First California Financial Group (FCAL)

[Enterprising Investor]

Letter from Gideon King, President of Loeb Capital Management to the Board of Directors of FCAL (7/26/12)

NEW YORK--(BUSINESS WIRE)--The following is a letter from Gideon King, President of Loeb Capital Management to the Board of Directors of First California Financial Group, Inc.

Board of Directors
First California Financial Group, Inc.
3027 Townsgate Road, Suite 300
Westlake Village, California 91361

To the Board of Directors:

Loeb Arbitrage Management LP and Loeb Offshore Management LP, together doing business as Loeb Capital Management, and affiliated entities (collectively, “Loeb”) over which it has management discretion own approximately 2,100,000 shares of the common stock of First California Financial Group, Inc. (“FCAL” or the “Company”). We have grown increasingly frustrated with the actions of the board and management of FCAL. In our opinion, a credible cash offer has been made and shareholders have been treated to “double-talk” on many levels with respect to this springboard (a credible offer) from which to run an auction process to sell the Company to the highest bidder. At no point has FCAL simply stated that it is engaged in a process to explore strategic alternatives to maximize shareholder value. Rather, we believe shareholders have been subjected to vague press releases that give shareholders no assurance that the board takes its fiduciary duties seriously. One example of the poor quality of the Company’s communication with shareholders is the following from a press release dated May 9, 2012: “The First California Board did not believe that it was in the best interest of stockholders to grant exclusivity to PacWest [Bancorp] in the absence of satisfactory clarification of the terms and value of its proposal and taking into account the other strategic alternatives that First California may pursue, including discussion with third parties.” We view this as muddy language that avoids declaratively stating that the appropriate actions will be taken. In our view, the time for this management team to “have its cake and eat it too” is over.

We request that this board and management team do what is right and shed inclinations to entrench themselves or, at the very least, to avoid presenting an image of entrenchment to shareholders. To this point, we have given senior members of the management team and board the benefit of the doubt. In light of today’s press release, in which C.G. Kum stated, “As always, we remain steadfast in enhancing the value of the First California franchise for our customer, employee and shareholder base,” we no longer will give this management team and board the benefit of the doubt. Kum’s pointed language seems to say it best: shareholders come last. I was told by a representative of FCAL that today’s press release will somehow answer our questions about the process underway to maximize value. We will conclude very shortly that there is no such process and that management is entrenched if shareholders are not assured in the near term that FCAL will run an authentic sales process and that the Company will be sold to the highest bidder.

Once again, we ask this board and management team to move with alacrity to sell the Company to the highest bidder. Further, we request that the Company disclose the names of the members of the special committee who are responsible for overseeing the process to maximize value for owners. In our view, the non-existence of a special committee would be nearly dispositive proof that FCAL just doesn’t care about its fiduciary duties.

Unfortunately, today’s press release has constituted an adversarial relationship between the owners and operators of FCAL. We reserve the right to acquire more stock in FCAL and please be aware it is our intention to take all steps necessary or support such steps, including but not limited to the removal of directors and members of management, to make certain that a process of value maximization is executed professionally and without conflicts of interest. Members of the analyst community have warned us about the corporate governance of FCAL - please prove their harsh words wrong.

Thank you for reading this letter.

Sincerely,

Gideon King
President, Chief Investment Officer

Mark J. Kaplow
Vice President

Contacts

Loeb Capital Management
Alexander H. McMillan, 212-483-7000

http://www.businesswire.com/news/home/20120726006673/en/Letter-Gideon-King-President-Loeb-Capital-Management