Citizens First Corporation's Board of Directors Rejects Porter Bancorp, Inc.'s Unsolicited Tender Offer
November 06 2009 - 12:05PM
PR Newswire (US)
BOWLING GREEN, Ky., Nov. 6 /PRNewswire-FirstCall/ -- Citizens First
Corporation (NASDAQ:CZFC) (the "Company") today announced that its
Board of Directors unanimously recommends that the holders of the
Company's common stock reject Porter Bancorp, Inc.'s (NASDAQ:PBIB)
("Porter Bancorp") unsolicited tender offer to acquire all
outstanding shares of the Company's common stock for $9.00 per
share, payable, at the election of the holder thereof in the form
of $9.00 in cash; or 0.5686 shares of the common stock of Porter
Bancorp; or $4.50 in cash and 0.2843 shares of Porter Bancorp
common stock. In making its recommendation, the Company sent the
following letter to its stockholders: November 6, 2009 Dear Fellow
Stockholders: By now you should have received the tender offer
materials of Porter Bancorp, Inc., by which Porter Bancorp is
making a tender offer to purchase shares of Citizens First
Corporation common stock. Your board of directors has carefully
evaluated the terms of Porter Bancorp's tender offer, with the
advice of our financial and legal advisers, and has concluded that
it is inadequate and not in the best interests of Citizens First or
its stockholders (other than Porter Bancorp). This letter, and the
enclosures, explain why we are recommending that you reject Porter
Bancorp's tender offer and not tender your shares for sale to
Porter Bancorp. Our reasons, as more fully discussed below and in
the enclosure, can be summarized in three points: First: The price
offered by Porter Bancorp is not adequate or fair to our
stockholders based on a thorough review by our independent
financial advisors, Chartwell Capital, Ltd.
(http://www.chartwellcapital.com/) and Commerce Street Capital, LLC
(http://www.commercestreetcapital.com/). -- Porter Bancorp's tender
offer is financially inadequate. -- Porter Bancorp's tender offer
does not properly reflect Citizens First's business, financial
condition, current business strategy and future prospects. -- The
board has concerns about the value of Porter Bancorp common stock
to the extent tendering stockholders elect this form of
consideration. -- Porter Bancorp's tender offer is taxable,
regardless whether you elect to receive shares of Porter Bancorp
stock or cash. Second: Now is not the appropriate time for a well
capitalized banking organization such as Citizens First to pursue a
sale transaction, given the depressed conditions prevalent in the
market generally and within the financial institutions industry in
particular. -- Porter Bancorp's tender offer is opportunistic. --
Porter Bancorp's tender offer is disruptive to Citizens First's
business, including its customers and key employees. Third: The
terms and conditions of Porter Bancorp's tender offer are coercive
and, in our view, create unacceptable risks for our stockholders
who do not tender their shares. Your board of directors unanimously
recommends that you reject Porter Bancorp's tender offer and NOT
tender your shares to Porter Bancorp. Our directors and executive
officers do not intend to tender their Citizens First shares. If
you have already tendered your shares, you have the right to
withdraw them now that you have the additional information we are
providing with this letter. Background information We recognize
that the stock markets in general, and the trading prices of
community banks such as Citizens First, have been disappointing.
Your board of directors, on a number of occasions, has deliberated
about the strategy that is in the best interests of your
organization and you, our stockholders, in this challenging
environment. Since last May 2009, a small group of local
shareholders has approached certain members of our board expressing
their views that Citizens First should add a representative to your
board of directors or seek a buyer for your company. We listened to
and considered their suggestions and concerns. For many of the same
reasons discussed below, the board of directors, working with its
independent professional advisors, concluded it was not in our
stockholders' best interests to pursue a sale at this time but that
the best approach was to pursue a strategy to enhance long-term
value for our stockholders and to position our organization to take
advantage of opportunities that arise when the economy and market
conditions improve. As discussed in our October 20, 2009 earnings
press release, we initiated a reevaluation of Citizens First's
business during the third quarter. And our analysis, and
determination about what is in our organization's best interests,
did not change when we evaluated the letter Porter Bancorp sent us
in September 2009 indicating an interest in engaging in exclusive
negotiations with Citizens First, or when we learned Porter Bancorp
had entered into option agreements, and obtained irrevocable
proxies, from an undisclosed group of our stockholders. While we
are not certain which stockholders of Citizens First entered into
option agreements with Porter Bancorp in October--Porter Bancorp
failed to publicly disclose their names--the board believes the
genesis is this same group of stockholders. Then, like now, we
concluded that pursuing the sale of your institution with Porter
Bancorp was not in the best interests of all of our stockholders.
Your board of directors unanimously recommends that you reject
Porter Bancorp's tender offer and NOT tender your shares to Porter
Bancorp. Why Porter Bancorp's tender offer should be rejected The
board's determination is based on numerous factors as detailed in
the enclosed Schedule 14D-9, including: Porter Bancorp's tender
offer is opportunistic. Porter Bancorp's tender offer comes at the
end of the worst economic recession in the United States since the
Great Depression. The recession has adversely affected the banking
industry in dramatic ways and resulted in significant declines in
the values of banking and financial stocks. As Porter Bancorp
observes in its tender offer materials, "Over the past year and a
half, the financial services industry as a whole, as well as the
securities markets generally, have been materially and adversely
affected by very significant declines in the values of nearly all
asset classes and by a very serious lack of liquidity. Financial
institutions in particular have been subject to increased
volatility and an overall loss in investor confidence." Like many
financial institutions, Citizens First's business and the trading
price of our common stock have been adversely affected by these
conditions. The board believes Porter Bancorp timed its tender
offer to take advantage of these conditions and attempt to acquire
control of Citizens First through a coercive offer, as discussed
further below, at a time when the trading price of our common stock
was at its most depressed. Porter Bancorp's tender offer is
financially inadequate. The board believes that Porter Bancorp's
tender offer does not fully reflect the intrinsic value of Citizens
First. On November 5, 2009, Commerce Street Capital rendered its
opinion to the board of directors of Citizens First, subsequently
confirmed in writing, that, as of November 5, 2009 and based upon
and subject to the factors and assumptions set forth in the written
opinion, the consideration proposed to be paid to our common
stockholders pursuant to Porter Bancorp's tender offer was
inadequate from a financial point of view to such holders (other
than Porter Bancorp and its affiliates). Porter Bancorp's tender
offer does not properly reflect Citizens First's business,
financial condition, current business strategy and future
prospects. Porter's $9.00 tender offer price is below both the
$11.08 book value and the $9.08 tangible book value per Citizens
First's common share as of September 30, 2009. During the third
quarter of 2009, the board and senior management undertook to
evaluate Citizens First's strategic plan. This included a complete
reevaluation of our branch delivery model with a focus on
streamlining delivery and staffing levels to generate improved
financial performance. We identified two branch locations that did
not currently meet, and were not likely to meet in the future,
targeted performance levels, and that were in such close proximity
to other centers that the two could easily be combined and maintain
service levels. In addition, we began to restructure to gain
efficiencies in our workforce, both at the branch level and in our
administrative services area, including taking initial steps to
reduce overall staff by twenty percent. The board believes that
Citizens First's plan to reduce operating expenses, combined with
ongoing efforts to improve net interest income, will allow Citizens
First to favorably impact its financial performance going forward
despite the current market conditions. The board believes this
long-term strategic plan is the best approach for creating value
for Citizens First and its stockholders, given the depressed market
for bank and financial stocks and other conditions, and that our
senior management will be able to create stockholder value
meaningfully in excess of the tender offer price through the
continued execution of this strategic plan. The board and
management remain entirely focused on generating the maximum value
for stockholders. Porter Bancorp's tender offer is coercive. Porter
Bancorp's tender offer by its terms is coercive and, as mentioned
above, timed by Porter Bancorp to take advantage of the depressed
trading price of our common shares. The board believes Porter
Bancorp chose this coercive tender offer structure to attempt to
acquire control of Citizens First, one of its competitors, at a
time when the trading price of our common shares was extremely
depressed and not reflective of Citizens First's true value and at
a tender offer price that the board believes, and has been advised
by its financial advisors, to be inadequate. Porter Bancorp's
tender offer is disruptive to Citizens First's business, including
its customers and key employees. The unsolicited nature of Porter
Bancorp's tender offer and the uncertainty surrounding the tender
offer are and will continue to be disruptive to our customer and
employee bases. Uncertainty surrounding future ownership and
management could result in customer attrition and the inability to
market new products to customers. The board has concerns about the
value of Porter Bancorp common stock to the extent stockholders who
tender Citizens First common shares elect this form of
consideration. Porter Bancorp identifies several risks in its
tender offer materials that could negatively impact Porter
Bancorp's business and the value of its common stock. You should
consider these risks carefully in considering the tender offer,
particularly should you determine to tender your Citizens First
common shares and elect to receive Porter Bancorp common stock in
the tender offer. The board has concerns that the risks identified
in Porter Bancorp's tender offer could limit Porter Bancorp's
growth prospects and negatively impact the future trading price of
Porter Bancorp common stock. The consideration offered by Porter
Bancorp is taxable. The tender offer price Porter Bancorp is
offering would generally be taxable to Citizens First common
stockholders, regardless of the form of the consideration that the
stockholders who tender our common shares in the tender offer
receive. Porter Bancorp's tender offer is highly conditional and
therefore may be illusory. The effect of the tender offer's
numerous and subjective conditions is that our common stockholders
cannot be assured that Porter Bancorp will consummate the tender
offer, resulting in what amounts to an option to purchase Citizens
First that can be exercised in Porter's discretion after causing
substantial disruption to our business. Citizens First's directors
and executive officers do not intend to tender their Citizens First
common shares. Our directors and executive officers believe that
the intrinsic value of Citizens First's business, financial
condition, current business strategy and future prospects have not
been fully reflected in Porter Bancorp's tender offer price. As a
result, to our knowledge, none of Citizens First's directors or
executive officers currently intends to tender any of their
Citizens First common shares for purchase pursuant to Porter
Bancorp's tender offer. Accordingly, the board of directors
unanimously recommends that Citizens First's stockholders reject
Porter Bancorp's tender offer and NOT tender their Citizens First
common shares in Porter Bancorp's tender offer. Your board of
directors and management team take their fiduciary responsibilities
to you, our stockholders, extremely seriously. We are committed to
creating value for all of our stockholders and remain open to
appropriate opportunities that will achieve this result. The
enclosed Schedule 14D-9 contains a detailed description of the
reasons for your board of directors' recommendation and the factors
considered by the board. We urge you to read the Schedule 14D-9 so
you will be fully informed before you make your decision. If you
have questions or need assistance, please call. Sincerely, Jack
Sheidler Todd Kanipe Chairman of the Board President and Chief
Executive Officer Citizens First Corporation Citizens First
Corporation Commerce Street Capital, LLC as well as Chartwell
Capital, Ltd. are serving as the Company's financial advisors, and
Wyatt, Tarrant & Combs, LLP is serving as legal counsel to the
Company. About the Company The Company is a bank holding company
headquartered in Bowling Green, Warren County, Kentucky. As of
September 30, 2009, the Company had total assets of $341.7 million
and total deposits of $275.7 million. About the Company's financial
advisors Commerce Street Capital, LLC
(http://www.commercestreetcapital.com/) is a leading investment
banking firm primarily serving small and medium sized financial
institutions. It is an affiliate of Service Equity Partners, LP and
Service Equity Partners (QP), LP, which own 9.9% of the Company's
common stock. Chartwell Capital, Ltd.
(http://www.chartwellcapital.com/) is a financial advisory firm
that provides services to the boards of directors and executive
management of financial institutions nationwide and has extensive
experience with bank acquisitions and branch sales in the
Commonwealth of Kentucky. Important information and where to find
it This press release is neither an offer to purchase nor the
solicitation of an offer to sell any securities. In response to the
exchange offer proposed by Porter Bancorp, Inc. referred to in this
press release, the Company has filed a Solicitation/Recommendation
Statement on Schedule 14D-9 with the SEC. Investors and security
holders are urged to read the Solicitation/Recommendation Statement
on Schedule 14D-9 because it contains important information.
Investors and security holders may obtain a free copy of the
Solicitation/Recommendation Statement on Schedule 14D-9 and other
documents that the Company files with the SEC in connection with
the exchange offer at the SEC's Web site at http://www.sec.gov/ and
the Company's Web site at http://www.citizensfirstbank.com/. In
addition, the Solicitation/Recommendation Statement on Schedule
14D-9 and other documents filed by the Company with the SEC in
connection with the exchange offer may be obtained from the Company
free of charge by directing a request to Citizens First
Corporation, Attn: M. Todd Kanipe, 1065 Ashley Street, Suite 200,
Bowling Green, Kentucky 42103. As used in this letter, the "tender
offer materials" of Porter Bancorp refers to the Preliminary
Prospectus/Offer to Exchange, Subject to Completion, dated October
23, 2009, of Porter Bancorp, Inc. and the related letter of
transmittal. Forward-looking statements Certain statements in this
press release may constitute "forward-looking" statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements are based upon assumptions as to
future events that may not prove to be accurate. These statements
are not guarantees of future performance and involve risks,
uncertainties and assumptions that are difficult to predict. Actual
outcomes and results may differ materially from what is expressed
or forecasted in these forward-looking statements. As a result,
these statements speak only as of the date they were made and the
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. Words such as "expects," "intends,"
"plans," "projects," "believes," "estimates," and similar
expressions are used to identify these forward-looking statements.
Among the risks and uncertainties that could cause actual results
to differ materially are economic conditions generally and in the
market areas of the Company, a continuation or worsening of the
current disruption in credit and other markets, goodwill
impairment, overall loan demand, increased competition in the
financial services industry which could negatively impact the
Company's ability to increase total earning assets, retention of
key personnel and the success of cost savings and expense
reductions from planned branch closures and restructuring. Actions
by the U.S. Department of the Treasury and federal and state bank
regulators in response to changing economic conditions, changes in
interest rates, loan prepayments by and the financial health of the
Company's borrowers, and other factors described in the reports
filed by the Company with the Securities and Exchange Commission
could also impact current expectations. DATASOURCE: Citizens First
Corporation CONTACT: M. Todd Kanipe, +1-270-393-0700, Web Site:
http://www.citizensfirstbank.com/
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