AltaPacific Bancorp fka ABNK

[56Chevy]

We have some answers -

Hmm maybe they A) believe the illusion of stock dividends create value or B) know they don't, yet hope the market doesn't realize that.

I sent the banks' CFO an e-mail Pagz. Below is what I sent and below that is his response.

From: 56Chevy
Sent: Tuesday, February 19, 2013 3:41 PM
To: Allen Christenson
Subject: IR questions

HI Mr. Christenson,

I’m a recent stockholder of ABNK and I have a couple questions.

What is the share structure of the bank – primarily the number of shares outstanding?

Do you have the most recent earnings per share (EPS) number?

I really like that the bank has a program to buy back shares …that’s great news for shareholders but what I find counter-productive is to offer a stock dividend (especially one paid in the form of new shares). To be honest Allen, I have to question the BoD rationality on this. The Bank is buying back shares and issuing more at the same time.

Why is that? If I had a choice I’d want the bank to continue buying back shares ..or paying down the debt.. but nix the stock dividend program altogether.

Any other thoughts or info you’d like to share would be most appreciated.

Sincerely,

56Chevy

==========================

56Chevy, thanks for your support of and interest in AltaPacific Bancorp and AltaPacific Bank.

In response to your questions, as of December 31, 2012 there were 5,135,869 shares issued and outstanding. Please note that that number will increase by approximately 5% following the recently announced stock dividend. Our unaudited EPS number for 2012 totals $0.37 which also has not been adjusted for the effect of the 5% stock dividend.

With respect to the 5% stock dividend, your question is appropriate and was discussed in great length by the Board of Directors. If desired, I would be happy to discuss this by phone. For now, I will do my best to try and offer some background to the decision of the Board and Management.

In short, it is our opinion that each activity – Stock Repurchase and Stock Dividend – are to be treated as separate events and are not to be connected. That said, our opinion is also based upon our knowledge of our shareholders and is not a universal opinion that applies to all companies.

Most of our shareholders are long term investors. They are not traders looking for short term profits. Their horizon is out 5-10 years. Please note that our opinions on these matters have been formed based upon constant feedback from institutional investors, market makers and other brokers as well as our individual contacts with many of our shareholders. In each case, the vast majority of professional and large individual investors have encouraged us to continue to maintain a repurchase program and they support the stock dividend. They perceive the repurchase program as accretive to the remaining shareholders while providing liquidity to those who want out or need liquidity. Additionally, the majority of the feedback we receive suggests that the stock dividend provides value to shareholders without diluting the Company’s equity capital. What the professionals have seen is consistent with my opening remark - most of our shareholders are not looking for short term profits. What they are looking for is a growth stock.

Regarding the repurchase program, as our stock is trading below book value, any shares repurchased by the Company increases the per share value for the remaining shareholders. With respect to the thought that we will soon be issuing 5% more shares and then potentially repurchasing those shares, there are a couple of comments. First, the Company is not obligated to repurchase ANY shares. We function as any buyer of stock. Management and the Board of Directors control the decision as to when we will repurchase shares. Second, it is our belief that very few shares, relatively speaking, will trade as a result of the stock dividend. We all want a certain amount of liquidity in our stock, and we feel the dividend will provide that. It does sound like you follow our stock and as such, you have probably noted that this dividend will be our 4th annual stock dividend. As we have analyzed the historic trading activity, both pre- and post-merger with Stellar Business Bank, we do not find evidence that the issuance of a stock dividend has resulted in a significant increase in trading volume.

As I mentioned above, if you would like to discuss this further, I would be happy to speak by phone. It is an excellent topic to discuss.
Regards,
Allen R. Christenson
Executive Vice President
Chief Financial Officer
AltaPacific Bank
3725 Westwind Blvd., Suite 100
Santa Rosa, CA 95403
Ph [phone]
Fax [phone]