Updated May 31, 2000 _Search The Pilot * * _Dissident Shareholders Hire Attorney ------------------------------------------------------------------------------- BY SARA LINDAU _The Committee to Protect First Savings Shareholder Value has hired veteran Raleigh lawyer Bruce McDaniel to represent it in its battle against the bank’s merger with Troy-based First Bank. McDaniel said Thursday in a brief telephone interview that the group’s options are "unlimited" but that any class action lawsuit would probably not be filed until after the proxy is released to shareholders. That would be sometime in early May, according to the latest estimates by First Savings Chairman and former CEO Bill Samuels. "The bank has a lot of questions to answer," said McDaniel. He has practiced law in business, securities-and-exchange and related areas for 40 years. He’s had a practice in Raleigh for 33 years and worked for almost five years in the federal Securities and Exchange Commission’s regional office in Atlanta. "We just have to do what we have to do to make sure the shareholders of the bank are being treated fairly and not being taken advantage of," McDaniel said. A North Carolina native and Wake Forest University graduate, McDaniel has represented both shareholders and merging companies through the years in cases in federal and state courts. "There aren’t that many proxy fights around here," said McDaniel, who said the Moore County bank disagreement could become such a fight. He described the issue as "intriguing. "McDaniel said he represented shareholders in a class action lawsuit several years ago against North Carolina railroads in a fight that lasted for years and went to the federal courts. Though the plaintiffs’ case against the merging companies was dismissed, the shareholders were finally awarded a higher price for their shares, he said. He represented Durham Hosiery Mill in a merger battle that went through several levels of federal court and currently represents insurance policy holders in a pending suit against Jefferson Pilot Corp., serving as local counsel for a New York firm in the case, McDaniel said. McDaniel suggested much of what happens hinges on whether the merger proposal with First Bank is approved by shareholders or rejected. If the merger goes through and if there is sufficient opposition among his clients, it could proceed further. If rejected, there is no reason for a case, since the dissident shareholders have stated they would rather that First Savings continue to be independently owned and operated rather than merged with another bank in a contract that they feel doesn’t financially benefit the shareholders sufficiently. The proxy votes to be returned by mail after shareholders get their statements and voting forms would be due about 20 days after the proxy statement is received, First Savings management told shareholders in a letter. The Committee to Protect is composed of about 70 shareholders who are opposed to the merger. First Savings President Johnny Burns and board Chairman Samuels would continue to work for the merged entity and receive an estimated $1 million "golden parachute" payment upon becoming employees of the new entity, First Bank. They have refused to answer a list of 16 questions submitted in writing to them by the committee and have repeatedly cited the advice of attorneys, stating that questions will be answered in the proxy statement. They have also declined to meet with members of the commttee. They and bank directors argue the merger will be good in the long term for First Savings shareholders and that First Savings needs First Bank’s techology and services. Though First Bank exceeds First Savings in having 34 offices in 14 counties and higher assets, dissidents maintain First Savings’ stock has been better valued, as has its book value. They expect to suffer financially through reduced book values, although the banks recently amended their merger agreement to give a slightly higher dividend to both sets of shareholders, six cents more to First Savings than they had at the time the merger agreement was announced in December, 1999. The committee is obtaining its own appraisal of whether the merger is fair to shareholders. Committee members say the two consulting firms that originally gave statements that the merger is fair to shareholders on both sides are under the same ownership. However, the fairness statement in the proxy statement will be provided by two separate firms, according to officials. McDaniel termed as "unusual" the practice of having the same firm, in effect, assess the fairness to shareholders for both parties. If the merger goes through by vote of the shareholders of both banks, First Savings, Moore County’s first locally owned and operated bank, would be taken over by First Bank. Based in Montgomery County, First Bank has 34 offices scattered throughout the region to First Savings’ six branches, all in Moore County. The book value of First Savings would be reduced, bringing up the book value for First Bank. One office for each of the two banks in Moore would close. First Bancorp would be the surviving company, with 11 branches in Moore County. No employee layoffs have been announced as part of the merger agreement.A bank’s book value is based on assets held, shares and other factors. During the months since the merger agreement was made public in December 1999, shareholders of First Savings have called The Pilot and written letters to the editor, with not one expressing approval of the merger. According to one source, a large shareholder of First Savings, representatives speaking for the merger have offered to meet one on one with selected dissidents. Whether any skeptics have been converted remains to be seen when the voting is done, but both sides say they expect to prevail in the shareholder vote. A draft of the proxy was filed with the Securities and Exchanged Commission last week. With a go-ahead from the SEC, shareholders would next get their proxy statements, which would be returned by mail with their votes. A meeting of shareholders would be set for a later date, probably in May or June.