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The offer grossly undervalues the Company. FABCs offer of $134.32, which is subject to
certain downward adjustments, substantially understates the Companys current fair market value,
does not include a control premium that would normally be paid for acquisition of control of a
company, and is not in the best interests of the stockholders.
The offer is extremely opportunistic and is not representative of the Companys fair market
value. FABC offered less than half of its current offer nearly two years ago and has established a
history of seeking to acquire the Company for a below-market price.
The offer includes misleading or inaccurate statements. FABC misleadingly compares the
value of its proposed purchase price to acquire control of the Company to a valuation for a
minority interest in the Company. FABC uses this misleading comparison in an attempt to
suggest FABCs price represents a significant premium over the Companys current value.
FABCs offer also misleads stockholders regarding the issuing of stock options and offering of
common stock. FABC implies the Board and management team have engaged in self-dealing at
the expense of stockholders. These assertions are patently false and are meant to try to discredit
the Board. The granting of stock options is a standard practice at many community banks and are
an important way to attract, retain and motivate high-quality employees. FABC also fails to note
the Company has sought and received stockholder approval for each stock option plan.
FABCs ability to obtain regulatory approvals is highly uncertain. FABC said it does not
intend to conduct a normal due diligence review, an unusual departure from standard practice.
Bank regulatory agencies typically expect an acquirer to perform a due diligence review.
The offers closing conditions make consummation of the offer highly conditional. The offer
includes numerous other conditions to FABCs obligation to consummate the offer, and FABC
reserves significant discretion in determining whether such conditions have been satisfied. These
conditions create significant uncertainty as to whether the offer will be completed.
The Companys strategic plan is more properly suited to create and foster increased
stockholder value. The Company has a strong strategic business plan that has generated
increased profitability in 2015 and the first nine months of 2016. By contrast, FABC provides
almost no detail in its offer materials regarding its proposed plan to manage Community Bank in
the event it was able to acquire the Company.
The Boards letter to stockholders also provided background on the relationship between the
Company and FABC and the context in which FABC made its offer.
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