Palisair seeks representation on 1st Century Bancshares board, will begin tender for company on March 14

By Lisa Kerner

Charlotte, N.C., March 3 - Palisair Capital Partners, LP reiterated its plan to begin a friendly tender offer to acquire up to 396,000 shares of 1st Century Bancshares, Inc. common stock for $8 per share, a 35% premium to the stock's 30-day average.

The offer will begin on March 14 and remain open for 20 business days.

As of Feb. 29, the hedge fund controlled 593,692 shares, or 6.0%, of 1st Century, according to a Palisair news release.

Palisair will have a 9.9% stake in 1st Century if the tender offer is fully subscribed.

Zachary James Cohen, managing member of the hedge fund, said 1st Century has a "tremendous amount of potential" not recognized by the market, making it an attractive investment at current price levels.

Cohen also praised 1st Century's "pristine" balance sheet and its management team, as well as founder and chief executive officer Alan Rothenberg's talent.

Palisair wants 1st Century to hire an investment banking firm to evaluate the acquisition of California banks that are in poor shape due to the mortgage crisis, declining customer deposits and lack of lines of credit or equity.

The investor cited as examples First Federal Bank, Fremont General, Downey Financial and Indymac.

Cohen said the "chances of these banks becoming insolvent in the next couple of years are the same as a 'coin-flip.'"

In addition, Cohen recommended that 1st Century contact Kenneth D. Moelis of Moelis and Co. for advice on how to leverage money, Sandler O'Neill for advice on acquisitions and Herb and Marion Sandler for advice on running a community thrift.

"Even most S&P 500 companies could only fantasize about having the type of relationships and business experience that 1st Century's management team and board of directors possess," Cohen said in the news release.

"All of this talent is being wasted with only one branch and a stock trading over-the-counter that few people know about."

Palisair plans to reach out to 1st Century's shareholders via a proxy statement to request that Cohen be named to the company's board.

As previously reported, Cohen said he would like to see the Los Angeles-based bank expand to serve high net worth individuals and not just business professionals.

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