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Shareholders OK local bank board

Amid concern over leadership, about 40 voters overwhelmingly approved new officials

Posted: July 12, 2012 5:23 p.m.
Updated: July 12, 2012 5:23 p.m.

Some 40 shareholders overwhelmingly approved the three legal actions put before them at Wednesday’s Bank of Santa Clarita annual shareholder meeting, but not without voicing some concerns about the actions of the bank’s leadership and its board of directors.

Giving shareholders an overview of the bank’s performance, executive chairman and CEO Frank Di Tomaso said the community bank has achieved its fourth year of profitability, with assets totaling $208 million.

Despite operating in a flat loan environment affecting the market in general, the bank experienced growth and indicators suggest the bank is going in a favorable direction, Di Tomaso said.

It has seen modest growth in loans over a three-year period, said Walt N. Purdy, senior vice president and CFO.

But he added it was tough to make good loans in the economic environment. Of the loans made, 74 percent have been in the commercial real estate lending arena.

“We have never had any losses on these loans,” Purdy said.

In regards to the bank’s future growth, Di Tomaso told shareholders the bank plans to expand its footprint into other markets outside the SCV area.

It is also investing in offering online and mobile products and services because the bank is behind the curve when it comes to this technology, Di Tomaso said.

After reviewing the bank’s performance, shareholders were asked to vote to elect the 11 nominees to the board of directors, add one new position to the board, and ratification of independent auditors.

A chorus of “ayes” responded to each vote without any vocal dissent noted.

In a single vote, shareholders elected all 11 nominees to the board, including James Bryan Batey, of Bakersfield, who was nominated to replace James Hicken, former president and CEO. Hicken resigned from the board in late May.

A short question-and-answer session with shareholders took place after the annual meeting adjourned.

That move prompted shareholder John Heys to ask why the meeting was closed before the discussion period, preventing the comments from becoming part of the official record.

“There was no particular reason,” said Keith Holmes, legal counsel from King, Holmes, Paterno & Berliner LLP in Los Angeles.  “We set it up that way so we wouldn’t forget to close the meeting.”

Shareholders in general questioned decisions being made by the bank and board of directors, among them the departure of two of the bank’s executives, Jim Hicken and Kim Altobello, when the bank has been performing well.

Of concern also was the high costs associated with the questionable departures, which includes $350,000 to cover one year’s worth of salary, continuation of medical benefits for one year and any legal costs that may be associated with the departures.

In response to a shareholder questioning the bank’s plan to return profit to the shareholders, Di Tomaso reiterated the bank’s goal is to expand into other markets and bring in better technology and software programs, which will translate to improved earnings.

“But surely you’re not planning to restore profitability by replacing your leadership team with a computer,” said shareholder Lorrie Baldwin.

Di Tomaso replied that the bank has also considered expanding into the San Fernando Valley and Ventura, and farther south of the SCV area.

“Originally, we thought we’d go up north, but the money isn’t there,” Di Tomaso said. “It’s agricultural lending and we don’t specialize in that.”

Another shareholder asked how long two of the bank's executive positions will remain open. Those open positions were created by the departure of Hicken and Altobello.

A definitive decision has not been made, Di Tomaso, adding the board will make a decision in a few months. In addition to serving as the bank’s executive chairman and CEO, he also serves as chairman of the board.

Shareholder Gary Cusumano questioned the rationale of the board adding a 12th position given the size of the community bank.

Saying he was baffled by the move, Cusumano said much larger companies with far greater revenue have much smaller boards.

Occasionally, the bank and board are approached by people with significant interests in the bank as shareholders who ask to join, Di Tomaso said. They should be given an opportunity to join the board of directors if it enhances the value of the bank, he said.

“Board members bring with them a wealth of business connections and referrals,” Di Tomaso said.

Cusumano insisted there must be a way to expand and grow without adding a 12th member to the board.

Shareholder Jim Backer said he was very disappointed in the actions that occurred at the bank this year.

“It’s contrary to the original mission of the bank and the stock has gone nowhere,” Backer said.  “We want to get a return on our stock, not just our investment.”

Shareholders Heys, Baldwin, Cusumano and Backer are also members of the bank’s original founding group.

Bank shares closed at $7.02 at close trading Thursday. Shares were trading at $7.80 on April 9, when the bank announced the management changes.


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