SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, For Use
of the Commission Only
(as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
ss. 240.14a-11(c) or ss. 240.14a-12
FOOTHILL INDEPENDENT BANCORP
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(Name of Registrant as Specified in its Charter)
BASSWOOD FINANCIAL PARTNERS, L.P.
BASSWOOD PARTNERS, L.L.C.
BASSWOOD CAPITAL MANAGEMENT, L.L.C.
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(Name of Person(s) Filing Proxy Statement if
Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PRELIMINARY COPY - SUBJECT TO COMPLETION, DATED MAY 6, 1999
PROXY STATEMENT
OF
BASSWOOD FINANCIAL PARTNERS, L.P.,
BASSWOOD PARTNERS, L.L.C., AND
BASSWOOD CAPITAL MANAGEMENT, L.L.C.
-----------------------
1999 ANNUAL MEETING OF THE SHAREHOLDERS
OF
FOOTHILL INDEPENDENT BANCORP
-----------------------
To Our Fellow Shareholders of
Foothill Independent Bancorp:
This Proxy Statement and the Blue Proxy Card are furnished by Basswood
Financial Partners, L.P., a Delaware limited partnership (the "Partnership"),
Basswood Partners, L.L.C., a Delaware limited liability company ("Basswood
Partners") and Basswood Capital Management L.L.C., a Delaware limited liability
company ("Basswood Capital" and, together with the Partnership and Basswood
Partners, "Basswood") in connection with the solicitation by Basswood of proxies
from the holders of Common Stock, no par value (the "Common Stock"), of Foothill
Independent Bancorp, a California corporation (the "Company" or "Foothill"), to
vote at the Annual Meeting of the shareholders of the Company, including any
adjournments or postponements thereof and any special meeting called in lieu
thereof (the "Annual Meeting"), scheduled to be held on May 25, 1999 at 4:30
P.M. (Pacific time) at the Glendora Country Club, 310 S. Amelia Avenue,
Glendora, California. This Proxy Statement and form of proxy will first be
furnished to shareholders of the Company on or about May 7, 1999. Shareholders
of record at the close of business on April 2, 1999 (the "Record Date") are
entitled to notice of and to vote at the Annual Meeting. The principal executive
offices of the Company are located at 510 South Grand Avenue, Glendora,
California 91741.
Basswood is seeking your proxies in support of the following proposal:
The election of Mr. Matthew Lindenbaum as the nominee of Basswood (the
"Basswood Nominee") to the Company's Board of Directors (the "Board")
BASSWOOD RECOMMENDS THAT YOU CUMULATE YOUR VOTES AND VOTE IN FAVOR OF THE
BASSWOOD NOMINEE FOR ELECTION TO THE BOARD.
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Shareholders of record of shares of Common Stock on the Record Date are
entitled to vote at the Annual Meeting. Each shareholder is entitled to one vote
for each share of Common Stock held as of the Record Date, except that in the
election of directors each shareholder may cumulate his or her votes and give
any one nominee a number of votes equal to the number of directors to be elected
multiplied by the number of shares which the shareholder is entitled to vote at
the meeting, or to distribute the votes among any number of candidates for
election to the Board, if (i) the name of the candidate for whom such votes are
cast has been placed in nomination prior to the voting and (ii) such shareholder
or any other shareholder has given notice at the meeting prior to the vote on
election of directors of that shareholder's intention to cumulate his or her
votes.
The Company has been notified of Basswood's intention to solicit proxies
on its own behalf by the filing of this Proxy Statement, the filing of Schedule
13D amendments by the Partnership, Mr. Matthew Lindenbaum and Mr. Bennett
Lindenbaum on April 9 and April 16, 1999, and by a letter addressed to the Board
of Directors of the Company dated April 15, 1999. In addition, Basswood informed
the Company by the filing of a Schedule 13D amendment by Basswood on November 2,
1998 and by letters addressed to the Board of Directors of the Company on
December 21, 1998 and January 27, 1999 of Basswood's intention to communicate
directly with the Company's shareholders. Basswood intends to deliver this Proxy
Statement and form of proxy to holders of a sufficient amount of the outstanding
shares of Common Stock to pass Basswood's proposals.
As of the Record Date, Basswood Partners, Mr. Matthew Lindenbaum and Mr.
Bennett Lindenbaum (the managing members of Basswood Partners) and the Accounts
(as defined below and including the Partnership) beneficially owned an aggregate
of 553,421 shares (or approximately 9.36%) of the Common Stock. Basswood
Partners is the general partner of the Partnership and Whitewood Financial
Partners, L.P., a Delaware limited partnership ("Whitewood"), and is the
investment general partner of Jet I, L.P., a Delaware limited partnership ("Jet
I"), each of which has from time to time acquired Common Stock. Basswood Capital
(of which Mr. Matthew Lindenbaum and Mr. Bennett Lindenbaum are managing
members) is the investment manager of Basswood International Fund, Inc., a
Cayman Islands exempted company ("Basswood International"), and acts as advisor
to several accounts. Prior to January 1, 1999, Basswood Partners and its
affiliates also advised the 1994 Garden State L.P., a Delaware limited
partnership ("Garden State") which from time to time acquired Common Stock. As
of January 1, 1999, however, Garden State contributed all shares of the
Company's Common Stock owned by it to the Partnership in return for a limited
partnership interest in the Partnership. The Partnership, Basswood
International, Whitewood and Jet I are referred to collectively as the
"Accounts." The participants in this
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solicitation are the Partnership, Basswood Partners, Basswood Capital, Messrs.
Matthew and Bennett Lindenbaum, and the Accounts (collectively, the
"Participants"). Additional information with respect to the Participants is set
forth below under "Voting Securities and Principal Holders Thereof" and in Annex
II.
The 553,421 Shares beneficially owned by Basswood Partners are owned of
record as of the Record Date as follows: the Partnership is the record owner of
445,738 Shares; Whitewood is the record owner of 4,608 Shares; Jet I is the
record owner of 22,292 Shares; Basswood International is the record owner of
80,683 Shares; and, Mr. Bennett Lindenbaum is the record owner of 100 Shares.
Basswood Partners and Basswood Capital have discretionary authority to vote all
of the shares of Common Stock beneficially owned by Basswood Partners, the
Partnership, Messrs. Matthew and Bennett Lindenbaum and the Accounts.
Basswood and Messrs. Matthew and Bennett Lindenbaum intend to cause all
of such shares to be voted cumulatively "FOR" the Basswood Nominee. See
"Voting Securities and Principal Holders Thereof."
BY SIGNING, DATING AND MAILING THE ENCLOSED BLUE PROXY CARD, YOU WILL
REVOKE ANY PREVIOUSLY DATED PROXY. ONLY YOUR LATEST-DATED PROXY WILL COUNT
AT THE MEETING.
THIS SOLICITATION IS BEING MADE BY BASSWOOD AND NOT ON BEHALF OF THE BOARD
OF DIRECTORS OF THE COMPANY.
YOUR VOTE IS EXTREMELY IMPORTANT. If you agree with Basswood's efforts, we
ask for your support by immediately signing, dating and mailing the enclosed
Blue Proxy Card.
SHARES HELD IN YOUR NAME. No matter how many shares you own, vote "FOR"
the Basswood Nominee by signing, dating and mailing the enclosed Blue Proxy
Card. Sign the Blue Proxy Card exactly as your name appears on the stock
certificate regarding your shares.
SHARES HELD IN YOUR BROKER'S OR BANK'S NAME. If you own shares in the name
of a brokerage firm, bank or other nominee, your broker, bank or other nominee
cannot vote your shares for the Basswood Nominee unless it receives your
specific instructions to do so. Please sign, date and mail as soon as possible
the enclosed Blue Proxy Card in the envelope that has been provided by your
broker, bank or other nominee to be sure that your shares are voted, or contact
the person responsible for your account and instruct that person to execute a
Blue Proxy Card on your behalf.
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QUESTIONS AND ASSISTANCE. If you have not received a Blue Proxy Card
or have any questions or need assistance in voting, please call:
BEACON HILL PARTNERS, INC.
90 BROAD STREET
NEW YORK, NEW YORK 10004
TOLL FREE: 1-800-755-5001
COLLECT: (212) 843-8500
ATTENTION: Rick Grubaugh
PLEASE REMEMBER TO DATE YOUR PROXY CARD, AS ONLY YOUR LATEST-DATED PROXY WILL
COUNT AT THE ANNUAL MEETING. IF YOU HAVE ANY DOUBTS AS TO WHETHER YOUR PROXY
WILL BE RECEIVED IN TIME TO BE CAST AT THE ANNUAL MEETING, PLEASE CALL BEACON
HILL PARTNERS, TOLL FREE: 1-800-755-5001 OR COLLECT: (212) 843-8500 PROMPTLY.
If you have any questions about the solicitation in general, please
call Matthew Lindenbaum at Basswood Partners collect at (212) 521-9500.
REASONS FOR THE SOLICITATION
Based on current publicly available information, Basswood currently
beneficially owns approximately 9.36% of the Company's outstanding Common
Stock. Basswood Partners, the Partnership, Basswood Capital and their affiliates
have been shareholders of the Company since October 2, 1996. Basswood is
disappointed with the financial performance of its investment in the Company ,
based on Foothill's stock price as compared with stock prices of comparable
companies in the banking industry, all as reported in the Company's Proxy
Statement for its 1999 Annual Meeting of Shareholders (the "1999 Proxy
Statement"). The Company's efficiency ratio, average return on equity and
average return on assets are all lower than the average performance of other
California banks with assets in the $250-$750 million dollar range (comparable
to the Company's approximately $468 million in assets)(1) (collectively, the
"Comparable Banks"), as derived by Basswood from the SNL Securities Quarterly
Bank Digest-March 1999 (published in March 1999 by SNL Securities, L.P.;
consent to reference was neither sought nor obtained by the Participants).
Moreover, the Company has not made available to Basswood, through its public
reports and statements or otherwise, information indicating any reasonable
prospect for a material
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(1) Comprised of the following banks: Pacific Bank, Pacific Crest Capital, Bank
of Commerce, VIB Corp, Central Coast Bancorp, Capital Corp of the West, Redwood
Empire Bancorp, Civic Bancorp, SJNB Financial Corp, North County Bancorp, Coast
Bancorp, Bank of Santa Clara, California Ind. Bancorp, Borel Bank & Trust Co.,
Orange National Bancorp, Nara Bank, NA, BWC Financial Corp, Professional
Bancorp, Community West Bancshares and Bank of Hemet.
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improvement in the Company's financial performance. Any effort to improve
earnings by an acquisition strategy would involve substantial, and Basswood
believes unacceptable, dilution to current shareholders.
Basswood believes that the underlying fundamentals of the Company have
been unacceptable compared to the Comparable Banks. Basswood has compiled from
published sources the following data on the Comparable Banks to compare
against the Company's financial performance over the stated reference period:
OPERATING PERFORMANCE OF THE COMPANY AND COMPARABLE INSTITUTIONS
(In thousands, except for percentages)
California Banks
(with assets
of $250-$750
Foothill (1) million) (2)
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Twelve months
ended 12/31/98
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Net Income $5,064
Average Return on Assets 1.10% 1.28%
Average Return on Equity 11.36% 14.46%
Efficiency Ratio 69.04% 63.35%
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(1) Unaudited; derived from a press release issued by the Company on January
28, 1999.
(2) Source: Derived by Basswood from SNL Securities Quarterly Bank
Digest-March 1999.
One means by which shareholder value can be maximized is, in Basswood's
opinion, exploring the sale of the Company.Recent transactions in the banking
industry, including several involving California banking institutions,
indicate that shareholders of such banks have received premiums over the then
current market price of the selling bank's common stock. For example,
SierraWest Bancorp was acquired on February 25, 1999 at a premium of 30.88%;
Bank of Commerce/San Diego was acquired on February 18, 1999 at a premium of
27.92%; and Bay Area Bancshares was acquired on January 26, 1999 at a premium of
35.03% (in each case, the premium is calculated based on the closing market
price of the acquired bank's common stock as of the date one day prior to the
public announcement of the acquisition). Basswood believes the shareholders
cannot reasonably expect to achieve, on a present value basis, the same level
premium if the Company continues its current financial performance.
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As set forth in the following table, Basswood beneficially owns shares
in several California banks, any of which could potentially be acquirers of
Foothill (which could present a potential conflict of interest for Basswood),
although none of the Participants is aware of any such proposals either having
been made or considered by either such other banks or by Foothill:
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SHARES OWNED % Owned (As of
COMPANY (As of April 26, 1999) indicated date)
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6.49%
Capital Corp of the West 299,199 (as of 3/12/99)
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3.04%
City Commerce Bank 50,621 (as of 12/31/98)
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First Community Bank of 4.96%
the Desert 230,142 (as of 4/9/99)
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National Mercantile 2.25%
Bancorp 15,002 (as of 4/9/99)
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2.23%
North County Bancorp 108,901 (as of 3/23/99)
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7.67%
Professional Bancorp 154,611 (as of 3/10/99)
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0.12%
UnionBanCal Corp. 213,774 (as of 2/26/99)
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3.18%
Western Bancorp 663,700 (as of 3/1/99)
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We believe that Foothill shareholders are in a position to take advantage
of the merger activity occurring in the banking industry over the past
several years. Now is the time to act! This is an excellent opportunity for
Foothill to actively explore the possibilities of achieving a sale of the
Company in order
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to maximize shareholder value. There is no assurance that we will continue to
experience the rapid pace of merger activity we have seen in recent years. Nor
is there any assurance that the value of Foothill stock will remain at or exceed
its current level if the opportunity to merge is missed. It is our opinion that
Foothill shareholders should be allowed to benefit from this merger activity.
Furthermore, if and when the pace of bank mergers slows, it is likely that the
stock prices of many financial institutions such as Foothill will decline
significantly.
A Board that includes Mr. Matthew Lindenbaum will, in Basswood's opinion,
better represent the interests of the Company and of all the Company's
shareholders than a Board composed entirely of incumbents and new nominees
nominated by the Company's existing management. Mr. Lindenbaum , like the
Company's other non-management directors, is not affiliated with Foothill's
management and has not been previously tied to Foothill in any manner. As a
result, Mr. Lindenbaum will bring fresh ideas and insights to the Company's
management and the Board. Mr. Lindenbaum is a successful businessman with
expertise in the financial services industry who, Basswood believes, can provide
valuable insight and guidance in a time of rapid evolution of the banking
industry. A brief summary of Mr. Lindenbaum's professional biography is set
forth in Annex I attached hereto.
Additionally, Mr. Lindenbaum is opposed to any programs, in general, which
may adversely affect shareholder value or serve to entrench management and has
indicated a clear desire to pursue steps, such as seeking buyers for Foothill,
intended to enhance shareholder value.
BACKGROUND OF THE SOLICITATION
Requests for Shareholder List and Related Documentation; Commencement of
Litigation
On December 21, 1998, Basswood Partners, L.P. (a predecessor entity to
Basswood Partners) requested in writing that the Company make available to it,
as required under applicable California statutory law, the right to inspect and
copy the records of the Company pertaining to the names, addresses and
shareholdings of the Company's shareholders. Basswood Partners, L.P. also
requested that the Company provide Basswood Partners, L.P. with certain
corporate and accounting records as well as certain other information (set forth
on an annex to the December 21, 1998 letter) relating to the shareholders,
including, among other things, all information in, or which comes into, the
possession or control of the Company or its transfer agent, or which can
reasonably be obtained from brokers, dealers, banks, clearing agencies or voting
trustees or their nominees, relating
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to the names of the Non-Objecting Beneficial Owners of shares ("NOBO's").
Basswood Partners informed Foothill that it intended to use those materials to,
among other things, communicate with Foothill's other shareholders about
Foothill's financial performance and methods of maximizing shareholder value.
Although Foothill produced a list of record shareholdersas of June 15, 1998, it
did not produce most of the records requested by Basswood Partners, L.P. , such
as the NOBO list, a breakdown of shares held in the name of Cede & Co., a
magnetic computer tape of Foothill's shareholders and any transfer sheets and
stop lists reflecting changes in Foothill's shareholders (collectively,
"Ancillary Shareholder Records"). The NOBO list is particularly important
because it discloses the identities of those shareholders who do not object to
their identities being disclosed, even though such shares are held in "street
name." Foothill subsequently admitted in the course of the litigation described
below that it has possession of the NOBO list. Thus, while the Company is able
to communicate directly with those Foothill shareholders on the NOBO list,
Basswood, until and unless it obtains the NOBO list, is prevented from doing so.
** 1 Foothill also failed to make available its corporate minutes and
accounting records, asserting that Basswood Partners, L.P. did not have a proper
purpose in seeking those records. Basswood is seeking the corporate records to,
among other things, determine the basis for the Company's recent By-Law
amendments and the reconstitution of the Board. As noted above, Basswood is
seeking the accounting records to, among other things, determine how the Company
arrived at its efficiency ratio -- an important indicator of the Company's
financial performance.
Upon determining from independent sources that the Company had in fact
obtained a NOBO list subsequent to its receipt of the December 21st letter,
Basswood Partners, L.P. submitted a second request on January 27, 1999 for the
information requested in the December 21st letter. The Company responded to this
second request on February 8, 1999 by again rejecting Basswood Partners, L.P.'s
request for access to additional information and records. The Company also
failed to return repeated telephone calls made by Basswood to the Company's
principal executive offices during January and February 1999.
As discussed in further detail below, on March 17, 1999 the Partnership
submitted a request in writing to the Company for the information requested by
Basswood Partners, L.P. in the December 21st and January 27th letters. On March
23, 1999, the Company responded to the March 17 request and again made available
only a list of record shareholders. The Company again declined to provide the
materials requested, originally by Basswood Partners, L.P. and now by the
Partnership, in their entirety, including the NOBO list.
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On February 17, 1999, Basswood Partners filed a petition for writ of
mandate seeking Foothill's shareholder, corporate and accounting records in the
Superior Court of California, County of Los Angeles. Foothill raised a myriad of
defenses to the petition, including the fact that Basswood Partners did not have
standing because the shareholders of record were investment partnerships, other
than Basswood Partners, L.L.C., and that Basswood Partners L.P., rather than
Basswood Partners, the petitioner, had made the request for the records.
Foothill also asserted that the Ancillary Shareholder Records were not available
under California law. On March 15, 1999, the Superior Court of California,
County of Los Angeles, denied "without prejudice" the petition for writ of
mandate and held that Basswood Partners L.L.C. had "failed to establish the
foundational criteria for the records requested." Because the denial was
"without prejudice," Basswood was free to raise its claims again if it met the
foundational criteria. The Court made no findings on the merits of the dispute.
** 2 In response to the court's decision, on March 17, 1999, the
Partnership made a request (the "March 17 Request") for shareholder, corporate
and accounting records from the Foothill board. Whitewood and Jet I joined in
the March 17 Request. The March 17 Request expressed the "hope that [Basswood]
can move forward without the need for further litigation and needless expense
for the Company, its shareholders and Basswood Financial Partners."
** 3 On March 23, 1999, the Company responded to the March 17 Request and
made available a list of record shareholders. However, the Company again
declined to provide the materials requested by Basswood in their entirety.
Accordingly, on March 31, 1999, the Partnership filed a petition for writ of
mandate seeking substantially the same shareholder and corporate records that
were sought by Basswood Partners in the petition for writ of mandate filed on
February 17, 1999.
On April 27, 1999, the Superior Court of California, County of Los
Angeles, granted the Partnership's request for corporate and accounting records
under Section 1601 of the California Corporations Code, but denied the request
for shareholder records under Section 1600 of the California Corporations Code.
On April 28, 1999, the Partnership demanded that the Company produce the
corporate and accounting records as ordered by the Court. On May 3, 1999, the
Company filed a pleading asserting that the Partnership was no longer a record
shareholder of Foothill and, thus, was not entitled to the records previously
ordered by the
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Court. The Partnership has not yet responded to the Company's assertion.
Inaccurate Public Disclosures
In a press release issued by the Company on January 28, 1999 and in the
accompanying quarterly financial data for the quarter ended December 31, 1998,
the Company stated that its efficiency ratio2 for the fourth quarter of 1998 was
63.88%. In response to Basswood Partners' request for Foothill's accounting
records, Foothill, in its Surreply, Memorandum of Points and Authorities in
Opposition to Petition for Preemptory Writ of Mandate, dated March 11, 1999,
stated that Basswood did not require the accounting records because the
efficiency ratio could be computed from publicly available financial information
provided by Foothill. However, when Basswood used the information contained in
Foothill's press releases to calculate Foothill's efficiency ratio for the
fourth quarter of 1998, it arrived at a different efficiency ratio percentage
than that which Foothill had reported - 67.64%.
The following table reflects the different calculations of relevant
financial data made by Basswood and the Company with respect to each quarter of
1998 (all calculations are based on data derived from a press release issued
by the Company on January 28, 1999):
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(2) The efficiency ratio is calculated by dividing non-interest expenses by
the sum of the net interest income fully taxable equivalent and other
income.
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(In thousands, except for percentages)
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
1998 1998 1998 1998
---- ---- ---- ----
Non Interest Expenses (5,540) (5,708) (5,699) (5,626)
Net Interest Income + Fed.
Tax Adjustment 6,252 6,578 6,977 7,051
Other Income 1,235 1,300 1,284 1,267
---------------------------------------------------
Efficiency Ratio - Per
Basswood 73.99% 72.45% 68.99% 67.64%
====== ====== ====== ======
Efficiency Ratio - Per
Foothill 73.54% 71.25% 68.03% 63.88%
====== ====== ====== ======
Reconstitution of the Board
On October 19, 1998, the Company announced by a press release the
appointment of three new members to the Board (Richard Galich, Ph.D., George
Sellers and Donna Miltenberger, who is the Executive Vice President of the
Company and the Executive Vice President and Chief Operating Officer of Foothill
Independent Bank, the bank subsidiary of the Company (the "Bank")). As a
consequence of such appointments, the Board was expanded to nine members by
the appointment of three new members; however, neither the press release nor any
other disclosure by the Company thereafter, until the Company's recent filing of
its 1999 Proxy Statement, indicated the class of directors to which each of the
three new members was appointed. In addition, the 1999 Proxy Statement
indicates that the Company's Board consists of only seven members, whereas the
Company's Form 10-K for the year ended December 31, 1998 (filed with the
Securities and Exchange Commission on March 30, 1999) was signed on behalf of
the Company by, among others, nine members of the Company's Board. It is unclear
based on Foothill's public filings and disclosure as of what date the Board was
reduced from nine to seven members. Basswood believes that the Company
reconstituted its Board as described above in an attempt to further entrench
management and as a defensive mechanism against potential third party interest
in acquiring the Company.
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* 1 moved from here; text not shown
* 2 moved from here; text not shown
* 3 moved from here; text not shown
A Founding Director of the Company Provides Unsolicited Support to
Basswood
On April 13, 1999, Mr. Wallace D. Gott of Upland, California, a founding
director, former chairman and current shareholder of the Company, wrote to Mr.
Matthew Lindenbaum. In his letter Mr. Gott indicated his dissatisfaction with
the current directors, management and performance of the Company, and
particularly his dissatisfaction with the Company's current chairman (Mr. Gott
is not a current member of Foothill's Board). The text of the letter is
reproduced in its entirety below:
4/13/99
Matthew Lindenbaum
[Address]
Dear Sir
I have read the recent articles in the Daily Bulletin of your involvement
with Foothill Independent Bank expressing displeasure with management and
the performance of the bank.
I am writing to let you know that I support you in this endeavor. I
currently own about 50,000 shares of FIB stock and can influence about
100,000 more. I was a founding director of the bank and was chairman for
about 10 years. I was the one responsible for the hiring of J.T. Waller
from First Trust Bank of Ontario to replace Hub Stokely as CEO of the
bank. The bank did very well under Mr. Waller's leadership. During my
chairmanship, I faced many difficulties in trying to have a cohesive board
and to get a building for the branch in [U]pland. The current chairman had
aligned himself with the director who owned property on Foothill Blvd. and
unsuccessfully tried to force the bank to build on that property. I feel
that I was responsible for the negotiation of one of the best leases the
bank currently has, which is the one of Mountain Ave. in Upland.
I feel that there are major problems that the directors are doing nothing
about. One being that several key employees have left the bank and have
[gone] to competitive banks. This problem started a few years
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back and is still ongoing. I feel that the make up of the present board is
conducive to a rubber stamp of management and I would support your efforts
to correct this situation.
If I can assist you in any way, please let me know.
Sincerely
/s/ Wallace D. Gott
Wallace D. Gott
CONCLUSION
Based on Basswood's perceptions of the opportunities and challenges
confronting the Company, and the Company's failure to respond in full to
Basswood's requests and communications, Basswood believes that the shareholders
would benefit from the election of Mr. Matthew Lindenbaum to the Board. Basswood
believes that Mr. Lindenbaum will bring a wealth of experience, specialized
knowledge, enthusiasm and vigor that is essential to the Company. Accordingly,
Basswood is proposing Mr. Lindenbaum based on Basswood's belief that the Company
would prosper -- and shareholders would benefit -- with the addition of Mr.
Lindenbaum as a non-management member of the Board. Mr. Lindenbaum will, at
all times, act in accordance with his fiduciary obligations under California
Law.
If elected, Mr. Lindenbaum could not individually effectuate action by
the Board. However, as more fully described above, by electing Mr. Lindenbaum,
Basswood believes that you will be sending a message to the remaining Board
members that you wish them to focus on enhancing shareholder value.
None of the Participants (as hereinafter defined) knows of any agreements
or understandings concerning the possible acquisition of the Company and there
can be no assurance that an acquisition can be effected at prices materially
above the current market value for the Common Stock.
BASSWOOD PROPOSAL
ELECTION OF BASSWOOD NOMINEE AS DIRECTOR
Basswood is proposing that the shareholders of the Company elect the
Basswood Nominee (Mr. Matthew Lindenbaum) to the Board at the Annual
Meeting. Mr. Lindenbaum, who has consented to serve as a director, would
serve if elected until the next annual meeting of shareholders at which the
class of directors of the Company's Board on which Mr. Lindenbaum would serve
is scheduled for election and until his successor has been elected and
qualified. Mr. Lindenbaum's business address is c/o Basswood
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Partners, L.L.C., 645 Madison Avenue, 10th Floor, New York, New York 10022. Mr.
Lindenbaum is 36 years old. A brief summary of Mr. Lindenbaum's professional
biography is set forth in Annex I attached hereto.
It is anticipated that Mr. Lindenbaum, upon election, will be entitled to
receive director's fees of $1,550 per month for service and attendance at Board
and committee meetings and $454 per month as reimbursement for health insurance
premiums, according to the 1999 Proxy Statement. However, Mr. Lindenbaum will
donate all director's fees received by him, except for amounts sufficient to
reimburse Mr. Lindenbaum for travel expenses incurred in connection with his
duties as a director, to Foothill Presbyterian Hospital. Annex II sets forth
certain information with respect to the Common Stock beneficially owned by Mr.
Lindenbaum.
VOTE AND RECOMMENDATION
The shares of Common Stock constitute the only outstanding class of voting
securities of the Company. A majority of the outstanding shares of Common Stock
will constitute a quorum at the Annual Meeting. Shareholders who abstain on any
proposal or withhold authority to vote on the election of directors will be
counted in determining the presence of a quorum. Broker non-votes will not be
counted in determining the presence of a quorum. Broker non-votes and
abstentions will have no effect on the election of directors because, assuming
the existence of a quorum, directors are elected by a plurality vote. Each
shareholder is entitled to one vote for each share of Common Stock held as of
the Record Date, except that in the election of directors each shareholder may
cumulate his or her votes and give any one nominee a number of votes equal to
the number of directors to be elected multiplied by the number of shares which
the shareholder is entitled to vote at the meeting, or to distribute the votes
among any number of candidates for election to the Board, if (i) the name of the
candidate for whom such votes are cast has been placed in nomination prior to
the voting and (ii) such shareholder or any other shareholder has given notice
at the meeting prior to the vote on election of directors of that shareholder's
intention to cumulate his or her votes. Basswood intends to cumulate the votes
to which the shares of Common Stock Basswood beneficially owns are entitled and
hereby solicits authority to cumulate those votes which are granted to it by
proxy (and to give any required notice thereof) voting in favor of the proposal
relating to the election of the Basswood Nominee to the Board. Unless instructed
to the contrary, the shares represented by the proxies will be voted "FOR" the
election of Mr. Matthew Lindenbaum.
17
<PAGE>
BASSWOOD RECOMMENDS THAT EACH SHAREHOLDER CUMULATE
HIS OR HER VOTES AND VOTE "FOR" MR. MATTHEW LINDENBAUM
(THE BASSWOOD NOMINEE).
CERTAIN INFORMATION REGARDING BASSWOOD PARTNERS, THE PARTNERSHIP, BASSWOOD
CAPITAL, THE BASSWOOD NOMINEE, THE ACCOUNTS AND OTHER PARTICIPANTS
Basswood Partners is a private investment limited liability company
organized under the laws of the State of Delaware. Basswood Partners' principal
business is overseeing and managing investments by affiliates of Basswood
Partners, including the Partnership, primarily in banks, bank holding companies
and thrift institutions and other financial services companies. The Partnership
is a limited partnership organized under the laws of the State of Delaware.
Basswood Capital is a limited liability company organized under the laws of
Delaware. Basswood Capital acts as investment manager to Basswood International
and as advisor to several accounts. The principal business address of each of
Basswood Partners, Messrs. Matthew and Bennett Lindenbaum, Basswood Capital and
each of the Accounts, including the Partnership, is 645 Madison Avenue, 10th
Floor, New York, New York 10022. As of the Record Date, 553,321 shares of Common
Stock were beneficially owned collectively by Basswood Partners and the
Accounts, including the Partnership, and 100 shares were owned of record by
Bennett Lindenbaum. Basswood or its predecessor entities has beneficially owned
shares of Common Stock since October 1996. From time to time, shares are and may
be sold between the Accounts in the ordinary course of investment business.
Messrs. Matthew and Bennett Lindenbaum also have investment discretion over
certain other accounts which do not currently own shares of Common Stock but
which may in the future buy and sell Common Stock from time to time.
Messrs. Matthew and Bennett Lindenbaum are the managing members of
Basswood Partners. As such, Messrs. Matthew and Bennett Lindenbaum may be
deemed to beneficially own the 553,421 shares of Common Stock beneficially
owned by Basswood Partners.
During the last five years, none of the Participants has been (i)
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, United States
federal or state securities laws or finding any violations with respect to such
laws. Each of Messrs. Matthew and Bennett Lindenbaum is a citizen of the United
States.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
18
<PAGE>
The shares of Common Stock constitute the only class of outstanding voting
securities of the Company. Accordingly, only holders of Common Stock are
entitled to vote at the Annual Meeting or execute proxies in connection
therewith. The Company stated in the 1999 Proxy Statement that as of April
2, 1999, there were 5,915,263 shares of Common Stock outstanding. Each
shareholder is entitled to one vote for each share of Common Stock held as of
the Record Date, except that in the election of directors each shareholder may
cumulate his or her votes and give any one nominee a number of votes equal to
the number of directors to be elected multiplied by the number of shares which
the shareholder is entitled to vote at the meeting, or to distribute the votes
among any number of candidates for election to the Board, if (i) the name of the
candidate for whom such votes are cast has been placed in nomination prior to
the voting and (ii) such shareholder or any other shareholder has given notice
at the meeting prior to the vote on election of directors of that shareholder's
intention to cumulate his or her votes.
The following table sets forth, as of April 2, 1999, the name of each
person who owned beneficially more than 5% of the shares of Common Stock
outstanding at such date, the number of shares owned by each such person, the
percentage of the outstanding shares represented thereby and certain information
with respect to such person. The information below (except with respect to
Basswood Partners and footnote (1)) is based on information reported by the
Company in the Company's 1999 Proxy Statement.
NUMBER OF SHARES PERCENTAGE
NAME AND ADDRESS BENEFICIALLY OF
OF BENEFICIAL OWNER OWNED CLASS
------------------- ----- -----
Basswood Partners, L.L.C. (1) 553,421 9.36%
Matthew Lindenbaum
Bennett Lindenbaum
645 Madison Avenue
New York, NY 10022
William V. Landecena (2) 358,762 (3) 6.06%
510 South Grand Avenue
Glendora, CA 91741
All Directors and Executive 1,239,464 (4) 20.95
Officers of the Company
as a Group (9 in number)
19
<PAGE>
- ----------
(1) As of January 1, 1999, Basswood Partners and Basswood Capital replaced
Basswood Partners, L.P. as the general partner of the Partnership and
Whitewood and investment general partner of Jet I and Basswood
International. As of the Record Date, the 553,421 Shares beneficially
owned by Basswood Partners are owned of record as follows: the Partnership
is the record owner of 445,738 Shares; Whitewood is the record owner of
4,608 Shares; Jet I is the record owner of 22,292 Shares; Basswood
International is the record owner of 80,683 Shares; and, Mr. Bennett
Lindenbaum is the record owner of 100 Shares.
(2) Mr. Landecena is the Chairman of the Board of Directors and is a director
of the Company and Foothill Independent Bank (the "Bank").
(3) Includes 79,488 shares of Common Stock subject to outstanding stock
options exercisable during the 60-day period ending June 2, 1999. The
shares beneficially owned by Mr. Landecena include shares held in several
trusts established by Mr. Landecena.
(4) Includes an aggregate of 446,942 shares of Common Stock subject to
outstanding stock options exercisable during the 60-day period ending June
2, 1999.
For information relating to the ownership of Common Stock by directors and
executive officers of the Company, see Annex III hereto.
INFORMATION CONCERNING THE COMPANY
The Company, whose principal executive offices are located at 510 S. Grand
Avenue, Glendora, California 91741, is subject to the informational requirements
of the Exchange Act and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy statements and other information filed by the Company with the
Commission in accordance with the Exchange Act may be inspected and copied at
the public reference facilities of the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the following regional
offices of the Commission: 7 World Trade Center, Suite 1300, New York, New York
10048 and Suite 1400, Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, such material concerning the Company
can be inspected at the offices of the Nasdaq National Market, 1735 K Street,
N.W., Washington, D.C. 20006. Please call the Commission at 800-SEC-0330 for
further information on the operation of the public reference facilities. The
Commission also maintains a World Wide Web site (http://www.sec.gov) that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.
SOLICITATION OF PROXIES
20
<PAGE>
Solicitation of proxies may be made by Beacon Hill Partners and Basswood.
Beacon Hill Partners will employ approximately twenty-five persons to solicit
shareholders. Proxies will be solicited by mail, advertisement, telephone or
telecopier and in person. Other than Beacon Hill Partners, no person will
receive additional compensation for such solicitation.
Banks, brokers, custodians, nominees and fiduciaries may be requested to
forward solicitation material to beneficial owners of the shares of Common
Stock. Basswood will reimburse banks, brokers, custodians, nominees and
fiduciaries for their reasonable expenses for sending solicitation material to
the beneficial owners on behalf of Basswood.
In addition, Basswood has retained Beacon Hill Partners to assist and to
provide advisory services in connection with this proxy solicitation for which
Beacon Hill Partners will be paid a fee of not more than $20,000 and will be
reimbursed for reasonable out-of-pocket expenses. Basswood has also agreed to
indemnify Beacon Hill Partners against certain liabilities and expenses in
connection with this proxy solicitation.
The cost of the solicitation of proxies with respect to the election of
the Basswood Nominee will be borne by Basswood. At the present time, Basswood
does not intend to request the Board or the shareholders to authorize the
reimbursement to Basswood for expenses incurred in connection with the
solicitation of proxies hereunder. Costs related to such solicitation of
proxies include expenditures for attorneys, accountants, financial advisers, the
fees of Beacon Hill Partners, public relations advisers, printing, advertising,
postage, all litigation and related expenses and filing fees. Such fees and
expenses are expected to aggregate approximately $200,000. To date, Basswood has
incurred approximately $155,000 of such total estimated expenditures.
If you have any questions concerning this Proxy Statement or the
procedures to be followed to execute and deliver a proxy, please contact Beacon
Hill Partners at:
BEACON HILL PARTNERS, INC.
90 BROAD STREET
NEW YORK, NEW YORK 10004
Call Toll-Free: 1-800-755-5001
Call Collect: (212) 843-8500
Attention: Rick Grubaugh
If you have any questions concerning this solicitation in general, feel
free to call Matthew Lindenbaum at Basswood Partners collect at (212) 521-9500.
PROXY PROCEDURES
21
<PAGE>
Unless contrary instructions are indicated on the proxy, all shares of
Common Stock represented by valid proxies received pursuant to this solicitation
(and not revoked before they are voted) will be voted "FOR" the election of Mr.
Matthew Lindenbaum, the Basswood Nominee, to the Board. A proxy executed by a
holder of shares may be revoked at any time before its exercise by sending a
written revocation (as provided below), by submitting another properly executed
proxy with a later date prior to the time of the Annual Meeting or by giving
notice of revocation at the Annual Meeting. The mere presence of any shareholder
at the Annual Meeting will not operate to revoke his or her proxy. The
revocation may be delivered to Basswood Financial Partners, L.P. c/o Beacon Hill
Partners, 90 Broad Street, New York, New York 10004 or the Company at 510 South
Grand Avenue, Glendora, California 91741 or at any other address provided by the
Company. Although a revocation or a later dated proxy delivered to the Company
but not to Basswood will be effective, Basswood requests that if a revocation or
a later dated proxy is delivered only to the Company, a photostatic copy of the
revocation or later dated proxy also be delivered to Beacon Hill Partners (FAX #
212-843-4384) so that it will be aware of such revocation or later dated proxy.
All revocations received by Basswood will be delivered by it to the Company, but
will be effective only upon their receipt by the Company. Basswood intends to
deliver any such revocations to the Company immediately prior to the convening
of the Annual Meeting. Shareholders who have executed and returned a proxy and
who then attend the Annual Meeting and desire to vote in person are requested to
so notify Basswood prior to the time of the Annual Meeting.
IF YOU WISH TO VOTE "FOR" THE ELECTION OF THE BASSWOOD NOMINEE TO THE
BOARD, PLEASE SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED BLUE PROXY CARD IN
THE POSTAGE-PAID ENVELOPE PROVIDED OR REGISTERED HOLDERS MAY FAX BOTH SIDES OF
THE ENCLOSED BLUE PROXY CARD TO BASSWOOD FINANCIAL PARTNERS, L.P. C/O BEACON
HILL PARTNERS AT 212-843-4384. BASSWOOD RECOMMENDS THAT YOU CUMULATE YOUR VOTES
AND VOTE "FOR" THE BASSWOOD NOMINEE.
SHAREHOLDER PROPOSAL FOR 2000 ANNUAL MEETING
According to the Company's 1999 Proxy Statement, any shareholder
proposal intended for inclusion in the proxy material for the 2000 Annual
Meeting must have been received in writing by the Company on or before December
27, 1999. The inclusion of any proposal will be subject to applicable rules of
the Commission.
OTHER MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
Neither Basswood nor any of the Participants is aware of any matter to be
considered by the Company's shareholders at the
22
<PAGE>
Annual Meeting other than the election of directors to the Board. However, if
any other matters come before the Annual Meeting, including any motion to
adjourn the Annual Meeting prior to the taking of a vote on the election of
directors, the proxies will vote in their discretion all shares covered by Blue
Proxy Cards with respect to such matters unless such discretionary authority has
been specifically withheld.
COMPANY INFORMATION
Except as otherwise noted herein, the information concerning the Company
and its shareholders (other than the Participants) contained in this Proxy
Statement has been taken from or is based upon documents and records on file
with the Commission and other publicly available information. Although the
Participants do not have any knowledge that would indicate that any statement
contained herein based upon such documents and records is untrue, the
Participants do not take any responsibility for the accuracy or completeness of
the information contained in such documents and records, or for any failure by
the Company to disclose events that may affect the significance or accuracy of
any such information. The Company's 1999 Proxy Statement, when distributed to
you, will contain additional information concerning the Common Stock, beneficial
ownership of the Common Stock by directors and officers and other information
concerning directors and officers, compensation paid to executive officers, and
the principal holders of Common Stock.
Only holders of record as of the close of business on the Record Date will
be entitled to vote at the Annual Meeting. Accordingly, it is important that you
vote the shares held by you on the Record Date or grant a proxy to vote such
shares even if you have sold such shares after such date.
If your shares are held in the name of a brokerage firm, bank, custodian,
fiduciary or other nominee on the Record Date, only it can vote your shares, and
only upon receipt of your specific instructions. Accordingly, please sign, date
and mail the enclosed blue proxy card in the envelope provided or contact the
person responsible for your account and give instructions for your shares to be
voted.
As fellow shareholders with common interests, we thank you very much for
your consideration of our proposals.
BASSWOOD FINANCIAL PARTNERS, L.P.
BASSWOOD PARTNERS, L.L.C.
BASSWOOD CAPITAL MANAGEMENT, L.L.C.
Dated: May 7, 1999
23
<PAGE>
ANNEX I
BIOGRAPHICAL INFORMATION REGARDING THE BASSWOOD NOMINEE
Mr. Matthew Lindenbaum, the Basswood Nominee, graduated Phi Beta Kappa
and Summa Cum Laude from Brandeis University in 1986 with a B.A. in
economics.
In June of 1986, Mr. Lindenbaum joined the Mortgage Finance Group at
Merrill Lynch Capital Markets where he structured derivative mortgage securities
and helped advise banks on their financial strategies.
In 1987, Mr. Lindenbaum left Merrill Lynch and joined Reid Nagle in
founding SNL Securities, L.P. SNL Securities provides data and research on
publicly traded banks, savings and loans, real estate and financial services
companies to money managers, investment banks, and consultants. In addition, SNL
Securities provides consulting services to banks, savings & loans and investor
groups seeking to purchase banks. While at SNL Securities, Mr. Lindenbaum helped
advise the Robert M. Bass Group on their government assisted acquisition of
American Savings and Loan of California. In addition to other acquisition
related consulting assignments, Mr. Lindenbaum also functioned as a bank equity
analyst and advised investment managers throughout the country on banking
related issues. Mr. Lindenbaum was a general partner of SNL Securities and
remains a limited partner of the firm.
For the past ten years, Mr. Lindenbaum has been managing family
investments and the various Basswood accounts either individually or through
Basswood Partners, L.L.C., Basswood Capital Management, L.L.C. and Basswood
Partners, L.P.
Mr. Lindenbaum has been quoted in various publications including Barrons,
Forbes, Business Week, and the New York Times. He has also appeared on CNN and
the Financial News Network as a commentator on banking issues.
Mr. Lindenbaum served as a Director of Garden State Bancshares, Inc. in
Jackson, New Jersey from April 1994 to January 1996 and currently sits on the
board of Community State Bank in Teaneck, New Jersey where he has been a
director and organizer since March 1997.
I-1
<PAGE>
ANNEX II
TRANSACTIONS BY BASSWOOD PARTNERS, L.L.C., BASSWOOD FINANCIAL PARTNERS,
L.P., MR. MATTHEW LINDENBAUM, MR. BENNETT LINDENBAUM AND EACH ACCOUNT
Since April 29, 1997, the Partnership, Mr. Matthew Lindenbaum, Mr. Bennett
Lindenbaum and each Account have engaged in the following transactions in
securities of the Company (Basswood Partners and Basswood Capital do not own of
record any securities of the Company). In each such transaction, the securities
acquired or disposed of consisted of shares of the Common Stock. The following
table does not reflect the receipt of stock dividends periodically declared by
the Company since October 1996. Except as otherwise indicated below, all
transactions were effected on the Nasdaq National Market.
Basswood Financial Partners
Trade Date Quantity Cost ($)
- ---------- -------- --------
04-30-97 730 10,128.75
07-02-97 3,705 49,654.37
08-29-97 740 10,637.50
09-02-97 175 2,571.87
09-18-97 7,565 105,910.00
09-19-97 2,225 31,428.12
09-25-97 13,430 192,744.25
10-02-97 6,670 107,653.75
10-10-97 3,785 63,871.87
10-23-97 2,405 40,283.75
11-13-97 1,876 28,960.75
11-24-97 3,750 60,937.50
12-01-97 600 9,630.00
12-16-97 4,110 68,328.75
01-06-98 11,470 195,334.10
02-20-98 390 6,552.00
02-23-98 13,295 228,947.50
02-24-98 2,345 40,744.37
02-25-98 3,910 68,913.75
04-06-98 320 5,429.60
06-11-98 5,100 83,665.50
07-01-98(1) (4,080) 64,922.83
(1) Sales
II-1
<PAGE>
10-06-98 1,000 10,112.50
12-31-98 1,185 17,846.10
01-06-99 15,065 223,903.56
02-03-99(1) (5,540) 83,512.70
04-06-99(1) (13,960) 204,751.46
1994 Garden State, L.P. (Subsequently contributed to Basswood Financial
Partners)
Trade Date Quantity Cost ($)
- ---------- -------- --------
04-30-97 80 1,110.00
07-02-97(1) (3,704) 49,452.71
08-29-97 70 1,006.25
09-18-97 690 9,660.00
09-19-97 205 2,895.62
09-25-97 1,235 17,724.12
10-02-97(1) (2,040) 32,832.70
10-10-97 319 5,383.12
10-23-97 200 3,350.00
11-13-97 159 2,454.56
11-24-97 320 5,200.00
12-01-97 50 802.50
12-16-97 345 5,735.62
01-06-98(1) (2,819) 47,853.80
02-20-98 30 504.00
02-23-98 960 16,531.25
02-24-98 170 2,953.75
02-25-98 280 4,935.00
04-06-98(1) (8,622) 145,981.07
07-01-98(1) (560) 8,907.90
12-31-98 52 783.12
- ------------
(1) Sales
II-2
<PAGE>
Basswood International Fund, Inc.
Trade Date Quantity Cost ($)
- ---------- -------- --------
04-30-97 180 2,497.50
08-29-97 180 2,587.50
09-18-97 1,835 25,690.00
09-19-97 540 7,627.50
09-25-97 3,260 46,787.49
10-02-97(1) (4,460) 71,781.30
10-10-97 850 14,343.75
10-23-97 540 9,045.00
11-13-97 443 6,838.81
11-24-97 885 14,381.25
12-01-97 145 2,327.25
12-16-97 995 16,541.87
01-06-98(1) (8,299) 140,846.29
02-20-98 75 1,260.00
02-23-98 2,600 44,773.75
02-24-98 460 7,992.50
02-25-98 765 13,483.12
04-06-98 8,140 138,115.45
06-11-98(1) (4,980) 81,395.38
07-01-98 4,860 77,556.25
10-06-98(1) (720) 7,208.75
12-31-98 251 3,780.06
01-06-99(1) (13,440) 198,407.99
02-03-99 5,620 85,283.50
04-06-99 14,250 209,581.87
- ------------
(1) Sales
II-3
<PAGE>
Bennett
Lindenbaum
Trade Date Quantity Cost ($)
- ---------- -------- --------
12-18-98 100 1,468.50
Whitewood Financial Fund
Trade Date Quantity Cost ($)
- ---------- -------- --------
04-30-97 10 138.75
08-29-97 10 143.75
09-02-97(1) (175) 2,466.53
09-18-97 100 1,400.00
09-19-97 30 423.75
09-25-97 155 2,228.12
09-25-97 20 283.50
10-02-97(1) (170) 2,736.05
10-10-97 46 776.25
10-23-97 55 921.25
11-13-97 22 339.62
11-24-97 45 731.25
12-01-97 5 80.25
12-16-97 50 831.25
01-06-98(1) (350) 5,939.30
02-20-98 5 84.00
02-23-98 145 2,497.50
02-24-98 25 434.37
02-25-98 45 793.12
04-06-98 165 2,799.64
06-11-98(1) (120) 1,961.33
07-01-98(1) (220) 3,499.53
10-06-98(1) (280) 2,803.40
12-31-98 12 180.72
01-06-99 725 10,775.31
02-03-99(1) (80) 1,205.95
04-06-99(1) (290) 4,253.43
- ------------
(1) Sales
II-4
<PAGE>
JET L.P I
Trade Date Quantity Cost ($)
- ---------- -------- --------
08-19-97 8,689 116,615.37
08-22-97 9,000 123,075.00
11-02-98 4,300 48,912.50
01-06-99(1) (2,350) 34,691.87
- ------------
(1) Sales
Except as set forth in this Proxy Statement, none of the Partnership,
Basswood Partners, Mr. Matthew Lindenbaum, Mr. Bennett Lindenbaum or any of the
Accounts, nor any associate of the foregoing, directly or indirectly owns any
securities of the Company or any subsidiary of the Company, beneficially or of
record, has the right to acquire beneficial ownership within 60 days or has
purchased or sold such securities within the past two years.
To the knowledge of Basswood, except as set forth in this Proxy Statement,
none of the Partnership, Basswood Partners, Basswood Capital, Mr. Matthew
Lindenbaum, Mr. Bennett Lindenbaum or any of the Accounts, nor any associate of
the foregoing, has any substantial interest, direct or indirect, by security
holdings or otherwise, in any matter to be acted upon at the Annual Meeting,
except for the election of directors.
The shares of Common Stock beneficially owned by the Participants have
been purchased in open market transactions. The funds for the purchase of the
shares held by the Accounts and Mr. Bennett Lindenbaum have come from the
various Accounts' respective working capital. No leverage was used to purchase
any of such shares. However, one or more of the Accounts' working capital may
include the proceeds of margin loans entered into in the ordinary course of
business with Goldman, Sachs & Co., such loans being secured by the securities
owned by such Accounts.
None of the Partnership, Basswood Partners, Basswood Capital, Mr. Matthew
Lindenbaum, Mr. Bennett Lindenbaum, any of the Accounts, nor any associate of
the foregoing, is, or within the past year has been, a party to any contract,
arrangement or understanding with any person with respect to any securities of
the Company, except that Messrs. Matthew and Bennett Lindenbaum are the managing
members of Basswood Partners and of Basswood Capital. Pursuant to the terms of
the Basswood Limited Liability Company Agreement dated as of January 1, 1999,
Messrs. Matthew and Bennett Lindenbaum have the authority to perform all acts
necessary to carry out the purposes and business of Basswood
II-5
<PAGE>
Partners and of Basswood Capital pursuant to such Limited Liability Company
Agreement.
None of the Partnership, Basswood Partners, Basswood Capital, Mr. Matthew
Lindenbaum, Mr. Bennett Lindenbaum, any of the Accounts, nor any associate of
the foregoing, has any arrangement or understanding with any person (A) with
respect to any future employment by the Company or its affiliates or (B) with
respect to any future transactions to which the Company or any of its affiliates
will or may be a party, nor has any of the above-referenced persons or entities
been indebted to the Company at any time.
Other than as described in this Proxy Statement, there are no pending
legal proceedings in which the Basswood Nominee or any of his associates is a
party adverse to the Company or any of its affiliates or in which the Basswood
Nominee or any of his associates has an interest adverse to the Company or any
of its affiliates. Basswood is currently engaged in the litigation described in
"Background of the Solicitation."
The Basswood Nominee does not hold any position or office with the Company
or any parent, subsidiary or affiliate of the Company, and has never served as a
director of the Company or any parent, subsidiary or affiliate of the Company.
The Basswood Nominee does not have any family relationship, by blood,
marriage or adoption, to any director, executive officer or person nominated or
chosen by the Company to become a director or executive officer of the Company.
During the last three fiscal years, no compensation was awarded to, earned by,
or paid to the Basswood Nominee by any person for any services rendered in any
capacity to the Company or its subsidiaries.
II-6
<PAGE>
BENEFICIAL OWNERSHIP OF SHARES BY THE BASSWOOD NOMINEE, MR. BENNETT
LINDENBAUM, BASSWOOD PARTNERS, L.L.C., BASSWOOD FINANCIAL PARTNERS, L.P.,
BASSWOOD CAPITAL MANAGEMENT, L.L.C. AND THE OTHER PARTICIPANTS IN THE
SOLICITATION
The following table sets forth the beneficial ownership of the Common
Stock as of April 2, 1999 by Mr. Matthew Lindenbaum (the Basswood Nominee),
Mr. Bennett Lindenbaum, the Partnership, Basswood Partners, Basswood Capital,
the other Participants in the solicitation named below and those employees of
Basswood who will be involved in the solicitation (none of whom will receive any
additional compensation in connection therewith). Mr. Lindenbaum shares voting
and investment power with respect to such shares with the other Participants,
and all such shares were owned beneficially by Mr. Lindenbaum. The business
address of each person and entity named in the following table is c/o Basswood
Partners, L.L.C., 645 Madison Avenue, 10th Floor, New York, New York 10022:
Number of Shares Percent
Name/Title Beneficially Owned of Class (1)
- ---------- ------------------ ------------
Matthew Lindenbaum 553,421 9.36%
/Managing Member of
Basswood Partners, L.L.C.
Bennett Lindenbaum 553,421 9.36%
/Managing Member of
Basswood Partners, L.L.C.
Basswood Partners, 553,421 9.36%
L.L.C.(2)
Basswood Financial 445,738 7.54%
Partners, L.P.
Basswood International 80,683 1.36%
Fund, Inc.(2)
Basswood Capital 80,683 1.36%
Management, L.L.C.(2)
Whitewood Financial 4,608 *
Partners, L.P.
Jet I, L.P. 22,292 *
Debbie Coticchio _ _
/Financial Reporting
Marc Samit /Financial _ _
Reporting
II-7
<PAGE>
Number of Shares Percent
Name/Title Beneficially Owned of Class (1)
- ---------- ------------------ ------------
Brian Jackelow /Financial _ _
Reporting
David Verlander /Analyst _ _
Claudine Blazina /Analyst _ _
Stella Kourkoulakos _ _
/Analyst
* less than 1%
- ---------------
(1) Based on the total number of shares of Common Stock outstanding as of
the Record Date according to the Company's 1999 Proxy Statement.
(2) As of January 1, 1999, Basswood Partners, L.L.C. and Basswood Capital
Management, L.L.C. replaced Basswood Partners, L.P. as the general partner
of the Partnership and Whitewood, and investment general partner of Jet I
and investment manager of Basswood International.
II-8
<PAGE>
ANNEX III
SHARES HELD BY THE COMPANY'S DIRECTORS
AND EXECUTIVE OFFICERS
Based upon Basswood's review of the Company's 1999 Proxy Statement, to
Basswood's knowledge, the directors and five most highly compensated executive
officers of the Company (and the directors and executive officers as a group)
beneficially owned as of April 2, 1999 the following amounts of the outstanding
shares of Common Stock:
SHARES OF
DIRECTOR COMMON STOCK
OF THE BENEFICIALLY
COMPANY OWNED AS OF PERCENT
NAME AND POSITIONS AGE SINCE (1) APRIL 2, 1999 OF CLASS
------------------ --- --------- ------------- --------
CLASS I DIRECTORS
George E. Langley 58 1980 203,491(2) 3.44%
President, Chief
Executive Officer and a
Director of the Company
and the Bank
Donna Miltenberger 43 1998 91,026(2) 1.54%
Executive Vice
President, Chief
Operating Officer and a
Director
of the Company and the
Bank
George Sellers 58 1998 7,067 *
Director of the Company
and the Bank
Max E. Williams 54 1995 69,389(2) 1.17%
Director of the Company
and the Bank
CLASS II DIRECTORS -
Nominees
Richard Galich 59 1998 110,901 1.87%
Director of the Company
and the Bank
William V. Landecena 74 1973 358,762(2)(3) 6.06%
Chairman of the Board
of Directors and a
Director of the Company
and the Bank
O. L. Mestad 76 1973 257,861(2) 4.36%
Director of the Company
and the Bank
EXECUTIVE OFFICERS (other
than those who are
Directors listed above)
Tom Kramer N/A N/A 118,700 (2) 2.01%
Executive Vice
President and Secretary
of the Company and the
Bank
ALL DIRECTORS AND ___ ___ 1,239,464 (4) 20.95%
EXECUTIVE OFFICERS OF
THE COMPANY AS A GROUP
(9 in number)
- ----------
* Less than 1%
III-1
<PAGE>
(1) All dates are the dates when the named individuals first became directors
of the Bank, the Company's predecessor and wholly owned subsidiary.
(2) Includes shares subject to outstanding options exercisable during the
60-day period ending June 2, 1999, as follows: Mr. Langley -- 93,465
shares; Ms. Miltenberger -- 60,038 shares; Mr. Williams -- 62,071 shares;
Mr. Landecena -- 79,488 shares; Mr. Mestad -- 82,703 shares; and Mr.
Kramer -- 58,951 shares.
(3) The shares beneficially owned by Mr. Landecena include shares held in
several trusts established by Mr. Landecena.
(4) Includes an aggregate of 446,942 shares of Common Stock subject to
outstanding stock options exercisable during the 60-day period ending June
2, 1999.
III-2
<PAGE>
Preliminary Copy--Subject to Completion [Form of Proxy Card]
BLUE PROXY CARD
ANNUAL MEETING OF SHAREHOLDERS OF FOOTHILL INDEPENDENT BANCORP
TO BE HELD ON MAY 25, 1999 TO VOTE "FOR" THE DIRECTOR NOMINEE SET FORTH
BELOW
THIS PROXY IS SOLICITED BY BASSWOOD FINANCIAL PARTNERS, L.P., BASSWOOD
PARTNERS, L.L.C. (COLLECTIVELY, "BASSWOOD")
AND BASSWOOD CAPITAL MANAGEMENT, L.L.C.
The undersigned hereby appoints Matthew Lindenbaum and Bennett Lindenbaum,
and each of them individually, each with full power of substitution, as proxy of
the undersigned, to attend the Annual Meeting of the shareholders of Foothill
Independent Bancorp (the "Company") to be held on May 25, 1999 at 4:30 P.M.
(Pacific time) at the Glendora Country Club, 310 S. Amelia Avenue, Glendora,
California, and at any and all adjournments or postponements thereof and any
special meeting called in lieu thereof, and to vote all Common Stock of the
Company, as designated on the reverse side of this proxy, with all powers the
undersigned would possess if personally present at the meeting.
This Proxy will be voted or withheld from being voted in accordance with
the instructions specified. IF NO CHOICE IS SPECIFIED, THE PROXY WILL CONFER
DISCRETIONARY AUTHORITY AND WILL BE VOTED "FOR" THE BASSWOOD NOMINEE LISTED
BELOW. This Proxy confers authority for each of the aforementioned persons to
vote in his or her discretion with respect to amendments or variations to the
matters identified in the notice of meeting accompanying this Proxy and other
matters which may properly come before this meeting. Basswood intends to
cumulate the votes to which the shares of the Company's Common Stock it
beneficially owns are entitled and hereby solicits authority to cumulate those
votes which are granted to it by proxy (and to give any required notice thereof)
voting in favor of the Basswood Proposal (Proposal 1 below) relating to the
election of the Basswood Nominee to the Board.
(Please mark an "X" in the appropriate box)
BASSWOOD FINANCIAL PARTNERS, L.P., BASSWOOD PARTNERS, L.L.C.
AND BASSWOOD CAPITAL MANAGEMENT, L.L.C.
RECOMMEND A VOTE "FOR" THE FOLLOWING PROPOSALS
1. ELECTION OF DIRECTOR: To elect the Basswood Nominee listed below.
[ ] FOR NOMINEE LISTED [ ] WITHHOLD AUTHORITY TO
BELOW VOTE FOR NOMINEE LISTED BELOW
Mr. Matthew Lindenbaum
III-3
<PAGE>
2. IN THEIR DISCRETION WITH RESPECT TO ANY OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE ANNUAL MEETING.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The undersigned hereby revokes any other proxy or proxies heretofore given to
vote or act with respect to the shares of the Company's Common Stock held by the
undersigned, and hereby ratifies and confirms all actions the herein named
proxies, their substitutes, or any of them may lawfully take by virtue hereof,
including but not limited to granting Basswood the authority to cumulate the
votes granted to it by this proxy and to give any required notice thereof.
Please date this Proxy and sign it exactly as your name or names appear on your
stock certificates or on a label affixed thereto. When shares are held jointly,
EACH joint owner should sign. When signing as attorney, executor, administrator,
trustee, guardian, corporate officer, etc., give full title as such. If shares
are held by a corporation, please sign in full corporate name by the President
or other authorized officer. If shares are held by a partnership, please sign in
partnership name by an authorized person.
Dated:
-----------------------------------------
-----------------------------------------
Signature
-----------------------------------------
Signature, if held jointly
-----------------------------------------
Title of Authority
If you have questions or need assistance in voting your shares, please contact
the firm assisting us in the solicitation of proxies:
BEACON HILL PARTNERS, INC.
90 BROAD STREET
NEW YORK, NEW YORK 10004
TOLL FREE: 1-800-755-5001
COLLECT: (212) 843-8500
ATTENTION: Rick Grubaugh
IN ORDER FOR YOUR PROXY TO BE VALID, IT MUST BE DATED.
PLEASE SIGN, DATE AND MAIL YOUR PROXY PROMPTLY TO
BEACON HILL PARTNERS, INC.
90 BROAD STREET
NEW YORK, NEW YORK 10004
III-4
