The takeover fight between Southern California's Fallbrook National Bank and Bank of Commerce is heating up.
Five Fallbrook officials-three officers and two directors-showed up last week for a meeting of Fallbrook shareholders called by San Diego-based Bank of Commerce. But they were told they could not enter the meeting room.
Bank of Commerce officials "wanted an opportunity to talk to the shareholders without controversy or disruption," said Peter Q. Davis, Bank of Commerce's chief executive officer.
The meeting was called for Bank of Commerce to make a takeover sales pitch to Fallbrook shareholders. Thomas E. Swanson, president and chief executive officer of Fallbrook, said Bank of Commerce officials didn't want Fallbrook officials there. Mr. Swanson was not present.
About 150 people attended the meeting. Some of them "seemed pretty irate" and demanded to know what the larger bank wanted, according to Hans Schroeder, bank analyst at Torrey Pines Securities in San Diego, who was present.
Bank of Commerce, which has $445 million of assets, has been trying for months to buy $91 million-asset Fallbrook. In late February and early March it offered $26.4 million in stock, almost 2.5 times book value, but Fallbrook refused.
Though Fallbrook portrays it as a hostile acquirer, Bank of Commerce hasn't given up. It's calling for 25% of Fallbrook shareholders to force a special meeting to consider and vote on a nonbinding proposal to sell. So far 16% have responded, almost all supporting a meeting.
Bank of Commerce, a leading Small Business Administration lender, wants access to Fallbrook's wealthy deposit base in northern San Diego County to fund its burgeoning loan growth. But Fallbrook officials argue that Bank of Commerce's stock is thinly traded and overvalued, and that a merger would hurt the community and employees.
Mr. Schroeder called the battle "pretty emotionally charged." He said Bank of Commerce is focusing on the generosity of its offer-now worth three times book value-and Fallbrook is trying to stress the loss of the community's "namesake bank."
"It's a case of whether to vote with your heart or your head," he said.
At their annual meeting April 23d, Fallbrook officials released the results of a survey of shareholders that asked if they supported the board's decision. So far, 60% of outstanding shares have responded, and 54% back the board. u