acquired
upon the exercise of stock options. By virtue of the ESOP's
purchase of 19,354 shares of the Subject Company's Common
Stock pursuant to the Offer, Mr. Lemon is deemed for reporting
purposes, as of September 16, 1996, to own 58,330 shares, or
7.73%, of the Subject Company's Common Stock.
As of May 10, 1996, Mr. Schofield reported beneficial
ownership of 37,876 shares, or 4.95%, of the Subject Company's
Common Stock, including the ESOP Shares and 10,000 shares
which may be acquired upon the exercise of stock options. By
virtue of the ESOP's purchase of 19,354 shares of the Subject
Company's Common Stock pursuant to the Offer, Mr. Schofield is
deemed for reporting purposes, as of September 16, 1996, to
own 57,230 shares, or 7.59%, of the Subject Company's Common
Stock.
Messrs. Lemon and Schofield disclaim beneficial ownership as
to both the ESOP Shares and those shares of the Subject
Company's Common Stock acquired by the ESOP pursuant to the
Offer.
(b) Not applicable.
Item 7. Contracts, Arrangements, Understandings or Relationships with Respect
to Subject Company's Securities.
Not applicable.
Item 8. Persons Retained, Employed or to Be Compensated.
The independent appraisal firm of Alex Sheshunoff and Company
("Sheshunoff") was retained by the ESOP Committee of the Board of
Directors of the Subject Company for the purpose of appraising the fair
market value of the shares of Common Stock of the Subject Company owned
by the ESOP as of December 31, 1995. Sheshunoff was paid a one-time fee
of $2,000 for performing its appraisal services, and the Subject
Company placed no restrictions or limitations upon Sheshunoff during
the performance of its appraisal function. In its valuation dated March
21, 1996 (the "Valuation"), Sheshunoff determined that the market
approach was the most relevant and useful
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<PAGE> 8
indicator of fair market value of the shares of Common Stock owned by
the ESOP. Utilizing this methodology, Sheshunoff determined, after
taking into account the Subject Company's profitability, size, market
share, recently instituted dividend policy and other factors, including
the fact that the Subject Company's book value per share (on a fully
diluted basis) at December 31, 1995 was $9.62, that the shares of
Subject Company Common Stock owned by the ESOP had a fair market value
of $14.50 per share as of December 31, 1995. Based, in part, on this
valuation, the trustees of the ESOP determined to make an offer to
purchase 20,000 shares of the Subject Company's Common Stock at $14.50
per share.
In the Valuation, Sheshunoff considered and rejected other
methodologies for determining fair market value, including the net
present value and net asset value approaches, which methodologies, if
utilized, would have resulted in higher or lower valuations of the
Common Stock owned by the ESOP.
A copy of the Valuation rendered by Sheshunoff is available to
shareholders of the Subject Company without charge upon request
therefor and is filed herewith and is incorporated herein by reference.
All references herein to such Valuation are qualified in their entirety
by reference to the complete Valuation.
Sheshunoff consented to the inclusion of a description of the Valuation
in this filing and the Schedule 14D-1 and to the filing of the
Valuation as an exhibit hereto and thereto. In addition, Sheshunoff
consented to the provision by the ESOP of a copy of the Valuation to
shareholders of the Subject Company upon request therefor.
Item 9. Financial Statements of Certain Bidders.
Not applicable.
Item 10. Additional Information.
Not applicable.
Item 11. Material To Be Filed as Exhibits.
Exhibit 20.1* - Offer to Purchase 20,000 Shares of Napa National
Bancorp Common Stock at a Net Selling Price of $14.50
Per Share (dated July 25, 1996).
Exhibit 20.2* - Valuation of Alex Sheshunoff and Company dated March
21, 1996.
Exhibit 20.3 - Offer to Purchase 20,000 Shares of Napa
National Bancorp Common Stock at a Net Selling Price
of $14.50 Per Share (dated July 25, 1996 and marked
to show immaterial changes from the version
previously filed).
Exhibit 20.4 - Valuation of Alex Sheshunoff and Company dated March
21, 1996, as amended.
* Previously Filed
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<PAGE> 9
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: September 17, 1996.
Napa National Bancorp Stock Participation Plan
By: /s/ C. Richard Lemon
-----------------------------------------
C. Richard Lemon
Co-Trustee
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<PAGE> 10
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: September 17, 1996.
/s/ C. Richard Lemon
-----------------------------------------
C. Richard Lemon
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<PAGE> 11
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: September 17, 1996.
/s/ George M. Schofield
-----------------------------------------
George M. Schofield
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<PAGE> 1
EXHIBIT 20.3
NAPA NATIONAL BANCORP STOCK PARTICIPATION PLAN
OFFER TO PURCHASE 20,000 SHARES OF
NAPA NATIONAL BANCORP COMMON STOCK
AT A NET SELLING PRICE OF $14.50 PER SHARE
================================================================================
THIS OFFER WILL EXPIRE AT 4:00 P.M.
CALIFORNIA TIME ON AUGUST 22, 1996 UNLESS EXTENDED
================================================================================
July 25, 1996
Dear Napa National Bancorp Shareholder:
This Offer to Purchase supersedes the letter previously distributed to
shareholders of Napa National Bancorp (the "Company") on April 25, 1996, and
constitutes a formal offer by the Napa National Bancorp Stock Participation Plan
(the "ESOP") to purchase up to 20,000 shares of the Company's common stock,
without par value (the "Common Stock"), on the terms stated below (the "Offer").
PLEASE BE ADVISED THAT THERE ARE ACTUAL OR POTENTIAL CONFLICTS OF
INTEREST IN CONNECTION WITH THE ESOP'S OFFER, WHICH CONFLICTS OF INTEREST ARISE
OUT OF THE FOLLOWING CIRCUMSTANCES:
(1) AS THE ESOP IS AN EMPLOYEE STOCK OWNERSHIP BENEFIT PLAN FOR
EMPLOYEES OF THE COMPANY, EMPLOYEES AND EXECUTIVE OFFICERS OF
THE COMPANY WILL BE DIRECT BENEFICIARIES OF THE PURCHASES OF
COMMON STOCK BY THE ESOP;
(2) MESSRS. C. RICHARD LEMON AND GEORGE M. SCHOFIELD, AS
CO-TRUSTEES OF THE ESOP ("CO-TRUSTEES"), OWE A FIDUCIARY DUTY
TO THE ESOP AND ITS BENEFICIARIES, WHILE, AS DIRECTORS OF THE
COMPANY, THEY OWE A FIDUCIARY DUTY TO THE COMPANY AND ITS
SHAREHOLDERS;
(3) THE DIRECTORS OF THE COMPANY (INCLUDING MESSRS. LEMON AND
SCHOFIELD) ARE ELECTED BY A MAJORITY VOTE OF THE COMPANY'S
OUTSTANDING COMMON STOCK, 69.7% OF WHICH WAS HELD OF RECORD BY
MR. W. CLARKE SWANSON, JR., AS OF MAY 10, 1996;
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<PAGE> 2
(4) ALTHOUGH THE CO-TRUSTEES DO NOT BELIEVE SO, THE ESOP AND THE
CO-TRUSTEES MAY BE DEEMED TO BE AFFILIATES OF THE COMPANY.
THE ESOP AND THE CO-TRUSTEES URGE EACH SHAREHOLDER TO CAREFULLY REVIEW
THE ENCLOSED MATERIALS AND TO CONSULT WITH HIS OR HER LEGAL, TAX AND BUSINESS
ADVISORS BEFORE MAKING ANY DECISION TO TENDER SHARES PURSUANT TO THIS OFFER.
The ESOP Committee of the Company's Board of Directors recently
commissioned a valuation of the shares of Company Common Stock owned by the ESOP
by a leading independent appraisal firm specializing in the valuation of
community bank stock, Alex Sheshunoff and Company ("Sheshunoff"). The Company
placed no restrictions or limitations upon Sheshunoff during the performance of
its appraisal function. In its valuation dated March 21, 1996 (the "Valuation"),
Sheshunoff determined that the market approach was the most relevant and useful
indicator of fair market value of the shares of Common Stock owned by the ESOP.
Utilizing this methodology, Sheshunoff determined, after taking into account the
Company's profitability, size, market share, recently instituted dividend policy
and other factors, that the shares of Company Common Stock owned by the ESOP had
a fair market value of $14.50 per share as of December 31, 1995. This
represented a multiple of approximately 1.5 times the Company's book value (on a
fully diluted basis) of $9.62 per share at December 31, 1995. As of June 30,
1996, the Company's unaudited book value (fully diluted) per share on a fully
diluted basis was $10.06.
In the Valuation, Sheshunoff considered and rejected other
methodologies for determining fair market value, including the net present value
and the net asset value approaches, which methodologies, if utilized, would have
resulted in higher or lower valuations of the Common Stock owned by the ESOP.
Interested shareholders are advised to carefully review the Valuation, which is
available without charge upon request to the Company (see below).
For the quarter and the six months ended June 30, 1996, the Company's
total earnings (unaudited) were $252,000 and $596,000, respectively. The
Company's unaudited fully diluted earnings per share for the quarter and the six
months ended June 30, 1996, were $.286 and $.675, respectively. On or about July
26, 1996, the Company expects to issue a press release setting forth unaudited
earnings information for the quarter and six months ended June 30, 1996. In
addition, on or about August 14, 1996, the Company expects to file with the
Securities and Exchange Commission (the "Commission") a Quarterly Report on Form
10-Q with respect to the quarter ended June 30, 1996 (the "Form 10-Q"). A copy
of the Company's press release and the Form 10-Q will be mailed to shareholders
of the Company without charge upon request therefor from Mr. Brian Kelly, Napa
National Bancorp, 901 Main Street, Napa, California 94559 (telephone (707)
257-2440). A copy of the Form 10-Q may also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.
The Valuation was rendered for the purpose of determining the fair
market value of the shares of Company Common Stock owned by the ESOP. Sheshunoff
has not rendered any opinion with respect to the value of other shares of the
Company's Common Stock including shares owned by other shareholders of the
Company.
A COPY OF THE VALUATION WILL BE MAILED TO SHAREHOLDERS OF THE COMPANY
WITHOUT CHARGE UPON REQUEST THEREFOR FROM MR. BRIAN KELLY, NAPA NATIONAL
BANCORP, 901 MAIN STREET, NAPA, CALIFORNIA 94559 (TELEPHONE (707) 257-2440). A
COPY OF THE VALUATION HAS ALSO BEEN FILED WITH THE COMMISSION AS AN EXHIBIT TO
THE ESOP'S SCHEDULE 14D-1 TENDER OFFER
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<PAGE> 3
STATEMENT AND MAY BE OBTAINED FROM THE PUBLIC REFERENCE SECTION OF THE
COMMISSION AT 450 FIFTH STREET, N.W., WASHINGTON, D.C. 20549, AT PRESCRIBED
RATES. ALL REFERENCES HEREIN TO THE VALUATION ARE QUALIFIED IN THEIR ENTIRETY BY
REFERENCE TO THE COMPLETE VALUATION. SHAREHOLDERS ARE URGED TO READ CAREFULLY
THIS OFFER TO PURCHASE AND THE VALUATION IN THEIR ENTIRETY.
The ESOP presently has sufficient funds available to purchase up to
20,000 shares of the Company's Common Stock. Based, in part, on the Valuation,
the trustees of the ESOP have determined to make an offer to purchase such
shares at $14.50 per share, which represents a multiple of about 1.44 times the
book value, as of June 30, 1996, of $10.06 per share compared to the
Valuation's multiple of approximately 1.5 times book value for the shares owned
by the ESOP as of December 31, 1995. As of May 10, 1996, there were 754,500
shares of the Company's Common Stock outstanding. Of these shares, 525,989
shares, or 69.7%, were held of record by Mr. W. Clarke Swanson, Jr., the
Company's Chairman of the Board and Chief Executive Officer. As of May 10, 1996,
27,676 shares of the Company's Common Stock, or 3.67%, were held of record by
the ESOP, of which Messrs. C. Richard Lemon and George M. Schofield are
co-trustees. Messrs. Lemon and Schofield disclaim beneficial ownership of the
shares of Common Stock held by the ESOP.
The Offer is being made to all shareholders of the Company, which
shareholders include certain of the officers, directors and affiliates of the
Company. The ESOP's purchase of shares tendered by the Company's officers,
directors and affiliates, if any, will be made on terms identical to those made
with respect to shares tendered by other shareholders of the Company.
EACH SHAREHOLDER OF THE COMPANY IS ADVISED TO CONSULT WITH HIS OR HER
OWN LEGAL, TAX AND BUSINESS ADVISORS IN CONNECTION WITH THE OFFER.
The terms of the Offer, along with certain information relating to the
Company and its common stock, are set forth below.
1. Purpose of the Offer. The purpose of this Offer is for the ESOP to
increase its shareholdings by acquiring 20,000 outstanding shares of the
Company's Common Stock.
2. Expiration of the Offer. The Offer shall expire at 4:00 p.m.,
California time, on August 22, 1996 (the "Initial Expiration Time"), unless
extended by the ESOP. The ESOP may elect to extend the Offer at any time and
from time to time by written notice to the Company's shareholders.
3. Method of Tendering Shares. Shares that are properly tendered to the
Company, and not withdrawn as permitted under Section 4 below, will be purchased
subject to the terms and conditions set forth herein.
Any shareholder wishing to accept the Offer should tender his or her
shares by completing and signing the enclosed Letter of Transmittal (the "Letter
of Transmittal"), having his or her signature guaranteed by an eligible
guarantor institution pursuant to Securities and Exchange Commission Rule
17Ad-15 (if necessary), and forwarding the Letter of Transmittal with his or her
stock certificates, properly endorsed, and any other documents required by the
Letter of Transmittal, to Mr. C. Richard Lemon, co-trustee of the ESOP, in his
capacity as depositary for shares tendered pursuant to the Offer (the
"Depositary"). Shareholders having shares registered in the name of a broker,
dealer, bank, trust company or nominee should contact their broker, dealer,
bank, trust company or nominee if they desire to tender their shares. Questions
and requests for
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<PAGE> 4
assistance or for additional copies of this Offer to Purchase should be directed
to the ESOP, Mr. C. Richard Lemon, 809 Coombs Street, Napa, California 94559,
(707) 252-7122. Except as otherwise stated in this Section, certificates for
tendered shares, to be properly tendered pursuant to the Offer, must be received
by the Depositary, together with a properly completed and executed Letter of
Transmittal and any other documents required by the Letter of Transmittal, at or
prior to the Initial Expiration Time, or, if the Offer is extended, at or prior
to the expiration of such extension period.
If certificates are registered in the name of a person other than the
signer of the Letter of Transmittal, the certificates must be endorsed or
accompanied by a stock power signed by the registered owner, with the signature
on the endorsement or stock power guaranteed by a commercial bank or trust
company in the United States or by a firm which is a member of any registered
national securities exchange or the National Association of Securities Dealers,
Inc. (each, an "Eligible Institution"). THE METHOD OF DELIVERY OF CERTIFICATES
FOR SHARES IS AT THE ELECTION AND RISK OF THE OWNER, BUT IT IS RECOMMENDED THAT
SUCH DELIVERY BE IN PERSON OR BY CERTIFIED OR REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED. MERE DEPOSIT IN THE MAIL DOES NOT
CONSTITUTE A TIMELY TENDER.
In all cases, payment for shares tendered and purchased pursuant to the
Offer will be made only after deposit with the Depositary of the certificates
therefor, a properly completed and duly executed Letter of Transmittal and any
other required documents.
The acceptance of the Offer as set forth above will constitute an
agreement between the tendering shareholder and the ESOP in accordance with the
terms and subject to the conditions of the Letter of Transmittal.
By executing the Letter of Transmittal as set forth therein, a
shareholder will be irrevocably appointing designees of the ESOP as proxies, to
the extent of said shareholder's rights, with respect to the shares tendered by
such shareholder and purchased by the ESOP. Such appointment is effective only
when the ESOP, by delivering the purchase price to Mr. Lemon in his capacity as
Depositary and as agent for the tendering shareholder, pays for the shares
tendered by such shareholder and purchased by the ESOP. Upon such payment, all
prior or other proxies given by such shareholder will be revoked. Such designees
will then be empowered to exercise all voting and other rights of such
shareholder as they in their discretion may deem proper in respect of any
meeting of shareholders (whether annual or special and whether or not an
adjourned meeting) of the Company or otherwise.
All questions as to the form of all documents and the validity
(including time of receipt) and acceptance of all tenders shall be determined by
the ESOP, which determination shall be final and binding for all purposes. The
ESOP reserves the absolute right to reject any and all tenders not in proper
form or the payment for which would, in the opinion of the ESOP's counsel, be
unlawful, or waive any of the conditions of the Offer or any defects or
irregularities in the tender of any shares. The ESOP's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and
instructions thereto) will be final and binding. The ESOP shall not be under any
duty to give notification of any defects or irregularities in tenders nor shall
it incur any liability for failure to give such notification.
4. Withdrawal of Tendered Shares. Shares deposited with the Depositary
pursuant to the Offer may be withdrawn by or on behalf of the depositing
shareholder at any time prior to
-4-
<PAGE> 5
August 22, 1996, or, if the Offer is extended past such Initial Expiration Date,
until the expiration of such extension period. Tendered shares which are not
purchased by the 40th business day after the commencement of this tender offer
may be withdrawn thereafter. To be effective, written or facsimile notice of
withdrawal must be timely received by the ESOP at the following address: Mr. C.
Richard Lemon, Co-Trustee, 809 Coombs Street, Napa, California 94559. Such
notice must specify the name of the tendering shareholder, the number of shares
to be withdrawn, the number of the certificate evidencing the shares to be
withdrawn, and the name in which the certificate is registered, if different
from that of the tendering shareholder. All questions as to the validity
(including timely receipt) of such notices will be determined by the ESOP, whose
determination shall be final and binding. Any shares effectively withdrawn will
be deemed not to have been duly tendered for purposes of the Offer. EXCEPT AS
STATED IN THIS SECTION 4, TENDERS ARE IRREVOCABLE.
5. Appraisal of the Company's Shares. As indicated above, the
independent appraisal firm of Alex Sheshunoff and Company ("Sheshunoff") was
retained by the ESOP Committee of the Board of Directors of the Company for the
purpose of appraising the fair market value of the shares of Company Common
Stock owned by the ESOP as of December 31, 1995. Sheshunoff was paid a one-time
fee of $2,000 for performing its appraisal services, and the Company placed no
restrictions or limitations upon Sheshunoff during the performance of its
appraisal function. Taking into account the Company's profitability, size,
market share, recently instituted dividend policy and other factors, Sheshunoff
determined that the shares of Company Common Stock owned by the ESOP had a fair
market value of $14.50 per share as of December 31, 1995. Based, in part, on the
Valuation, the trustees of the ESOP have determined to make an offer to
purchase 20,000 shares of the Company's Common Stock at $14.50 per share.
A COPY OF THE VALUATION WILL BE MAILED TO SHAREHOLDERS OF THE COMPANY
WITHOUT CHARGE UPON REQUEST THEREFOR FROM MR. BRIAN KELLY, NAPA NATIONAL
BANCORP, 901 MAIN STREET, NAPA, CALIFORNIA 94559 (TELEPHONE (707) 257-2440). A
COPY OF THE VALUATION HAS ALSO BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE "COMMISSION") AS AN EXHIBIT TO THE ESOP'S SCHEDULE 14D-1 TENDER
OFFER STATEMENT AND MAY BE OBTAINED FROM THE PUBLIC REFERENCE SECTION OF THE
COMMISSION AT 450 FIFTH STREET, N.W., WASHINGTON, D.C. 20549, AT PRESCRIBED
RATES. ALL REFERENCES HEREIN TO THE VALUATION ARE QUALIFIED IN THEIR ENTIRETY BY
REFERENCE TO THE COMPLETE VALUATION. SHAREHOLDERS ARE URGED TO READ CAREFULLY
THIS OFFER TO PURCHASE AND THE VALUATION IN THEIR ENTIRETY.
6. Payment of Purchase Price. Payment for the shares tendered pursuant
to this Offer prior to August 22, 1996 (the "Initial Expiration Time") and not
withdrawn pursuant to Section 4 hereof will be made as promptly as practicable
after all Conditions of Purchase have been met or waived (see Section 9). If the
Offer is extended, payment for shares tendered prior to the Initial Expiration
Time and during the extension period and not previously purchased will be made
as promptly as practicable after the expiration of the extension period and
after all Conditions of Purchase have been met or waived. The ESOP reserves the
right, in its sole discretion, to waive any Conditions of Purchase unless
prohibited by law. Payment for shares purchased will be made only after share
certificates in proper form have been received by the Depositary.
SALES BY TENDERING SHAREHOLDERS PURSUANT TO THE OFFER WILL BE TAXABLE
TRANSACTIONS FOR FEDERAL AND STATE INCOME TAX PURPOSES AND SHAREHOLDERS ARE
URGED TO CONSULT THEIR TAX ADVISERS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES
THEREOF.
-5-
<PAGE> 6
7. Source and Amount of Funds. It is anticipated that all funds
required in connection with the Offer will be obtained from the ESOP's currently
available funds, which consist of voluntary contributions from employees of the
Company and matching contributions made by the Company. The ESOP does not intend
to obtain any funds from outside sources for use in connection with the Offer.
8. Pro Rata Allocation. The ESOP intends to purchase no more than
20,000 shares pursuant to the Offer. All shares tendered pursuant to the Offer
will be accepted until August 22, 1996, at 4:00 p.m., California time, or, if
the Offer is extended past such time, until the expiration of such extension
period (such period of time, the "Acceptance Period"). In the event that the
total number of shares tendered to the ESOP pursuant to the Offer exceed 20,000,
an allocation will be made such that the number of shares taken up and paid for
by the ESOP will be determined in a manner as nearly as may be pro rata,
disregarding fractions, according to the number of shares tendered by each
shareholder during the Acceptance Period. All shareholders will have the right
to withdraw tendered shares pursuant to the terms of Section 4 hereof,
regardless of whether more than 20,000 shares or some lesser number are tendered
pursuant to the Offer.
9. Conditions of Purchase. The ESOP may withdraw or amend the Offer
prior to payment for shares validly tendered if any of the events described in
(a), (b), (c) or (d) below has occurred (which events are herein sometimes
referred to collectively as "Conditions of Purchase"):
(a) Litigation. There shall be instituted or threatened any action or
proceeding before any court, administrative agency or governmental authority the
results of which may have a material adverse effect on the business, operations,
prospects or financial condition of the ESOP or the Company or which seeks to
enjoin, set aside or question the consummation, in whole or in part, of the
Offer or the transactions contemplated herein.
(b) Regulatory Actions. Any action shall have been taken or any
statute, rule, regulation or order proposed, enacted or entered by any state,
federal or foreign government, agency or court which renders the ESOP unable to
purchase or pay for some or all of the shares or makes such purchase or payment
illegal or, in the sole judgment of the management of the ESOP, prohibits,
restricts or delays consummation of the Offer.
(c) Deregistration. The number of shareholders of the Company's Common
Stock tendering their shares for payment pursuant to the Offer will cause the
Company's Common Stock to be eligible for termination of registration pursuant
to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended, as a
result of the Company's Common Stock being held of record by fewer than 300
persons. Currently, the Company has approximately 390 holders of record. It is
not expected, therefore, that this event will occur.
(d) Miscellaneous. There shall have been (i) the declaration of a
banking moratorium by federal or California State authorities; (ii) the
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States; or (iii) a natural
disaster or act of God which impairs the value of the assets of the ESOP, the
Company or its subsidiaries or the collateral supporting such assets.
-6-
<PAGE> 7
Any determination made by the ESOP concerning the events described in
this section shall be final and binding upon all parties. The foregoing
conditions are for the sole benefit of the ESOP and may be waived by the ESOP in
whole or in part, unless prohibited by law.
10. Extension of Tender Period; Termination; Amendments. The ESOP
reserves the right, at any time and from time to time, to extend the period
during which the Offer is open. The ESOP reserves the right to terminate the
Offer and not purchase or pay for any shares not theretofore purchased or paid
for upon the occurrence of a failure of any of the conditions specified in
Section 9 hereof. Any such extension or termination will be followed as promptly
as practicable by public announcement thereof. The ESOP reserves the right to
amend the Offer by public announcement of any amendment.
11. Certain Federal Income Tax Consequences. Sales of shares by
shareholders pursuant to the Offer will be taxable transactions for federal
income tax purposes and may also be taxable transactions under applicable state,
local, foreign and other tax laws. The federal income tax consequences to a
shareholder may vary depending upon the shareholder's particular facts and
circumstances.
The maximum federal income tax rate on ordinary income for individuals,
estates and trusts is currently 39.6% (although income at certain specified
levels may be subject to tax at a higher effective rate due to the phase-out of
the personal exemptions and the benefit of certain itemized deductions for high
income taxpayers); long-term capital gains, however, are currently subject to a
tax at a maximum rate of 28% for these taxpayers. For corporations, the maximum
federal income tax rate on income is currently 35% (although income at certain
specified levels may be subject to tax at a higher effective rate due to the
phase-out of the 15%, 25% and 34% brackets). There is presently no special
long-term capital gains rate applicable to corporate taxpayers. Any gain
recognized by shareholders who hold their shares as capital assets for more than
one year would be taxed at the rates applicable to long-term capital gains.
Shareholders are also urged to consult with their own tax advisors
regarding any possible impact on their obligation to make estimated tax payments
as a result of the recognition of any capital gain (or the receipt of any
ordinary income) caused by the sale of any shares to the ESOP pursuant to the
Offer.
To prevent federal income tax backup withholding equal to 31% of the
gross payments made pursuant to the Offer, each shareholder who does not
otherwise establish an exemption from such withholding must notify the
Depositary of such shareholder's correct taxpayer identification number (Social
Security number or employer identification number) or certify that such
shareholder is awaiting a shareholder identification number and provide certain
other information by completing a Form W-9. Foreign shareholders must submit a
completed Form W-8 and provide further certification in order to avoid the
applicable backup withholding.
The foregoing discussion may not apply to shares acquired in connection
with the exercise of stock options or pursuant to other compensation
arrangements with the Company.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION
ONLY. THE TAX CONSEQUENCES OF A SALE PURSUANT TO THE OFFER MAY VARY DEPENDING
UPON, AMONG OTHER THINGS, THE PARTICULAR CIRCUMSTANCES OF THE TENDERING
SHAREHOLDER. NO INFORMATION IS
-7-
<PAGE> 8
PROVIDED HEREIN AS TO THE STATE, LOCAL OR FOREIGN TAX CONSEQUENCES OF THE
TRANSACTION CONTEMPLATED BY THE OFFER. SHAREHOLDERS ARE URGED TO CONSULT THEIR
OWN TAX ADVISORS TO DETERMINE THE PARTICULAR FEDERAL, STATE AND LOCAL TAX
CONSEQUENCES OF SALES MADE BY THEM PURSUANT TO THE OFFER.
12. Certain Legal Matters. The ESOP is not aware of any approval or
other action by any federal, state or foreign governmental or administrative
agency which would be required for the acquisition of shares by the ESOP as
contemplated herein. Should any such approval or other action be required, it is
presently contemplated that such approval or action would be sought. However,
there is no present intent to delay the purchase of shares pursuant to the Offer
pending the outcome of any such matter. There is, of course, no assurance that
any such approval or other action, if needed, could be obtained without
substantial conditions.
13. Miscellaneous. This Offer is not being made to, nor will tenders be
accepted from or on behalf of holders of, shares in any jurisdiction in which
the making or acceptance thereof would not be in compliance with the laws of
such jurisdiction. In any jurisdiction where securities or blue sky laws require
the Offer to be made by a licensed broker or dealer, the Offer shall be deemed
to be made on behalf of the ESOP by one or more registered brokers or dealers
which are licensed under the laws of such jurisdiction.
EACH SHAREHOLDER OF THE COMPANY IS ADVISED TO CONSULT WITH HIS OR HER
OWN LEGAL, TAX AND BUSINESS ADVISORS IN CONNECTION WITH THE OFFER.
No person has been authorized to give any information or make any
representation other than as contained in the Offer and the Letter of
Transmittal and, if given or made, such information or representation must not
be relied upon as having been authorized.
Very truly yours,
Napa National Bancorp Stock
Participation Plan
By /s/ C. Richard Lemon
--------------------------------------
C. Richard Lemon
Co-Trustee
-8-
<PAGE> 9
LETTER OF TRANSMITTAL
THIS FORM SHOULD BE COMPLETED, SIGNED AND SENT TO THE DEPOSITARY NAMED
BELOW, TOGETHER WITH YOUR CERTIFICATE(S) REPRESENTING SHARES OF COMMON STOCK OF
NAPA NATIONAL BANCORP. PLEASE READ CAREFULLY ALL INSTRUCTIONS.
TO: C. RICHARD LEMON, CO-TRUSTEE OF THE NAPA NATIONAL BANCORP STOCK
PARTICIPATION PLAN (THE "PLAN") IN HIS CAPACITY AS DEPOSITARY FOR THE PLAN'S
TENDER OFFER COMMENCED JULY 25, 1996.
By Overnight or Regular Mail or By Hand:
Napa National Bancorp Stock Participation Plan
Mr. C. Richard Lemon, Co-Trustee
809 Coombs Street
Napa, California 94559
FOR ASSISTANCE CALL 707-252-7122
Ladies and Gentlemen:
In accordance with the terms of that certain Offer to Purchase 20,000
Shares of Napa National Bancorp Common Stock at a Net Selling Price of $14.50
Per Share dated July 25, 1996 (the "Offer to Purchase Shares") first distributed
to the shareholders of Napa National Bancorp (the "Company") by the Napa
National Bancorp Stock Participation Plan (the "ESOP"), relating to the ESOP's
tender offer to purchase up to 20,000 shares of common stock, without par value,
of the Company ("Common Stock") at a net selling price of $14.50 per share, the
undersigned hereby tenders to you, as depositary for shares tendered pursuant to
the Offer to Purchase Shares, the certificate(s) described below representing
shares of Common Stock pursuant to the terms of the Offer to Purchase Shares.
Submission of the certificate(s) described below is subject to the
terms, conditions and limitations set forth in the Offer to Purchase Shares and
in the Instructions included in this Letter of Transmittal. As Depositary,
please deliver in exchange for such certificate(s) payment in the net amount of
$14.50 per share accepted for purchase by the ESOP pursuant to the Offer to
Purchase Shares. In the event that the ESOP does not accept for purchase all of
the shares tendered herewith, you as Depositary are instructed to return the
same to the undersigned.
- --------------------------------------------------------------------------------
CERTIFICATE(S) SURRENDERED
- --------------------------------------------------------------------------------
Name(s) and Address of Registered Holder(s)
(Please fill in exactly as Name(s) Certificates Enclosed
appear(s) on Certificate(s) (Attach signed list if necessary)
- --------------------------------------------------------------------------------
Number of
Shares of Common
Certificate Stock Represented
Number(s) by Certificate
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
Total Shares
- --------------------------------------------------------------------------------
-1-
<PAGE> 10
- --------------------------------------------------------------------------------
BOX A:
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 2 and 3)
MAIL PAYMENT TO:
Fill in this space ONLY if the payment to be made for the shares of
Common Stock described above that are accepted for purchase by the ESOP is to be
mailed to an address other than that indicated in the box headed "Certificate(s)
Surrendered."
Name(s)
-------------------------------------------------------------------------
(Type or Print)
-------------------------------------------------------------------------
(Type or Print)
Address
-------------------------------------------------------------------------
Number and Street
- --------------------------------------------------------------------------------
City State Zip Code
- --------------------------------------------------------------------------------
The undersigned represents and warrants that the undersigned has full
power and authority to transfer the shares of Common Stock tendered herewith and
that the transferee will acquire good and unencumbered title thereto, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim when the Common Stock are accepted for payment by the ESOP.
The undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or the ESOP to be necessary and desirable to complete
the transfer of the shares of Common Stock tendered herewith.
Dated: , 1996
---------------------
PLEASE SIGN HERE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) of registered holder(s) must be EXACTLY as name(s)
appear(s) on the box headed "Certificate(s) Surrendered." If signed by an agent,
see Instruction 2 below.
THE DEPOSITARY HAS BEEN INSTRUCTED NOT TO MAKE ANY PAYMENT FOR YOUR SHARES UNTIL
THIS LETTER OF TRANSMITTAL HAS BEEN EXECUTED AND DELIVERED TO THE DEPOSITARY.
-2-
<PAGE> 11
- --------------------------------------------------------------------------------
BOX B: SIGNATURE GUARANTEE
(See Instruction 2)
Fill in this space ONLY if required by Instruction 2.
The undersigned hereby guarantees the signature(s) which appear(s) on
this Letter of Transmittal.
Dated: , 1996
---------------------
PLEASE SIGN HERE
- --------------------------------------------------------------------------------
(Name of Firm Issuing Guarantee)
- --------------------------------------------------------------------------------
(Fix Medallion Stamp Above)
- --------------------------------------------------------------------------------
INSTRUCTIONS
1. Completion of Delivery of Letter of Transmittal. The Letter of
Transmittal must be properly completed and signed by the registered holder(s) of
the shares of Common Stock being tendered herewith, and mailed or delivered with
the certificate(s) for such shares to the Depositary at one of the addresses set
forth on the first page hereof. If additional space is needed for listing
certificates, attach a separate signed sheet.
THE METHOD OF DELIVERY OF THIS DOCUMENT AND ANY ENCLOSURES IS AT THE ELECTION
AND RISK OF THE OWNER. IF SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED BECAUSE THE RISK OF LOSS IN TRANSIT
IS YOURS.
2. Signing Letter of Transmittal. If this Letter of Transmittal is
signed by the registered holder(s) of the shares of Common Stock tendered
herewith, the shareholder's name on the Letter of Transmittal must be signed in
EXACTLY the same manner as the name appears on the certificate(s) surrendered
herewith. If the shares of Common Stock are registered in the name of a trustee,
executor, administrator, guardian or other person acting in a fiduciary or
representative capacity, such person must indicate his or her capacity when
signing. If certificates are registered in different forms of a name (e.g.,
"John Doe" and "J. Doe"), the shareholder should sign as many Letters of
Transmittal as there are different registrations. If a certificate is registered
in the name of two or more holders, each such holder must sign. If special
delivery instructions have been indicated in Box A hereof, the signature on this
Letter of Transmittal must be guaranteed by an eligible guarantor institution
pursuant to Securities and Exchange Commission Rule 17Ad-15. If the Letter of
Transmittal is signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, and such person is not the registered shareholder,
he or she must indicate the capacity when signing and must submit proper
evidence of his or her authority to act.
3. Special Instructions for Payment. Unless instructions to the
contrary are given in Box A, any payment for tendered shares of Common Stock
accepted by the ESOP for purchase will be mailed to the address shown in the box
headed "Certificate(s) Surrendered."
4. Lost Certificate. If your certificate representing shares of Common
Stock is lost, stolen or destroyed, complete and execute this Letter of
Transmittal and forward it to the Depositary with a letter stating that the
certificate representing such shares is lost, stolen or destroyed. Upon
receiving those materials, the Depositary will send you documents to be
completed by you regarding the lost certificate. After you have completed those
documents to the Depositary's satisfaction and returned them to the Depositary,
payment will be made in accordance with Instruction 3.
-3-
<PAGE> 12
5. Miscellaneous. Neither the ESOP nor the Depositary is under any duty
to give notification of defects in any Letter of Transmittal, and neither the
ESOP nor the Depositary shall incur any liability for failure to give such
notification. Each of the ESOP and the Depositary has the absolute right to
reject any and all Letters of Transmittal not in proper form or to waive any
irregularities in any Letter of Transmittal.
6. Additional Copies. Additional copies of the Letter of Transmittal
may be obtained from the Depositary at his address set forth on the first page
hereof.
-4-
<PAGE> 1
Exhibit 20.4
[LETTERHEAD OF ALEX SHESHUNOFF & CO. INVESTMENT BANKING]
March 21, 1996
Trustees of the Napa National Stock Participant Plan of
Napa National Bancorp
901 Main Street
Napa, California 94559
Dear Trustees:
Pursuant to your request, we are presenting to you our fair market value of the
Common Stock of Napa National Bancorp (the "Corporation") owned by the Napa
National Stock Participant Plan ("ESOP"). This valuation of the shares owned by
the ESOP ("ESOP Shares") complies with the annual appraisal requirements of the
United States Department of Labor ("DOL") as specified in Regulation
1.107A-13(c)(5). The ESOP owned, as of the valuation date of December 31, 1995,
25,000 shares of the Corporation's common stock, 3.31% of the total common
shares outstanding of the Corporation.
Alex Sheshunoff & Co. Investment Banking renders valuation opinions of banks,
bank holding companies, thrifts and other financial institutions nationwide. As
part of our valuation business, we render opinions for tax purposes, estate
planning, employee stock ownership plans, private placements, buy/sell
agreements, initial public offerings, secondary offerings, dissenters' rights
proceedings, mergers and acquisitions including fairness opinions, and other
purposes. We are experts in the valuation of common stock of entities engaged in
the lines of business of the Corporation. The staff of Alex Sheshunoff & Co.
Investment Banking are qualified appraisers and exhibit such through our
extensive experience performing over 1,500 appraisals of banks and bank holding
companies over the past 5 years.
In preparing the valuation report, we reviewed information regarding the
Corporation's financial performance and condition for the three years ending
December 31, 1995. We received from the Corporation projected income, asset
growth, book value, and dividends for the five fiscal years ending December 31,
2000. We did not verify the accuracy of such information and assumed it to be
accurate in all material respects. We did not independently value the assets and
liabilities of the Corporation and have not been furnished with appraisals. We
also reviewed other publicly available information regarding the market for bank
and bank Corporation common stock and economic conditions in the Corporation's
market area. We believe such publicly available information to be accurate;
however, we cannot guarantee the accuracy of such information.
<PAGE> 2
Trustees of the Napa National
Stock Participant Plan
March 21, 1996
Page 2
We valued the ESOP Shares at their "fair market value" as of the valuation date.
Fair market value is defined as the price at which the ESOP Shares would change
hands between a willing buyer and a willing seller when the former is not under
any compulsion to buy and the latter is not under any compulsion to sell. Both
parties are assumed to be able and willing to trade and are well informed about
all relevant factors impacting the value of the ESOP Shares and their market.
We considered the Corporation as a going-concern under its current business
strategy and did not value the ESOP Shares based upon a liquidation or other
restructuring of the Corporation. We believe that the most useful valuation
approach under the fair market valuation method is to derive the value of ESOP
Shares based upon the price of comparable transactions of institutions in the
same lines of business as the Corporation. However, because the market for the
Corporation's common stock is relatively illiquid, we have represented the value
of such shares utilizing the present valuation method as well. We also
considered the appropriate adjustments to the ESOP Shares as a result of the
lack of marketability of such shares and the terms of the ESOP.
In arriving at our opinion of the fair market value of the ESOP Shares, we
considered the financial performance and condition of the Corporation and its
subsidiary including future earnings and dividend paying capacity, the economic
outlook of the trade area and the banking industry in general, previous sales of
the Corporation's stock, the size of the ESOP Shares being valued, and the
market price of selected comparable banking institutions.
It is our opinion that as of December 31, 1995, the fair market value of the
ESOP Shares was $14.50 per share. Our valuation of the ESOP Shares shall not be
construed and is not intended to be a valuation or a recommendation with respect
to the purchase or sale of the common stock of the Corporation. Our valuation is
solely our opinion of the fair market value of the ESOP Shares and may be
materially different at any date other than the valuation date indicated herein.
The application of the valuation methodologies utilized in arriving at our
opinion is discussed in the accompanying valuation report, which should be read
in its entirety to fully understand our conclusion.
Our valuation of the ESOP Shares is provided for the use of the ESOP
Trustees pursuant to the annual valuation requirement of the DOL. Without the
consent of Alex Sheshunoff & Co. Investment Banking, it may not be used for any
other purpose than that stated above and may not be quoted in whole or in part,
or otherwise referred to in any report or document, or furnished or otherwise
communicated to any other person without the consent of Alex Sheshunoff & Co.
Investment Banking. However, we do not object to one or more participants in the
ESOP being afforded the opportunity to review our valuation letter and report
upon their specific request to do so, provided they are supplied with this
letter and the entire report herein. We do not
<PAGE> 3
Trustees of the Napa National
Stock Participant Plan
March 21, 1996
Page 3
object to the disclosure of this letter and report herein to any advisor, lender
or consultant or other individual or entity for use in connection with the
annual valuation requirement of the DOL. This letter and report herein shall not
be provided to the Internal Revenue Service unless the IRS specifically requests
the information. Please advise us in writing if such a request is made.
Respectfully Submitted,
/s/ Gerard A. Feil
------------------
Gerard A. Feil
Senior Associate
ALEX SHESHUNOFF & CO.
INVESTMENT BANKING
<PAGE> 4
[LOGO OF ALEX SHESHUNOFF & CO.
INVESTMENT BANKING]
<PAGE> 5
FAIR MARKET VALUE
OF 25,000 SHARES (3.31%)
OF THE OUTSTANDING COMMON STOCK OF
NAPA NATIONAL BANCORP, NAPA, CALIFORNIA
OWNED BY THE
STOCK PARTICIPATION PLAN
AS OF DECEMBER 31, 1995
FAIR MARKET VALUE DISCUSSION
EXHIBITS
I. GUIDELINE COMPANIES
II. FINANCIAL PROJECTIONS
III. FAIR MARKET VALUE SUMMARY
IV. CORPORATION FINANCIAL DATA
This material represents our opinion, based on interpretation and analysis of
information generally available to the public or specifically released by the
subject banks or on their behalf. We believe that our sources of information are
reliable, however, we do not assume any liability for the accuracy or
comprehensiveness of the information. Certain of the data presented in this
report are the result of calculations performed by us on figures obtained from
other sources. While we believe the calculations are correct, we make no
representation as to their accuracy. The assumptions used to make projections of
future performance are not certain to become reality. If future events do not
occur as projected, the actual future performance level may vary substantially
from the projections contained within. This material is not to be reproduced in
whole or in part without our specific written permission.
Copyright 1996/ Alex Sheshunoff & Co. Investment Banking
P.O. Box 2017
Austin, Texas 78768-2017
(512) 479-8200
<PAGE> 6
FAIR MARKET VALUE DISCUSSION
<PAGE> 7
FAIR MARKET VALUE
OF 25,000 SHARES OF NAPA NATIONAL BANCORP, NAPA, CALIFORNIA
OWNED BY THE STOCK PARTICIPATION PLAN
AS OF DECEMBER 31, 1995
DESCRIPTION OF ASSIGNMENT
This appraisal estimates the fair market value of the minority interest in the
voting stock of Napa National Bancorp, Napa, California, (the "Corporation")
owned by the Napa National Stock Participation Plan ("ESOP"), as of December 31,
1995. Alex Sheshunoff & Co. Investment Banking was retained by the trustees of
the ESOP to prepare the annual valuation as required by the United States
Department of Labor pursuant to the Tax Reform Act of 1986. As of the valuation
date, the ESOP owned 25,000 shares of the Corporation's common stock, or 3.31%
of the primary shares outstanding.
Our valuation was prepared based upon the financial statements and other
information provided to us by the Corporation, which we did not independently
verify. We also utilized other publicly available information, which we believe
to be accurate; however, we cannot guarantee the accuracy of such information.
In preparing our valuation, we conducted an analysis; of: (1) the Corporation's
operating performance and financial condition for the three years ended December
31, 1995; (2) the projected income, dividends, asset growth and book value of
the Corporation for the five years ending December 31, 2000; (3) the market for
the Corporation's common stock; (4) the competitive environment in which the
Corporation operates; and (5) the general economic conditions impacting the
Corporation's operations and business prospects. Our valuation is limited by the
conditions stated herein and presented in our valuation letter to the Trustees.
Our valuation letter and this report should be read in their entirety to fully
understand our conclusion.
OVERVIEW OF THE CORPORATION
Napa National Bancorp is a one bank holding company whose only subsidiary is
Napa National Bank, Napa, California, (the "Bank"). The Corporation owns 100% of
the Bank's outstanding common stock. The principal assets of the Corporation
consist of its investment in the Bank and cash and securities for investment
purposes. Other than the operations of the Bank, the Corporation's activities
are not material to its performance.
The Corporation was profitable in each of the three years ended December 31,
1995. Net income rose in fiscal year 1995 to $1.1 million, for a return on
average equity ("ROE") of 15.96%, from $777 thousand and a ROE of 13.04% and
$500 thousand and a ROE of 9.40% during 1994
1.
<PAGE> 8
and 1993, respectively. 1995 earnings were influenced by a non-recurring moving
expense in conjunction with the relocation of the main office. Management
believes that in 1996 net income will increase to approximately $1.38 million, a
return on average assets of 1.22% and return on average equity of 17.36%. The
only other community bank in the area recently was purchased by a major holding
company. As such, management believes they will gain customers and have
significant growth potential as the only independent community bank in Napa.
Management also announced that the Corporation would begin paying dividends in
1996. The Corporation's historical and projected operating performance and
financial condition are displayed in Exhibits IV and II, respectively.
The Bank, headquartered in Napa, California, operates a traditional local
community bank with primary loan products consisting of real estate loans,
commercial loans and consumer loans. The Bank's loan portfolio grew by 18.3%
during 1995, with the majority of growth occurring in real estate loans and
consumer loans. The Bank gathers its deposits within its local market area. The
Bank's deposits were principally core deposits and deposit accounts over
$100,000 were 9.7% of total deposits. As of December 31, 1995, the Bank's total
assets were $104.8 million and deposits were $97.0 million. The Bank's balance
sheet was strong with equity at December 31, 1995 of $7.2 million. The Bank's
tier one leverage ratio was 7.16% and the estimated risk-based capital ratio
approached 10.47%. On a consolidated basis, the Corporation's total assets were
$104.9 million and equity was $7.4 million.
The Bank reported good asset quality with past due loans to total loans of 1.93%
and allowance for loan and lease losses of 1.77% of total loans at December 31,
1995.
The Bank's three offices are located in Napa County, California, and held 5.39%
of county deposits as of June 30, 1994. Economic growth in the Bank's market
area, like much of the nation, slowed at the end of 1995. Overall, Napa County
is projected to experience an increase in population of 9.2% between 1994 and
1997 to 125,977 and per capita income is anticipated to increase by 28.2% to
$27,846.
MARKET FOR BANK HOLDING COMPANY STOCK
The market for bank stock remained strong during 1995. As measured by the SNL
index of all publicly traded bank and bank holding company common stock, prices
rose 51% during 1995. The index of small institutions (under $500 million in
total assets) rose a more modest 35%. In comparison, the S&P 500 index rose 34%
during 1995. Low inflation, the prospect of future rate cuts by the Federal
Reserve as retail data for the Christmas season was weak, and the anticipation
of continued industry consolidation were important factors in the equity market
for bank securities at year-end. Inflation trends and earnings reports will
continue to be important factors in determining investor decisions for bank
stocks during 1996.
2.
<PAGE> 9
The fair market value of the ESOP Shares is impacted by its minority interest
and lack of marketability. The ESOP Shares represent a minority interest in the
Corporation as distinguishable from a controlling interest. As such, we valued
the ESOP shares as if the Corporation were a going concern and specifically not
as an acquisition nor liquidation. A significant difference between the ESOP
shares and the shares of publicly traded banking institutions is the inability
at any given time to sell the ESOP Shares because a ready liquid market does not
exist. The impact of the lack of marketability is discussed herein.
DEFINITION OF FAIR MARKET VALUE
We define fair market value as the amount at which the ESOP Shares would change
hands between a willing seller and a willing buyer when neither is acting under
compulsion and when both have reasonable knowledge of the relevant facts. This
definition complies with the definition found in the U.S. Tax Code and Revenue
Ruling 59-60. We assumed that the hypothetical buyer and seller are able, as
well as willing, to trade shares and to obtain information concerning factors
relevant to the value of and the market for the ESOP Shares. In addition, we
appraised the ESOP shares under the assumption that the Corporation was a going
concern and would continue to operate as a banking concern under its current
business strategy.
In arriving at our estimate of fair market value, we utilized the market and net
present value methods. We believe the use of comparable transaction data
supplied by the market approach is the most relevant and useful indicator of
fair market value for the securities of a closely held corporation. The trading
characteristics of companies in the banking industry provide compelling evidence
of value and a large and liquid market exists for such securities. The net
present value approach discounts the projected dividends from holding the common
stock over a five year holding period, assuming a residual value equal to book
value, at a risk-adjusted rate. We also discounted the net present value of the
future benefits to be received by the shareholders of the Corporation over a
five year period as measured by the Corporation's projected earnings, assuming a
residual value equal to 10 times projected earnings. We did not utilize the net
asset value approach, which derives a value by determining the market value of
the individual components of the balance sheet, since we valued the Corporation
as a going concern and not as a liquidation.
MARKET APPROACH
The market approach estimates a value by examining the relevant market pricing
characteristics of similar securities which are publicly traded. This produces a
market value as if the securities were exchanged in the open market on a
minority interest basis, or a freely traded value. We selected a group of
regional banks and bank holding companies (the "guideline companies") which we
believe investors would likely to compare to the Corporation when making a
decision to purchase the Corporation's Common Stock. In selecting the guideline
companies, we employed the following criteria: (1) primary market area in the
West; (2) total assets less than $500 million (3) positive net income; (3) not
subject to announced
3.
<PAGE> 10
or rumored acquisition; and (4) publicly traded securities as evidenced by
listing on a major exchange. Exhibit I presents selected financial data for the
guideline companies.
We note the following conclusions relevant to the guideline companies and the
Corporation: (1) the Corporation's return on equity and return on assets were
similar to the average and median of the guideline companies; (2) the
Corporation and the guideline companies generally reported good asset quality;
(3) all but five of the guideline companies were paying a dividend; and (4) the
guideline companies were typically community banks experiencing similar market
conditions to the Corporation. Significantly, the price appreciation of the
guideline companies over the past year was lower than price appreciation overall
within the banking sector (as displayed in Exhibit I). Accordingly, we believe
the Corporation's common stock would trade at valuation ratios and the
characteristics similar to the guideline companies if freely traded.
The market value for bank and bank holding company common stock is typically
determined by price/book and price/earnings ratios. The weight accorded to the
price/book and price/earnings approaches varies depending upon market
conditions, the influence of takeover speculation in the market, and other
factors. We believe that as of the valuation date, the market was giving the
price/book and price/earnings ratios equal weight in making valuation decisions
for companies reporting returns on equity and other financial characteristics
similar to the Corporation. Exhibit I presents the market valuation
characteristics of the guideline companies. Based upon the trading pattern of
the selected guideline companies and the financial comparisons with the
Corporation overall, we believe the Corporation's market value utilizing the
market approach would be at 1.52 times book value, or $15.00 per share, and
12.11 times estimated 1996 earnings, or $19.01 per share. Giving equal weight to
the price/book and price/earnings ratios produces a freely traded value of
$17.00 per share.
The Corporation's shares are distinguishable from the shares of publicly traded
companies due to their lack of marketability. Sales of the Corporation's stock
trade infrequently, and sellers may not be able to sell their shares when
desired. The Corporation's stock is not listed on a major stock exchange. Also
impacting the discount for lack of marketability is the dividend policy and
paying capacity of the Corporation. The Corporation has paid a dividend in
recent years and anticipates paying a dividend in the future, which tends to
lower the lack of marketability discount modestly. Additionally, the ESOP Shares
are also subject to a put option at their fair market value, which also reduces
the lack of marketability discount.
Two types of studies provide evidence of the lack of marketability discount.
Restricted stock studies indicate a discount of 35% and possibly higher. Studies
of IPOs provide evidence of a discount for lack of marketability of
approximately 45%. Given weight to the considerations discussed above, we
believe a lack of marketability discount of 15% is appropriate. After applying
the marketability discount, the market value approach produces a value of $14.50
per share.
4.
<PAGE> 11
Another indicator of market value is recent trading activity in the
Corporation's common stock. Management reported to us recent trades during 1995
at an average price of $10.00.
NET PRESENT VALUE APPROACH
The net present value approach discounts the anticipated cash flow from an
investment in the Corporation's common stock, considering projected dividends
and the future residual value of the stock. We received from management
estimates of projected income, dividends and book value over a five year period
and utilized these projections in determining the appropriate cash flow. We
discounted the projected future dividends plus a residual at an appropriate risk
adjusted rate. The residual value of an investment is difficult to measure given
the uncertainty regarding future earnings and book value. Over the long-term,
book value represents the economic value of the balance sheet of a banking
concern and we believe it appropriate to utilize the projected book value of the
Corporation to calculate residual value at the end of the projection period. We
also discounted the future benefits to be received by the shareholders as
measured by projected earnings and utilized a residual value of 10 times ending
period earnings.
Important to the net present value approach is the determination of the
appropriate discount rate. The discount rate was estimated by comparing the
Corporation's average return on equity, the average return on equity for the
guideline companies, and the equity risk premium over the risk-free rate which
incorporates investors' expectations. In deriving the equity risk premium we
utilized the arithmetic mean and geometric mean returns for common shares listed
on the S&P 500 Index above the risk-free rate over the past 65 years.(1) This
arithmetic and geometric means were 7.0% and 5.4%, respectively.
We also considered possible adjustments which may be due to the small size of
the Corporation's market value and risk inherent in holding the Corporation's
stock. In particular, we examined betas of publicly traded community banks with
assets below $500 million, which ranged from (0.659) to 1.985 with an average
beta of 0.31 and median of 0.28. Stocks with a beta less than one have risk
levels that are lower than that of the overall market. We estimated the risk
premium for the Corporation's stock, considering the above information, to be
7.0%. We utilized the 10-year Treasury bond as an estimate of the risk-free
rate. Based upon our analysis of the Corporation and the benchmark rates below,
we believe a discount rate of 12% is appropriate. The following benchmarks were
utilized in selecting the discount rate:
<TABLE>
<CAPTION>
Comparative Returns on Equity
-----------------------------
<S> <C>
Corporation's return on equity 15.96%
Guideline Companies' Average ROE 12.38%
Average ROE of Publicly Traded Banks under $500 million 12.40%
</TABLE>
5.
<PAGE> 12
<TABLE>
<CAPTION>
Risk-weighted Discount Rate
---------------------------
<S> <C>
10-year T-Bond (risk-free rate) 5.68%
Equity Risk Premium 7.00%
-----
Risk-adjusted Rate 12.68%
</TABLE>
Discounting the projected dividends and earnings along with their respective
estimated residual values at a 12% discount rate (based upon the Corporation's
financial projections displayed in Exhibit II) produces an estimated net present
value of $13.10 per share as measured by the anticipated dividends and $29.73
per share as measured by discounting projected earnings.
(1) As determined in the Stocks, Bonds, Bills and Inflation: 1995 Yearbook
(Chicago: Ibbotron Associates, 1995).
RECONCILIATION OF VALUE
Exhibit III presents a summary of the range of values produced under various
valuation methods. The following estimates of value were indicated:
<TABLE>
<S> <C>
Market Value Approach $14.50
Net Present Value of Dividends $13.10
Net Present Value of Earnings $29.73
</TABLE>
We believe that the market value approach is the most useful in valuing the ESOP
Shares and produces a value of $14.50 per share. The net present value approach
results in a value not materially different from the market value approach and
supports our conclusion.
CONCLUSION
Based upon the above analysis, we have concluded that as of December 31, 1995,
the fair market value of the ESOP Shares was $14.50 per share.
This analysis is provided to you solely for the confidential, internal use of
the Trustees of the Napa National Stock Participation Plan; and, without the
prior written consent of Alex Sheshunoff & Co. Investment Banking, it may not be
quoted in whole or in part, or otherwise referred to in any report or document,
or furnished or otherwise communicated to any person outside your organization.
However, we do not object to one or more participants in the stock participation
plan being afforded the opportunity to review our documentation report, upon
their specific request to do so. We do not object to the disclosure of our
documentation report to any advisor, lender or consultant or other individual or
6.
<PAGE> 13
entity directly related to the stock participation plan. We do request that our
documentation report not be provided to the Internal Revenue Service unless the
IRS specifically requests the information. Please advise us in writing if the
IRS makes such a request.
Respectfully submitted,
ALEX SHESHUNOFF & CO. INVESTMENT BANKING
By /s/ Gerard A. Feil
--------------------------------------
7.
<PAGE> 14
EXHIBIT I
GUIDELINE COMPANIES
<PAGE> 15
Comparable Values for Regional Banking Organizations
in the West with Assets Under $500 million
December 31, 1995
<TABLE>
<CAPTION>
====================================================================================================================================
12/31/95 12/31/94 Date of Latest Return % Change
Bid Bid Financial 12 Months Book Annualized Price to Price to Dividend on in
Organization State Price Price Data Earnings Value Dividend Earnings Equity Yield Equity Price
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Civic BanCorp CA $7.50 $5.50 12/31/95 $0.67 $6.54 $0.00 11.19x 1.15x 0.00% 10.24% 36.36%
- ------------------------------------------------------------------------------------------------------------------------------------
Eldorado Bancorp CA $16.13 $9.77 12/31/95 $1.36 $11.35 $0.31 11.86x 1.42x 1.89% 11.98% 65.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Far East National Bank CA $9.43 $6.14 12/31/95 $0.80 $7.23 $0.05 11.79x 1.30x 0.48% 11.07% 53.72%
- ------------------------------------------------------------------------------------------------------------------------------------
FP Bancorp, Inc. CA $7.88 $5.00 12/31/95 $0.72 $6.35 $0.00 10.94x 1.24x 0.00% 11.34% 57.50%
- ------------------------------------------------------------------------------------------------------------------------------------
Riverside National Bank CA $13.50 $7.50 12/31/95 $1.19 $10.01 $0.49 11.34x 1.35x 3.59% 11.89% 80.00%
- ------------------------------------------------------------------------------------------------------------------------------------
SJNB Financial Corp. CA $13.38 $7.75 12/31/95 $1.20 $11.02 $0.21 11.15x 1.21x 1.57% 10.89% 72.58%
- ------------------------------------------------------------------------------------------------------------------------------------
Transworld Bancorp CA $12.00 $6.60 12/31/95 $1.16 $8.61 $0.00 10.34x 1.39x 0.00% 13.47% 81.82%
- ------------------------------------------------------------------------------------------------------------------------------------
American Bancorp of Nevada NV $21.00 $9.38 12/31/95 $1.26 $8.37 $0.00 16.67x 2.51x 0.00% 15.05% 124.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Centennial Bancorp OR $12.05 $7.28 12/31/95 $0.88 $5.67 $0.00 13.69x 2.12x 0.00% 15.52% 65.43%
- ------------------------------------------------------------------------------------------------------------------------------------
Averages 12.11x 1.52x 0.84% 12.38% 70.71%
- ------------------------------------------------------------------------------------------------------------------------------------
Medians 11.34x 1.35x 0.00% 11.89% 65.43%
====================================================================================================================================
</TABLE>
Source: SNL Securities, L.P.
<PAGE> 16
EXHIBIT II
FINANCIAL PROJECTIONS
<PAGE> 17
Financial Projections for
Napa National Bancorp
Napa, California
<TABLE>
<CAPTION>
============================================================================================================================
Common & Preferred
------------------ Loan Est. Risk
Net Loss Intan- Est. Based Long
Total Asset Net Income Return Return Dividend Total Reserve gible Tier I Capital Term
Assets Growth Income Growth on Avg on Avg Dividends Payout Equity $(000) Assets Leverage Ratio Debt
Year $(000) Rate $(000) Rate Assets Equity $(000) Ratio $(000) "1" $(000) Ratio "2" $(000)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Historical
- ----------------------------------------------------------------------------------------------------------------------------
1993 $77,241 21.73% $500 1370.59% 0.71% 9.40% $0 0.00% $5,569 $912 $0 7.92% 10.60% $0
1994 $86,477 11.96% $777 55.40% 0.95% 13.04% $0 0.00% $6,346 $1,050 $0 7.75% 10.94% $0
1995 $104,851 21.25% $1,101 41.70% 1.15% 15.96% $0 0.00% $7,447 $1,325 $0 7.78% 10.84% $0
- ----------------------------------------------------------------------------------------------------------------------------
Projected
- ----------------------------------------------------------------------------------------------------------------------------
1996 $120,579 15.00% $1,380 25.34% 1.22% 17.36% $377 27.34% $8,450 $1,563 $0 7.50% 10.72% $0
1997 $138,665 15.00% $1,750 26.80% 1.35% 19.15% $377 21.56% $9,822 $1,801 $0 7.58% 10.82% $0
1998 $159,465 15.00% $2,102 20.11% 1.41% 19.20% $377 17.95% $12,067 $2,071 $0 8.10% 11.43% $0
1999 $183,385 15.00% $2,623 24.79% 1.53% 19.82% $377 14.38% $14,393 $2,382 $0 8.40% 11.86% $0
2000 $210,893 15.00% $3,154 20.26% 1.60% 19.85% $377 11.96% $17,390 $2,739 $0 8.82% 12.39% $0
============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
===============================================
Per Share Year-end
----------------------- Primary
Fully Common Common
Diluted Common Divi- Shares
Year Earnings Equity dends Outstanding
- -----------------------------------------------
<S> <C> <C> <C> <C>
Historical
- -----------------------------------------------
1993 $0.663 $7.381 $0.000 754,500
1994 $1.030 $8.411 $0.000 754,500
1995 $1.459 $9.870 $0.000 754,500
- -----------------------------------------------
Projected
- -----------------------------------------------
1996 $1.573 $11.199 $0.500 754,500
1997 $1.995 $13.018 $0.500 754,500
1998 $2.396 $14.725 $0.460 819,500
1999 $2.990 $17.352 $0.455 829,500
2000 $3.595 $20.292 $0.440 857,000
===============================================
</TABLE>
Net Present Value (discount of 12%)
<TABLE>
<S> <C>
Dividends with a residual value which equals book value in year 2000 $13.10
Net Income through year 2000 with a 10x earnings residual value in 2000 $29.73
</TABLE>
<TABLE>
<CAPTION>
Outstanding Common Shares 1995 1996
------------------------- ---- ----
<S> <C> <C>
Average Fully Diluted Shares 754,500 877,300
Average Primary Shares 754,500 754,500
</TABLE>
"1" The Loan Loss Reserve is assumed to increase at the same growth rate as
Total Assets unless a projected Loan Loss Reserve to Total Assets ratio
is input, which would cause the Loan Loss Reserve to change in
accordance with the specified Loan Loss Reserve to Total Assets ratio.
"2" The Estimated Risk-Based Capital Ratio is calculated for purposes of
this analysis as follows: Tier I Capital (common equity + perpetual
preferred stock + convertible preferred stock - intangible assets) +
Tier II Capital (loan loss reserve + convertible debt) divided by
Estimated Net Risk-Weighted Assets (gross risk-weighted assets -
intangible assets - excess loan loss reserve). In Tier II Capital, the
Loan Loss Reserve is limited to 1.25% of Gross Risk-Weighted Assets,
excluding Intangible Assets. Any excess Loan Loss Reserve is subtracted
from the denominator. For projection purposes, the Gross Estimated
Risk-Weighted Assets are assumed to grow at the same rate as Total
Assets.
Alex Sheshunoff & Co.
Investment Banking
<PAGE> 18
EXHIBIT III
FAIR MARKET VALUE SUMMARY
<PAGE> 19
FAIR MARKET VALUE OF 3.31% OF THE COMMON STOCK OF
NAPA NATIONAL BANCORP
NAPA, CALIFORNIA
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
Value
Per Share
---------
<S> <C>
Book Value (Equity as of 12/31/95) $9.87
Adjusted Book Value (Company's equity per share adjusted for the average price to equity ratio of
comparable publicly-traded companies)
- $9.87 x 1.52x (less 15% discount for lack of marketability $12.75
Market Value
- Previous trades of Company's stock $10.00
- Price charge indicated by average change in comparable companies from prior valuation ($9.00 * 70.71% increase) $15.36
Adjusted Earnings Value (Company's earnings per share adjusted for the average price to earnings
ratio of comparable publicly-traded companies)
- 1995 EPS $1.46 x P/E 12.11x (less 15% discount for lack of marketability) $15.03
- 1996 EPS (est.) $1.57 x P/E 12.11x (less 15% discount for lack of marketability) $16.16
Net Present Value 12% Rate of Return
- Dividends with a residual value which equals book value in year 2000 $13.10
- Net Income through 2000 with a 10x earnings residual value in year 2000 $29.73
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
FAIR MARKET VALUE $14.50
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
FMV as a Multiple of Book Value (12/31/95 Equity/Assets 7.10%) 1.47x
FMV as a Percentage of Total Assets (12/31/95 Total Assets Per Share $138.97) 10.43%
FMV as a Multiple of Earnings
- 1995 (ROA = 1.15%) 9.93x
- Est. 1996 (ROA = 1.22%) 9.24x
NPV of Dividends/FMV 90.34%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 20
EXHIBIT IV
CORPORATION FINANCIAL DATA
<PAGE> 21
NAPA NATIONAL BANCORP, CONSOLIDATED
Balance Sheets
<TABLE>
<CAPTION>
Final Bank Final HC Leasing Eliminations Eliminations Final Cons. Final Cons.
12/31/95 12/31/95 12/31/95 DR CR 12/31/95 12/31/94
---------- -------- -------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks 7,106,672 8,667 41 (8,708) 7,106,672 5,458,696
Time deposits--other financial institutions 4,355,975 4,355,975 4,357,000
Federal Funds Sold 14,780,000 14,780,000 10,760,000
Investment Securities 1,431,590 268,963 (268,963) 1,431,590 1,380,911
Loans 74,698,787 112,000 (112,000) 74,698,787 63,153,366
Allowance for loan losses (1,324,792) (1,324,792) (1,050,264)
Furniture, fixtures and equipment, net 2,489,032 2,489,032 1,449,391
Accrued interest receivable 668,278 0 666,278 432,320
Other assets 631,799 16,000 647,799 535,654
OREO 0 0 0 0
------------------------------------------------------------------------------------
104,835,341 293,630 112,041 0 (389,671) 104,851,341 86,477,074
====================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing demand 19,078,967 8,708 19,068,259 18,098,015
Interest bearing:
Savings 12,535,184 230,152 12,305,032 14,366,759
Transaction 28,098,354 38,811 28,059,543 24,430,649
Time certificates 37,319,176 37,319,176 22,482,647
------------------------------------------------------------------------------------
TOTAL DEPOSITS 97,029,681 0 0 277,671 0 96,752,010 79,378,070
Federal Funds Purchased 0 0 0
Accrued interest payable and other
liabilities 649,183 115,298 112,000 652,481 753,329
------------------------------------------------------------------------------------
TOTAL LIABILITIES 97,678,864 115,298 0 389,671 0 97,404,491 80,131,399
Shareholders' equity:
Common stock 5,150,000 1,664,559 100,000 6,914,559 6,914,559
Retained Earnings 2,006,477 (1,486,227) 12,041 532,291 (568,884)
------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 7,156,477 178,332 112,041 0 0 7,446,850 6,345,675
------------------------------------------------------------------------------------
104,835,341 293,630 112,041 389,671 0 104,851,341 66,477,074
====================================================================================
</TABLE>
<PAGE> 22
NAPA NATIONAL BANCORP
Statements of Operations
<TABLE>
<CAPTION>
Final Bank Final HC Leasing Eliminations Eliminations Final Cons. Final Cons.
12/31/95 12/31/95 12/31/95 DR CR 12/31/95 12/31/94
---------- -------- -------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income:
Interest and fees on loans 7,515,096 7,515,096 5,618,912
Interest on investment securities 82,712 6,733 6,733 82,712 46,688
Interest on federal funds sold 582,897 582,897 412,237
Interest on time deposits with other 0 0
financial institutions 250,907 250,907 147,590
----------------------------------------------------------------------------
TOTAL INTEREST INCOME 8,431,612 6,733 0 6,733 0 8,431,612 6,225,427
Interest expense:
Interest on deposits
Savings 297,374 (5,693) 291,681 322,946
Interest bearing transaction 518,237 (1,040) 517,197 469,947
Time 1,825,287 1,825,287 864,803
----------------------------------------------------------------------------
TOTAL INTEREST ON DEPOSITS 2,640,898 0 0 0 (6,733) 2,634,165 1,657,696
Interest on Fed Funds Purchased 0 0 0
----------------------------------------------------------------------------
NET INTEREST INCOME 5,790,714 6,733 0 6,733 6,733 5,797,447 4,567,731
Provision (credit) for loan losses 323,000 323,000 148,500
----------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 6,733 0 6,733 6,733 5,474,447 4,419,231
Other Income:
Service charges on deposit accounts 469,444 469,444 382,131
Other customer fees and charges 249,704 249,704 227,957
Gain (loss) on sale of mortgages 795 795 17,283
Other Income 68,860 11,663 80,523 0
----------------------------------------------------------------------------
TOTAL OTHER INCOME 788,803 11,663 0 0 0 800,466 627,371
Other expense:
Salaries and employee benefits 2,214,865 45,720 2,260,585 1,963,663
Occupancy 401,767 401,767 276,914
Equipment 360,224 380,224 341,120
Professional Fees 415,619 1,142 416,761 176,348
Marketing and business development 123,708 123,708 135,086
Stationery & Supply 95,408 95,408 67,473
Other 729,886 239 730,125 756,303
----------------------------------------------------------------------------
TOTAL OTHER EXPENSE 4,361,477 47,101 0 0 0 4,408,578 3,716,907
INCOME (LOSS) BEFORE INCOME TAXES 1,895,040 (28,705) 0 6,733 6,733 1,866,335 1,329,695
Income taxes 765,200 0 765,200 552,880
----------------------------------------------------------------------------
NET INCOME (LOSS) 1,129,840 (28,705) 0 6,733 6,733 1,101,135 776,815
============================================================================
</TABLE>
