SOURCE: 1st Century Bancshares, Inc.

May 08, 2008 23:05 ET

1st Century Bancshares, Inc. Letter to Shareholders

LOS ANGELES, CA--(Marketwire - May 8, 2008) - 1st Century Bancshares, Inc. (OTCBB: FCTY) mailed the following letter to its shareholders:

Dear Fellow Stockholder:

The Annual Meeting of Stockholders of 1st Century Bancshares (the "Company"), scheduled for May 29, 2008, is fast approaching. We urge you to return the enclosed WHITE proxy card in the envelope provided, or to follow the instructions on the card to cast your vote by telephone or via the Internet.

As you may have heard, a 28-year-old hedge fund manager named Zachary James Cohen, acting through his 8-month-old hedge fund called Palisair Capital Partners, L.P., has nominated himself to your Board of Directors. THE NOMINATING COMMITTEE AND BOARD OF DIRECTORS HAVE CONSIDERED AND UNANIMOUSLY REJECTED COHEN'S REQUEST TO BE NOMINATED TO YOUR BOARD. It is our belief, based on our review of his background and his prior communications with and about the Company, that Cohen lacks the experience, maturity, judgment, and temperament necessary to be a board member of a holding company of a depository financial institution. Cohen has little experience of any kind, much less the breadth of experience possessed by your Board's nominees, that we believe would justify his nomination.

Equally important, many of the ideas he has put forward, if pursued, would be, in our opinion, dangerous to the Company and its stockholders:

--  Cohen wants us to make high-risk "bet the farm" acquisitions of assets
    or institutions with questionable or deteriorating value;
--  Cohen wants us to rapidly build out a large branch system when other
    banks that have pursued that strategy are suffering;
--  Cohen wants your Company to abandon its mission, deviate from its core
    values and ignore the strengths of our management and Board of Directors;
--  Cohen wants us to take aggressive actions that appear to be focused on
    short-term stock movements rather than carefully building a solid core
    business.
    

All in all, Cohen's ill-conceived ideas amount to treating your Company like a hedge fund, rather than the prudent and successful commercial bank in which you chose to invest. We reject those ideas, and urge you to do so as well by throwing away the Green proxy card.

1st Century has a sound and proven business plan for creating stockholder value by building a solid banking institution, and we will continue to explore opportunities for growth and expansion in a prudent manner. Your Board and management have no intention of deviating from that course. We take great pride in our achievements in steadily growing the Company and promoting long-term stockholder value, and we believe that our results in our 4-year history speak for themselves:


                                                               At or for
                                                               the three
                                                              months ended
                                                             March 31, 2008
                     At or for the years ended December 31    (unaudited)
                  ------------------------------------------- -------------
(in thousands,
 except per share
 and share data)     2004      2005       2006      2007

Total assets      $ 86,147  $ 161,635  $ 200,752 $ 223,855       $  258,655
Loans, net (1)      33,197     84,988    126,312   169,864          174,568
Total deposits      64,015    107,090    145,087   161,193          192,936
Total
 stockholders’
 equity             21,563     53,116     54,109    58,612           59,317
Income (loss)
 before income
 taxes              (2,820)    (2,218)       145       792              350
Tangible book
 value per share
 (2)              $   4.12  $    5.47  $    5.53 $    5.91       $     5.98


(1) Total gross loans less allowance for loan losses and net unearned fee
    income.
(2) Adjusted for 2-for-1 stock split that occurred on February 28,
    2005.

While Cohen is now trying to disparage those achievements, just a little more than a month ago, he wrote to one of your Directors that "the senior management team and Board of Directors at 1st Century Bank is [the] most well-established, experienced, connected, wealthy, high-powered, and well-respected team of people under one roof in the history of community banking." He has called us a "Dream Team" and said that we have "the most pristine balance sheet of any bank in Southern California." "Dream Team" or not, your Board and management is dedicated to protecting your capital and believe that now, the most turbulent period our economy has experienced in recent memory, is not the time to embark upon new and risky ventures or investments that have left numerous financial institutions suffering staggering losses, huge credit write downs and impaired capital.

Please use the enclosed WHITE proxy card to vote for your Board's nominees. If you have inadvertently returned a Green proxy card, you have every legal right to change your vote -- only your latest dated proxy card counts. Please vote TODAY by telephone, via the Internet, or by signing, dating and returning the enclosed WHITE proxy card in the envelope provided.

Thank you for your continued support,

   Alan I. Rothenberg                    Jason P. DiNapoli
   Chairman of the Board &               President, Chief Operating Officer
   Chief Executive Officer               & Corporate Secretary

                                 REMEMBER:
        You can vote your shares by telephone, or via the Internet.
      Please follow the easy instructions on the enclosed proxy card.


         If you have any questions, or need assistance in voting
                Your shares, please call our proxy solicitor,

                         INNISFREE M&A INCORPORATED
                 Shareholders call Toll-Free: (888) 750-5834
               Banks and Brokers Call Collect: (212) 750-5833

Contact Information

  • Contacts:
    INNISFREE M&A INCORPORATED
    Shareholders call Toll-Free: (888) 750-5834
    Banks and Brokers Call Collect: (212) 750-5833