SHAREHOLDERS PROTECTIVE COMMITTEE-
Professional Bancorp, Inc.
c/o Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
June 12, 1996
Dear Professional Bancorp Shareholder:
For the past five years, Joel Kovner has taken an average of more than
$500,000 per year in total compensation from Professional Bancorp. During the
same period, we shareholders haven't received any cash dividends and, over the
past 3 1/2 years, our stock values have actually declined.
Now, Joel Kovner and his fellow directors want us to reward them with a
stock option plan for what they call "the most successful year" in the Bank's
history. We think 1995 was a profound disappointment a year of continuing
performance decline at a time when banks in California and the nation have
generally prospered.
Let's look at the facts:
1995 CONTINUING PERFORMANCE DECLINE
- In 1995, the Bank inflated earnings by selective security trades selling
its winners for a $1,000,000 gain and holding its losers (which have a
gross unrealized loss of $876,000). The pre-tax income excluding investment
transactions of the Bank, the "Core Earnings," actually decreased by more
than $200,000.
- Major income and expense categories deteriorated:
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For Example (000 omitted): 1994 1995
Net Interest Income After Loan Losses - Decreased 12,916 12,824
Other Income (excluding security transactions) - Decreased 1,524 1,435
Non-Interest Expenses (excluding FDIC 12,093 12,345
premium reductions) Increased
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- The Bank's net loans and leases declined to 31% of its average assets down
from more than 53% five years ago. This places the Bank in the bottom 2% of
its Peer Group. (This Peer Group is a group of similar size and type banks
selected by the Comptroller of the Currency for comparison purposes.)
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Professional Bancorp Shareholder
June 12, 1996
Page Two
- The Bank's pre-tax operating income was less than 1% of its average assets.
This places the Bank in the bottom 6% of its Peer Group. In fact, this
return is less than 1/2 of the Peer Group average.
- In five years, the Bank's non-performing loans have increased ten times
from .42% of total loans to 4.18%. This ratio is seven times worse than
the Peer Group average.
- In five years, the Bank's bad loan losses have increased almost four times
from .38% to 1.45%. The Bank's bad loan losses are higher than 96% of its
Peer Group.
- Since 1992, the Bank's common stock has declined in value by about 10%.
During the same period of time, the S&P 500 Index increased 50% and the
Bank's peer group index increased 70%.
Mr. Kovner is trying to divert your attention from the Bank's performance
under his stewardship. But the overriding fact remains that Mr. Kovner is paid
lavishly while the Bank languishes. You can change this if you VOTE YOUR YELLOW
PROXY CARD TODAY.
Sincerely yours,
SHAREHOLDERS PROTECTIVE COMMITTEE- Professional Bancorp, Inc.
By: /s/ Milton J. Schloss Sr.
Milton J. Schloss Sr., Trustee, Committee Chairperson
Shareholders Protective Committee
Milton J. Schloss Sr., Trustee, Milton J. Schloss Sr. Trust U/A DTD 1/3/84,
1385 Tennessee Avenue, Cincinnati, Ohio 45229, No. of Shares Beneficially
Owned: 21,000; George E. Fern Co., George J. Budig, President, 1100 Gest
Street, Cincinnati, Ohio 45203, No. of Shares Beneficially Owned: 60,270;
Martin S. Goldfarb, M.D., 2080 Century Park East, Suite 1806, Los Angeles,
California 90067, No. of Shares Beneficially Owned: 22,050; Herbert B. Weiss,
Esq., Delaware Charter Guarantee & Trust, Trust FBO Herbert Weiss IRA, Keating,
Muething & Klekamp, 1800 Provident Tower, 1 East Fourth Street, Cincinnati,
Ohio 45202, No. of Shares Beneficially Owned: 10,500; Joel S. Moskowitz, Esq.,
4300 Carew Tower, 441 Vine Street, Cincinnati, Ohio 45202, No. of Shares
Beneficially Owned: 3,675; and Mark B. Kuby, M.D., 8014 Plainfield,
Cincinnati, Ohio 45236, No. of Shares Benefically Owned: 26,250
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YOUR VOTE IS EXTREMELY IMPORTANT
1. Please SIGN, MARK, DATE and MAIL your YELLOW proxy card. If you wish to
vote for the Committee Nominees, you must submit the YELLOW proxy card and
must NOT submit the Company's white proxy card.
2. If you have already voted on the Company's white proxy card, you have every
legal right to change your mind and vote FOR the Committee Nominees on the
YELLOW proxy card. Only your latest dated proxy card will count.
3. If your shares are held for you by a bank or brokerage firm, only your bank
or broker can vote your shares and only after receiving your instructions.
Please call your bank or broker and instruct your representative to vote
FOR the Committee Nominees on the YELLOW proxy card.
4. Time is short. Please vote today!
If you have questions or need assistance in voting your shares or in changing
your vote, please contact:
Shareholders Protective Committee
c/o Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
513-381-2122
OR
Call the Committee's Solicitors
Toll-Free (800) 326-9653
