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Section 1: S-4/A (FORM S-4/A)

 

As filed with the Securities and Exchange Commission on August 8, 2019.

Registration No. 333-232830

 

 

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

Amendment No. 1

to

FORM S-4

REGISTRATION STATEMENT

UNDER THE SECURITIES ACT OF 1933

 

BAYCOM CORP

(Exact name of registrant as specified in its charter)

 

California 6022 37-1849111
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)

 

500 Ygnacio Valley Road, Suite 200

Walnut Creek, CA 94596

(925) 476-1800

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

Keary L. Colwell

Senior Executive Vice President, Chief Financial Officer and Corporate Secretary

BayCom Corp

500 Ygnacio Valley Road, Suite 200

Walnut Creek, CA 94596

(925) 476-1800

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

Copies of communications to:

 

Dave M. Muchnikoff, P.C.

Michael S. Sadow, P.C.

Silver, Freedman, Taff & Tiernan LLP

3299 K Street, N.W. Suite 100

Washington, DC 20007

(202) 295-4500

John Zeilinger
Kevin Tracy

Baird Holm LLP

1700 Farnam Street, Suite 1500

Omaha, NE 68102

(402) 344-0500

 

 

 

Approximate date of commencement of the proposed sale of the securities to the public: As soon as practicable after the effective date of this Registration Statement and upon consummation of the transactions described herein.

 

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ¨

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, “non-accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ¨ Accelerated Filer x
Non-accelerated filer ¨ Smaller reporting company x
Emerging growth company x    

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ¨

 

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ¨

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ¨

 

 

 

CALCULATION OF REGISTRATION FEE

 

Title of each class of
securities to be registered
  Amount to be
registered (1)
  Proposed maximum
offering
price per share
   Proposed maximum
aggregate
offering price (2)
   Amount of
registration fee (3)
 
Common Stock, no par value  876,804 shares   N/A    $11,778,580    $1,428 

 

(1)Represents the maximum number of common shares of BayCom Corp (“BayCom”) estimated to be issuable upon completion of the merger with TIG Bancorp (“TIG”) that are currently outstanding. Pursuant to Rule 416, this Registration Statement also covers an indeterminate number of additional securities of BayCom as may be issuable as a result of stock splits, stock dividends or similar transactions.
(2)Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act of 1933, as amended (the “Securities Act”), and computed pursuant to Rule 457(f)(2) and (f)(3) under the Securities Act, by multiplying the book value of TIG Bancorp’s common stock of approximately $10.04 per share as of June 30, 2019, the latest practicable date prior to the date of filing this registration statement, by 3,183,400, the maximum number of shares of TIG Bancorp’s common stock to be cancelled in the merger described herein, less the estimated aggregate cash consideration to be paid in the merger of $20,182,756.
(3)Calculated in accordance with Rule 457(f) under the Securities Act by multiplying the proposed maximum aggregate offering price by 0.0001212.

 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

 

 

 

The information in this proxy statement/prospectus is not complete and may be changed. We may not issue the securities offered by this proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This document is not an offer to sell these securities, and we are not soliciting an offer to buy these securities, in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY PROXY STATEMENT/PROSPECTUS—SUBJECT TO COMPLETION—

DATED AUGUST 8, 2019

 

 

To the Shareholders of TIG Bancorp:

 

You are cordially invited to attend the special meeting of shareholders of TIG Bancorp, which we refer to as TIG. The special meeting will be held on Wednesday, September 18, 2019, at 3:00 p.m., Mountain Time at the main office of the Company’s subsidiary bank, First State Bank of Colorado, located at 8400 East Crescent Parkway, Suite 100, Greenwood Village, Colorado 80111.

 

As described in the enclosed proxy statement/prospectus, the board of directors of TIG has approved a merger agreement that provides for the merger of TIG with and into BayCom Corp, which we refer to as BayCom, with BayCom being the surviving entity in the merger. TIG will hold a special meeting of its stockholders in connection with the merger. TIG has two classes of common stock: voting common stock (“TIG voting common stock”), and non-voting common stock (“TIG non-voting common stock”), which are collectively referred to herein as “TIG common stock”. Holders of TIG voting common stock will be asked to vote to approve the merger agreement and the transactions contemplated thereby, as described in the accompanying proxy statement/prospectus. Approval of the merger agreement and the transactions contemplated thereby requires the affirmative vote of the holders of at least a majority of the outstanding shares of TIG voting common stock. All of the directors and executive officers of TIG, collectively holding an aggregate 228,400 of TIG voting common stock (or approximately 13.5% of the outstanding voting shares) and certain other TIG stockholders who collectively own an additional 510,500 shares of TIG voting common stock (or approximately 30.2% of the outstanding voting shares) as of the TIG record date, have signed voting agreements with BayCom agreeing to vote for approval of the merger agreement and the transactions contemplated thereby. Accordingly, the holders of approximately 43.7% of the outstanding voting shares entitled to vote on the merger have entered into voting agreements with BayCom to vote in favor of the merger agreement. We are seeking your vote on this important transaction, as well as the other matters to be considered at the special meeting.

 

Under the terms of the merger agreement, each holder of TIG common stock will have the right, with respect to each of their shares of TIG common stock, to receive (i) 0.27543 of a share of common stock, no par value per share, of BayCom (which we refer to in this proxy statement/prospectus as “BayCom common stock”), and (ii) $6.34, in cash, which we refer to as the merger consideration. As of June 28, 2019, the last trading day before public announcement of the merger, the merger consideration was valued at $12.37 per TIG common share or approximately $39.4 million in the aggregate based on BayCom’s closing stock price of $21.90 on that date. Based on the closing price of BayCom’s common stock of $21.60 on August 7, 2019, the latest practicable trading day before the printing of this proxy statement/prospectus, the value of the merger consideration payable to TIG shareholders was $12.29 per share or $39.1 million in the aggregate.

 

The market value of the stock portion of the merger consideration to be paid to the holders of TIG common stock will vary from the closing price of BayCom common stock on the date BayCom and TIG announced the merger, on the date that this proxy statement/prospectus is mailed to TIG shareholders, on the date of the TIG special meeting and on the date the merger is completed and thereafter. However, there will not be any adjustment to the merger consideration for changes in the market price of BayCom common stock. Therefore, you will not know at the time of the TIG special meeting the precise aggregate merger consideration or the market value of the merger consideration you will receive upon completion of the merger. You should obtain current stock quotations for BayCom common stock. BayCom’s common stock trades on the NASDAQ Global Select Market under the symbol “BCML.”

 

We expect the transaction to be tax-free for TIG shareholders, except with respect to any cash received by them. After completion of the merger, based on the issued and outstanding BayCom common stock as of June 30, 2019 and the estimated BayCom common stock to be issued to TIG shareholders based on an exchange ratio of 0.27543, TIG shareholders would own approximately 6.8% of BayCom’s common shares (ignoring any BayCom common stock they may already own).

 

 

 

 

We cannot complete the merger unless the holders of a majority of the outstanding TIG voting common stock vote to approve the merger agreement. Your vote is very important. TIG will hold its special meeting of shareholders on September 18, 2019 to vote on the merger agreement. Your board of directors recommends that holders of TIG voting common stock vote FOR approval of the merger agreement and the other items to be considered at the special meeting. Whether or not you plan to attend the special meeting, please take the time to vote on the proposal to approve the merger agreement and the other matters to be considered by following the instructions that accompany your proxy card and casting your vote by returning your completed, signed, and dated proxy card in the enclosed envelope (please allow a minimum of 10 days for your proxy card to be processed). Please vote as soon as possible to make sure that your shares are represented at the special meeting. If you do not vote, it will have the same effect as voting against the merger agreement.

 

We encourage you to read carefully the detailed information about the merger contained in this proxy statement/prospectus, including the section entitled “Risk Factors” beginning on page 12.

 

We look forward to seeing you at the special meeting.

 

   
     
  Gary L. Webb  
  Chairman of the Board  
  TIG Bancorp  

 

Neither the Securities and Exchange Commission nor any state securities commission or bank regulatory agency has approved or disapproved the BayCom common stock to be issued in the merger or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

 

The securities that BayCom is offering through this proxy statement/prospectus are not savings or deposit accounts or other obligations of any bank or nonbank subsidiary of BayCom or TIG, and they are not insured by the Federal Deposit Insurance Corporation or any other government agency.

 

This proxy statement/prospectus is dated August 8, 2019 and is first being mailed to TIG shareholders or otherwise delivered to TIG shareholders on or about August 16, 2019.

 

 

 

 

 

TIG Bancorp
8400 East Crescent Parkway

Suite 100

Greenwood Village, CO 80111

 

NOTICE OF SPECIAL MEETING OF TIG SHAREHOLDERS

 

  · Date: September 18, 2019
  · Time: 3:00 p.m., Mountain Time
  · Place: First State Bank of Colorado
      8400 East Crescent Parkway
      Suite 100
      Greenwood Village, CO 80111

 

TO OUR SHAREHOLDERS:

 

We are pleased to notify you of and invite you to attend a special meeting of shareholders. At the special meeting, holders of TIG voting common stock will be asked to vote on the following matters:

 

·approval of the Agreement and Plan of Merger, dated as of June 28, 2019, by and between BayCom Corp (“BayCom”) and TIG Bancorp (“TIG”) (the “merger agreement”). The merger agreement provides the terms and conditions under which it is proposed that TIG merge with and into BayCom, as described in the accompanying proxy statement/prospectus;

 

·a proposal of the TIG board of directors to adjourn or postpone the special meeting, if necessary or appropriate to solicit additional proxies in favor of the merger agreement (which we refer to as the “adjournment proposal”); and

 

·any other business that may be properly submitted to a vote at the special meeting or any adjournment or postponement of the special meeting.

 

There are two classes of TIG common stock: voting common stock, $0.00001 par value per share (“TIG voting common stock”) and non-voting common stock, $0.00001 par value per share (“TIG non-voting common stock”). Only holders of record of TIG voting common stock at the close of business on that date are entitled to notice of and to vote on the proposals at the TIG special meeting and any adjournments of the TIG special meeting. Approval of the merger proposal requires the affirmative vote of a majority of the outstanding shares of TIG voting common stock. As a result, abstentions and broker non-votes will have the same effect as votes against approval of the merger proposal. Approval of the TIG adjournment proposal requires the affirmative vote of a majority of the shares of TIG voting common stock present in person or represented by proxy. Abstentions will have the same effect as votes against approval of the TIG adjournment proposal, and broker non-votes will have no effect on the approval of the TIG adjournment proposal assuming a quorum has been established. All of the directors and executive officers of TIG, collectively holding an aggregate 228,400 shares of TIG voting common stock (or approximately 13.5% of the outstanding voting shares) and certain other TIG shareholders who collectively own an additional 510,500 shares of TIG voting common stock (or approximately 30.2% of the outstanding voting shares) as of the TIG record date, have signed voting agreements with BayCom agreeing to vote for approval of the merger agreement and the transactions contemplated thereby. Accordingly, the holders of approximately 43.7% of the outstanding voting shares entitled to vote on the merger have entered into voting agreements with BayCom to vote in favor of the merger proposal.

 

The merger agreement, which is attached as Appendix A to this proxy statement/prospectus, sets forth the terms of the merger. The transaction is also more fully described in the enclosed proxy statement/prospectus. You are urged to read these documents carefully and in their entirety. In particular, see “Risk Factors” beginning on page 12 of the accompanying proxy statement/prospectus.

 

TIG shareholders will be given the opportunity to exercise dissenters’ rights in accordance with certain procedures specified in the Colorado Revised Statutes Title 7, Article 113. If you meet all of the requirements under applicable Colorado law, and follow all of its required procedures, you may receive cash in the amount equal to the fair value of your shares. For additional details about dissenters’ rights, please refer to “Dissenters’ Rights” beginning on page 66 and Appendix C to this proxy statement/prospectus.

 

 

 

 

TIG’s board of directors has unanimously approved the merger agreement, believes that the merger agreement and the transactions contemplated thereby, including the merger, are in the best interests of TIG and its shareholders, and unanimously recommends that holders of TIG voting common stock vote “FOR” the approval of the merger agreement proposal and “FOR” the adjournment proposal.

 

Your vote is very important. To ensure that your shares are voted at the special meeting, please follow the instructions that accompany your proxy card and cast your vote by returning your completed, signed, and dated proxy card in the enclosed envelope (please allow a minimum of 10 days for your proxy card to be processed).

 

  BY ORDER OF THE BOARD OF DIRECTORS
   
 
August 8, 2019 Boyd B. Hodges
  Corporate Secretary

 

 

 

 

REFERENCES TO ADDITIONAL INFORMATION

 

This proxy statement/prospectus incorporates important business and financial information about BayCom from documents filed with the Securities and Exchange Commission, or the SEC, that are not included in or delivered with this proxy statement/prospectus. You can obtain any of the documents filed with or furnished to the SEC by BayCom, free of charge, from the SEC’s website at http://www.sec.gov. You may also request copies of these documents free of charge, by written or oral request by contacting BayCom at the following address:

 

BayCom Corp
Corporate Secretary
500 Ygnacio Valley Road, Suite 200

Walnut Creek, CA 94596

(925) 476-1800

 

TIG does not have a class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, is not subject to the reporting requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and accordingly does not file documents or reports with the SEC.

 

All website addresses given in this proxy statement/prospectus are for information only and are not intended to be an active link or to incorporate any website information into this proxy statement/prospectus.

 

If you would like to request documents, please do so by September 9, 2019 in order to receive them before TIG’s special meeting of shareholders (which we refer to as the “TIG special meeting”). The section of this proxy statement/prospectus entitled “Where You Can Find More Information” has additional information about obtaining copies of documents that BayCom has filed with the SEC.

 

ABOUT THIS PROXY STATEMENT/PROSPECTUS

 

This proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the SEC by BayCom (File No. 333-232830), constitutes a prospectus of BayCom under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the shares of common stock, no par value per share, of BayCom (which we refer to as “BayCom common stock”) to be issued pursuant to the Agreement and Plan of Merger, dated as of June 28, 2019, by and among BayCom and TIG. This document also constitutes a proxy statement of TIG and also includes a notice with respect to the TIG special meeting. These proxy materials are furnished in connection with proxy solicitation being conducted by the board of directors of TIG.

 

Except where the context otherwise indicates, BayCom has supplied all information contained in this proxy statement/prospectus relating to BayCom, and TIG has supplied all information contained in this proxy statement/prospectus relating to TIG.

 

You should rely only on the information contained in, or incorporated by reference into, this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. This proxy statement/prospectus is dated August 12, 2019, and you should assume that the information in this proxy statement/prospectus is accurate only as of such date. You should assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of the date of the document that includes such information. Neither the mailing of this proxy statement/prospectus to TIG shareholders nor the issuance by BayCom of BayCom common stock in connection with the merger will create any implication to the contrary.

 

This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

 i

 

 

TABLE OF CONTENTS

 

Questions and Answers About the Merger AND THE TIG SPECIAL MEETING 1
Summary 5
Risk Factors 12
Risks Related to the Merger 12
Risks Related to BayCom Common Stock 14
Risks Relating to BayCom and BayCom’s Business 16
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 16
Selected Consolidated Financial Information of BayCom 18
GAAP RECONCILIATION AND MANAGEMENT EXPLANATION OF NON-GAAP FINANCIAL MEASURES 21
Selected Consolidated Financial Information of TIG 22
UNAUDITED Pro Forma PER SHARE DATA 24
Market Price Data and Dividend Information 25
The Special meeting of TIG Shareholders 25
Voting and Proxy Procedure 26
Proxy Solicitation 27
Security Ownership of Management and Certain Beneficial Owners 28
The Merger 29
General 29
Background of the Merger 29
Recommendation of the TIG Board of Directors and Reasons of TIG for the Merger 30
Opinion of TIG’s Financial Advisor 31
Reasons of BayCom for the Merger 36
Conversion of Shares and Exchange of Certificates 36
Regulatory Approvals Required for the Merger 37
Accounting Treatment 37
Interests of Certain Persons in the Merger 37
Method of Effecting the Acquisition 39
Effective Time 39
Declaration and Payment of Dividends and Stock Transfers 39
No Fractional Shares 40
Share Matters 40
Public Trading Markets 40
THE MERGER AGREEMENT 41
The Merger 41
Effective Time and Completion of the Merger 41
Consideration to be Received in the Merger 41
Exchange Procedures 42
Conduct of Business Pending the Merger 43
Agreement Not to Solicit Other Offers 45
Representations and Warranties 46
Special Meeting and Recommendation of TIG’s Board of Directors 47
Conditions to Completion of the Merger 48
Termination of the Merger Agreement 49
Employee and Benefit Plan Matters 50
Indemnification and Continuance of Director and Officer Liability Coverage 51
Expenses 51
Amendment, Waiver and Extension of the Merger Agreement 51
Voting Agreements 51
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCEs OF THE MERGER 52
Tax Consequences of the Merger Generally 53
Cash Received Instead of a Fractional Share of BayCom Common Stock 54
Cash Received on Exercise of Dissenters’ Rights 54
Possible Treatment of Gain as a Dividend 55
Net Investment Income Tax 55

 

 ii

 

 

Backup Withholding 56
Reporting Requirements 56
Description of BayCom Capital Stock 57
Comparison of RIGHTS OF TIG COMMON STOCK AND BAYCOM COMMON STOCK 61
Dissenters’ Rights 66
LEGAL MATTERS 67
Experts 67
WHERE YOU CAN FIND MORE INFORMATION 67
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE 68

 

Appendix A Agreement and Plan of Merger A-1
Appendix B Opinion of Vining Sparks IBG, LP B-1
Appendix C Colorado Dissenters’ Rights Statute C-1

 

 iii

 

 

Questions and Answers About the Merger AND THE TIG SPECIAL MEETING

 

The following are some of the questions that you, as a shareholder of TIG, may have and answers to those questions. These questions and answers, as well as the following summary, are not meant to be a substitute for the information contained in the remainder of this document, and this information is qualified in its entirety by the more detailed descriptions and explanations contained elsewhere in this document. We urge you to read this document in its entirety prior to making any decision as to your TIG common stock and the merger agreement. In addition, we incorporate by reference into this document important business and financial information about BayCom. You may obtain the information incorporated by reference into this document without charge by following the instructions in the section entitled “Where You Can Find More Information.”

 

Q:Why do TIG and BayCom want to merge?

 

A.BayCom wants to merge to enter into the attractive Colorado markets TIG serves. Both companies believe the merger will benefit the communities in which TIG operates, its customers, employees and shareholders. We each have long been committed to serving our local customer base. In addition, for TIG, the merger will allow its customers access to a number of products and services that cannot be offered to them now on a cost-effective basis. The board of directors of TIG has considered a number of available strategic options and in the board’s opinion, none of these options, including TIG remaining independent, is likely to create value for TIG shareholders greater than that if TIG merges with BayCom. Please read the sections entitled “The Merger—Recommendation of the TIG Board of Directors and Reasons of TIG for the Merger” beginning on page 30, and “Reasons of BayCom for the Merger” on page 36.

 

Q:What will TIG shareholders receive in the merger?

 

A:Upon completion of the merger, each outstanding share (except for dissenting shares) of TIG voting common stock and TIG non-voting common stock (collectively, “TIG common stock”), will be converted into the right to receive, promptly following the completion of the merger, (i) 0.27543 of a BayCom common stock share (the “exchange ratio”) and (ii) $6.34 in cash (which we refer to as the “merger consideration”). BayCom will not issue any fractional shares of BayCom common stock in the merger. TIG shareholders who would otherwise be entitled to a fractional share of BayCom common stock upon completion of the merger will instead receive an amount in cash (rounded to the nearest cent) equal to the fractional share interest multiplied by $23.00.

 

Q:Will the value of the merger consideration change between the date of this document and the time the merger is completed?

 

A:Yes. Although the number of shares of BayCom common stock that TIG shareholders will receive in the merger will be fixed based on the exchange ratio, the value of the merger consideration will fluctuate between the date of this document and the completion of the merger based upon the market value of the BayCom common stock. Therefore, in these circumstances, any fluctuation in the market price of BayCom common stock after the date of this document will change the value of the BayCom common stock that TIG shareholders will receive.

 

Q:What is being voted on at the TIG special meeting?

 

A:Holders of the TIG voting common stock will be voting on the approval of the merger agreement, as well as any proposal of the TIG board of directors to adjourn or postpone the TIG special meeting, if necessary or appropriate to solicit additional proxies in favor of the merger agreement (which we refer to as the “adjournment proposal”).

 

Q:Who is entitled to vote at the TIG special meeting?

 

A: Holders of TIG voting common stock of record at the close of business on August 6, 2019, the record date for the special meeting, are entitled to receive notice of and to vote on matters that come before the TIG special meeting and any adjournments or postponements of the TIG special meeting. However, a holder of TIG voting common stock may only vote his or her shares if he or she is present in person or is represented by proxy at the TIG special meeting.

 

 1 

 

 

Q:How do I vote?

 

A:After carefully reading and considering the information contained in this document, please follow the instructions that accompany your proxy card and cast your vote as soon as possible by returning your completed, signed, and dated proxy card in the enclosed envelope(please allow a minimum of 10 days for your proxy card to be processed). You may also attend the special meeting and vote in person. Even if you are planning to attend the special meeting, we request that you cast your vote by proxy card. For more detailed information, please see the section entitled “The Special Meeting of TIG Shareholders” beginning on page 25.

 

Q:How many votes do I have?

 

A: Each share of TIG voting common stock that you own as of the record date entitles you to one vote. As of the close of business on August 6, 2019, there were outstanding 1,692,300 shares of TIG voting common stock. As of that date, 228,400 of the outstanding TIG voting common stock shares entitled to vote were held by directors and executive officers of TIG and their respective affiliates.

 

Q:What constitutes a quorum at the TIG special meeting?

 

A:The presence of the holders of a majority of the shares entitled to vote at the special meeting constitutes a quorum. Presence may be in person or by proxy. You will be considered part of the quorum if you return a signed and dated proxy card, or if you vote in person at the special meeting.

 

Q:Why is my vote important?

 

A:If you do not vote by proxy or in person at the special meeting, it will be more difficult for TIG to obtain the necessary quorum to hold its special meeting. In addition, if you fail to vote, by proxy or in person, it will have the same effect as a vote against approval of the merger agreement. The merger agreement must be approved by the holders of a majority of the outstanding shares of TIG voting common stock entitled to vote at the special meeting. Certain holders of TIG voting common stock, including TIG directors, representing 43.7% of the outstanding TIG voting common stock have agreed to vote for approval of the merger agreement. If you are the record holder of TIG voting common stock (meaning a share certificate has been issued in your name and/or your name appears on TIG’s stock ledger) and you respond but do not indicate how you want to vote, your proxy will be counted as a vote in favor of approval of the merger agreement, as well as a vote in favor of approval of the adjournment proposal. If your shares are held in street name with a broker, your broker will vote your shares on the merger agreement proposal only if you provide instructions to it on how to vote. Shares that are not voted because you do not properly instruct your broker will have the effect of votes against approval of the merger agreement.

 

If you respond and abstain from voting, your abstention will have the same effect as a vote against approval of the merger agreement but will have no effect on the adjournment proposal.

 

Q:What is the recommendation of the TIG board of directors?

 

A:The TIG board of directors unanimously recommends a vote “FOR” approval of the merger agreement and “FOR” approval of the adjournment proposal.

 

Q:What if I return my proxy but do not mark it to show how I am voting?

 

A:If your proxy card is signed and returned without specifying your choice, your shares will be voted in favor of approval of both the merger agreement and adjournment proposal in accordance with the recommendation of the TIG board of directors.

 

 2 

 

 

Q:Can I change my vote after I have voted?

 

A:Yes. If you are a holder of record of TIG voting common stock, you may revoke your proxy at any time before it is voted by:

 

·signing and returning a proxy card with a later date,

 

·delivering a written revocation of your proxy to TIG’s corporate secretary, or

 

·attending the TIG special meeting in person and voting by ballot at the special meeting.

 

Attendance at the TIG special meeting by itself will not automatically revoke your proxy. TIG’s corporate secretary’s mailing address is: Corporate Secretary, TIG Bancorp, 8400 East Crescent Parkway, Suite 100, Greenwood Village, Colorado 80111. A revocation or later-dated proxy received by TIG after the vote is taken at the TIG special meeting will not affect your previously submitted proxy.

 

If your shares are held in “street name” through a bank or broker, you should contact your bank or broker to change your voting instructions.

 

Q:What regulatory approvals are required to complete the merger?

 

A:Promptly following the merger, TIG’s subsidiary bank, First State Bank of Colorado, will be merged with and into BayCom’s subsidiary bank, United Business Bank, which we often refer to in this document as the “bank merger.” In order to complete the merger, BayCom and TIG must first obtain all regulatory approvals, consents and orders required in connection with the merger and the bank merger. Accordingly, the parties must obtain the approval of or waiver by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), and the California Department of Business Oversight (the “DBO”). As of the date of this proxy statement/prospectus, BayCom, United Business Bank and First State Bank of Colorado have submitted applications and notifications to obtain the required regulatory approvals. There can be no assurances that such approvals will be received on a timely basis, or as to the ability of BayCom, United Business Bank and First State Bank of Colorado to obtain the approvals on satisfactory terms or the absence of litigation challenging such approvals. The regulatory approvals to which completion of the merger are described in more detail under the section entitled “The Merger— Regulatory Approvals Required for the Merger” on page 37.

 

Q:Do I have dissenters’ or appraisal rights with respect to the merger?

 

A:Yes. TIG is a Colorado corporation. Under Colorado law, holders of TIG common stock have the right to assert dissenters’ rights and, rather than receive the merger consideration, demand the “fair value” of their shares. To do so, you must not vote in favor of the merger and must notify TIG of your intention to demand payment of the fair value of your shares, rather than the merger consideration, before the special meeting, in accordance the procedures set forth below under the section entitled “Dissenters’ Rights” beginning on page 66, and in Appendix C of this proxy statement/prospectus.

 

Q:What are the material U.S. federal income tax consequences of the merger to me?

 

A:The merger is expected to qualify for U.S. federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, which we refer to throughout this proxy statement/prospectus as the Code. A TIG shareholder generally will recognize gain, but not loss, in an amount equal to the lesser of (1) the amount of gain realized (i.e., the excess, if any, of the sum of the cash received (other than cash received in lieu of a fractional share) and the fair market value of the BayCom common stock received pursuant to the merger over that holder’s adjusted tax basis in its shares of TIG common stock surrendered) and (2) the amount of cash received (other than cash received in lieu of a fractional share) pursuant to the merger. In addition, TIG shareholders will recognize gain or loss with respect to the receipt of cash in lieu of fractional shares. For further information concerning U.S. federal income tax consequences of the merger, see the section entitled “Material United States Federal Income Tax Consequences of the Merger” beginning on page 52.

 

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Q:What risks should I consider before I vote on the merger?

 

A:We encourage you to read carefully the detailed information about the merger contained in this document, including the section entitled “Risk Factors” beginning on page 12.

 

Q:When do you expect to complete the merger?

 

A:We are working to complete the merger in the quarter ending December 31, 2019. We must first obtain the necessary regulatory approvals and the approval of TIG’s shareholders entitled to vote at the special meeting. In the event of delays, the date for completing the merger can occur as late as December 31, 2019, after which TIG and BayCom would need to mutually agree to extend the closing date of the merger. We cannot assure you as to if and when all the conditions to the merger will be met nor can we predict the exact timing. It is possible we will not complete the merger.

 

Q:What happens if the merger is not completed?

 

A:If the merger is not completed, holders of TIG common stock will not receive any consideration for their shares in connection with the merger. Instead, TIG will remain an independent company. In addition, if the merger agreement is terminated in certain circumstances, a termination fee may be required to be paid by TIG. See “The Merger Agreement—Termination of the Merger Agreement” on page 49 for a complete discussion of the circumstances under which a termination fee would be required to be paid.

 

Q:If I am a holder of TIG common stock in certificated form, should I send in my TIG share certificates now?

 

A:No. Please do not send in your TIG share certificates with your proxy. After completion of the merger, the exchange agent will send you instructions for exchanging TIG share certificates for the merger consideration. See “The Merger Agreement—Exchange Procedures.”

 

Q:What should I do if I hold my TIG common stock in book-entry form at a bank or broker?

 

A:You are not required to take any special additional actions if your TIG common stock is held in book-entry form at a bank or broker. After the completion of the merger, the exchange agent will send you instructions for converting your book entry shares for the merger consideration. See “The Merger Agreement—Exchange Procedures.”

 

Q:Whom should I contact with questions or to obtain additional copies of this document?

 

A:TIG Bancorp
 8400 East Crescent Parkway, Suite 100,
 Greenwood Village, Colorado 80111
 (303) 955-4495

 

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Summary

 

This summary highlights selected information about the merger but may not contain all of the information that may be important to you. You should carefully read this entire document for a more complete understanding of the matters being considered at the TIG special meeting. Unless we have stated otherwise, all references in this document to BayCom are to BayCom Corp, and its consolidated subsidiary, United Business Bank, unless the context otherwise requires. All references to TIG are to TIG Bancorp and its consolidated subsidiary First State Bank of Colorado, unless the context otherwise requires. All references to the merger agreement are to the Agreement and Plan of Merger, dated as of June 28, 2019, between BayCom and TIG, a copy of which is attached as Appendix A to this document. References to the “combined company,” means, following the merger, BayCom and its subsidiaries, including TIG. References to “we,” “us” and “our” in this document mean BayCom and TIG together.

 

The Companies

 

BayCom Corp
500 Ygnacio Valley Road, Suite 200
Walnut Creek, CA 94596
(925) 476-1800

 

BayCom is a bank holding company incorporated under the laws of the State of California and the parent company of United Business Bank, a state-chartered, FDIC-insured bank that provides a broad range of financial services to businesses and business owners as well as individuals through its network of 25 full service branches and one loan production office located in Northern and Central California, Seattle, Washington and Albuquerque and Central, New Mexico. BayCom believes the size, growth and increasing economic diversity of its market areas, when combined with its business-focused strategy of delivering relationship-driven financial services, provides BayCom with excellent opportunities for long-term sustainable growth. BayCom has implemented a growth strategy that includes strategic acquisitions that have either strengthened its presence in existing markets or expanded its operations into new markets with attractive business prospects in addition to organic loan growth and deposit generation. While not without risk, BayCom believes there are certain advantages resulting from mergers and acquisitions. These advantages include, among others, the diversification of its loan portfolio with seasoned loans, the expansion of its market areas and an effective method to augment its growth and risk management infrastructure through the retention of local lending personnel and credit administration personnel to manage the client relationships of the banks being acquired. Most recently, BayCom completed on May 24, 2019, the acquisition of Uniti Financial Corporation (“Uniti”) and Uniti Bank.

 

BayCom is subject to regulation by the Federal Reserve Board and United Business Bank is examined and regulated by the DBO and the Federal Reserve Board. BayCom had total consolidated assets of approximately $1.8 billion, total deposits of approximately $1.5 billion and total consolidated shareholders’ equity of approximately $234.6 million at June 30, 2019. BayCom’s principal executive offices are located at 500 Ygnacio Valley Road, Suite 200, Walnut Creek, CA 94596 and its telephone number is (925) 476-1800. BayCom completed its initial public offering (“IPO”) on May 8, 2018. BayCom trades on the Nasdaq Global Select Market under the symbol “BCML.”

 

TIG Bancorp

8400 East Crescent Parkway, Suite 100,

Greenwood Village, Colorado 80111
(303) 955-4495

 

TIG is a bank holding company for First State Bank of Colorado. TIG’s business activities generally are limited to passive investment activities and oversight of its investment in First State Bank of Colorado. As a bank holding company, TIG is subject to regulation by the Federal Reserve Board. First State Bank of Colorado is examined and regulated by the Federal Reserve Board and by the Colorado Department of Banking. TIG was formed in 2017 by experienced bank investors to acquire Custer Bancorp on November 3, 2017, the former holding company for First State Bank of Colorado. First State Bank of Colorado serves its communities through its Denver Tech Center Branch in Arapahoe County, its Fountain Branch in El Paso County, its Westcliffe Branch in Custer County and its four branches in the communities of Crawford, Delta, Hotchkiss and Paonia all in Delta County. TIG had total consolidated assets of approximately $230.5 million, total deposits of approximately $197.0 million and total consolidated shareholders’ equity of approximately $31.9 million at June 30, 2019. TIG’s principal executive offices are located at 8400 East Crescent Parkway, Suite 100, Greenwood Village, Colorado 80111, and its telephone number is (303) 955-4495.

 

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The Merger (Page 29)

 

We propose a merger in which TIG will merge with and into BayCom with BayCom as the surviving corporation. Immediately following the merger, TIG’s wholly owned subsidiary bank, First State Bank of Colorado, will merge with and into BayCom’s wholly owned subsidiary bank, United Business Bank, with United Business Bank as the surviving institution. As a result of the mergers, TIG will cease to exist as a separate corporation and First State Bank of Colorado will cease to exist as a separate financial institution.

 

Based on the number of BayCom common stock and TIG common stock outstanding as of August 6, 2019, TIG shareholders will collectively own up to approximately 6.8% of the outstanding BayCom common stock after the merger. See the section entitled “The Merger Agreement—Consideration to be Received in the Merger.”

 

We expect the merger of TIG and BayCom to be completed during the quarter ending December 31, 2019. If the merger is not completed by December 31, 2019, TIG and BayCom would need to mutually agree to extend the closing date of the merger.

 

Approval of the merger agreement requires the affirmative vote, in person or by proxy, of a majority of the outstanding TIG voting common stock. As an inducement to and condition of BayCom’s willingness to enter into the merger agreement, certain of the shareholders of TIG, including each of its directors, agreed to vote all of their shares of TIG voting common stock in favor of approval of the merger agreement at the TIG special meeting. As of August 6, 2019, the voting agreements covered 738,900 shares of TIG voting common stock, constituting approximately 43.7% of TIG’s outstanding voting shares. The voting agreements terminate if the merger agreement is terminated in accordance with its terms. A copy of the form of voting agreement is attached as Exhibit A to the merger agreement attached as Appendix A to this proxy statement/prospectus.

 

No vote of BayCom shareholders is required (or will be sought) in connection with the merger.

 

The Merger Agreement (Page 41)

 

The merger agreement is described beginning on page 41. The merger agreement also is attached as Appendix A to this document. We urge you to read the merger agreement in its entirety because it contains important provisions governing the terms and conditions of the merger.

 

Consideration to be Received in the Merger (Page 41)

 

In the merger, TIG shareholders will have the right, with respect to each share of their TIG common stock, to receive 0.27543 of a BayCom common stock share and $6.34 in cash. The value of the consideration to be received by TIG shareholders in the merger will vary with the trading price of BayCom common stock between now and the completion of the merger. See “The Merger Agreement-Consideration to be Received in the Merger.”

 

TIG Shareholders Will Own Approximately 6.8% of the Outstanding BayCom Common Stock after the Merger (Page 41)

 

Based on the number of shares of BayCom common stock and TIG common stock outstanding as of August 6, 2019, TIG shareholders will collectively own approximately 6.8% of the outstanding BayCom common stock after the merger. See the section entitled “The Merger Agreement—Consideration to be Received in the Merger.”

 

Recommendation of the TIG Board of Directors and Reasons of TIG for the Merger (Page 30) 

 

The TIG board of directors believes the merger is in the best interests of TIG and the TIG shareholders. The TIG board of directors unanimously recommends that holders of TIG voting common stock vote “FOR” the approval of the merger agreement. For the factors considered by the TIG board of directors in reaching its decision to approve the merger agreement and making its recommendation, see “The Merger—Recommendation of the TIG Board of Directors and Reasons of TIG for the Merger.”

 

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Opinion of TIG’s Financial Advisor (Page 31)

 

In connection with the merger, TIG’s financial advisor, Vining Sparks IBG, LP or Vining Sparks, delivered a written opinion, dated June 28, 2019, to the TIG board of directors as to the fairness, from a financial point of view and as of such date, to the holders of TIG common stock of the merger consideration in the merger. The full text of the opinion, which describes the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by Vining Sparks in preparing the opinion, is attached as Appendix B to this proxy statement/prospectus. You should read the opinion and the description of Vining Sparks’ opinion contained in this proxy statement/prospectus carefully in their entirety.

 

Vining Sparks’ opinion speaks only as of the date of the opinion. The opinion of Vining Sparks does not reflect any developments that may have occurred or may occur after the date of its opinion and prior to the completion of the merger. The opinion was for the information of, and was directed to, the TIG board of directors (in its capacity as such) in connection with its consideration of the financial terms of the merger. The opinion does not constitute a recommendation to the TIG board of directors in connection with the merger, and it does not constitute a recommendation to any holder of TIG common stock or any shareholder of any other person as to how to vote in connection with the merger or any other matter. Vining Sparks’ opinion does not address the underlying business decision of TIG to engage in the merger or enter into the merger agreement, the form or structure of the merger, the relative merits of the merger as compared to any other alternative business strategies that might exist for TIG or the effect of any other transaction in which TIG might engage.

 

Share Price Information (Page 25)

 

BayCom’s common stock is traded on Nasdaq Global Select Market under the symbol “BCML.” TIG’s common stock is not listed on an exchange or quoted on any automated services, and there is no established trading market for shares of TIG common stock.

 

The following table sets forth (a) the last reported sale prices per share of BayCom common stock on (i) June 28, 2019, the last trading day preceding public announcement of the signing of the merger agreement and (ii) August 7, 2019, the last practicable date prior to the mailing of this proxy statement/prospectus and (b) the equivalent price per TIG share, determined by multiplying the 0.27543 exchange ratio by such prices and then adding the cash consideration of $6.34 per share.

 

Date     BayCom Closing Price     Exchange Ratio     Cash payment
per share
    Value of Merger
Consideration per
share of
TIG
 
  June 28, 2019     $ 21.90       0.27543     $ 6.34     $ 12.37  
  August 7, 2019   $ 21.60       0.27543     $ 6.34     $ 12.29  

 

TIG’s Directors and Executive Officers Have Interests in the Merger that Differ From, or are in Addition To, Your Interests in the Merger (Page 37)

 

You should be aware that some of the directors and executive officers of TIG have interests in the merger that are different from, or are in addition to, the interests of TIG shareholders. These interests may create potential conflicts of interest. TIG’s board of directors was aware of and considered these interests, among other matters, when making its decisions to approve the merger agreement and in recommending that TIG shareholders vote in favor of approving the merger agreement. These include the following:

 

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·TIG’s director and the President of First State Bank of Colorado, Jeffrey A. Walker will become the President of the Colorado Division of United Business Bank at an annual base salary of $175,000.

 

·Upon consummation of the merger, Jim Noble, Executive Vice President, Chief Operating Officer and Chief Financial Officer of First State Bank of Colorado will receive a cash bonus of $75,000, Josh Dearmore, Senior Vice President and Market President-Denver of First State Bank of Colorado will receive a cash bonus of $55,000 and Lina Lee, Assistant Vice President and Senior Credit Analyst of First State Bank of Colorado will receive a cash bonus of $35,000.

 

·TIG’s directors and executive officers will receive indemnification from BayCom for their past acts and omissions in their capacities as directors and officers as well as continuing insurance coverage with respect thereto for a period of four years after completion of the merger, to the fullest extent permitted under TIG’s organizational documents and to the fullest extent otherwise permitted by law.

 

In addition, each TIG director has entered into a voting agreement in favor of BayCom agreeing to vote his TIG voting common stock for approval of the merger agreement and approval of the adjournment proposal.

 

For a more complete description of these interest interests, see “The Merger – Interests of Certain Persons in the Merger” on page 37.

 

Material United States Federal Income Tax Consequences of the Merger (Page 52)

 

The merger is expected to qualify for U.S. federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Code. As a result, a TIG shareholder generally will recognize gain, but not loss, in an amount equal to the lesser of (1) the amount of gain realized (i.e., the excess, if any, of the sum of the cash received (other than cash received in lieu of a fractional BayCom common share) and the fair market value of the BayCom common stock received pursuant to the merger over that holder’s adjusted tax basis in its shares of TIG common stock surrendered) and (2) the amount of cash received (other than cash received in lieu of a fractional BayCom common share) pursuant to the merger. In addition, TIG shareholders will recognize gain or loss with respect of the receipt of cash in lieu of fractional shares of BayCom common stock.

 

For further information concerning U.S. federal income tax consequences of the merger, please see “Material United States Federal Income Tax Consequences of the Merger” beginning on page 52.

 

Tax matters are very complicated and the consequences of the merger to any particular TIG shareholder will depend on that shareholder’s particular facts and circumstances. TIG shareholders are urged to consult their own tax advisors to determine their own tax consequences from the merger.

 

Accounting Treatment (Page 37)

 

The merger will be accounted for as an acquisition of TIG by BayCom under the acquisition method of accounting in accordance with U.S. generally accepted accounting principles.

 

In Order to Complete the Merger, We Must First Obtain Certain Regulatory Approvals (Page 48)

 

In order to complete the merger, BayCom and TIG must first obtain all regulatory approvals, consents or waivers required in connection with the merger and the bank merger. Accordingly, the parties must obtain the approval of the Federal Reserve Board and the DBO. The U.S. Department of Justice may review the impact of the merger and the bank merger on competition. As of the date of this proxy statement/prospectus, BayCom, United Business Bank and First Colorado Bank of Colorado have submitted applications and notifications to obtain the required regulatory approvals.

 

There can be no assurance as to whether all regulatory approvals will be obtained or as to the dates of the approvals. There also can be no assurance that the regulatory approvals received will not contain a condition or requirement that results in a failure to satisfy the conditions to closing set forth in the merger agreement. See the section entitled “The Merger Agreement—Conditions to Completion of the Merger” on page 48.

 

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TIG Shareholders Have Dissenters’ Rights (Page 66)

 

Under Colorado law, holders of TIG common stock have the right to assert dissenters’ rights and, rather than receive the merger consideration, demand the “fair value” of their shares. To do so, you must not vote in favor of the merger and must notify TIG of your intention to demand payment of the fair value of your shares, rather than the merger consideration, before the special meeting, in accordance the procedures set forth below under the section entitled “Dissenters’ Rights” beginning on page 66, and in Appendix C of this proxy statement/prospectus. Colorado law requires that the “fair value” of the shares be considered as of immediately prior to the effective time of the merger, and without considering the effect of the merger, and requires TIG to make the initial determination of fair value. If a shareholder objects to this determination, TIG may petition a court to determine fair value. The fair value determined by such a court may be greater than, equal to or less than the merger consideration. One condition to BayCom’s obligation to complete the merger is that the total number of dissenting shares of must be less than 5.0% of the total number of outstanding shares of TIG common stock.

 

Additional Conditions to Consummation of the Merger (Page 48)

 

In addition to the regulatory approvals, the consummation of the merger depends on a number of conditions being met, including, among others:

 

·approval of the merger agreement by the holders of a majority of the outstanding shares of TIG voting common stock;

 

·authorization of the BayCom common stock to be issued in the merger for listing on Nasdaq;

 

·the effectiveness of a registration statement on Form S-4 with the SEC in connection with the issuance of BayCom common stock in the merger;

 

·absence of any order, injunction, decree or law preventing or making illegal completion of the merger or the bank merger;

 

·receipt by each party of an opinion from such party’s tax counsel that the merger will qualify as a tax-free reorganization for U.S. federal income tax purposes;

 

·accuracy of the representations and warranties of TIG and BayCom, subject to the standards set forth in the closing conditions of the merger agreement;

 

·performance in all material respects by TIG and BayCom of all obligations required to be performed by either of them under the merger agreement;

 

·dissenting shares shall be less than 5% of the issued and outstanding TIG common shares; and

 

·receipt of certain third-party consents by TIG.

 

Where the law permits, either BayCom or TIG could elect to waive a condition to its obligation to complete the merger although that condition has not been satisfied. We cannot be certain when (or if) the conditions to the merger will be satisfied or waived or that the merger will be completed.

 

In addition, after TIG’s shareholders have adopted the merger agreement, we may not amend the merger agreement to reduce the amount or change the form of consideration to be received by TIG shareholders in the merger without the approval of TIG shareholders as required by law.

 

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We May Decide Not to Complete the Merger (Page 49)

 

TIG and BayCom, by mutual consent, can agree at any time not to complete the merger, even if the shareholders of TIG have voted to approve the merger agreement. Also, either party can decide, without the consent of the other, not to complete the merger in a number of other situations, including:

 

·if any governmental entity that must grant a required regulatory approval of the merger or the bank merger has denied such approval and such denial has become final and nonappealable, unless the denial is due to the failure of the party seeking to terminate the merger agreement to perform or observe the covenants and agreements of that party set forth in the merger agreement;

 

·if any governmental entity of competent jurisdiction has issued a final nonappealable order, injunction or decree enjoining or otherwise prohibiting or making illegal the consummation of the merger or the bank merger;

 

·failure to complete the merger by December 31, 2019, unless the failure of the closing to occur by that date is due to the failure of the party seeking to terminate the merger agreement to perform or observe the covenants or agreements of that party;

 

·if the other party has breached any of its covenants, agreements, representations or warranties contained in the merger agreement based on the closing condition standards set forth in the merger agreement, and the party seeking to terminate is not then in material breach of any representation, warranty, covenant or other agreement contained in the merger agreement, and the breach is not cured within thirty (30) days following written notice to the party committing the breach, or which breach, by its nature, cannot be cured within such thirty (30) day period; and

 

·if the approval of the shareholders of TIG contemplated by the merger agreement is not obtained by reason of the failure to obtain the vote required at the TIG special meeting, except this right may not be exercised by TIG if TIG or its board of directors has committed an act that would entitle BayCom to terminate the merger agreement and receive the termination fee specified in the merger agreement.

 

BayCom, without the consent of TIG, can terminate the merger agreement:

 

·if the board of directors of TIG fails to recommend to its shareholders the approval of the merger agreement, or adversely changes, or publicly announces its intention to adversely change its recommendation.

 

TIG, without the consent of BayCom, can terminate the merger agreement:

 

·prior to obtaining shareholder approval in order to enter into an agreement relating to a superior proposal; provided, however, that TIG has not materially breached the merger agreement provisions outlined in “The Merger Agreement—Agreement Not to Solicit Other Offers” on page 45.

 

Under some circumstances, TIG will be required to pay a termination fee to BayCom if the merger agreement is terminated (Page 49)

 

TIG must pay BayCom a termination fee of $1.2 million if:

 

·BayCom terminates the merger agreement as a result of: (i) the TIG board of directors failing to recommend the approval of the merger agreement or adversely changing or publicly announcing its intention to adversely change its recommendation and the TIG shareholders failing to approve the merger agreement; (ii) TIG breaching its nonsolicitation or related obligations as provided in the merger agreement; or (iii) TIG refuses to call or hold the TIG special meeting for a reason other than that the merger agreement has been previously terminated;

 

·TIG terminates the merger agreement prior to obtaining shareholder approval of the merger agreement in order to enter into an agreement relating to a superior proposal; provided, however, that TIG has not materially breached its nonsolicitation and related obligations as provided in the merger agreement; and

 

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·the merger agreement is terminated by either party as a result of the failure of TIG’s shareholders to approve the merger agreement and if, prior to such termination, there is publicly announced a proposal for a tender or exchange offer, for a merger or consolidation or other business combination involving TIG or First State Bank of Colorado or for the acquisition of a majority of the voting power in, or a majority of the fair market value of the business, assets or deposits of, TIG or First State Bank of Colorado and, within one year of the termination, TIG or First State Bank of Colorado either enters into a definitive agreement with respect to that type of transaction or consummates that type of transaction.

 

Comparison of Shareholder Rights (Page 65)

 

The conversion of your TIG common stock into the right to receive BayCom common stock in the merger will result in differences between your rights as a TIG shareholder, which are governed by the Colorado Business Corporation Act, or CBCA and TIG’s Articles of Incorporation and Bylaws, and your rights as a BayCom shareholder, which are governed by the California General Corporation Law or CGCL and BayCom’s Articles of Incorporation and Bylaws.

 

The TIG Special Meeting (Page 25)

 

The TIG special meeting of TIG’s shareholders will be held on Wednesday, September 18, 2019, at 3:00 p.m., Mountain Time at the main office of TIG’s subsidiary bank, First State Bank of Colorado, located at 8400 East Crescent Parkway, Suite 100, Greenwood Village, Colorado 80111, unless adjourned or postponed. At the special meeting, holders of TIG voting common stock will be asked to:

 

·approve the merger agreement; and

 

·approve the adjournment proposal.

 

TIG shareholders entitled to vote will also be asked to act on any other business that may be properly submitted to a vote at the TIG special meeting or any adjournments or postponements of the TIG special meeting.

 

You may vote at the TIG special meeting if you owned TIG voting common stock as of the close of business on August 6, 2019. You may cast one vote for each share of TIG voting common stock you owned at that time. Approval of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding TIG voting common stock. If you mark “ABSTAIN” on your proxy, or fail to submit a proxy and fail to vote in person at the TIG special meeting or if your shares are held in street name and you fail to instruct your bank or broker how to vote with respect to the merger agreement, it will have the same effect as a vote “AGAINST” the merger agreement. Certain shareholders of TIG, including each of its directors, representing 43.7% of the outstanding TIG voting common stock have agreed to vote for approval of the merger agreement.

 

Approval of the adjournment proposal requires the affirmative vote of a majority of the votes cast at the TIG special meeting. If you mark “ABSTAIN” on your proxy, or fail to submit a proxy and fail to vote in person at the TIG special meeting or if your shares are in street name and you fail to instruct your bank or broker how to vote with respect to the adjournment proposal, it will have no effect on such proposal.

 

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Risk Factors

 

By voting in favor of the merger agreement, you will be choosing to invest in the common shares of BayCom as combined with TIG. An investment in the combined company’s common shares involves a high degree of risk. In addition to the other information included in this proxy statement/prospectus, including the matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” on page 16, you should carefully consider the matters described below in determining whether to vote in favor of approval of the merger agreement.

 

Risks Related to the Merger

 

Because the market price of BayCom common stock will fluctuate, TIG shareholders cannot be sure of the value of the merger consideration they will receive.

 

Upon completion of the merger, each share of TIG common stock will be converted into the right to receive merger consideration consisting of 0.27543 of a BayCom common stock share and $6.34 in cash pursuant to the terms of the merger agreement. Accordingly, the value of the merger consideration to be received by the TIG shareholders will be based on the value of BayCom common stock. The value of the shares of BayCom common stock to be received by TIG shareholders in the merger may vary from the value as of the date we announced the merger, the date that this document was mailed to TIG shareholders, the date of the TIG special meeting, and the closing date of the merger. Any change in the market price of BayCom common stock prior to completion of the merger will affect the value of the stock portion of the merger consideration that TIG shareholders will receive upon completion of the merger. Accordingly, at the time of the TIG special meeting, TIG shareholders will not know or be able to calculate the value of the stock portion of the merger consideration they would receive upon completion of the merger. Share price changes may result from a variety of factors, including general market and economic conditions, changes in our respective businesses, operations and prospects, and regulatory considerations, among other things. Many of these factors are beyond the control of BayCom and TIG. Holders of TIG voting common stock should obtain current market quotations for BayCom common stock before voting their shares at the TIG special meeting.

 

TIG’s shareholders will have less influence as shareholders of BayCom than as shareholders of TIG.

 

Holders of TIG’s voting common stock currently have the right to vote in the election of the board of directors of TIG and on other matters affecting TIG. Following the merger, the holder of TIG common stock as a group will hold an ownership interest of  approximately 6.8% of BayCom. Upon completion of the merger, each TIG shareholder will become a shareholder of BayCom with a percentage ownership of the combined company much smaller than such shareholder’s percentage ownership of TIG. Because of this, TIG’s shareholders will have less influence on the management and policies of BayCom than they now have on the management and policies of TIG.

 

If BayCom is unable to integrate the combined operations successfully, its business and earnings may be negatively affected.

 

The merger involves the integration of companies that have previously operated independently. Successful integration of TIG’s operations will depend primarily on BayCom’s ability to consolidate operations, systems and procedures and to eliminate redundancies and costs. No assurance can be given that BayCom will be able to integrate its post-merger operations without encountering difficulties including, without limitation, the loss of key employees and customers, the disruption of the ongoing business of BayCom or TIG or possible inconsistencies in standards, controls, procedures and policies. Anticipated economic benefits of the merger are projected to come from various areas that BayCom’s management has identified through the due diligence and integration planning process. The elimination and consolidation of duplicate tasks are projected to result in annual cost savings. If BayCom has difficulties with the integration, it might not fully achieve the economic benefits it expects to result from the merger. In addition, BayCom may experience greater than expected costs or difficulties relating to the integration of the business of TIG, and/or may not realize expected cost savings from the merger within the expected time frame.

 

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The fairness opinion of TIG’s financial advisor received by TIG’s board of directors prior to signing of the merger agreement does not reflect changes in circumstances since the signing of the merger agreement.

 

Changes in the operations and prospects of BayCom or TIG or general market and economic conditions, and other factors that may be beyond the control of BayCom and TIG, may alter the value of BayCom or TIG or the price of BayCom common stock or TIG common stock by the time the merger is completed. The opinion of TIG’s financial advisor, dated June 28, 2019, does not speak as of the time the merger will be completed or as of any date other than the date of such opinion. For a description of the opinion of TIG’s financial advisor, please refer to “The Merger—Opinion of TIG’s Financial Advisor.” For a description of the other factors considered by the board of directors of TIG in determining to approve the merger agreement, please refer to “The Merger—Recommendation of the TIG Board of Directors and Reasons of TIG for the Merger.”

 

The merger agreement limits TIG’s ability to pursue alternatives to the merger.

 

The merger agreement contains non-solicitation provisions that, subject to limited exceptions, limit TIG’s ability to discuss, facilitate or commit to competing third-party proposals to acquire all or a significant part of TIG. Although TIG’s board of directors is permitted to take certain actions in connection with the receipt of a competing acquisition proposal if it determines in good faith that the failure to do so would violate its fiduciary duties, taking such actions could, and other actions (such as withdrawing or modifying its recommendation to TIG shareholders that they vote in favor of approval of the merger agreement) would, entitle BayCom to terminate the merger agreement and receive a termination fee of $1.2 million. See the section entitled “The Merger Agreement—Termination of the Merger Agreement” on page 49. These provisions might discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of TIG from considering or proposing that acquisition even if it were prepared to pay consideration with a higher per share price than that proposed in the merger, or might result in a potential competing acquiror proposing to pay a lower per share price to acquire TIG than it might otherwise have proposed to pay. The payment of the termination fee could also have an adverse impact on TIG’s financial condition.

 

TIG will be subject to business uncertainties and contractual restrictions while the merger is pending.

 

BayCom and TIG have operated and, until the completion of the merger, will continue to operate, independently. Uncertainty about the effect of the merger on employees and customers may have an adverse effect on TIG and consequently on BayCom. These uncertainties may impair TIG’s ability to attract, retain or motivate key personnel until the merger is consummated, and could cause customers and others that deal with TIG to seek to change existing business relationships with TIG. Retention of certain employees may be challenging during the pendency of the merger, as certain employees may experience uncertainty about their future roles with BayCom. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with BayCom, BayCom’s business following the merger could be harmed. In addition, the merger agreement restricts TIG from making certain acquisitions and taking other specified actions until the merger occurs without the consent of BayCom. These restrictions may prevent TIG from pursuing attractive business opportunities that may arise prior to the completion of the merger. See “The Merger Agreement—Conduct of Businesses Pending the Merger.”

 

TIG’s directors and executive officers have additional interests in the merger.

 

In deciding how to vote on the approval of the merger agreement, you should be aware that TIG’s directors and executive officers might have interests in the merger that are different from, or in addition to, the interests of TIG shareholders generally. See the section entitled “The Merger—Interests of Certain Persons in the Merger.” TIG’s board of directors was aware of these interests and considered them when it recommended approval of the merger agreement to the TIG shareholders.

 

 13 

 

 

Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on BayCom following the merger.

 

Before the merger and the bank merger may be completed, BayCom and TIG must obtain approvals from the Federal Reserve Board and the DBO. Other approvals, waivers or consents from regulators may also be required. An adverse development in either party’s regulatory standing or other factors could result in an inability to obtain approvals or delay their receipt. These regulators may impose conditions on the completion of the merger or the bank merger or require changes to the terms of the merger or the bank merger. While BayCom and TIG do not currently expect that any such conditions or changes will be imposed, there can be no assurance that they will not be, and such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs on or limiting the revenues of BayCom following the merger, any of which might have an adverse effect on BayCom following the merger. BayCom is not obligated to complete the merger if the regulatory approvals received in connection with the completion of the merger impose any unduly burdensome condition upon BayCom following the merger or United Business Bank following the bank merger. See “The Merger—Regulatory Approvals Required for the Merger” and “The Merger Agreement – Conditions to Completion of the Merger.”

 

The merger is subject to certain closing conditions that, if not satisfied or waived, will result in the merger not being completed, which may cause the price of BayCom common stock or TIG common stock to decline.

 

The merger is subject to customary conditions to closing, including the receipt of required regulatory approvals and approval of TIG’s shareholders. If any condition to the merger agreement is not satisfied or waived, to the extent permitted by law, the merger will not be completed. In addition, BayCom and TIG may terminate the merger agreement under certain circumstances, even if TIG’s shareholders approve the merger agreement. If BayCom and TIG do not complete the merger, the trading prices for BayCom common stock or the value of TIG common stock may decline. In addition, neither company would realize any of the expected benefits of having completed the merger. If the merger is not completed and TIG’s board of directors seeks another merger or business combination, TIG shareholders cannot be certain that TIG will be able to find a party willing to offer equivalent or more attractive consideration than the consideration BayCom has agreed to provide. If the merger is not completed, additional risks could materialize, which could materially and adversely affect the business, financial condition and results of BayCom and TIG, including the recognition of the expenses relating to the merger without realizing the economic benefits of the merger. For more information on closing conditions to the merger agreement, see “The Merger Agreement— Conditions to Completion of the Merger” included elsewhere in this proxy statement/prospectus.

 

Risks Related to BayCom Common Stock

 

The market price of BayCom common stock may be subject to substantial fluctuations, which may make it difficult for you to sell your shares at the volumes, prices, and times desired.

 

The trading price of BayCom common stock may be volatile, which may make it difficult for you to resell your shares at the volume, prices and times desired. There are many factors that may impact the market price and trading volume of BayCom common stock, including:

 

·actual or anticipated fluctuations in BayCom’s operating results, financial condition, or asset quality;

 

·market conditions in the broader stock market in general, or in BayCom’s industry in particular;

 

·publication of research reports about BayCom, its competitors, or the bank and non-bank financial services industries generally, or changes in, or failure to meet, securities analysts’ estimates of BayCom’s financial and operating performance, or lack of research reports by industry analysts or ceasing of coverage;

 

·future issuances of BayCom common stock or other securities;

 

·significant acquisitions or business combinations, strategic partnerships, joint ventures, or capital commitments by or involving BayCom’s competitors or it;

 

·additions or departures of key personnel;

 

·trades of large blocks of BayCom common stock;

 

·economic and political conditions or events;

 

·regulatory developments; and

 

·other news, announcements, or disclosures (whether by BayCom or others) related to us, its competitors, its core markets, or the bank and non-bank financial services industries.

 

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The stock market and, in particular, the market for financial institution stocks, has experienced substantial fluctuations in recent years, which in many cases have been unrelated to the operating performance and prospects of particular companies. In addition, significant fluctuations in the trading volume in BayCom common stock may cause significant price variations to occur. Increased market volatility may materially and adversely affect the market price of BayCom common stock, which could make it difficult to sell your shares at the volume, prices and times desired.

 

The trading volume in BayCom’s common stock is less than other larger financial institutions.

 

Although BayCom common stock is listed for trading on NASDAQ, the trading volume in BayCom’s common stock is less than that of other, larger financial services companies. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of BayCom common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which BayCom has no control. Given the lower trading volume of BayCom’s common stock, significant sales of BayCom common stock, or the expectation of these sales, could cause the price of BayCom common stock to decline.

 

Use of BayCom’s common stock for future acquisitions or to raise capital may be dilutive to existing stockholders.

 

When BayCom determines that appropriate strategic opportunities exist, it may acquire other financial institutions and related businesses, subject to applicable regulatory requirements. BayCom may use BayCom’s common stock for such acquisitions. BayCom may also seek to raise capital for such acquisitions through selling additional common stock. It is possible that the issuance of additional common stock in such acquisitions or capital transactions may be dilutive to the interests of BayCom’s existing stockholders.

 

A future issuance of stock could dilute the value of BayCom common stock.

 

BayCom may sell additional shares of BayCom common stock, or securities convertible into or exchangeable for such shares, in subsequent public or private offerings. Future issuance of any new shares could cause further dilution in the value of BayCom’s outstanding shares of BayCom common stock. BayCom cannot predict the size of future issuances of BayCom common stock, or securities convertible into or exchangeable for such shares, or the effect, if any, that future issuances and sales of shares of BayCom common stock will have on the market price of BayCom common stock. Sales of substantial amounts of BayCom common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of BayCom common stock.

 

BayCom has not historically declared or paid cash dividends on its common stock and does not expect to pay dividends on its common stock in the foreseeable future. Consequently, your only opportunity to achieve a return on your investment in the foreseeable future is if the price of its common stock appreciates.

 

BayCom’s board of directors has not declared a dividend on its common stock since its inception. BayCom’s ability to pay dividends on its common stock is dependent on United Business Bank’s ability to pay dividends to BayCom, which is limited by applicable laws and banking regulations. BayCom’s ability to pay dividends on its common stock may in the future be restricted by the terms of any debt or preferred securities BayCom may incur or issue. Payments of future dividends, if any, will be at the discretion of BayCom’s board of directors after taking into account various factors, including its business, operating results and financial condition, current and anticipated cash needs, plans for expansion and any legal or contractual limitations on its ability to pay dividends. In addition, if required payments on its outstanding debt obligations, including its junior subordinated debentures held by its unconsolidated subsidiary trusts, are not made or suspended, BayCom may be prohibited from paying dividends on our common stock.

 

BayCom may issue shares of preferred stock in the future, which could make it difficult for another company to acquire it or could otherwise adversely affect holders of its common stock, which could depress the price of our common stock.

 

Although there are currently no shares of BayCom preferred stock issued and outstanding, BayCom’s articles of incorporation authorize the issuance of up to 10,000,000 shares of one or more series of preferred stock. The board also has the power, without shareholder approval, to set the terms of any series of preferred stock that may be issued, including voting rights, dividend rights, preferences over our common stock with respect to dividends or in the event of a dissolution, liquidation or winding up and other terms. In the event that BayCom issues preferred stock in the future that has preference over its common stock with respect to payment of dividends or upon its liquidation, dissolution or winding up, or if BayCom issues preferred stock with voting rights that dilute the voting power of its common stock, the rights of the holders or the market price of BayCom common stock could be adversely affected. In addition, the ability of BayCom’s board of directors to issue shares of preferred stock without any action on the part of its shareholders may impede a takeover of BayCom and prevent a transaction perceived to be favorable to its shareholders.

 

 15 

 

 

Risks Relating to BayCom and BayCom’s Business

 

BayCom is, and will continue to be, subject to the risks described in BayCom’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as updated by subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are filed with the SEC and incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” included elsewhere in this proxy statement/prospectus.

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This document, including information included or incorporated by reference in this document, may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and BayCom and TIG intend for such forward-looking statements to be covered by the safe harbor provisions for forward looking statements contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, (i) statements about the benefits of the merger, including future financial and operating results, cost savings, enhancements to revenue and accretion to reported earnings that may be realized from the merger; (ii) statements about our respective plans, objectives, expectations and intentions and other statements that are not historical facts; (iii) statements about expectations regarding the timing of the closing of the merger and the ability to obtain regulatory approvals on a timely basis; and (iv) other statements identified by words such as “expects,” “projects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “possible,” “potential,” “strategy,” or words of similar meaning. These forward-looking statements are based on current beliefs and expectations of BayCom’s and TIG’s respective management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and beyond BayCom’s and TIG’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

 

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

 

·our ability to successfully integrate any assets, liabilities, customers, systems, and personnel;

 

·the required regulatory approvals for the merger and bank merger and/or the approval of the merger agreement by the shareholders of TIG might not be obtained or other conditions to the completion of the merger set forth in the merger agreement might not be satisfied or waived;

 

·the growth opportunities and cost savings from the merger may not be fully realized or may take longer to realize than expected;

 

·operating costs, customer losses and business disruption following the merger, including adverse effects on relationships with employees, may be greater than expected;

 

·adverse governmental or regulatory policies may be enacted;

 

·the interest rate environment may change, causing margins to compress and adversely affecting net interest income;

 

·the global financial markets may experience increased volatility;

 

 16 

 

 

·we may experience adverse changes in our credit rating;

 

·we may experience competition from other financial services companies in our markets; and

 

·an economic slowdown may adversely affect credit quality and loan originations.

 

Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed under “Risk Factors” beginning on page 12 of this proxy statement/prospectus and in BayCom’s reports filed with the SEC.

 

For any forward-looking statements made in this proxy statement/prospectus, BayCom and TIG claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on these statements, which speak only as of the date of this proxy statement/prospectus or the date of the applicable document incorporated by reference in this proxy statement/prospectus. BayCom and TIG do not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. All subsequent written and oral forward-looking statements concerning the merger or other matters addressed in this proxy statement/prospectus and attributable to BayCom, TIG or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this proxy statement/prospectus.

 

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Selected Consolidated Financial Information of BayCom

 

The following tables set forth selected consolidated financial information of BayCom for the periods and at the dates indicated. The information at December 31, 2018 and 2017 and for the years ended December 31, 2018, 2017 and 2016 is derived in part from and should be read together with the audited consolidated financial statements and notes thereto of BayCom incorporated by reference into this proxy statement/prospectus from BayCom’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. The information at December 31, 2016, 2015 and 2014 and for the fiscal years ended December 31, 2015 and 2014 is derived in part from audited consolidated financial statements and notes thereto of BayCom that are not incorporated by reference into or attached to this proxy statement/prospectus. The operating results for the six months ended June 30, 2019 and 2018 are not necessarily indicative of the operating results that may be expected for any future interim period or the year ending December 31, 2019. See the section entitled “Where You Can Find More Information” on page 67.

 

   At and For the
Six Months Ended June 30,
   At and For the Year Ended December 31, 
   2019   2018   2018   2017   2016   2015   2014 
Selected Financial Condition Data:  (unaudited)                     
   (In thousands) 
Total assets  $1,771,727   $1,345,672   $1,478,395   $1,245,794   $675,299   $623,304   $504,391 
Cash and due from banks   351,594    319,512    327,561    251,596    130,213    111,391    145,281 
Investments available-for-sale   100,271    54,433    99,796    40,505    13,918    23,615    17,540 
FHLB stock and FRB stock, at cost   11,342    8,454    9,243    7,759    3,923    3,846    2,859 
Loans receivable, net   1,213,527    908,463    970,189    886,864    504,264    460,208    322,908 
Total liabilities   1,537,090    1,152,032    1,277,642    1,127,159    597,236    550,923    446,217 
Deposits   1,505,382    1,138,168    1,257,768    1,104,305    590,759    543,304    437,941 
Borrowed funds   8,201    5,417    8,161    11,387            6,000 
Total equity   234,637    193,640    200,753    118,635    78,063    72,381    58,174 

 

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   At and For the Six Months
Ended June 30,
   At and For the Year Ended December 31, 
   2019   2018   2018   2017   2016   2015   2014 
Selected Operating Data:  (unaudited)                     
   (Dollars in thousands, except per share data) 
                                    
Interest and dividend income  $34,305   $27,303   $56,860   $44,253   $29,625   $25,715   $19,637 
Interest expense   3,422    2,289    4,942    4,312    3,074    2,691    2,310 
Net interest income before provision for loan losses   30,883    25,014    51,918    39,941    26,551    23,024    17,327 
Provision for loan losses   722    497    1,842    462    598    1,412    1,074 
Net interest income after provision for loan losses   30,161    24,517    50,076    39,479    25,953    21,612    16,253 
Noninterest income   4,660    3,809    7,082    4,794    1,358    6,902    3,705 
Noninterest expense   24,543    16,779    36,669    30,124    16,963    19,350    13,063 
Income before provision for income taxes   10,278    11,547    20,489    14,149    10,348    9,164    6,895 
Provision for income taxes   3,110    3,190    5,996    8,889    4,436    1,712    1,717 
Net income  $7,168   $8,357   $14,493   $5,260   $5,912   $7,452   $5,178 
                                    
Per Share Data:                                   
Shares outstanding at end of period   12,052,266    10,869,275    10,869,275    7,496,995    5,472,426    5,493,209    4,875,787 
Average diluted shares outstanding   11,139,287    8,495,230    9,692,009    6,520,230    5,449,998    5,466,468    4,740,152 
Diluted EPS  $0.64   $0.99   $1.50   $0.81   $1.09   $1.37   $1.09 
Book value per share  $19.47   $17.82   $18.47   $15.82   $14.26   $13.18   $11.93 
Tangible book value per share(1)  $16.69   $16.48   $16.46   $13.81   $14.12   $12.96   $11.76 
Dividends paid during period                            
Dividend payout ratio                            

 

(1) BayCom calculates tangible book value per share, a non-GAAP financial measure, by dividing tangible common equity by the number of common shares outstanding at the end of the period. See “GAAP Reconciliation and Management Explanation of non-GAAP Financial Measures” for a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measure.
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    At and For the Six
Months ended June 30,
    At and For the Years Ended December 31,  
    2019     2018     2018     2017     2016     2015     2014  
    (unaudited)                                
    (Dollars in thousands)  
Selected Financial Ratios and Other Data:                                                
Performance Ratios:                                                        
Return on average assets     0.93 %     1.29 %     1.07 %     0.51 %     0.91 %     1.24 %     1.13 %
Return on average equity     6.79 %     13.40 %     8.28 %     5.28 %     7.87 %     10.36 %     10.02 %
Yield on earning assets     4.78 %     4.58 %     4.54 %     4.59 %     4.74 %     4.47 %     4.55 %
Rate paid on average interest bearing liabilities     0.79 %     0.59 %     0.62 %     0.65 %     0.73 %     0.72 %     0.89 %
Interest rate spread(1)     4.00 %     3.99 %     3.92 %     3.94 %     4.01 %     3.75 %     3.66 %
Net interest margin(2)     4.31 %     4.19 %     4.15 %     4.14 %     4.25 %     4.00 %     3.95 %
Dividend payout ratio     -       -       -       -       -       -       -  
Noninterest expense to average assets     3.18 %     2.64 %     2.78 %     2.93 %     2.61 %     3.21 %     2.79 %
Average interest earning assets to average interest bearing liabilities     164.68 %     153.73 %     157.80 %     144.87 %     149.24 %     153.08 %     148.15 %
Efficiency ratio(3)     69.05 %     58.95 %     62.15 %     67.34 %     60.78 %     64.66 %     62.11 %
                                                         
Capital Ratios(4):                                                        
Tier 1 leverage ratio     11.55 %     9.46 %     10.04 %     8.92 %     10.59 %     10.59 %     10.67 %
Common equity tier 1     16.22 %     13.36 %     14.63 %     12.43 %     13.43 %     13.30 %     15.78 %
Tier 1 capital ratio     16.22 %     13.36 %     14.63 %     12.43 %     13.43 %     13.30 %     15.78 %
Total capital ratio     16.73 %     13.91 %     15.17 %     12.94 %     14.18 %     14.13 %     16.50 %
Equity to total assets at end of period     13.24 %     14.39 %     13.58 %     14.68 %     11.56 %     11.61 %     11.53 %
                                                         
Asset Quality Ratios:                                                        
Non-performing assets to total assets(5)     0.25 %     0.07 %     0.27 %     0.01 %     0.28 %     0.05 %     0.59 %
Non-performing loans to total loans     0.31 %     0.10 %     0.32 %     0.02 %     0.22 %     0.07 %     0.01 %
Allowance for loan losses to non- performing loans     153.85 %     493.56 %     164.32 %     2,354.75 %     343.18 %     1,152.69 %     84.49 %
Allowance for loan losses to total loans     0.48 %     0.50 %     0.53 %     0.47 %     0.74 %     0.83 %     0.77 %
Classified assets (graded substandard and doubtful)   $ 8,295     $ 7,906     $ 8,602     $ 7,017     $ 7,602     $ 9,620     $ 3,325  
Total accruing loans 30-89 days past due   $ 4,957     $ 2,673     $ 2,707     $ 1,894     $ 625     $ 499     $ 399  
Total loans 90 days past due and still accruing   $ 597     $ 122                 $ 230     $ 334     $ 96  
                                                         
Other Data:                                                        
Number of full service offices     25       17       22       19       10       10       7  
Number of full-time equivalent employees     262       165       214       158       110       103       78  

 

(1) Interest rate spread is calculated as the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.
(2) Net interest margin is calculated as net interest income divided by total average earning assets.
(3) Calculated by dividing noninterest expense by the sum of net interest income before provision for loan losses plus noninterest income.
(4) Regulatory capital ratios are for United Business Bank only.
(5) Non-performing assets consists of non-accruing loans and other real estate owned.

 

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GAAP RECONCILIATION AND MANAGEMENT EXPLANATION OF
NON-GAAP FINANCIAL MEASURES

 

Tangible book value per share is a non-GAAP financial measure generally used by financial analysts and investment bankers to evaluate financial institutions. For tangible book value, the most directly comparable financial measure calculated in accordance with GAAP is book value. Tangible common shareholders’ equity is calculated by excluding goodwill and core deposit intangibles from shareholders’ equity. Tangible book value per share is calculated by dividing tangible common shareholders’ equity by the number of common shares outstanding at the end of the period. BayCom believes that this measure is consistent with the capital treatment by its bank regulatory agencies, which excludes intangible assets from the calculation of risk-based capital ratios and presents this measure to facilitate comparison of the quality and composition of BayCom’s capital over time and in comparison, to its competitors. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Further, this non-GAAP financial measure of tangible book value per share should not be considered in isolation or as a substitute for book value per share or total shareholders’ equity determined in accordance with GAAP and may not be comparable to a similarly titled measure reported by other companies.

 

The following table reconciles, as of the dates set forth below, total shareholders’ equity to tangible common equity and compares book value per common share to tangible book value per common share (dollars in thousands, except per share data).

 

   At or For the Six Months
Ended June 30,
   At or For the Years ended December 31, 
Tangible Common Equity  2019   2018   2018   2017   2016   2015   2014 
   (unaudited)                     
   (Dollars in thousands, except per share data) 
Total shareholders’ equity  $234,637   $193,640   $200,753   $118,635   $78,063   $72,381   $58,174 
                                    
Less:                                   
Goodwill   (26,449)   (10,365)   (14,594)   (10,365)            
Core deposit intangibles   (6,990)   (4,194)   (7,205)   (4,772)   (802)   (1,201)   (812)
Tangible common equity  $201,198   $179,081   $178,954   $103,498   $77,261   $71,180   $57,362 
Common shares outstanding   12,052,266    10,869,275    10,869,275    7,496,995    5,472,426    5,493,209    4,875,787 
Book value per common share (GAAP)  $19.47   $17.82   $18.47   $15.82   $14.26   $13.18   $11.93 
Tangible book value per common share (non-GAAP)  $16.69   $16.48   $16.46   $13.81   $14.12   $12.96   $11.76 

 

 21 

 

 

Selected Consolidated Financial Information of TIG

 

The following table summarizes selected historical consolidated financial data of TIG as of and for the years ended December 31, 2018 and 2017. TIG is providing the following information to aid you in your analysis of the financial aspects of the merger. TIG derived the information as of and for each of the two years ended December 31, 2018 and December 31, 2017 from its historical audited consolidated financial statements for these fiscal years. The historical consolidated financial data for the six months ended June 30, 2019 and 2018 is derived from unaudited consolidated financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation at such dates and for such periods have been made.

 

The operating results for the six months ended June 30, 2019 and 2018 are not necessarily indicative of the operating results that may be expected for any future interim period or the year ending December 31, 2019.

 

   At or For the Six Months
Ended June 30,
   At or For the Year Ended December 31, 
   2019   2018   2018   2017(1) 
   (unaudited)   (Dollars in thousands, except per share data) 
Operations Data:                    
Interest income  $5,282   $4,940   $10,782   $1,640 
Interest expense   352    323    661    108 
Net interest income   4,930    4,617    10,121    1,532 
Provision for loan losses   137    473    960    123 
Noninterest income   487    780    1,330    154 
Noninterest expense   3,726    3,668    7,526    3,041(2)
Income tax expense (benefit)   377    306    723    (166)
Net income (loss)   1,176    950    2,242    (1,312)
Earnings (loss) per common share                    
Basic  $0.37   $0.30   $0.70   $(0.41)
Diluted   0.37    0.30    0.70    (0.41)
Dividend payout ratio to common shareholders   ––    ––         
Performance Ratios:                    
Net interest spread(3)   4.31%   4.16%   4.33%   4.16%
Net interest margin(4)   4.87%   4.48%   4.64%   4.43%
Efficiency ratio(5)   68.79%   67.97%   65.73%   180.37%
Noninterest expense to average assets   3.18%   2.64%   3.16%   1.39%
Return on average assets   1.02%   0.83%   0.94%   -0.60%
Return on average common equity   8.33%   7.47%   8.31%   -5.36%

 

(1) The December 31, 2017 operating results for TIG Bancorp represent two months of performance, November 1, 2017 through December 31, 2017. TIG Bancorp’s acquisition of Custer Bancorp was effective November 30, 2017.
(2) December 31, 2017 financial information includes one-time merger related expenses of $1.6 million.
(3) Net interest spread is the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities.
(4) Net interest margin is net interest income divided by average interest earning assets.
(5) The efficiency ratio is noninterest expense divided by the sum of net interest income and noninterest income.

 

 22 

 

 

   At or For the Six Months
Ended June 30,
   At or For the Year Ended December 31, 
   2019   2018   2018   2017 
   (unaudited)   (Dollars in thousands, except per share data) 
                 
Balance Sheet Data:                    
Total assets  $230,506   $229,274   $238,282   $218,849 
Total loans receivable, net   144,576    155,636    151,028    144,603 
Investment securities   32,601    42,751    37,376    47,035 
Goodwill & CDI   3,818    4,123    3,872    4,155 
Deposits   196,980    199,046    206,657    188,466 
FHLB advances                
Shareholders’ equity   31,952    29,085    30,458    28,538 
                     
Financial Measures:                    
Book value per common share  $10.04   $9.14   $9.57   $8.97 
Stockholders’ equity to assets ratio   13.87%   12.69%   12.79%   13.04%
Net loans to deposits   73.40%   78.19%   73.08%   76.73%
                     
Capital Ratios:(1)                    
Total risk-based capital ratio   19.53%   16.02%   17.51%   15.96%
Tier 1 risk-based capital ratio   18.72%   15.65%   16.85%   15.87%
Leverage ratio   11.78%   10.80%   10.77%   10.50%
Common equity tier 1 capital to risk weighted assets   18.72%   15.65%   16.85%   15.87%
                     
Asset Quality Ratios:                    
Non-performing loans to loans receivable, net   0.75%   0.73%   0.63%   0.93%
Allowance for loan losses to nonperforming loans   107.00%   48.00%   104.00%   10.00%
Non-performing assets to total assets   0.53%   0.70%   0.53%   0.95%
Net (recoveries) charge-offs on loans to average loans receivable, net   (0.02)%   0.03%   0.06%   0.0%
                     
Other Data:                    
Number of banking offices   7    7    7    7 
Number of full-time equivalent employees   62    64    65    59 
Deposits per branch   28,140    28,435    29,522    26,924 
Assets per full-time equivalent   3,717    3,582    3,666    3,709 

  

(1)Regulatory capital ratios are for First State Bank of Colorado.

 

 23 

 

 

UNAUDITED Pro Forma PER SHARE DATA

 

The table below sets forth the book value per common share and basic and diluted earnings per common share data for (i) each of BayCom, Uniti Financial Corporation (which BayCom acquired on May 24, 2019) and TIG on a historical basis, (ii) BayCom on a pro forma combined basis with Uniti, (iii) for BayCom on a pro forma combined basis with TIG and (iv) TIG on a pro forma combined basis per TIG equivalent share. The pro forma combined amounts and pro forma combined per equivalent share information gives effect to the merger as if the merger occurred on June 30, 2019, in the case of the book per common share value data, and as if the merger occurred on January 1, 2019 and operated in calendar year 2019 in the case of earnings per common share data. Uniti information is provided through May 24, 2019, the date of the BayCom acquisition. The Pro Forma Combined Amounts for BayCom and TIG reflect certain acquisition accounting adjustments, which are based on estimates that are subject to change depending on fair values as of the merger completion date. The Pro Forma Combined per TIG Equivalent Share data shows the effect of the merger from the perspective of an owner of TIG common stock. The pro forma financial data in the table below is provided for illustrative purposes, does not include any projected cost savings, revenue enhancements or other possible financial benefits of the merger to the combined company and does not attempt to suggest or predict future results. This information also does not necessarily reflect what the historical financial condition or results of operations of the combined company would have been had BayCom, Uniti and TIG been combined as of the dates and for the periods shown.

 

  

BayCom

Historical

   Uniti
Historical(3)
   Pro Forma
Combined
Amounts for
BayCom and
Uniti
   TIG
Historical
   Pro Forma
Combined
Amounts For
BayCom
and
TIG
  

Pro Forma
Combined

Per TIG

Equivalent

Share(1)

 
At or For the Six Months Ended June 30, 2019:                              
                               
Book value per common share(2)  $19.47   $3.08   $19.47   $10.04   $19.66   $11.76 
                               
Basic earnings per common share  $0.64   $(0.02)  $0.55   $0.37   $0.59   $0.04 
                               
Diluted earnings per common share  $0.64   $(0.02)  $0.55   $0.37   $0.59   $0.04 
                               
At or For the Year Ended December 31, 2018:                              
                               
Book value per common share(2)   $18.47   $3.10   $18.61   $9.57   $19.07   $11.59 
                               
Basic earnings per common share  $1.50   $0.25   $1.60   $0.70   $1.60   $0.12 
                               
Diluted earnings per common share  $1.50   $0.24   $1.60   $0.70   $1.60   $0.12 

 

(1)Calculated by multiplying the Pro Forma Combined Amounts for BayCom and TIG by the exchange ratio of 0.27543 and, solely in the case of the book value per common share at June 30, 2019, adding to that result, $6.34, which is the per share cash merger consideration payable to holders of TIG common stock. See “The Merger Agreement – Consideration to be Received in the Merger” on page 41.

(2)The pro forma combined book value and common shares for BayCom and TIG as of June 30, 2019 was $254.2 million and 12,929,070, respectively. The pro forma combined book value and common shares as of December 31, 2018 was $245.2 million and 12,861,085, respectively.

(3) Earnings January 1, 2019 to May 24, 2019.

 

 24 

 

 

Market Price Data and Dividend Information

 

BayCom’s common stock is listed on Nasdaq under the symbol “BCML.” Prior to the completion of BayCom’s initial public offering on May 8, 2018, BayCom’s common stock was quoted on the OTCQB, Over the Counter Marketplace, under the symbol “BCML.” TIG’s common stock is not listed on an exchange or quoted on any automated services, and thereto no established trading market for TIG common stock. The BayCom common stock shares issuable upon completion of the merger will be listed on the NASDAQ. The following table sets forth, for the calendar quarters indicated, the high and low sales prices per BayCom common share as reported on Nasdaq and the OTCQB. Neither BayCom nor TIG has paid any dividends since inception.

 

    BayCom  
       
    Market Price  
    High     Low  
2019            
Third quarter 2019 (through August 7, 2019)   $ 23.56     $ 20.37  
June 30, 2019     24.85       19.74  
March 31, 2019     25.00       20.55  
2018                
December 31, 2018   $ 26.38     $ 19.43  
September 30, 2018     26.71       23.83  
June 30, 2018     25.21       21.35  
March 31, 2018     23.50       19.25  
2017                
December 31, 2017   $ 19.75     $ 17.80  
September 30, 2017     18.00       16.90  
June 30, 2017     17.45       16.35  
March 31, 2017     13.75       14.80  

 

You should obtain current market quotations for BayCom common stock, as the market price of BayCom common stock will fluctuate between the date of this document and the date on which the merger is completed, and thereafter. You can get these quotations on the Internet, from a newspaper or by calling your broker. Current market quotations for TIG common stock are not available.

 

As of June 30, 2019, there were approximately 734 holders of record of BayCom common stock. As of June 30, 2019, there were approximately 56 holders of record of TIG common stock. These numbers do not reflect the number of persons or entities who may hold their stock in nominee or “street name” through brokerage firms.

 

Following the merger, the declaration of dividends will be at the discretion of BayCom’s board of directors and will be determined after consideration of various factors, including earnings, cash requirements, the financial condition of BayCom, applicable state law and government regulations and other factors deemed relevant by BayCom’s board of directors.

 

The Special meeting of TIG Shareholders

 

This proxy statement/prospectus constitutes the proxy statement of TIG for use at the TIG special meeting to be held on Wednesday, September 18, 2019 at 10:00 a.m. Mountain Time, at the main office of TIG’s subsidiary bank, First State Bank of Colorado, 8400 East Crescent Parkway, Suite 100, Greenwood Village, CO 80111.

 

At the TIG special meeting, the holders of TIG voting common stock will consider and vote upon (i) approval of the merger agreement; and (ii) approval of the adjournment proposal.

 

Pursuant to the merger agreement, TIG will merge with and into BayCom, and TIG’s wholly owned subsidiary, First State of Bank of Colorado, will merge with and into United Business Bank. We expect to complete the merger of TIG with and into BayCom during the quarter ending December 31, 2019.

 

 25 

 

 

Upon completion of the merger, TIG shareholders will receive shares of BayCom common stock as merger consideration for each share of TIG common stock they own, as described in “The Merger Agreement—Consideration to be Received in the Merger” on page 41.

 

TIG has supplied all information contained in this proxy statement/prospectus with respect to TIG. BayCom has supplied all information contained in this proxy statement/prospectus with respect to BayCom.

 

This proxy statement/prospectus is first being provided to shareholders of TIG on or about August 16, 2019.

 

Voting and Proxy Procedure

 

Shareholders Entitled to Vote. The close of business on August 6, 2019 was the record date for determining shareholders of TIG voting common stock entitled to receive notice of and to vote at the TIG special meeting. On the record date, there were 1,692,300 shares of TIG voting common stock outstanding held by 56 holders of record. TIG has no other class of voting securities outstanding. Each holder of TIG voting common stock is entitled to one vote for each share of TIG voting common stock held in that holder’s name on TIG’s books as of the record date on any matter submitted for a vote of shareholders at the TIG special meeting.

 

Voting Your Shares. Holders of record who receive this proxy statement/prospectus and proxy card from TIG can vote their shares using one of the following methods:

 

·Complete and return a written proxy card (please allow a minimum of 10 days for your proxy card to be processed); or

 

·Vote in person at the TIG special meeting.

 

Submitting your voting instructions by any of the methods mentioned above will not affect your right to attend the TIG special meeting and vote.

 

If you are a beneficial owner of TIG common stock held by a broker, bank or other nominee (i.e., in “street name”), you will need proof of ownership to be admitted to the TIG special meeting. A recent brokerage statement or letter from a bank or broker are examples of proof of ownership. If you want to vote your TIG voting common stock held in street name in person at the TIG special meeting, you will have to get a written proxy in your name from the broker, bank or other nominee who holds your shares.

 

Quorum. The presence, in person or by proxy, of at least a majority of the total number of outstanding TIG voting common stock entitled to vote is necessary to constitute a quorum at the TIG special meeting. Abstentions and broker non-votes will be counted as shares present and entitled to vote at the TIG special meeting for purposes of determining the existence of a quorum.

 

Proxies; Proxy Revocation Procedures. The TIG board of directors solicits proxies so that each holder of TIG voting common stock has the opportunity to vote on the merger agreement and any other proposal to be considered at the TIG special meeting. When a proxy card is returned properly signed and dated, the shares represented thereby will be voted in accordance with the instructions on the proxy card. If a shareholder of record attends the TIG special meeting and wishes to vote in person, he or she may vote by ballot. Where no instructions are indicated, proxies will be voted in accordance with the recommendations of the TIG board of directors. The board recommends a vote:

 

·FOR approval of the merger agreement; and

 

·FOR approval of the adjournment proposal.

 

TIG shareholders of record entitled to vote may revoke a proxy at any time by: (i) signing another proxy with a later date; (ii) giving written notice of the revocation of your proxy to the Secretary of TIG prior to the TIG special meeting; or (iii) voting in person at the TIG special meeting. Attendance at the TIG special meeting will not in and of itself constitute revocation of your proxy. Written notices of revocation or other communications about revoking your proxy should be addressed to TIG Bancorp, Attn: Corporate Secretary, 8400 East Crescent Parkway, Suite 100, Greenwood Village, Colorado 80111.  If your shares are held in “street name” through a bank, broker or other nominee, you must follow the instructions on the form you receive from your bank, broker or other nominee with respect to revoking your proxy.

 

 26 

 

 

TIG shareholders who return a properly executed proxy but provide no instruction with respect on how to vote on the merger agreement will not be eligible to assert their dissenters’ rights.

 

Vote Required; Voting Agreements. Approval of the merger agreement will require the affirmative vote, in person or by proxy, of a majority of the outstanding TIG voting common stock.

 

The directors and certain shareholders of TIG have entered into voting agreements with BayCom with respect to the TIG common stock they own, representing 43.7% of the outstanding shares entitled to vote, in which they have agreed, among other things, to vote, or cause to be voted, all of their TIG voting common stock in favor of the merger agreement and the adjournment proposal. See the section entitled “The Merger Agreement—Voting Agreements” on page 51. Because approval of the merger agreement requires the affirmative vote of a majority of the outstanding shares of TIG voting common stock, failure to vote, abstentions and broker non-votes will have the same effect as a vote against the merger agreement.

 

The adjournment proposal will be approved if a majority of the votes cast at the special meeting are voted in favor of the adjournment proposal. The failure to vote, abstentions and broker non-votes on the adjournment proposal will have no effect on such proposal.

 

Proxy Solicitation

 

The accompanying proxy is being solicited by the board of directors of TIG. TIG will bear the entire cost of solicitation of proxies from holders of its common shares. In addition to the solicitation of proxies by mail, certain officers, directors and employees of TIG, without extra remuneration, may also solicit proxies in person, by telephone, facsimile or otherwise. TIG will pay printing, postage and mailing costs of the proxy statement/prospectus. All other costs, including legal and accounting fees, shall be borne by the party incurring such costs.

 

 27 

 

 

Security Ownership of Management and Certain Beneficial Owners

 

The following table sets forth the beneficial ownership of TIG voting common stock as of August 6, 2019 by (i) each director of TIG, (ii) TIG’s executive officers, (iii) all directors and executive officers of TIG as a group and (iv) each shareholder known by TIG to beneficially own more than 5% of the outstanding TIG common stock. Unless otherwise specified, the address of each listed shareholder is c/o TIG Bancorp, 8400 East Crescent Parkway, Suite 100, Greenwood Village, Colorado 80111.

 

The percentage of beneficial ownership is calculated in relation to the total number of shares of TIG voting common stock that were issued and outstanding as of August 6, 2019, the voting record date. Beneficial ownership is determined in accordance with the rules of the SEC, which generally attribute beneficial ownership of securities to persons who possess sole or shared voting or investment power with respect to those securities. Unless otherwise indicated, and subject to the voting agreements entered into with BayCom in connection with the merger (see “The Merger Agreement—Voting Agreements”), to TIG’s knowledge, the persons or entities identified in the table below have sole voting and investment power with respect to all shares shown as beneficially owned by them.

 

Name  Number of
Shares of
Voting
Common
Stock
Beneficially
Owned (1)
   Number of
Shares of
Non-Voting
Common Stock
Beneficially
Owned
   Percent of Shares
of Voting Common
Stock Outstanding
(%)
 
             
Executive Officers and Directors               
Gary Webb, Chairman and President   71,200        4.21%
Boyd Hodges, Vice Chairman and Secretary   81,100        4.79%
Jeffrey Walker, Director and President, First State Bank of Colorado   61,100        3.61%
Adam Desmond, Director   15,000        0.89%
Ben Mackovack, Director            
Jason Ruggiero, Director            
Martin Friedman, Director            
                
All Executive Officers and Directors as a group (7 persons)   228,400    ¾    13.50%
                
Name of Beneficial Owner               
Strategic Value Private Investors, LP(2)   167,500    502,400    9.90%
EJF Sidecar Fund Series, LLC- Small Financial Equity Series(3)   167,500    599,300    9.90%
Financial Hybrid Opportunity Fund LLC(4)   167,500    334,100    9.90%
Siena Capital Partners I, L.P.   165,100    54,400    9.76%
Mark and Sheri Urbanczyk   90,000        5.32%

 

 

* Does not exceed 1%.

 

(1) The shares “beneficially owned” include shares owned by or for, among others, the spouse and/or minor children of the individual and any other relative who has the same home as such individual, as well as other shares with respect to which the individual has or shares voting or investment power. Beneficial ownership may be disclaimed as to certain of the shares.
(2) Mr. Mackovak is this owner’s representative on the board.
(3) Mr. Ruggiero is this owner’s representative on the board.
(4) Mr. Friedman is this owner’s representative on the board.

 

 

 28 

 

 

The Merger

 

General

 

The boards of directors of BayCom and TIG have unanimously approved the merger agreement providing for the merger of TIG with and into BayCom, with BayCom being the surviving entity, and the merger of First State Bank of Colorado with and into United Business Bank, with United Business Bank being the surviving institution. We expect to complete the merger of TIG with and into BayCom during the quarter ending December 31, 2019.

 

Background of the Merger

 

As part of an ongoing effort to improve First State Bank of Colorado’s franchise and enhance shareholder value, TIG’s directors and management have periodically reviewed various strategic options. During these reviews, the board of directors evaluated the cost of adding additional financial products and locations in an effort to remain competitive in the marketplace, while implementing a growth strategy that provides acceptable returns to shareholders.

 

On July 20, 2018, TIG engaged GLC Advisors & Co. or GLC to serve as its exclusive financial advisor to explore a potential merger or sale of TIG. During July 2018, GLC assisted management with the preparation of a confidential information memorandum for use in informing prospective purchasers about TIG. On August 3, 2018, TIG’s board of directors approved the list of potential interested acquirers and merger partners. During August 2018, GLC contacted 23 potential interested parties and received 10 signed confidentiality agreements. On August 31, 2018, GLC received three preliminary proposals from interested parties.

 

On September 4, 2018, GLC presented an analysis of the preliminary offers to the board of directors of TIG. The board selected an investor group, PGC Bancorporation (“PGC”), and executed a letter of intent with PGC to conduct preliminary due diligence including a review of the loan portfolio. Between September and December 2018, PGC had several meetings with management and conducted on-site diligence and held numerous follow-up meetings and discussions with TIG to complete due diligence. On December 21, 2018, TIG and PGC executed a merger agreement with the execution of the merger agreement being made public on January 16, 2019. During January and February of 2019, PGC attempted to finalize its ongoing capital raising efforts and held meetings with various bank investors and potential equity partners. On January 25, 2019, PGC and GLC entered into an Amendment to the Agreement and Plan of Merger to extend the time period to which PCG would make available copies of binding subscriptions agreements from its investor group. PGC was unable to meet the amended deadline and could not satisfy the capital raise requirements, which resulted in the termination of the merger agreement.

 

In March 2019, GLC met with the TIG Board of Directors to review and discuss other potential interested acquirers and merger partners with the board of directors. During March and April of 2019, GLC contacted 25 potential interested parties (some parties were part of the initial outreach in August 2018) and received 13 signed confidentiality agreements. On April 10, 2019, GLC received four preliminary proposals from interested parties. On April 12, 2019, GLC presented an analysis of the preliminary offers to the board of directors of TIG. After instructing GLC to negotiate each of the initial offers, the board of directors selected to hold further discussions with Party A. In April, Party A held initial discussions with TIG’s board of directors and management. During this time, Party A and Party A’s financial advisor held negotiations with GLC regarding purchase price, consideration composition, and the board of directors.

 

On May 2, 2019, it was brought to GLC’s attention that BayCom was interested in entering Colorado through acquisitions. As a result, GLC introduced BayCom to the sale process and executed a non-disclosure agreement on that same day. On May 6, 2019, BayCom submitted a non-binding letter of intent. Following this, TIG requested both Party A and BayCom to present their best revised letters of intent. On May 10, 2019, the TIG board of directors met to discuss Party A and BayCom’s final letters of intent and voted to accept BayCom’s letter of intent based on superior shareholder liquidity.

 

During May and June 2019, BayCom held several meetings with management and conducted on-site diligence and held numerous follow-up meetings and discussions with TIG to complete due diligence. At the same time period, TIG conducted reverse due diligence on BayCom. During this period, the parties and their legal counsel negotiated the terms and conditions of the merger agreement and related documents.

 

 29 

 

 

On June 20, 2019, the board of directors of TIG met in a special meeting and representatives from GLC and TIG’s legal counsel were in attendance. Vining Sparks delivered its financial analyses and oral opinion (subsequently confirmed in writing by Vining Sparks in a written opinion dated June 28, 2019) with respect to TIG and the proposed merger with BayCom to the effect that the merger consideration was fair, from a financial point of view, to TIG’s shareholders.

 

On June 27, 2019, the board of directors of TIG met to discuss acceptance of the merger agreement. Representatives from GLC and TIG’s legal counsel, Baird Holm LLP were in attendance. Counsel then reviewed with the board of directors the merger agreement and related agreements which had been distributed to the board of directors and discussed all of the key terms and conditions of the agreements. After further discussion, the board of directors approved the transaction and authorized the execution of the merger agreement and related agreements.

 

On June 28, 2019 BayCom’s board of directors held a special meeting to review and discuss the proposed merger and the merger agreement. At this meeting, BayCom’s board of directors received presentations from its legal counsel, Silver, Freedman, Taff and Tiernan LLP and its financial advisor, Janney Montgomery Scott LLC. Following this discussion, BayCom’s board of directors unanimously voted to approve the merger agreement and the other transactions contemplated by the merger agreement, including the merger, and authorized BayCom’s executives to execute the merger agreement.

 

The merger agreement and related documents were executed by the parties on June 28, 2019. The transaction was announced the morning of July 1, 2019, by a joint press release issued by both companies.

 

Recommendation of the TIG Board of Directors and Reasons of TIG for the Merger

 

TIG’s board of directors believes that the merger is in the best interest of TIG and its shareholders. Accordingly, TIG’s board of directors has unanimously approved the merger agreement and unanimously recommends that TIG’s shareholders vote “FOR” approval of the merger.

 

In reaching its decision to approve the merger agreement and related transactions, the TIG board of directors consulted with its senior management and financial advisor with respect to the financial aspects and fairness of the merger consideration, from a financial point of view, to the holders of shares of TIG common stock, and its outside legal counsel as to its legal duties and the terms of the merger agreement. The TIG board of directors believes that combining with BayCom will create a stronger and more diversified organization and is in the best interests of TIG, its shareholders and First State Bank of Colorado.

 

The terms of the merger agreement, including the consideration to be paid to TIG’s shareholders, were the result of arm’s length negotiations between representatives of TIG and representatives of BayCom. In arriving at its determination to approve the merger agreement, TIG’s board of directors considered a number of factors, including the following, which are not presented in order of priority:

 

·the purchase price to be received by TIG shareholders;

 

·that the transaction is expected to be tax-free to TIG shareholders to the extent that they receive BayCom stock in exchange for their shares of TIG common stock;

 

·recent bank acquisition activity in the Colorado market and purchase prices paid in recent bank transactions;

 

·results that could be expected to be obtained by TIG if it continued to operate the Bank independently, and the potential benefits to TIG’s shareholders of such course, as compared with the value of the merger consideration being offered by BayCom;

 

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·the possible effects of the proposed merger on employees of First State Bank of Colorado;

 

·the belief of the TIG board of directors that BayCom stock represents an investment in a well-capitalized and Nasdaq listed institution with potential long-term value and increased liquidity for shareholders;

 

·the opinion of Vining Sparks, financial advisor to the TIG board of directors, that, as of the date of such opinion, and based upon and subject to the assumptions, qualifications and limitations set forth in the written opinion, the merger consideration to be received by the TIG shareholders was fair to the TIG shareholders from a financial point of view, as more fully described under “— Opinion of TIG’s Financial Advisor,” below;

 

·the possibility that the value of the stock consideration to be received by TIG shareholders could be higher or lower than the value disclosed when the agreement was first announced based on the trading performance of BayCom ’s common stock price;

 

·the existence of a mutual shareholder between BayCom and TIG; and

 

·confidence in BayCom’s ability to complete the merger.

 

The foregoing discussion of the factors considered by the TIG board of directors is not intended to be exhaustive, but does set forth the principal factors considered by the board. Based on the factors described above, the TIG board of directors determined that the merger with BayCom would be advisable and in the best interests of TIG and its shareholders and approved the merger agreement and related transactions contemplated by the merger agreement. In view of the wide variety and complexity of factors considered by the TIG board of directors in connection with its evaluation of the merger, the board did not consider it practical, and did not attempt, to quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its decision and did not undertake to make any specific determination as to whether any particular factor, or any aspect of any factor, was favorable or unfavorable to the ultimate determination of the board. Rather, the TIG board of directors made its recommendation based on the totality of information presented to, and the investigation conducted by, it. In considering the factors discussed above, individual directors may have given different weights to different factors. The TIG board of directors collectively made its determination with respect to the merger based on the conclusion reached by its members, based on the factors that each of them considered appropriate, that the merger is in the best interests of TIG shareholders and that the benefits expected to be achieved from the merger outweigh the potential risks and vulnerabilities.

 

This summary of the reasoning of TIG’s board of directors and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the section entitled “Cautionary Statement Regarding Forward-Look Statements.”

 

Opinion of TIG’s Financial Advisor

 

TIG’s board of directors retained Vining Sparks to render financial advisory and investment banking services. Vining Sparks is a nationally recognized investment banking firm with substantial expertise in transactions similar to the proposed transaction and is familiar with TIG and its business. As part of its investment banking business, Vining Sparks is regularly engaged in the valuation of financial services companies and their securities in connection with mergers and acquisitions, private placements and valuations for estate, corporate and other purposes.

 

At the June 20, 2019 meeting of the TIG board of directors, Vining Sparks rendered its opinion to the TIG board of directors that the merger consideration to be received by the holders of TIG common stock in the proposed transaction is fair, from a financial point of view, to the holders of TIG common stock. The opinion was subsequently confirmed by Vining Sparks by delivery of its written opinion dated June 28, 2019. The full text of Vining Sparks’ opinion is attached as Appendix B to this proxy statement/prospectus and should be read in its entirety.

 

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Vining Sparks’ opinion was directed to TIG’s board of directors and is limited to the fairness, from a financial point of view, of the consideration to be received by holders of TIG common stock in the proposed transaction. It did not address TIG’s underlying business decision to proceed with the proposed transaction or constitute a recommendation to the TIG board of directors as to how it should vote on the merger and does not constitute a recommendation to any holder of TIG common stock as to how such shareholder should vote in connection with the merger.

 

Vining Sparks’ opinion was reviewed and approved by Vining Sparks’ Fairness Opinion Committee in conformity with its policies and procedures established under the requirements of Rule 5150 of the Financial Industry Regulatory Authority.

 

For purposes of Vining Sparks’ opinion and in connection with its review of the proposed transaction, Vining Sparks has, among other things:

 

·reviewed the terms of the merger agreement made available to Vining Sparks;

 

·reviewed certain publicly available financial statements, both audited (where available) and un-audited, and related financial information of TIG and BayCom, including those included in their respective annual reports for the past two years and their respective quarterly reports for the past two years;

 

·reviewed publicly available consensus “street estimates” of BayCom earnings for 2019 and 2020 and reviewed publicly available research reports;

 

·reviewed certain financial forecasts and projections of TIG, prepared by TIG management, as well as the amount and timing of the cost savings and related expenses and synergies expected to result from the merger discussed with TIG management;

 

·held discussions with senior management of TIG concerning the past and current results of operations of TIG, its current financial condition and management’s opinion of its future prospects;

 

·reviewed reported market prices and historical trading activity of BayCom common stock;

 

·reviewed certain aspects of the financial performance of BayCom and compared such financial performance of BayCom, together with stock market data relating to BayCom common stock, with similar data available for certain other financial institutions the securities of which are publicly traded;

 

·reviewed the financial terms of merger and acquisition transactions, to the extent publicly available, involving other financial institutions and financial institution holding companies that Vining Sparks deemed to be relevant;

 

·reviewed the pro forma financial impact of the merger on TIG; and

 

·reviewed such other information, financial studies, analyses and investigations, as Vining Sparks considered appropriate under the circumstances.

 

In conducting its review and arriving at its opinion, Vining Sparks has assumed and relied, without independent verification, upon the accuracy and completeness of all the financial and other information that has been provided to it by TIG and BayCom, and their respective representatives, and of the publicly available information that was reviewed by Vining Sparks. Vining Sparks is not an expert in the evaluation of the adequacy of allowances for loan losses and it did not independently verify the adequacy of such allowances. Vining Sparks assumed that the allowance for loan losses set forth in the financial statements of BayCom and TIG were adequate to cover such losses and complied fully with applicable law, regulatory policy and sound banking practice as of the date of such financial statements. Vining Sparks did not conduct a physical inspection of any of the properties or facilities of TIG or BayCom, did not make any independent evaluation or appraisal of the assets, liabilities or prospects of TIG or BayCom, was not furnished with any such evaluation or appraisal, and did not review any individual credit files. Vining Sparks assumed that any projections provided by or approved by TIG were reasonably prepared and reflect the best currently available estimates and judgments of TIG management.

 

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Vining Sparks’ opinion is necessarily based on economic, market, and other conditions as in effect on, and the information made available to it as of, the date of its opinion. Events occurring after the date thereof, including but not limited to, changes affecting the securities markets, the results of operations or material changes in the assets or liabilities of BayCom or TIG could materially affect the assumptions used in preparing the opinion. Vining Sparks assumed that there were no material changes in the assets, liabilities, financial condition, results of operations, business or prospects of either TIG or BayCom since the date of the last financial statements of each entity that were made available to Vining Sparks. Vining Sparks assumed that all of the representations and warranties contained in the merger agreement and all related agreements are true and correct, that each party to the merger agreement will perform all of the covenants required to be performed by each party under such agreement and that the conditions precedent in the merger agreement are not waived.

 

In delivering its opinion to the board of directors of TIG, Vining Sparks prepared and delivered to TIG’s board of directors written materials containing various analyses and other information. The following is a summary of the material financial analyses performed by Vining Sparks in connection with the preparation of its opinion and does not purport to be a complete description of all the analyses performed by Vining Sparks. The summary includes information presented in tabular format, which should be read together with the text that accompanies those tables. The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, an opinion is not necessarily susceptible to partial analysis or summary description. Vining Sparks believes that its analyses must be considered as a whole and that selecting portions of such analyses and the factors considered therein, without considering all factors and analyses, could create an incomplete view of the analyses and the processes underlying its opinion. In its analyses, Vining Sparks made numerous assumptions with respect to industry performance, business and economic conditions, and other matters, many of which are beyond the control of TIG, BayCom and Vining Sparks. Any estimates contained in Vining Sparks’ analyses are not necessarily indicative of future results or values, which may be significantly more or less favorable than such estimates. Estimates of values of companies do not purport to be appraisals or necessarily reflect the prices at which companies or their securities may actually be sold.

 

Vining Sparks’ opinion was based on information available to Vining Sparks through the date of its opinion and conditions as they existed and could be evaluated on the date thereof. Vining Sparks reviewed the financial terms of the proposed transaction set forth in the merger agreement and for purposes of the financial analyses described below and based on merger consideration of 0.27543 of a BayCom common stock share and $6.34 in cash for each outstanding share of TIG. Based on a stock price of $23.01 per share for BayCom common stock (the closing price on June 14, 2019), the merger consideration payable in exchange for each share of TIG common stock would equal $12.67 per share.

 

Selected Company Analysis - BayCom. Vining Sparks used publicly available information to compare selected financial information and stock pricing for BayCom with a selected group of financial institutions. The BayCom peer group consisted of publicly traded California banking organizations with total assets between $1 billion and $2.5 billion, excluding merger targets. While Vining Sparks believes that the companies listed below are similar to BayCom, none of these companies have the same composition, operations, size or financial profile as BayCom.

 

Company   Ticker   City   State
American Business Bank   AMBZ   Los Angeles   CA
Avidbank Holdings, Inc.   AVBH   San Jose   CA
Bank of Commerce Holdings   BOCH   Sacramento   CA
California BanCorp   CALB   Oakland   CA
CBB Bancorp, Inc.   CBBI   Los Angeles   CA
Central Valley Community Bancorp   CVCY   Fresno   CA
First Choice Bancorp   FCBP   Cerritos   CA
First Northern Community Bancorp   FNRN   Dixon   CA

 

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Company   Ticker   City   State
Malaga Financial Corporation   MLGF   Palos Verdes Estates   CA
Oak Valley Bancorp   OVLY   Oakdale   CA
OP Bancorp   OPBK   Los Angeles   CA
Pacific City Financial Corporation   PCB   Los Angeles   CA
Pacific Mercantile Bancorp   PMBC   Costa Mesa   CA
Provident Financial Holdings, Inc.   PROV   Riverside   CA
River City Bank   RCBC   Sacramento   CA
Seacoast Commerce Banc Holdings   SCBH   San Diego   CA

 

To perform this analysis, Vining Sparks used financial information as of March 31, 2019, a price of $23.01 per share of BayCom common stock (the closing price on June 14, 2019) and pricing data for the peer group as of June 14, 2019 obtained from S&P Global Market Intelligence. The following table sets forth the comparative financial and market data:

 

   BayCom   Peer Group
Median
 
Total Assets (in millions)  $1,482.5   $1,198.3 
Return on Average Assets   1.33%   1.33%
Return on Average Equity   9.69%   12.12%
Equity/Assets   13.92%   11.26%
Loans/Deposits   77.16%   91.87%
Loan Loss Reserve/Gross Loans   0.56%   1.07%
Nonperforming Assets/Assets   0.19%   0.16%
Efficiency Ratio   55.10%   61.05%
Price/Book Value Per Share   1.21x   1.25x
Price/Tangible Book Value Per Share   1.35x   1.38x
Price/LTM Earnings Per Share   15.9x   11.6x

 

Stock Trading History. Vining Sparks reviewed the closing per share market prices and volumes for BayCom common stock on a daily basis from December 14, 2018 to June 14, 2019. BayCom is listed for trading on NASDAQ under the symbol “BCML”. For the period between December 14, 2018 to June 14, 2019, the trading price of BayCom common stock ranged from a low of $17.19 to a high of $25.00 and the average closing price was $22.43. The closing price of BayCom common stock on June 14, 2019 was $23.01 per share. For the period between December 14, 2018 and June 14, 2019, the average daily trading volume for BayCom common stock was 22,146 shares.

 

Analysis of Selected Financial Institution Transactions. Vining Sparks reviewed certain publicly available information regarding selected merger and acquisition transactions (the “Comparable Transactions”) announced from January 1, 2017 to June 14, 2019 involving acquired financial institutions located in Colorado, New Mexico and Utah, with total assets under $400 million and a return on assets over 0.00%. The transactions included in the group are shown below. This data was obtained from S&P Global Market Intelligence.

 

Buyer   State   Seller   State
First Bancshares, Inc.   MO   Stockmens Bank   CO
Mid-America Financial Corp.   KS   Morgan Financial Corporation   CO
People’s Utah Bancorp   UT   Town & Country Bank, Inc.   UT
Guaranty Bancorp   CO   Castle Rock Bank Holding Company   CO

 

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Buyer   State   Seller   State
Triumph Bancorp, Inc.   TX   Valley Bancorp, Inc.   CO
FFP Group, Inc.   CO   Raton Capital Corporation   NM
BayCom Corp   CA   Bethlehem Financial Corporation   NM
Beresford Bancorporation, Inc.   SD   Western Bancshares of Alamogordo   NM
Glacier Bancorp, Inc.   MT   FNB Bancorp   UT

 

Vining Sparks reviewed the multiples of transaction value to tangible book value, transaction value to 2018 earnings, transaction value to assets and tangible book premium to core deposits, and calculated high, low and median multiples for the Comparable Transactions. These ratios were compared with corresponding transaction ratios for the proposed merger based on the transaction value of $12.67 for TIG common stock. The results of the analysis are set forth in the following table:

 

Transaction Multiples:  Proposed
Transaction
   Comparable
Transaction
Low
   Comparable
Transaction
Median
   Comparable
Transaction
High
 
Transaction Value/Tangible Book Value   1.45x   1.16x   1.46x   2.16x
Transaction Value/2018 Earnings   17.99x   13.20x   18.25x   25.80x
Transaction Value/Assets   17.56%   10.60%   15.00%   26.05%
Tangible Book Premium/Core Deposits   6.49%   2.70%   6.85%   17.51%

 

No company or transaction used as a comparison in the above analysis is identical to TIG or the proposed transaction. Accordingly, an analysis of these results is not strictly mathematical. An analysis of the results of the foregoing involves complex considerations and judgments concerning differences in financial and operating characteristics of TIG and the companies included in the Comparable Transactions.

 

Present Value Analysis. Vining Sparks calculated the present value of theoretical future earnings of TIG and compared the transaction value to the calculated present value of TIG’s common stock on a stand-alone basis. Based on projected earnings for TIG of $2.7 million in 2019, $3.0 million in 2020, $3.3 million in 2021, $3.6 million in 2022 and $3.9 million in 2023, discount rates ranging from 12% to 18%, and including a residual value, the stand-alone present value of TIG indicated an implied range of values per share of $6.70 to $11.36.

 

Discounted Cash Flow Analysis. Using a discounted cash flow analysis, Vining Sparks estimated the net present value of the future streams of after-tax cash flow that TIG could produce to benefit a potential acquirer, referred to as dividendable net income, and added a terminal value. Based on projected earnings for TIG for 2019 through 2023 (indicated above), we assumed after-tax distributions to a potential acquirer such that its tier 1 leverage ratio would be maintained at 9.00%. The terminal value for TIG was calculated based on TIG’s projected 2023 equity, the median price to tangible book multiple paid in the Comparable Transactions and utilized discount rate of 12%. This discounted cash flow analysis indicated an implied value of $11.12 per share.

 

Pro Forma Merger Analysis. Vining Sparks performed pro forma merger analyses to calculate the financial implications of the merger to the holders of TIG common stock. This analysis assumes, among other things, the terms of the transaction as indicated above, the merger closes at December 31, 2019 and cost savings and revenue enhancement opportunities of $2.5 million annually in the years 2020 through 2023, which approximates 35% of TIG’s total overhead expense in 2018. This analysis utilized earnings estimates of $2.05 per share in 2019, $2.29 per share in 2020 and $2.50 per share in 2021 for BayCom and earnings estimates of $0.85 per share in 2019, $0.94 per share in 2020 and $1.04 per share in 2021 for TIG. This analysis indicated that the merger could be accretive to TIG’s projected earnings per share in 2020 and 2021.

 

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In the two years prior to the issuance of this opinion, Vining Sparks engaged in securities and loan sales and trading activity with TIG and/or its subsidiary bank for which Vining Sparks was paid commissions or other fees, which may include mark-ups on the purchase or sale of loans and securities. In the two years prior to the issuance of this opinion, Vining Sparks has provided financial advisory services to BayCom and has engaged in securities and loan sales and trading activity with BayCom and/or its subsidiary bank for which Vining Sparks was paid commissions or other fees, which may include mark-ups on the purchase or sale of loans and securities. Pursuant to the terms of an engagement letter with TIG, Vining Sparks received a fee of $75,000 upon delivery of its opinion. Vining Sparks’ opinion fee is not contingent upon consummation of the proposed transaction. In addition, TIG has agreed to indemnify Vining Sparks against certain liabilities and expenses arising out of or incurred in connection with its engagement, including liabilities and expenses which may arise under the federal securities laws.

 

Based upon the foregoing analyses and other investigations and assumptions set forth in its opinion, without giving specific weightings to any one factor or comparison, Vining Sparks determined that the per share merger consideration to be paid in exchange for each share of TIG common stock in the merger was fair, from a financial perspective, to the TIG shareholders.

 

Reasons of BayCom for the Merger

 

The merger will enable BayCom to expand its commercial banking presence into the attractive Colorado markets First State Bank of Colorado serves. During its deliberation regarding the approval of the merger agreement, the board of directors of BayCom considered a number of factors, including, but not limited to, the following:

 

·TIG’s strong existing commercial customer base and reputation for providing quality customer service;

 

·the compatibility of the merger with BayCom’s long-term community banking strategy;

 

·the ability to expand into the State of Colorado and First State Bank of Colorado’s locations in the Denver metropolitan area and nearby communities;

 

·the ability of the combined company to offer a broader array of products and services to TIG’s customers;

 

·TIG’s financial performance and strong asset quality;

 

·potential opportunities to reduce operating costs and enhance revenue; and

 

·BayCom management’s prior record of integrating acquired financial institutions.

 

BayCom based these assumptions on its present assessment of where savings could be realized based upon the present independent operations of TIG. Actual savings in some or all of these areas could be higher or lower than currently expected.

 

In reaching its decision to approve the merger agreement, BayCom’s board of directors also considered the risks associated with the transaction, and, after due consideration, concluded that the potential benefits of the proposed transaction outweighed the risks associated with the proposed transaction.

 

The foregoing information and factors considered by BayCom’s board of directors are not intended to be exhaustive. In view of the variety of factors and the amount of information considered, BayCom’s board of directors did not find it practicable to, and did not, quantify, rank or otherwise assign relative weights to the specific factors it considered in approving the transaction. In addition, individual members of BayCom’s board of directors may have given different weights to different factors. BayCom’s board of directors considered all of these factors as a whole, and overall considered them to be favorable to, and to support, its determination.

 

Conversion of Shares and Exchange of Certificates

 

As soon as reasonably practicable after the effective time of the merger, upon receipt and acceptance of your TIG common stock certificate (or book entry shares) with duly executed transmittal materials by OTR, Inc., as exchange agent, you shall be entitled to a statement evidencing shares of BayCom common stock issued as merger consideration and cash in lieu of any fractional share interest.

 

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Regulatory Approvals Required for the Merger

 

The closing of the merger is conditioned upon the receipt of all approvals of regulatory authorities required for the merger and the bank merger. Under the terms of the merger agreement, BayCom and TIG have agreed to use their commercially reasonable best efforts to obtain all necessary permits, consents, approvals and authorizations from any governmental authority necessary, proper or advisable to consummate the merger and the bank merger.

 

The merger and/or the bank merger is subject to prior approval by the DBO and the receipt of a waiver or prior approval from the Federal Reserve Board. Accordingly, the parties must obtain the approval of or waiver by the Federal Reserve Board and the approval of the DBO. As of the date of this proxy statement/prospectus, BayCom, United Business Bank and First State Bank of Colorado have submitted applications and notifications to obtain the required regulatory approvals.

 

There can be no assurance as to whether all regulatory approvals will be obtained or as to the dates of the approvals. There also can be no assurance that the regulatory approvals received will not contain a condition or requirement that results in a failure to satisfy the conditions to closing set forth in the merger agreement. See the section entitled “The Merger Agreement—Conditions to Completion of the Merger.”

 

Accounting Treatment

 

The costs incurred by BayCom related to the merger are expected to be approximately $2.9 million and are expensed as incurred. The merger will be accounted for under the acquisition method in accordance with accounting principles generally accepted in the United States. For purposes of preparing BayCom’s consolidated financial statements, BayCom will establish a new accounting basis for TIG’s assets and liabilities based upon their estimated fair values as of the acquisition date. BayCom will record any excess of the fair value of the aggregate consideration transferred over the fair value of the net assets, including any identifiable intangible assets, of TIG as goodwill. Goodwill will be periodically reviewed for impairment not less often than annually. Intangible assets with definite lives will be amortized against BayCom’s earnings following completion of the merger. The acquisition method of accounting will result in the operating results of TIG being included in the operating results of BayCom beginning from the date of completion of the merger.

 

Interests of Certain Persons in the Merger

 

In the merger, the directors and executive officers of TIG will receive the same consideration for their TIG shares as the other shareholders of TIG. In considering the recommendation of the TIG board of directors that you vote to approve the merger agreement, you should be aware that some of TIG’s executive officers and directors may have interests in the merger and may have arrangements, as described below, which may be considered to be different from, or in addition to, those of TIG’s shareholders generally. The TIG board of directors was aware of these interests and considered them, among other matters, in reaching its decisions to approve the merger agreement and to recommend that you vote in favor of approving the merger agreement. Further, pursuant to the merger agreement, each director of TIG has delivered to BayCom (i) an executed voting agreement, (ii) each independent director of TIG has delivered to BayCom a resignation, non-solicitation and non-disclosure agreement and (iii) each non-independent director has delivered a resignation, non-compete and non-disclosure agreement, each substantially in the forms attached as exhibits to the merger agreement for no additional consideration.

 

These interests include the following:

 

·First State Bank of Colorado’s Chief Executive Officer and TIG director, Jeffrey A. Walker will become President of the Colorado Division of United Business Bank at an annual salary of $175,000 and will be entitled to severance benefits if he is terminated without cause within one year following the merger on the same basis as otherwise similarly situated employees of TIG and First State Bank of Colorado retained by BayCom after the closing date.

 

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·Upon consummation of the merger, Jim Noble, Executive Vice President, Chief Operating Officer and Chief Financial Officer of First State Bank of Colorado will receive a cash bonus of $75,000, Josh Dearmore, Senior Vice President and Market President-Denver of First State Bank of Colorado will receive a cash bonus payment of $55,000 and Lina Lee, Assistant Vice President and Senior Credit Analyst of First State Bank of Colorado will receive a cash bonus of $35,000.

 

·The current directors and executive officers of TIG, together with their affiliates, beneficially owned, as of the record date for the TIG special meeting, a total of 228,400 shares of TIG voting common stock, representing approximately 13.5% of the total outstanding TIG voting common stock entitled to vote. Each of TIG’s directors holding TIG voting common stock has executed a voting agreement, agreeing to vote his shares for approval of the merger agreement and the adjournment proposal. See “The Merger Agreement – Voting Agreements.”

 

·As described under “The Merger Agreement—Indemnification and Continuance of Director and Officer Liability Coverage,” BayCom will indemnify (and advance expenses to) the directors and officers of TIG and its subsidiary, for a period of four years from and after the effective time of the merger, to the fullest extent permitted by any of the TIG’s or First State Bank of Colorado’s articles of incorporation or charter, bylaws, or applicable law, with respect to claims pertaining to matters occurring at or prior to the effective time of the merger. Prior to the completion of the merger, TIG shall purchase a prepaid tail policy for directors’ and officers’ liability insurance providing for coverage of up to four years after completion of the merger with respect to actions, omissions, events, matters, and circumstances occurring prior to the effective time provided that the cost thereof shall not exceed 200% of TIG’s current annual premium for such insurance. BayCom will cause such policy to be maintained in full force and effect for its full term and will cause all obligations thereunder to be honored by the combined company after the merger.

 

Voting Agreements

 

As described under the section entitled, “The Merger Agreement - Voting Agreements,” all of the TIG directors and executive officers holding TIG voting common stock and certain TIG shareholders holding TIG voting common stock have entered into voting agreements in favor of BayCom providing that they will vote their TIG voting common stock for approval of the merger agreement and forbear from taking other actions that would be inconsistent with such obligation or precludes their shares from being voted in favor of the merger agreement.

 

Director Agreements

 

Each non-independent TIG director has entered into a resignation, non-compete and non-disclosure agreement with BayCom whereby the director has agreed to resign as a director upon consummation of the merger and for one year thereafter the individual will not, subject to limited exceptions in certain cases, without the prior written consent of BayCom:

 

·refer any customers to any financial institution other than the financial institution subsidiaries of BayCom;

 

·solicit the business of any customer of First State Bank of Colorado for any other person or entity for the purpose of providing services on behalf of any person or entity other than BayCom or any of its financial institution subsidiaries;

 

·induce any customer to terminate or reduce any aspects of its relationship with BayCom or any of its financial institution subsidiaries;

 

·participate as an officer, director, employee or consultant, in any financial institution in the Colorado counties of Adams, Arapahoe, Custer, Delta, Denver, Douglas, El Paso and Jefferson, or

 

·directly or indirectly, solicit or offer employment to any officer or employee of BayCom or any of its subsidiaries, or take any action intended or reasonably expected to cause any officer or employee or entity doing business with, BayCom or any of its subsidiaries to terminate his, her or its employment or business relationship with BayCom or any of its subsidiaries.

 

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The agreement also provides that the TIG director may not during the term of the agreement make derogatory statements about BayCom or any of its subsidiaries or any of their respective directors, officers, employees, agents, or representatives, in each case subject to standard exceptions. Each non-independent director has also agreed to release certain claims against TIG and First State Bank of Colorado due to their position as an executive officer and to not disclose confidential information about the TIG entities.

 

Mr. Walker has entered into a resignation, non-compete and non-disclosure Agreement in substantially the same form and substance as the agreements described above, except that Mr. Walker has also agreed to not receive a severance payment he is entitled to under his employment agreement, effective upon the closing of the merger.

 

Each independent director has entered into a resignation, non-solicitation and non-disclosure agreement to substantially the same form and substance as the agreement for non-independent directors except that these agreements do not provide for a release of claims or limitations on their ability to participate as an officer, director, employee or consultant, in any financial institution in the Colorado counties of Adams, Arapahoe, Custer, Delta, Denver, Douglas, El Paso and Jefferson.

 

Method of Effecting the Acquisition

 

Subject to the consent of TIG, which shall not be unreasonably withheld or delayed, BayCom may at any time change the method of effecting the acquisition of TIG (including by providing for the merger of a wholly-owned subsidiary of BayCom with TIG). However, no change may: (i) alter or change the amount or kind of consideration to be issued to holders of the TIG common stock, as provided for in the merger agreement; (ii) have an adverse effect on the tax treatment of the transaction to BayCom, TIG or TIG’s shareholders; or (iii) impede or materially delay completion of the transactions contemplated by the merger agreement.

 

Effective Time

 

The effective time of the merger will be the time and date when the merger becomes effective as set forth in the agreement of merger and statement of merger relating to the merger that will be filed with the Secretary of State of California and the Secretary of State of the State of Colorado on the closing date of the merger. The closing date will occur on a date to be specified by BayCom and TIG. Subject to applicable law, this date will be no later than the last day of the month (but no earlier than five (5) business days) after the latest to occur of: (i) receipt of all required regulatory approvals and the expiration of all required waiting periods; (ii) approval of the merger agreement by the voting shareholders of TIG and (iii) satisfaction or waiver (subject to applicable law) of the other closing conditions set forth in the merger agreement (other than those conditions that by their nature are to be satisfied or waived at the closing), unless extended by mutual agreement of BayCom and TIG.

 

We anticipate that the merger will be completed during the quarter ending December 31, 2019. However, completion of the merger could be delayed if there is a delay in obtaining the required regulatory approvals or in satisfying other conditions to the merger. The date for completing the merger can occur as late as December 31, 2019, after which TIG or BayCom would need to mutually agree to extend the closing date of the merger. See the sections entitled “Regulatory Approvals Required for the Merger” and “The Merger Agreement—Conditions to Completion of the Merger.”

 

Declaration and Payment of Dividends and Stock Transfers

 

Holders of TIG common stock will not be paid dividends or other distributions declared after the effective time with respect to the BayCom common stock into which their TIG common stock has been converted until they surrender their TIG common stock certificates for exchange after the effective time. Upon surrender of those certificates after the effective time of the merger, the combined company will pay any unpaid dividends or other distributions, without interest. After the effective time of the merger, there will be no transfers on TIG’s stock transfer books of TIG common stock issued and outstanding immediately prior to the effective time. If certificates representing TIG common stock are presented for transfer after the effective time of the merger, they will be cancelled and exchanged for a statement evidencing the applicable number of shares of BayCom common stock issued as merger consideration, any cash in lieu of fractional shares and unpaid dividends or other distributions which respect to the shares of BayCom common stock represented thereby.

 

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No Fractional Shares

 

No fractional share interests will be issued to any shareholder of TIG upon completion of the merger. For each fractional share that would otherwise be issued, BayCom will pay cash in an amount equal to the fraction of a BayCom common share which the holder would otherwise be entitled to receive, multiplied by $23.00. No interest will be paid or accrued on cash payable to holders of those certificates in lieu of fractional shares.

 

Share Matters

 

None of BayCom, TIG, the exchange agent or any other person will be liable to any former shareholder of TIG for any amount delivered in good faith to a public official pursuant to applicable abandoned property, escheat or similar laws.

 

If a certificate for TIG common stock has been lost, stolen or destroyed, the exchange agent will issue the consideration properly payable under the merger agreement upon the making of an affidavit by the person claiming that loss, theft or destruction and the posting of a bond in an amount reasonably necessary as indemnity against any claim that may be made against BayCom with respect to that lost certificate.

 

For a description of BayCom common stock and a description of the differences between the rights of the holders of TIG common stock compared to the rights of the holders of BayCom common stock, see the sections entitled “Description of BayCom Capital Stock” and “Comparison of Rights of TIG Common Stock and BayCom Common Stock.”

 

Public Trading Markets

 

BayCom’s common shares are listed on Nasdaq under the symbol “BCML.” TIG’s common stock not listed on an exchange or quoted on any automated services, and there is no established trading market for shares of TIG common stock.” The shares of BayCom common stock issuable in the merger for TIG common shares will be listed on Nasdaq.

 

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THE MERGER AGREEMENT

 

The following is a summary of the material provisions of the merger agreement. This summary is qualified in its entirety by reference to the merger agreement, a copy of which is attached as Appendix A to this proxy statement/prospectus and is incorporated herein by reference. You should read the merger agreement in its entirety, as it is the legal document governing the merger.

 

The Merger

 

The boards of directors of BayCom and TIG have each unanimously approved the merger agreement, which provides for the merger of TIG into BayCom, with BayCom as the surviving corporation of the merger. The merger agreement provides that after the effective time of the merger BayCom intends to merge First State Bank of Colorado, a wholly owned subsidiary of TIG, with and into United Business Bank, a wholly owned subsidiary of BayCom, with United Business Bank as the surviving institution.

 

Effective Time and Completion of the Merger

 

The merger agreement provides that unless both BayCom and TIG agree to a later date, the filings necessary to make the merger effective will be made on or before the last day of the month (but no earlier than five business days) after all of the conditions to completion of the merger have been satisfied or waived (other than those that by their nature are to be satisfied or waived at the closing of the merger).

 

We currently expect that the merger will be completed in the quarter ending December 31, 2019, subject to the approval of the merger agreement by the holders of TIG voting common stock, the receipt of all necessary regulatory approvals and the expiration of all regulatory waiting periods. However, completion of the merger could be delayed if there is a delay in obtaining the required regulatory approvals or in satisfying any other conditions to the merger. There can be no assurances as to whether, or when, BayCom and TIG will obtain the required approvals or complete the merger. See “—Conditions to Completion of the Merger.”

 

Consideration to be Received in the Merger

 

Under the terms of the merger agreement, upon completion of the merger, each share of TIG common stock that is outstanding immediately prior to the merger, other than shares described below, will be converted into the right to receive 0.27543 of a BayCom common stock share and $6.34 in cash.

 

Shares of TIG common stock for which dissenters’ rights have been properly exercised will not be converted into the merger consideration (See “Dissenters’ Rights” on page 65). Also, shares of TIG common stock, which are beneficially owned by TIG or BayCom, will be cancelled for no consideration.

 

If, prior to the effective time of the merger, the outstanding shares of BayCom common stock are increased, decreased, changed into or exchanged for a different number or kind of shares or securities as a result of a reorganization, recapitalization, reclassification, stock dividend, stock split or other similar change in capitalization, an appropriate and proportionate adjustment will be made to the exchange ratio.

 

The value of the BayCom common stock to be received by TIG shareholders in the merger may vary from the value as of the date we announced the merger, the date that this document was mailed to TIG shareholders, the date of the meeting of TIG shareholders and the date of completion of the merger. Any change in the market price of BayCom common stock prior to completion of the merger will affect the value of the merger consideration that TIG shareholders will receive upon completion of the merger. Accordingly, at the time of the TIG special meeting, TIG shareholders will not know or be able to calculate the value of the merger consideration they would receive upon completion of the merger. See “Risk Factors” on page 12.

 

No fractional share interests will be issued in connection with the merger. Instead, BayCom will make a cash payment to each TIG shareholder who would otherwise receive a fractional BayCom share in an amount equal to the fractional share multiplied by $23.00. A TIG shareholder also has the right to obtain the fair value of his or her TIG shares in lieu of receiving the merger consideration under the merger agreement by strictly following the procedures under Colorado law, as discussed under “Dissenters’ Rights” beginning on page 66.

 

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Exchange Procedures

 

Prior to the effective time of the merger, BayCom will appoint as the exchange agent under the merger agreement, its transfer agent, OTR, Inc. As soon as reasonably practicable after the effective time of the merger, the exchange agent will mail to each holder of record of TIG common stock who does not exercise dissenters’ rights a letter of transmittal and instructions for the surrender of the holder’s TIG share certificate(s) and/or conversion of book-entry shares for the merger consideration and cash in lieu of any fractional BayCom share. TIG shareholders should not send in their share certificates until they receive the letter of transmittal and instructions.

 

Upon surrender to the exchange agent of the certificate(s) representing his or her TIG common stock, accompanied by a properly completed letter of transmittal, a TIG shareholder will be entitled to promptly receive the merger consideration and cash in lieu of any fractional BayCom share. Until surrendered, each such certificate will represent after the effective time of the merger, for all purposes, only the right to receive, without interest, the merger consideration and cash in lieu of any fractional BayCom share. BayCom or the exchange agent will be entitled to deduct and withhold from any cash consideration payable under the merger agreement to any holder of TIG common stock, the amounts it is required to deduct and withhold under the Code or any provision of state, local or foreign tax law. If any such amounts are withheld and paid over to the appropriate governmental authority, these amounts will be treated for all purposes of the merger agreement as having been paid to the persons from whom they were withheld. Any reference to in this section to “TIG common stock certificate,” “certificate,” or “existing certificate” shall be deemed, as appropriate, to include reference to book-entry account statements relating to the ownership of TIG common stock, and any provisions herein relating to such certificates shall be interpreted in a manner that appropriately accounts for book-entry shares.

 

No dividends or other distributions with respect to BayCom common stock after completion of the merger will be paid to the holder of any unsurrendered TIG common stock certificates with respect to the BayCom common stock represented by those certificates until those certificates have been properly surrendered. Following the proper surrender of any such previously unsurrendered TIG common stock certificate, the holder of the certificate will be entitled to receive, without interest, (i) the amount of unpaid dividends or other distributions with a record date after the effective time of the merger payable with respect to the whole shares of BayCom common stock represented by that certificate and/or (ii) at the appropriate payment date, the amount of dividends or other distributions payable with respect to BayCom common stock represented by that certificate with a record date after the effective time of the merger (but before the date on which the certificate is surrendered) and with a payment date subsequent to the issuance of the BayCom common stock issuable in exchange for that certificate.

 

The merger consideration and cash in lieu of any fractional BayCom share may be issued or paid in a name other than the name in which the surrendered TIG common stock certificate is registered if (i) the certificate surrendered is properly endorsed or otherwise in a proper form for transfer, and (ii) the person requesting the payment or issuance pays any transfer or other similar taxes due or establishes to the satisfaction of BayCom that such taxes have been paid or are not applicable.

 

After the effective time of the merger, there will be no transfers on the stock transfer books of TIG other than to settle transfers of TIG shares that occurred prior to the effective time. If, after the effective time of the merger, certificates for TIG common stock are presented for transfer to the exchange agent, the certificates will be cancelled and exchanged for the merger consideration, cash in lieu of any fractional share of BayCom common stock and any unpaid dividends or distributions on BayCom common stock deliverable with respect thereto, in each case without interest.

 

Any portion of the merger consideration and cash to be paid in lieu of fractional BayCom common stock shares that has been deposited with the exchange agent and remains unclaimed by TIG shareholders at the expiration of six months after the effective time of the merger may be returned to BayCom. In that case, former TIG shareholders who have not yet surrendered their TIG common stock certificates may after that point look only to BayCom with respect to the merger consideration, any cash in lieu of any fractional BayCom common stock shares and any unpaid dividends and distributions on the BayCom common stock to which they are entitled, in each case, without interest. None of BayCom, the exchange agent or any other person will be liable to any former TIG shareholder for any amount delivered in good faith to a public official pursuant to applicable abandoned property, escheat or similar laws.

 

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In the event any TIG common stock certificate is lost, stolen or destroyed, in order to receive the merger consideration and any cash in lieu of any fractional BayCom share, the holder of that certificate must provide an affidavit of that fact and, if reasonably required by BayCom or the exchange agent, post a bond in such amount as BayCom determines is reasonably necessary to indemnify it against any claim that may be made against it with respect to that certificate.

 

Conduct of Business Pending the Merger

 

Pursuant to the merger agreement, TIG and BayCom have agreed to certain restrictions on their activities until the merger is completed or terminated. In general, each party has agreed that, except as otherwise permitted by the merger agreement, or as required by applicable law or a governmental entity or with the prior written consent of the other party, it will:

 

·use commercially reasonable best efforts to maintain and preserve intact its business organization and advantageous business relationships;

 

·not take any action that is intended to or that would reasonably be expected to adversely affect or materially delay the ability of either party or its subsidiaries to obtain any necessary regulatory approvals or to complete the merger or the bank merger;

 

·not take any action that is intended or that would reasonably be expected to cause the merger or the bank merger to fail to qualify as a reorganization under Section 368(a) of the Code or cause any of its representations and warranties in the merger agreement to be untrue in any material respect or any of the conditions in the merger agreement to be unsatisfied or to result in a violation of any provision of the merger agreement; and

 

·not take any action that is likely to materially impair its ability to perform any of its obligations under the merger agreement or its subsidiary bank to perform any of its obligations under the bank merger agreement.

 

BayCom has also agreed that it will not and will not permit any of its subsidiaries to amend its articles of incorporation or bylaws in a manner that would materially and adversely affect the economic benefits of the merger to TIG’s shareholders.

 

TIG has also agreed that it will, and will cause each of its subsidiaries to, conduct its business in the ordinary course consistent with past practice. TIG has further agreed that it will not, and will not permit any of its subsidiaries, to do any of the following, except as required by law or a governmental entity, expressly contemplated or permitted by the merger agreement, or with the prior written consent of BayCom:

 

·issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional shares of its capital stock, other ownership interests or any warrants, options, other equity-based awards, convertible securities or other arrangements or commitments to acquire capital stock or other ownership interests;

 

·issue any other capital securities, including trust preferred or other similar securities, voting debt securities or other securities;

 

·pay any dividends or other distributions on its capital stock or other ownership interests, other than dividends from wholly owned subsidiaries to TIG or to another wholly owned subsidiary of TIG; or directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire any shares of its capital stock, other ownership interests, or rights with respect to the foregoing;

 

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·(i) enter into, modify, renew or terminate any employment, consulting, severance, change in control or similar agreement or arrangement with any director, officer, employee, or service provider, or grant any salary or wage increase or increase any employee benefit (including incentive or bonus payments) other than (A) at will agreements, (B) normal increases in salary to rank and file employees, (C) incentive bonuses as specified pursuant to the merger agreement, and (D) severance in accordance with past practice; (ii) hire any new officers; or (iii) promote any employee to a rank of vice president or higher;

 

·establish, modify, renew or terminate any employee benefit plan or accelerate the vesting of benefits under any employee benefit plan;

 

·sell, transfer, lease or encumber any of its assets, except in the ordinary course of business consistent with past practice, and in the case of a sale or transfer, at fair value, or with respect to Other Real Estate Owned and related properties in the ordinary course at a reasonable price; or sell or transfer any of its deposit liabilities;

 

·enter into, modify or renew any data processing contract, service provider agreement or any lease, license or maintenance agreement relating to real or personal property or intellectual property or information technology assets, other than the annual renewal of an agreement that is necessary to operate its business in the ordinary course consistent with past practice, or permit to lapse its rights in any material intellectual property or information technology assets;

 

·acquire the assets, business, deposits or properties of any person, other than pursuant to foreclosure, in a fiduciary capacity or in satisfaction of debts contracted prior to the date of the merger agreement;

 

·sell or acquire any loans (excluding originations) or loan participations, except in the ordinary course of business consistent with past practice;

 

·amend its articles of incorporation or bylaws or similar governing documents;

 

·materially change its accounting principles, practices or methods, except as may be required by accounting principles generally accepted in the United States or any governmental entity;

 

·enter into, materially modify, terminate or renew any TIG Contract (as such term is defined in the merger agreement);

 

·settle any legal claims involving an amount in excess of $15,000, excluding amounts paid or reimbursed under any insurance policy;

 

·foreclose upon any real property without obtaining a phase one environmental report, except for one- to four-family non-agricultural residential properties of five acres or less which it does not have reason to believe contains hazardous substances or might be in violation of or require remediation under environmental laws;

 

·in the case of First State Bank of Colorado, (i) voluntarily make a material change in its deposit mix; (ii) increase or decrease the interest rate paid on its time deposits or certificates of deposit except in a manner consistent with past practice and competitive factors in the marketplace; (iii) incur any liability or obligation relating to retail banking and branch merchandising, marketing and advertising activities and initiatives except in the ordinary course of business consistent with past practice; (iv) open any new branch or deposit taking facility; or (v) close or relocate any existing branch or other facility;

 

·acquire any investment securities outside of the limits specified in the merger agreement;

 

·make capital expenditures outside the limits specified in the merger agreement;

 

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·materially change its loan underwriting policies or make loans or extensions of credit in excess of amounts specified in the merger agreement;

 

·invest in any new or existing joint venture or any new real estate development or construction activity;

 

·materially change its interest rate and other risk management policies and practices;

 

·incur any debt for borrowed funds other than in the ordinary course of business consistent with past practice with a term of one year or less, or guaranty any obligations or liabilities of any other person or entity other than the issuance of letters of credit in the ordinary course of business;

 

·create any lien on any of its assets or properties other than pursuant to agreements with the Federal Home Loan Bank of Topeka and federal funds transactions;

 

·make charitable contributions in excess of limits specified in the merger agreement;

 

·enter into any new lines of business;

 

·make, change or revoke any tax election, amend any tax return, enter into any tax closing agreement, or settle any liability with respect to disputed taxes; or

 

·agree or commit to do any of the foregoing.

 

Agreement Not to Solicit Other Offers

 

TIG has agreed that, from the date of the merger agreement until the effective time of the merger or, if earlier, the termination of the merger agreement, it will not, and will cause its subsidiaries not to, directly or indirectly: (i) initiate, solicit, encourage or knowingly facilitate inquiries or proposals with respect to, or engage in any discussions or negotiations concerning, or provide to any person any confidential or nonpublic information concerning, its and its subsidiaries’ business, properties or assets; or (ii) have any discussions with any person or entity relating to an acquisition proposal.

 

Notwithstanding this agreement, if TIG receives an unsolicited written acquisition proposal prior to TIG shareholder approval of the merger agreement that TIG’s board of directors determines in good faith constitutes or is reasonably likely to constitute a transaction that is more favorable from a financial point of view to the shareholders of TIG than the merger with BayCom (referred to as a “superior proposal”), TIG may provide confidential information to and negotiate with the third party that submitted the acquisition proposal if the TIG board of directors determines in good faith, after consulting with counsel, that the failure to do so would violate the board’s fiduciary duties. In order to constitute a superior proposal, an acquisition proposal must be for a tender or exchange offer, for a merger or consolidation or other business combination involving TIG or First State Bank of Colorado or for the acquisition of a majority of the voting power in, or a majority of the fair market value of the business, assets or deposits of, TIG or First State Bank of Colorado. TIG must promptly advise BayCom of any acquisition proposal received and keep it apprised of any related developments.

 

The merger agreement generally prohibits the TIG board of directors from withdrawing or modifying in a manner adverse to BayCom the board’s recommendation that TIG’s shareholders vote to approve the merger agreement (referred to as a “change in recommendation”). At any time prior to the approval of the merger agreement by TIG’s shareholders, however, the TIG board of directors may effect a change in recommendation in response to a bona fide written unsolicited acquisition proposal that the board determines in good faith, after consultation with counsel, constitutes a superior proposal. The TIG board of directors may not make a change in recommendation in response to a superior proposal, or terminate the merger agreement to pursue a superior proposal, unless it has given BayCom at least four business days to propose a modification to the merger agreement and, after considering any such proposed modification, the TIG board of directors determines in good faith, after consultation with counsel, that the third party unsolicited proposal continues to constitute a superior proposal.

 

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If BayCom terminates the merger agreement based on a change in recommendation by the TIG board of directors or TIG terminates the merger agreement to pursue a superior proposal, TIG would be required to pay BayCom a termination fee of $1.2 million in cash. See “—Termination of the Merger Agreement.”

 

Representations and Warranties

 

The representations and warranties described below and included in the merger agreement were made only for purposes of the merger agreement and as of specific dates, are solely for the benefit of BayCom and TIG, may be subject to limitations, qualifications or exceptions agreed upon by the parties, including those included in confidential disclosures made for the purposes of, among other things, allocating contractual risk between BayCom and TIG rather than establishing matters as facts, and may be subject to standards of materiality that differ from those standards relevant to shareholders. You should not rely on the representations and warranties or any description thereof as characterizations of the actual state of facts or condition of BayCom, TIG or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the merger agreement, which subsequent information may or may not be fully reflected in public disclosures by BayCom or TIG. The representations and warranties and other provisions of the merger agreement should not be read alone, but instead should be read only in conjunction with the information provided elsewhere in this proxy statement/prospectus.

 

The merger agreement contains customary representations and warranties of each of BayCom and TIG relating to their respective businesses. The representations and warranties in the merger agreement do not survive completion of the merger.

 

The representations and warranties made by each of TIG and BayCom in the merger agreement relate to a number of matters, including the following:

 

·corporate matters, including due organization and qualification and subsidiaries;

 

·capitalization;

 

·authority relative to execution and delivery of the merger agreement and the absence of conflicts with, or violations of, organizational documents or other obligations as a result of the merger or bank merger;

 

·required governmental and other regulatory filings, consents and approvals in connection with the merger and the bank merger;

 

·reports to regulatory authorities;

 

·financial statements, internal controls, books and records, and absence of undisclosed liabilities;

 

·in the case of TIG, broker’s fees payable in connection with the merger;

 

·the absence of certain changes or events;

 

·legal proceedings;

 

·tax matters;

 

·employee benefit matters;

 

·in the case of BayCom, filings with the SEC;

 

·compliance with applicable laws;

 

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·in the case of TIG, certain contracts;

 

·absence of agreements with regulatory authorities;

 

·derivative instruments and transactions;

 

·environmental matters;

 

·investment securities, commodities and, in the case of TIG, bank owned life insurance;

 

·title to real property and other assets;

 

·intellectual property and information technology assets;

 

·in the case of TIG, related party transactions;

 

·in the case of TIG, inapplicability of takeover statutes;

 

·absence of action or circumstance that would prevent the merger or the bank merger from qualifying as a reorganization under Section 368(a) of the Code;

 

·in the case of TIG, receipt of a fairness opinion from TIG’s financial advisor;

 

·the accuracy of information supplied for inclusion in this proxy statement/prospectus and other documents;

 

·loan matters;

 

·insurance matters;

 

·in the case of TIG, the proper administration of all fiduciary business;

 

·in the case of TIG, the accuracy and completeness of corporate and stock ownership records; and

 

·in the case of TIG, the absence of claims requiring indemnification;

 

·absence of any known facts or circumstances that may prevent or unreasonably delay BayCom’s or United Business Bank’s receipt of the required regulatory approvals for the transactions contemplated;

 

·in the case of BayCom, no financing contingencies; and

 

·in the case of BayCom, as of the date of the merger agreement and immediately following closing of the transaction, compliance with all capital requirements, standards and ratios required by each regulatory agency having jurisdiction over them.

 

Certain representations and warranties of BayCom and TIG are qualified as to “materiality” or “material adverse effect” as defined in the merger agreement.

 

Special Meeting and Recommendation of TIG’s Board of Directors

 

 TIG has agreed to, and to cause its board of directors to take all action to, hold the special meeting for the purpose of voting upon the merger agreement and use commercially reasonable best efforts to obtain from its shareholders the vote required to approve the merger agreement, including by communicating to its shareholders its recommendation (and including such recommendation in this proxy statement/prospectus) that they approve the merger agreement.

 

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Notwithstanding any change in recommendation by the board of directors of TIG, unless the merger agreement has been terminated in accordance with its terms, TIG is required to convene the TIG special meeting and to submit the merger agreement to a vote of its shareholders. TIG will adjourn or postpone the TIG special meeting if there are insufficient shares of TIG voting common stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of such meeting.

 

Conditions to Completion of the Merger

 

Mutual Closing Conditions. The obligations of BayCom and TIG to complete the merger are subject to the satisfaction of the following conditions:

 

·approval of the merger agreement by TIG’s shareholders;

 

·authorization for listing on Nasdaq of the BayCom common stock to be issued in the merger;

 

·the Registration Statement on Form S-4, of which this proxy statement/prospectus is a part, being effective and not subject to any stop order by the SEC;

 

·absence of any injunction or other legal restraint blocking the merger or the bank merger; and

 

·required regulatory approvals are received without the imposition of any non-standard unduly burdensome condition or requirement as reasonably determined by the BayCom board of directors;

 

Additional Closing Conditions for the Benefit of BayCom. In addition to the mutual closing conditions, BayCom’s obligation to complete the merger is subject to the satisfaction or waiver of the following conditions:

 

·accuracy of the representations and warranties made by TIG subject to the closing condition standards set forth in the merger agreement and the receipt by BayCom of a certificate signed by the Chief Executive Officer or Chief Operating Officer of TIG to that effect;

 

·performance in all material respects by TIG of the obligations required to be performed by it at or prior to the effective time of the merger and the receipt by BayCom of a certificate signed by the Chief Executive Officer or Chief Operating Officer of TIG to that effect;

 

·the holders of less than 5% of the outstanding shares of TIG common stock exercising dissenters’ rights under Colorado law;

 

·the receipt of consent from counterparties under specified contracts; and

 

·the receipt by BayCom of an opinion of its legal counsel to the effect that the merger will be treated as a reorganization within the meaning of Section 368(a) of the Code.

 

Additional Closing Conditions for the Benefit of TIG. In addition to the mutual closing conditions, TIG’s obligation to complete the merger is subject to the satisfaction or waiver of the following conditions:

 

·accuracy of the representations and warranties made by BayCom subject to the closing condition standards set forth in the merger agreement and the receipt by TIG of a certificate signed by the Chief Executive Officer or Chief Financial Officer of BayCom to that effect;

 

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·performance in all material respects by BayCom of the obligations required to be performed by it at or prior to the effective time of the merger and the receipt by TIG of a certificate signed by the Chief Executive Officer or Chief Financial Officer of BayCom to that effect; and

 

·the receipt by TIG of an opinion of its legal counsel to the effect that the merger will be treated as a reorganization within the meaning of Section 368(a) of the Code.

 

Termination of the Merger Agreement

 

BayCom and TIG can jointly agree to terminate the merger agreement at any time. Either company may also terminate the merger agreement:

 

·if a regulatory or other governmental authority has denied approval of the merger or the bank merger and such denial has become final and non-appealable, provided that the denial is not due to the failure of the company seeking termination to fulfill its obligations under the merger agreement, or if a court or regulatory other governmental authority issues a final, non-appealable order, injunction or decree permanently enjoining or otherwise prohibiting or making illegal the merger or the bank merger;

 

·if the merger has not been completed by December 31, 2019, unless due to the failure of the company seeking termination to perform or observe its covenants and agreements set forth in the merger agreement;

 

·if the other company breaches any representation, warranty, covenant or other agreement (provided that the terminating company is not then in material breach of representation, warranty, covenant or other agreement) , which breach results in a failure to satisfy the closing conditions of the company seeking termination and such breach is not cured within thirty (30) days following written notice to the breaching company or by its nature or timing cannot be cured within that time period;

 

·if the provision giving BayCom the right to terminate the merger agreement as described in the next paragraph is not applicable and the shareholders of TIG fail to approve the merger agreement at the TIG special meeting.

 

In addition to the circumstances described above, BayCom may terminate the merger agreement if (i) the board of directors of TIG fails to recommend that TIG shareholders approve the merger agreement or makes a change in recommendation; (ii) TIG materially breaches any of the provisions relating to acquisition proposals, as described under “—Agreement Not to Solicit Other Offers”; or (iii) TIG refuses to call or hold the shareholder meeting for a reason other than that the merger agreement has been previously terminated. Immediately following such a termination by BayCom, TIG must pay to BayCom a termination fee of $1.2 million in same day funds.

 

In addition to the circumstances described above, TIG may terminate the merger agreement prior to obtaining shareholder approval in order to enter into an agreement relating to a superior proposal; provided, however, that TIG has (i) not materially breached the merger agreement provisions outlined in “—Agreement Not to Solicit Other Offers” and (ii) paid BayCom the $1.2 million termination fee.

 

TIG must also pay the $1.2 million termination fee to BayCom if the merger agreement is terminated by either party as a result of the failure of TIG’s shareholders to approve the merger agreement and if, prior to such termination, there is publicly announced a proposal for a tender or exchange offer, for a merger or consolidation or other business combination involving TIG or First State Bank of Colorado or for the acquisition of a majority of the voting power in, or a majority of the fair market value of the business, assets or deposits of, TIG or First State Bank of Colorado and, within one year of the termination, TIG or First State Bank of Colorado either enters into a definitive agreement with respect to that type of transaction or consummates that type of transaction.

 

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Employee and Benefit Plan Matters

 

Following the effective time of the merger, BayCom shall maintain or cause to be maintained employee benefit plans and compensation opportunities for the benefit of employees of TIG and its subsidiaries who continue their employment with BayCom after the merger closing date (referred to below as “covered employees”) which, provide employee benefits and compensation programs that are substantially comparable to the employee benefits and compensation programs that are made available to similarly situated employees of BayCom or its subsidiaries, as applicable. Until such time as BayCom causes covered employees to participate in the benefit plans that are made available to similarly situated employees of BayCom or its subsidiaries, a covered employee’s continued participation in employee benefit plans of TIG and its subsidiaries will be deemed to satisfy this provision of the merger agreement. In no event will any covered employee be eligible to participate in any closed or frozen plan of BayCom or its subsidiaries.

 

To the extent that a covered employee becomes eligible to participate in a BayCom benefit plan, BayCom shall cause the plan to recognize years of prior service of such covered employee with TIG, its subsidiary or their predecessors, for purposes of eligibility, participation, vesting and, in the case of vacation or paid time off plans only, for benefit accrual, but only to the extent such service was recognized immediately prior to the merger closing date under a comparable TIG benefit plan in which such covered employee was eligible to participate immediately prior to the effective time of the merger. This recognition of service will not duplicate any benefits of a covered employee with respect to the same period of service.

 

With respect to any BayCom benefit plan that is a health, dental, vision or similar plan, BayCom or a subsidiary of BayCom shall use commercially reasonable best efforts to:

 

·cause the waiver of all limitations as to pre-existing conditions and waiting periods with respect to participation and coverage requirements applicable to the covered employees, to the extent such condition was or would have been covered under, or such waiting period was satisfied under, a TIG benefit plan maintained for such covered employees immediately prior to the merger closing date; and

 

·recognize expenses incurred by a covered employee in the year that includes the closing date (or, if later, the year in which the covered employee is first eligible to participate) for purposes of any applicable deductible and annual out-of-pocket expense requirements.

 

TIG has agreed to take, and cause its subsidiaries to take, all actions reasonably requested by BayCom that may be necessary or appropriate to (i) cause the continuation on and after the effective time of the merger, of any contract, arrangement or insurance policy relating to any TIG benefit plan for such period as may be requested by BayCom, (ii) facilitate the merger of any TIG benefit plan into any employee benefit plan maintained by BayCom or a BayCom subsidiary, and/or (iii) amend or terminate any TIG benefit plan (to the extent permitted by the terms thereof and Section 409A of the Code) immediately prior to the effective time of the merger, except as otherwise provided in the merger agreement.

 

BayCom has agreed that it or its subsidiaries will honor all employment, change in control and severance agreements previously identified by TIG and all previously identified benefits vested under the other TIG benefit plans, in each case with respect to employees, officers, directors and consultants of TIG or any its subsidiary who are not retained immediately following the effective time of the merger, or who do not enter into new employment, change in control or severance agreements with BayCom prior to the effective time of the merger, except in the case of the executive employment agreement with Jeffrey Walker, which agreement will be terminated immediately prior to the effective time of the merger, with no severance payments or benefits to be provided under such agreement. Mr. Walker, First State Bank of Colorado’s Chief Executive Officer and TIG director, will become President of the Colorado Division of United Business Bank upon completion of the merger and will be entitled to severance benefits if he is terminated without cause within one year following the merger on the same basis as otherwise similarly situated employees of TIG and First State Bank of Colorado retained by BayCom after the closing date.

 

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Employees of TIG and First State Bank of Colorado who are terminated within one year after the merger (other than for cause, death, disability, normal retirement or voluntary resignation) will be entitled to receive (A) severance compensation based on the number of years of service with TIG and the employees’ base salary or weekly rate of pay, as applicable, subject to the timely execution (without revocation) of a general release and waiver of claims; (B) accrued benefits, including vacation pay, through the date of separation, and (C) any rights to continuation of medical coverage to the extent such rights are required under applicable federal or state law and subject to the employee’s compliance with all applicable requirements for such continuation coverage, including payment of all premiums or other expenses related to such coverage.

 

Indemnification and Continuance of Director and Officer Liability Coverage

 

 For a period of four years following the merger, BayCom will maintain and preserve the rights to indemnification of the current and former directors and officers of TIG and its subsidiaries to the maximum extent permitted by applicable organizational documents and to the fullest extent permitted by law, in connection with any claims arising out of or relating to matters existing or occurring at or prior to the effective time of the merger, including the transactions contemplated by the merger agreement.

 

Prior to the completion of the merger, TIG shall purchase a prepaid tail policy for directors’ and officers’ liability insurance for a coverage period up to four years with respect to actions, omissions, events, matters, and circumstances occurring prior to the effective time provided that the cost thereof shall not exceed 200% of TIG’s current annual premium for such insurance. BayCom will cause such policy to be maintained in full force and effect for its full term and will cause all obligations thereunder to be honored by the combined company after the merger.

 

Expenses

 

All expenses incurred in connection with the merger will be paid by the party incurring the expenses, except that TIG will bear the costs and expenses of printing and mailing this proxy statement/prospectus and BayCom has paid the filing fee for the Registration Statement on Form S-4 of which this proxy statement/prospectus is a part.

 

Amendment, Waiver and Extension of the Merger Agreement

 

 Subject to compliance with applicable law, the merger agreement may be amended by the parties at any time before or after approval of the merger agreement by the shareholders of TIG, except that after approval of the merger agreement by the shareholders of TIG, there may not be, without further approval of such shareholders, any amendment of the merger agreement that requires further approval of such shareholders under applicable law.

 

At any time prior to completion of the merger, the parties may, to the extent legally allowed, extend the time for the performance of any of the obligations or other acts of the other party, waive any inaccuracies in the representations and warranties contained in the merger agreement or in any document delivered pursuant to the merger agreement, and waive compliance with any of the agreements or satisfaction of any conditions contained in the merger agreement.

 

Voting Agreements

 

 As an inducement to BayCom to enter into the merger agreement, the directors and certain shareholders of TIG have entered into voting agreements with BayCom with respect to the shares of TIG voting common stock they beneficially own. The following summary of the voting agreements is qualified in its entirety by reference to the form of voting agreement, a copy of which is attached as Exhibit A to the merger agreement, which is included in Appendix A to this proxy statement/prospectus.

 

Pursuant to the voting agreements, the directors and certain shareholders of TIG have agreed:

 

·to vote, or cause to be voted, all of the TIG voting common stock that he has, directly or indirectly, the right to vote or direct the voting (i) in favor of approval of the merger proposal; (ii) in favor of the adjournment proposal, if necessary, to solicit additional proxies to approve the merger proposal; (iii) against any action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of TIG contained in the merger agreement or of the shareholder contained in the voting agreement; and (iv) against any acquisition proposal, as described under “—Agreement Not to Solicit Other Offers,” or any other action, agreement or transaction that is intended, or could reasonably be expected, to impede, interfere or be inconsistent with, delay, postpone, discourage or materially and adversely affect consummation of the transactions contemplated by the merger agreement; and

 

·not to sell, transfer or otherwise dispose of any TIG common stock until after shareholder approval of the merger proposal, excluding (i) a transfer where the transferee has agreed in writing to abide by the terms of the voting agreement in a form reasonably satisfactory to BayCom, (ii) a transfer by will or operation of law, or (iii) a transfer made with the prior written consent of BayCom.

 

The obligations under each voting agreement will terminate concurrently with any termination of the merger agreement.

 

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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCEs OF THE MERGER

 

This discussion addresses the material United States federal income tax consequences of the merger to U.S. holders (as defined below) of TIG common stock. The discussion is based on provisions of the Code, U.S. Treasury regulations, administrative rulings of the Internal Revenue Service, or IRS, and judicial decisions, all as currently in effect and all of which are subject to change (possibly with retroactive effect) and to differing interpretations.

 

For purposes of this discussion, we use the term “U.S. holder” to mean:

 

·an individual who is a citizen or resident of the United States;

 

·a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof or the District of Columbia;

 

·a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) such trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or

 

·an estate that is subject to U.S. federal income taxation on its income regardless of its source.

 

This discussion applies only to U.S. holders that hold their TIG common stock as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment), and does not address all aspects of U.S. federal income taxation that may be relevant to a particular U.S. holder in light of the holder’s particular circumstances or to U.S. holders subject to special treatment under the U.S. federal income tax laws, including without limitation the following:

 

·banks and other financial institutions;

 

·pass-through entities and investors therein;

 

·persons liable for the alternative minimum tax;

 

·insurance companies;

 

·tax-exempt organizations;

 

·dealers in securities or currencies;

 

·traders in securities that elect to use a mark-to-market method of accounting;

 

·persons that hold TIG common stock as part of a straddle, hedge, constructive sale, conversion or other integrated transaction;

 

·mutual funds;

 

·regulated investment companies;

 

·real estate investment trusts;

 

·retirement plans, individual retirement accounts or other tax-deferred accounts;

 

·persons whose “functional currency” is not the U.S. dollar;

 

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·U.S. expatriates and former residents of the United States; and

 

·persons who acquired their TIG common stock through the exercise of an TIG option, through a tax qualified retirement plan or otherwise as compensation.

 

Furthermore, this discussion does not address any state, local, or non-U.S. tax consequences, or U.S. federal estate, gift, alternative minimum tax or other non-income tax consequences.

 

If a partnership or other entity taxed as a partnership for U.S. federal income tax purposes holds TIG common stock, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. Partnerships and partners in such a partnership should consult their tax advisors about the tax consequences of the merger to them.

 

The actual U.S. federal income tax consequences of the merger to you may be complex and will depend on your specific situation and on factors that are not within our control. This discussion does not constitute tax advice. You should consult with your own tax advisor as to the tax consequences of the merger in your particular circumstances, including the applicability and effect of the alternative minimum tax, the estate and gift tax, and any state, local or non-U.S. and other tax laws and of changes in those laws.

 

Tax Consequences of the Merger Generally

 

It is a condition to TIG’s obligation to complete the merger that TIG receives a written opinion of Baird Holm LLP, dated as of the closing date, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. It is a condition to BayCom’s obligation to complete the merger that BayCom receives a written opinion of its special counsel, Silver, Freedman, Taff & Tiernan LLP, dated as of the closing date, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. These opinions will be based on the assumption that the merger will be completed in the manner set forth in the merger agreement and the registration statement on Form S-4 of which this proxy statement/prospectus forms a part, and on representation letters provided by officers of TIG and BayCom to be delivered at the time of the closing. Those opinions will also be based on the assumption that the representations set forth in the merger agreement and the representation letters are, as of the effective time of the merger, true and complete without qualification and that the representation letters are executed by appropriate and authorized officers of TIG and BayCom. If any of the assumptions or representations upon which such opinions are based is inconsistent with the actual facts with respect to the merger, the U.S. federal income tax consequences of the merger could be adversely affected.

 

In addition, neither of the tax opinions given in connection with the merger or in connection with the filing of the registration statement will be binding on the IRS. Neither TIG nor BayCom intends to request any ruling from the IRS as to the U.S. federal income tax consequences of the merger, and consequently, there is no assurance that the IRS will treat the merger as a “reorganization” within the meaning of Section 368(a) of the Code.

 

Assuming that the merger is completed in the manner set forth in the merger agreement and the registration statement on Form S-4 of which this proxy statement/prospectus forms a part, and that the representations found in the merger agreement and in the representation letters provided by officers of TIG and BayCom delivered at the time of closing will be true and complete without qualification as of the effective time of the merger, it is the opinion of each of Baird Holm LLP and Silver, Freedman, Taff & Tiernan LLP that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

 

Based solely on the information set forth herein and subject to the assumptions, qualifications and limitations set forth herein and in their respective federal income tax opinions filed as exhibits to the registration statement on Form S-4, this discussion of the material U.S. federal income tax consequences of the merger, to the extent such discussion expresses conclusions as to the application of U.S. federal income tax law, constitutes the opinions of Baird Holm LLP, special counsel to TIG, and Silver, Freedman, Taff & Tiernan LLP, special counsel to BayCom. These respective tax opinions were rendered in reliance upon representations and covenants, including those contained in certificates of officers of TIG and BayCom, reasonably satisfactory in form and substance to Baird Holm LLP, and Silver, Freedman, Taff & Tiernan LLP. If any of the representations, covenants or assumptions upon which the opinions are based are inconsistent with the actual facts, the U.S. federal income tax consequences of the merger could be adversely affected. Copies of the tax opinions are attached as Exhibits 8.1 and 8.2 to the registration statement on Form S-4.

 

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Subject to the foregoing, the material U.S. federal income tax consequences of the merger to U.S. holders of TIG common stock will be as follows:

 

·gain (but not loss) will be recognized on the receipt of the merger consideration in exchange for TIG common stock pursuant to the merger in an amount equal to the lesser of (1) the amount by which the sum of the fair market value of the BayCom common stock on the date of the completion of the merger and cash (other than cash received instead of a fractional BayCom common share) received by a holder of TIG common stock exceeds such holder’s tax basis in its TIG common stock, and (2) the amount of cash received by such holder of TIG common stock (other than cash received instead of a fractional share of BayCom common stock, which will be taxed as discussed in the section entitled “Cash Received Instead of a Fractional Share of BayCom Common Stock” below);

 

·the aggregate basis of the BayCom common stock received in the merger will be the same as the aggregate basis of the TIG common stock for which it is exchanged, decreased by the amount of cash received in the merger (except with respect to any cash received instead of a fractional share of TIG common stock), decreased by any basis attributable to a fractional share of TIG common stock for which cash is received, and increased by the amount of any gain recognized on the exchange (regardless of whether such gain is classified as capital gain, or as ordinary dividend income, as discussed below, but excluding any gain or loss recognized with respect to fractional interests in BayCom common stock for which cash is received); and

 

·the holding period of BayCom common stock received in exchange for TIG common stock will include the holding period of the TIG common stock for which it is exchanged.

 

If a U.S. holder of TIG common stock acquired different blocks of TIG common stock at different times or at different prices, any gain or loss, when recognized, will be determined separately with respect to each block of TIG common stock and such holder’s basis and holding period will be determined by reference to each block of TIG common stock. If a U.S. holder determines that it has a loss with respect to any block of shares, such loss cannot be recognized as part of the merger and cannot be used to offset any gain recognized in the merger. Any such holder should consult its tax advisor regarding the manner in which gain or loss should be determined for each identifiable block of TIG common stock surrendered in the merger and with respect to determining the bases or holding periods of the BayCom common stock received in the merger.

 

Cash Received Instead of a Fractional Share of BayCom Common Stock

 

A U.S. holder of TIG common stock that receives cash in lieu of a fractional share of BayCom common stock will be treated as having received the fractional share pursuant to the merger and then as having exchanged the fractional share for cash in a redemption by BayCom. As a result, a U.S. holder generally will recognize gain or loss equal to the difference between the amount of cash received and the basis in the fractional share, as set forth above. This gain or loss will generally be long-term capital gain or loss if, as of the effective time of the merger, the holding period for such stock is greater than one year. The deductibility of capital losses is subject to limitations.

 

Cash Received on Exercise of Dissenters’ Rights

 

A U.S. holder of TIG common stock that receives cash in exchange for such holder’s TIG common stock upon exercise of dissenter’s rights will recognize gain or loss (assuming the TIG common stock is held as a capital asset) equal to the difference between the amount of cash received and the holder’s adjusted tax basis in the TIG common stock exchanged therefor. Each U.S. holder of TIG common stock is urged to consult such holder’s tax advisor regarding the manner in which gain or loss should be calculated among different blocks of TIG common stock exchanged in the merger. Such gain or loss will generally be long-term or short-term capital gain or loss, depending on the U.S. holder’s holding period in the TIG common stock exchanged. The tax consequences of cash received may vary depending upon your individual circumstances. Each holder of TIG common stock who contemplates exercising statutory dissenters’ rights should consult a tax adviser as to the possibility that all or a portion of the payment received pursuant to the exercise of such rights will be treated as dividend income.

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Possible Treatment of Gain as a Dividend

 

Any gain recognized by a U.S. holder of TIG common stock in connection with the merger generally will be capital gain unless such holder’s receipt of cash has the effect of a distribution of a dividend, in which case the gain will be treated as a dividend to the extent of such holder’s ratable share of TIG’s accumulated earnings and profits, as calculated for U.S. federal income tax purposes. For purposes of determining whether your receipt of cash has the effect of a distribution of a dividend, you will be treated as if you first exchanged all of your TIG common stock solely in exchange for BayCom common stock and then BayCom immediately redeemed a portion of those shares for the cash that you actually received in the merger (referred to herein as the “deemed redemption”). Receipt of cash will generally not have the effect of a dividend to you if such receipt is “not essentially equivalent to a dividend” or “substantially disproportionate,” each within the meaning of Section 302(b) of the Code. In order for the deemed redemption to be “not essentially equivalent to a dividend,” the deemed redemption must result in a “meaningful reduction” in your deemed percentage stock ownership of BayCom following the merger. The determination generally requires a comparison of the percentage of the outstanding stock of BayCom that you are considered to have owned immediately before the deemed redemption to the percentage of the outstanding stock of BayCom that you own immediately after the deemed redemption. The IRS has indicated in rulings that any reduction in the interest of a minority shareholder that owns a small number of shares in a publicly and widely held corporation and that exercises no control over corporate affairs would result in capital gain (as opposed to dividend) treatment. For purposes of applying the foregoing tests, a shareholder will be deemed to own the stock the shareholder actually owns and the stock the shareholder constructively owns under the attribution rules of Section 318 of the Code. Under Section 318 of the Code, a shareholder will be deemed to own the shares of stock owned by certain family members, by certain estates and trusts of which the shareholder is a beneficiary, and by certain affiliated entities, as well as shares of stock subject to an option actually or constructively owned by the shareholder or such other persons.

 

If, after applying these tests, the deemed redemption results in a capital gain, the capital gain will be long-term if your holding period for your TIG common stock is more than one year as of the date of the exchange. If, after applying these tests, the deemed redemption results in the gain recognized being classified as a dividend, such dividend will be treated as either ordinary income or qualified dividend income. Any gain treated as qualified dividend income will be taxable to you at the long-term capital gains rate, provided you held the shares giving rise to such income for more than 60 days during the 121-day period beginning 60 days before the effective time of the merger. The determination as to whether you will recognize a capital gain or dividend income as a result of your exchange of TIG common stock for a combination of BayCom common stock and cash in the merger is complex and is determined on a shareholder-by-shareholder basis. Accordingly, we urge you to consult your own tax advisor with respect to any such determination that is applicable to your individual situation.

 

Net Investment Income Tax

 

A Medicare contribution tax is imposed on the “net investment income” of certain individuals, estates and trusts with income exceeding certain threshold amounts. A U.S. holder of TIG common stock that is an individual is subject to a 3.8% tax on the lesser of: (1) his or her “net investment income” for the relevant taxable year, or (2) the excess of his or her modified adjusted gross income for the taxable year over a certain threshold (between $125,000 and $250,000 depending on the individual’s U.S. federal income tax filing status). Estates and trusts are subject to similar rules. Net investment income generally would include any capital gain recognized in connection with the merger (including any gain treated as a dividend), as well as, among other items, other interest, dividends, capital gains and rental or royalty income received by such individual. Holders of TIG common stock should consult their tax advisors as to the application of this additional tax to their circumstances.

 

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Backup Withholding

 

A non-corporate U.S. holder may be subject to backup withholding (currently at a rate of 24%) on any cash received in the merger, including cash received in lieu of a fractional share of BayCom common stock. Backup withholding generally will not apply, however, to such U.S. holders who:

 

·furnish a correct taxpayer identification number, certify that they are not subject to backup withholding on Form W-9 or successor form and otherwise comply with all the applicable requirements of the backup withholding rules; or

 

·provide proof that they are otherwise exempt from backup withholding.

 

Any amounts withheld under the backup withholding rules will generally be allowed as a refund or credit against the U.S. holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.

 

Reporting Requirements

 

A U.S. holder receiving shares of BayCom common stock as a result of the merger will be required to retain records pertaining to the merger. Each U.S. holder that is required to file a U.S. federal income tax return and is a “significant holder” will be required to file a statement with the holder’s U.S. federal income tax return setting forth the holder’s basis (determined immediately before the exchange) in the TIG common stock surrendered and the fair market value (determined immediately before the exchange) of the TIG common stock that is exchanged by such holder pursuant to the merger. A “significant holder” is a U.S. holder that receives shares of BayCom common stock in the merger and that, immediately before the merger, owned at least 5% of the outstanding stock of TIG (by vote or value) or securities of TIG with a tax basis of $1 million or more.

 

The preceding discussion is intended only as a summary of material U.S. federal income tax consequences of the merger. Tax matters regarding the merger are very complicated, and the tax consequences of the merger to any particular TIG shareholder will depend on that shareholder’s particular situation. TIG shareholders are strongly encouraged to consult their own tax advisor as to the specific tax consequences resulting from the merger, including tax return reporting requirements, the applicability and effect of federal, state, local, and other tax laws and the effect of any proposed changes in the tax laws to them.

 

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DESCRIPTION OF BAYCOM CAPITAL STOCK

 

The following briefly summarizes the material terms of BayCom’s capital stock. In connection with this summary, we urge you to read BayCom’s articles of incorporation and bylaws in their entirety, copies of which have been filed with the SEC and are available, without charge, to any person by following the instructions listed under “Where You Can Find More Information.”

 

BayCom’s articles authorize the issuance of up to 100,000,000 shares of common stock, no par value, and up to 10,000,000 shares of preferred stock, no par value. At June 30, 2019, BayCom had issued and outstanding 12,052,266 shares of common stock, and no shares of preferred stock.

 

Common Stock

 

Governing Documents.   Holders of shares of BayCom common stock have the rights set forth in its articles, bylaws and California law.

 

Dividends and Distributions.   The payment of dividends is subject to the restrictions set forth in the CGCL. The CGCL provides that neither a company nor any of its subsidiaries shall make any distribution to its shareholders unless: (i) the amount of retained earnings of the company immediately prior to the distribution equals or exceeds the sum of  (A) the amount of the proposed distribution plus (B) the preferential dividends arrears amount, or (ii) immediately after the distribution, the value of the company’s assets would equal or exceed the sum of its total liabilities plus the preferential rights amount.

 

Further, it is the policy of the Federal Reserve Board that bank holding companies, such as BayCom, should generally pay dividends on common stock only out of income available over the past year, and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. It is also the Federal Reserve Board’s policy that bank holding companies should not maintain dividend levels that undermine their ability to be a source of strength to its banking subsidiaries.

 

Holders of BayCom common stock may receive dividends when, as and if declared by its board of directors out of funds legally available for the payment of dividends, subject to any restrictions imposed by regulatory authorities and the payment of any preferential amounts to which any class of preferred stock may be entitled. BayCom has not paid any cash dividends since inception and has instead retained earnings for the purpose of increasing capital to support growth. The payment of dividends by BayCom will depend on the company’s net income, financial condition, regulatory requirements and other factors, including the results of the Bank’s operations. BayCom intends to continue to follow its existing policy of retaining earnings to increase capital for future growth and does not anticipate paying cash dividends in the foreseeable future.

 

Ranking.   BayCom’s common stock ranks junior with respect to dividend rights and rights upon liquidation, dissolution or winding up of BayCom to all other securities and indebtedness of BayCom.

 

Upon any voluntary or involuntary liquidation, dissolution or winding up of BayCom, the holders of its common stock are entitled to share equally, on a per share basis, in all of BayCom’s assets available for distribution, after payment to creditors and subject to any prior distribution rights granted to holders of any then outstanding shares of preferred stock.

 

Conversion Rights.  BayCom’s common stock is not convertible into any other shares of our capital stock.

 

Preemptive Rights.   Holders of BayCom common stock do not have any preemptive rights.

 

Voting Rights.   The holders of BayCom common stock are entitled to one vote per share on any matter to be voted on by the shareholders. The holders of BayCom common stock are entitled to cumulative voting rights with respect to the election of directors. This means that a shareholder has the right to vote the number of shares owned by him or her for as many candidates as there are directors to be elected, or to cumulate his or her shares and give one candidate as many votes as the number of directors multiplied by the number of shares owned shall equal, or to distribute them on the same principle among as many candidates as he or she deems appropriate. A plurality of the shares voted shall elect all of the directors then standing for election at a meeting of shareholders at which a quorum is present. This means the candidates receiving the highest number of affirmative votes, up to the number of directors to be elected, are elected as directors.

 

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Redemption.   BayCom has no obligation or right to redeem its common stock.

 

Stock Exchange Listing.   BayCom’s common stock is listed on the NASDAQ Global Select Market under the symbol “BCML.”

 

Preferred Stock

 

Upon authorization of BayCom’s board of directors, BayCom may issue shares of one or more series of its preferred stock from time to time. BayCom’s board of directors may, without any action by holders of common stock and except as may be otherwise provided in the terms of any series of preferred stock of which there are shares outstanding, adopt resolutions to designate and establish a new series of preferred stock. Upon establishing such a series of preferred stock, the board will determine the number of shares of preferred stock of that series that may be issued and the rights and preferences of that series of preferred stock. The rights of any series of preferred stock may include, among others:

 

·general or special voting rights;

 

·preferential liquidation rights;

 

·preferential cumulative or noncumulative dividend rights;

 

·redemption or put rights; and

 

·conversion or exchange rights.

 

BayCom may issue shares of, or rights to purchase shares of, one or more series of its preferred stock that have been designated from time to time, the terms of which might:

 

·adversely affect voting or other rights evidenced by, or amounts otherwise payable with respect to, the common stock or other series of preferred stock;

 

·discourage an unsolicited proposal to acquire BayCom; or

 

·facilitate a particular business combination involving BayCom. Any of these actions could have an anti-takeover effect and discourage a transaction that some or a majority of BayCom’s shareholders might believe to be in their best interests or in which shareholders might receive a premium for their stock over our then market price.

 

Anti-Takeover Considerations and Special Provisions of Our Articles, Bylaws and California Law

 

California law, federal banking regulations and certain provisions of our articles and bylaws could have the effect of delaying or deferring the removal of incumbent directors or delaying, deferring or discouraging another party from acquiring control of us, even if such removal or acquisition would be viewed by our shareholders to be in their best interests. These provisions, summarized below, are intended to encourage persons seeking to acquire control of us to first negotiate with our board of directors. These provisions also serve to discourage hostile takeover practices and inadequate takeover bids. BayCom believes that these provisions are beneficial because the negotiation they encourage could result in improved terms of any unsolicited proposal.

 

Federal Banking Regulations.   Provisions of federal banking laws, including regulatory approval requirements, could make it difficult for a third party to acquire us, even if doing so would be perceived to be beneficial to our shareholders. Acquisition of 10% or more of any class of voting stock of a bank holding company or depository institution, including shares of our common stock following completion of this offering, generally creates a rebuttable presumption that the acquirer “controls” the bank holding company or depository institution. Also, a bank holding company must obtain the prior approval of the Federal Reserve Board before, among other things, acquiring direct or indirect ownership or control of more than 5% of the voting shares of any bank, including our bank.

 

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California Law.   Under the CGCL, most business combinations, including mergers, consolidations and sales of substantially all of the assets of a California corporation, must be approved by the vote of the holders of at least a majority of the outstanding shares of common stock and any other affected class of stock of such corporation. The articles or bylaws of a California corporation may, but are not required to, set a higher standard for approval of such transactions. BayCom’s articles of incorporation and bylaws do not set higher limits.

 

BayCom is subject to the provisions of Section 1203 of the CGCL, which contains provisions that may have the effect of deterring hostile takeovers or delaying or preventing changes in control in which our shareholders could receive a premium for their shares or other changes in our management. First, if an “interested person” makes an offer to purchase the shares of some or all of our existing shareholders, we must obtain an affirmative opinion in writing as to the fairness of the offering price prior to completing the transaction. California law considers a person to be an “interested person” if the person directly or indirectly controls BayCom, if the person is directly or indirectly controlled by one of our officers or directors, or if the person is an entity in which one of our officers or directors holds a material financial interest. If, after receiving an offer from such an “interested person”, BayCom receives a subsequent offer from a neutral third party, then BayCom must notify its shareholders of this offer and afford each of them the opportunity to withdraw their consent to the “interested person” offer.

 

Authorized But Unissued Capital Stock.   As of the date of this proxy statement/prospectus, BayCom has 87,947,734 shares of authorized but unissued common stock, of which BayCom has reserved 288,635 shares to be utilized for awards that remain available for grant and issuance under its 2017 Omnibus Equity Incentive Plan and up to 876,804 shares may be issued to TIG shareholders upon the closing of the merger. BayCom also has 10,000,000 shares of authorized but unissued preferred stock, and its board of directors may authorize the issuance of one or more series of preferred stock without shareholder approval. These shares could be used by the board of directors to make it more difficult or to discourage an attempt to obtain control of BayCom through a merger, tender offer, proxy contest or otherwise.

 

Limitation on Right to Call a Special Meeting of Shareholders.  BayCom’s bylaws provide that special meetings of shareholders may only be called by its board, the chairperson of its board, the president or by the holders of not less than 10% of our outstanding shares of capital stock entitled to vote for the purpose or purposes for which the meeting is being called.

 

Advance Notice Provisions.   Additionally, BayCom’s bylaws provide that nominations for directors must be made in accordance with the provisions of its bylaws, which generally require, among other things, that such nominations be provided in writing to BayCom’s president by the later of: (i) the close of business 21 days prior to the meeting of shareholders called for the election of directors, or (ii) 10 days after the date of mailing of the notice of meeting to shareholders, and that the notice to BayCom’s president contain certain information about the shareholder and the director nominee.

 

Filling of Board Vacancies; Removals.   Any vacancies in BayCom’s board of directors and any directorships resulting from any increase in the number of directors may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director, and each director so elected shall hold office until the next annual meeting and until the director’s successor has been elected and qualified. However, a vacancy created on the board by the removal of a director may be filled only by the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present, or by the unanimous written consent of all shares entitled to vote thereon.

 

New or Amendment of the Bylaws.   New bylaws may be adopted or the bylaws may be amended or repealed by the vote or written consent of holders of a majority of the outstanding shares entitled to vote. BayCom’s bylaws also provide that except for changing the range of directors which is currently set at five (5) to nine (9), the bylaws may be altered, amended or repealed by its board without prior notice to or approval by BayCom’s shareholders, except as otherwise may be required by California law.

 

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Voting Provisions.   BayCom’s articles do not provide for certain heightened voting thresholds needed to consummate a change in control transaction, such as a merger, the sale of substantially all of its assets or other similar transaction. Accordingly, BayCom will be able to consummate a change in control transaction or sell all or substantially all of its assets by obtaining the affirmative vote of the holders of shares of its capital stock having at least a majority of the voting power of all outstanding capital stock entitled to vote thereon.

 

Elimination of Liability and Indemnification.   BayCom’s articles of incorporation eliminate the personal liability of its directors for monetary damages to the fullest extent permitted under California law. A director’s liability, however, is not eliminated with respect to (i) intentional misconduct or knowing and culpable violation of law; (ii) acts or omissions that a director believes to be contrary to the best interests of the corporation or its shareholders or that involve the absence of good faith on the part of the director; (iii) receipt of an improper personal benefit; (iv) acts or omissions that show reckless disregard for the director’s duty to the corporation or its shareholders, where the director in the ordinary course of performing a director’s duties should be aware of a risk of serious injury to the corporation or its shareholders; (v) acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director’s duty to the corporation and its shareholders; (vi) transactions between the corporation and a director who has a material financial interest in such transaction; and (vii) liability for improper distributions, loans or guarantees. BayCom’s articles of incorporation and bylaws also provide, among other things, for the indemnification of its directors, officers and agents, and authorizes its board of directors to pay expenses incurred by, or to satisfy a judgment or fine rendered or levied against, such agents in connection with any personal legal liability incurred by the individual while acting for BayCom within the scope of his or her employment (subject to certain limitations). It is the policy of BayCom’s board of directors that its directors, officers and agents shall be indemnified to the maximum extent permitted under applicable law and BayCom’s articles of incorporation and bylaws, and BayCom has obtained director and officer liability insurance covering all of BayCom’s and the Bank’s officers and directors.

 

Transfer Agent

 

BayCom’s transfer agent is OTR Transfer, Inc. The transfer agent’s address is 1050 SW Sixth Ave, Ste. 1230, Portland, Oregon 97204-1114 and the telephone number is (503) 225-0375.

 

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COMPARISON OF RIGHTS OF TIG COMMON STOCK AND

BAYCOM COMMON STOCK

 

When the merger becomes effective, shareholders of TIG who receive shares of BayCom common stock in exchange for their shares of TIG common stock will become shareholders of BayCom. BayCom is a California corporation and the rights of BayCom shareholders are governed by the CGCL, as well as the BayCom articles of incorporation and the BayCom bylaws. TIG is a Colorado corporation, and its shareholders’ rights are governed by the CBCA and the TIG articles of incorporation and TIG bylaws. You are urged to read carefully the relevant provisions of the CGCL and CBCA, as well as BayCom’s and TIG’s governing documents. To find out where copies of these documents can be obtained, see “Where You Can Find Additional Information.”

 

After the merger, as BayCom shareholders, the rights of former TIG shareholders will be governed by the BayCom articles of incorporation, the BayCom bylaws and the CGCL. The following is a summary of material differences between the rights of holders of BayCom common stock and holders of TIG common stock. The summary does not purport to be a complete statement of the provisions affecting, and differences between, the rights of holders of BayCom common stock and holders of TIG common stock. Rather, the summary is intended to provide a general overview of the differences in shareholders’ rights under the governing corporate instruments of BayCom and TIG, and other known material differences. For more detailed information with respect to BayCom, see “Description of BayCom Capital Stock” beginning on page 57.

 

TIG   BayCom
     
Authorized Capital Stock
     
TIG’s articles of incorporation state that the authorized capital stock of TIG consists of 3,500,000 shares of stock, par value 0.00001 per share, consisting of 2,000,000 shares of TIG voting common stock and 1,500,000 shares of TIG non-voting common stock. As of August 6, 2019 there were 1,692,300 shares of TIG voting common stock and 1,491,100 shares of TIG non-voting common stock outstanding. Subject to compliance with the CBCA, TIG’s articles of incorporation and bylaws, the TIG board of directors may authorize the issuance of additional shares of authorized TIG voting common stock and TIG non-voting common stock.   BayCom’s articles of incorporation states that the authorized capital stock of BayCom consists of 100,000,000 shares of common stock, without par value, and 10,000,000 shares of preferred stock, without par value. As of June 30, 2019 there were 12,052,266 shares of BayCom common stock outstanding. No shares of BayCom preferred stock are issued and outstanding or reserved for issuance. Subject to compliance with the CGCL, BayCom’s articles of incorporation and bylaws, the BayCom board of directors may authorize the issuance of additional shares of authorized common stock and preferred stock.
     
Voting Rights
     

Holders of TIG voting common stock have unlimited voting rights and are entitled to one vote for each share held of record on all matters submitted to a vote of shareholders. Holders of TIG common stock do not have cumulative voting rights in the election of directors. Holders of TIG non-voting common stock do not have any voting rights except as may otherwise be required from time to time by law.

 

In any election of directors, the candidates receiving the highest number of votes are elected.

  Each BayCom shareholder entitled to vote is entitled to one vote for each share held on each matter submitted to a vote of shareholders. In the election of directors, each shareholder may cumulate votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the shareholder’s shares are normally entitled, or distribute the shareholder’s votes on the same principle among as many candidates as the shareholder chooses.
     

 

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TIG   BayCom
     
    No shareholder is entitled to cumulate votes in favor of any candidate or candidates unless such candidate’s or candidates’ names have been placed in nomination prior to the voting and the shareholder has given notice at the meeting prior to the voting of the shareholder’s intention to cumulate the shareholder’s votes. If any one shareholder has given such notice, all shareholders may then cumulate their votes for candidates in nomination. In any election of directors, the candidates receiving the highest number of votes of the shares entitled to be voted for them, up to the number of directors to be elected by such shares, are elected.
     
Number of Directors
     

TIG’s bylaws state that the number of directors that may serve on TIG’s board of directors cannot be less than one nor more than 10, provided, that the number of directors may be changed from time to time by resolution of the Board. There are currently seven members of the TIG board of directors.

 

  BayCom’s bylaws state that the number of directors that may serve on BayCom’s board of directors cannot be less than five nor more than nine until changed by an amendment of the articles or a bylaw amendment duly adopted by the vote or written consent of holders of a majority of the outstanding shares entitled to vote. The exact number of directors shall be fixed from time-to-time by a resolution adopted by BayCom’s board of directors or by a bylaw or an amendment of the bylaws adopted by a vote of a majority of the shares entitled to vote represented at a duly held meeting at which quorum is present, by the written consent of the holders of a majority of the outstanding share entitled to vote, or by shareholder approval by the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum). The number of directors is fixed by the board of directors at eight, and there are currently eight members of the BayCom board of directors. Pursuant to the merger agreement, the directors of BayCom immediately prior to the effective time of the merger, will be the directors of BayCom following the closing of the merger.
     
Election of Directors
     
TIG’s bylaws provide that directors shall be elected annually by the shareholders at the annual meeting of the shareholders. If, for any reason, the annual meeting is not held or the directors are not elected thereat, then the directors may be elected at any special meeting of the shareholders called and held for that purpose. The term of office of the directors shall begin immediately after their election and continue until their respective successors are elected and qualified.   BayCom’s bylaws provide that directors shall be elected annually by the shareholders at the annual meeting of the shareholders. If, for any reason, the annual meeting is not held or the directors are not elected thereat, then the directors may be elected at any special meeting of the shareholders called and held for that purpose. The term of office of the directors shall begin immediately after their election and continue until their respective successors are elected and qualified.
     
Classification of Board of Directors
     
TIG’s bylaws do not provide for a classified board of directors.   BayCom’s bylaws do not provide for a classified board of directors.

 

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TIG   BayCom
     
Vacancies
     

TIG’s bylaws provide that when one or more directors resign from the board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations become effective. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by the shareholders, the board of directors or a majority of the directors then in office.

 

  BayCom’s bylaws provide that a vacancy on the board of directors, not including a vacancy created by the removal of a director, may be filled by a majority of the remaining directors, even though less than a quorum, or by a sole remaining director. Any director so elected may hold office until the next annual meeting of shareholders and until such director’s successor is elected at an annual or special shareholders meeting. A vacancy created by the removal of a director shall be filled only by a person elected by a majority of the shareholders entitled to vote at a duly held meeting at which a quorum is present or by the unanimous written consent of the holders of the outstanding shares. The shareholders may elect a director at any time to fill any vacancy not filled by directors. Any such election by written consent other than to fill a vacancy created by removal requires the consent of a majority of the outstanding shares entitled to vote.
     
Removal of Directors
     
A director may be removed from office with or without cause by a vote of shareholders but only if the number of votes cast in favor of removal exceeds the number of votes cast against removal. No reduction of the authorized number of directors shall have the effect of removing any director before his or her term of office expires.  

A director may be removed from office without cause by a vote of shareholders holding a majority of the outstanding shares entitled to vote at an election of directors; however, unless the entire board of directors is removed, an individual director shall not be removed if the votes cast against removal, or not consenting in writing to such removal, would be sufficient to elect such director if voted cumulatively at an election at which the total number of votes were cast, or, if such action is taken by written consent, all shares entitled to vote were voted, and the entire number of directors authorized at the time of the director’s most recent election were then being elected. In addition, a director may also be removed from office by the Superior Court of the county in which the principal office is located, at the suit of shareholders holding at least 10% of the number of outstanding shares of any class, in case of fraudulent or dishonest acts or gross abuse of authority or discretion with reference to the corporation, in the manner provided by the law. The Board of Directors may also declare vacant the office of a director who has been declared of unsound mind by a court order or convicted of a felony.

 

No reduction of the authorized number of directors shall have the effect of removing any director before his or her term of office expires.

 

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TIG   BayCom
     
Nomination of Director Candidates by Shareholders
     
TIG’s bylaws do not contain provisions for nomination of candidates for election as directors. Three of TIG’s institutional shareholders have the contractual right, which they have exercised, to be represented on the board of directors of both TIG and its subsidiary bank by one director of its choice.   BayCom’s bylaws permit shareholders who are entitled to vote in the meeting of shareholders to nominate a director for election if written notice is delivered to the president of the corporation by the later of 21 days prior to any meeting of shareholders called for election of directors or 10 days following the day on which the notice of meeting was mailed.
     
Shareholder Action Without a Meeting
     
TIG’s bylaws provide that any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice if a consent in writing, setting forth the action so taken, is signed by the number of shareholders whose affirmative vote would be required to take such action at a meeting at which all shares entitled to vote thereon were present and voted.   BayCom’s bylaws provide that any action which may be taken at any annual or special meeting of the shareholders may be taken without a meeting and without prior notice if a consent in writing, setting forth the action so taken, is signed by the number of shareholders whose affirmative vote would be required to take such action at a meeting at which all shares entitled to vote thereon were present and voted. Unanimous written consent shall be required for election of directors to non-vacant positions.
     
Special Meetings of Shareholders
     
TIG may call a special shareholders meeting at any time upon the request of the board of directors, chairman of the board, the president, or of the TIG shareholders entitled to cast not less than 10% of the votes at such a meeting.   BayCom may call a special shareholders meeting at any time upon the request of the board of directors, chairman of the board, the president, or of the BayCom shareholders entitled to cast not less than 10% of the votes at such a meeting.
     
Indemnification of Directors and Officers
     
TIG’s articles of incorporation provide that to the extent permitted by law, each director, whether or not then in office, officer, employee, or agent of TIG shall be indemnified by TIG against all costs and expenses reasonably incurred by or imposed upon him or her in connection with or resulting from any civil or criminal action, suit or proceeding to which he or she may be made a party by reason of his or her being or having been a director, officer, employee, or agent of TIG, except in relation to matters in which he or she has been finally adjudged in such action, suit or proceeding to have been derelict in the performance of his or her duties as such director. The foregoing right to indemnification shall include a right to reimbursement of the amounts paid and expenses incurred in settling, compromising or otherwise adjusting such action, suit or proceeding, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of TIG, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.  

BayCom’s articles of incorporation authorize BayCom to indemnify its directors, officers, employees and agents to the fullest extent permitted by California law.

 

BayCom’s bylaws provide that BayCom will indemnify its directors, officers, employees and agents or any person serving at the request of BayCom as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, who was or is made a party to or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding against all expenses, liabilities, losses, judgments, fines, ERISA excise taxes and penalties, settlements, any interest, assessments and other charges, incurred in connection with any such proceeding, and any federal, state, local or foreign taxes imposed as a result of the actual or deemed receipt of such foregoing payments. Further, the bylaws provide that such indemnification shall be in excess of that expressly permitted by Section 317 of the CGCL.

 

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TIG   BayCom
     

In addition, TIG’s articles of incorporation provide that the foregoing indemnity provisions shall not be deemed to be exclusive of any other rights to which those indemnified may be otherwise entitled, nor shall such provisions be deemed to prohibit the TIG from extending its indemnification to cover other persons or activities to the extent permitted by law or pursuant to any provisions in its bylaws.

 

TIG’s bylaws provide more detailed indemnification for directors and executive officers of TIG, including procedures for determination and authorization of indemnification and advance payment of expenses incurred by directors and executive officers.

 

Certain of TIG’s institutional shareholders have contractual indemnification rights.

   
     
Amendments to Articles of Incorporation and Bylaws
     

TIG’s bylaws generally may be amended or repealed by shareholders having at least a majority of the voting power or by the board of directors unless the CBCA reserves such power to the shareholders.

 

TIG’s articles of incorporation may be amended by the affirmative vote of the issued and outstanding shares entitled to vote.

 

BayCom’s bylaws may be amended or repealed by the affirmative vote of a majority of the outstanding shares entitled to vote. BayCom’s bylaws may be amended or repealed by the board of directors other than a bylaw specifying or changing a fixed number of directors or the maximum or minimum number of directors or changing from a fixed to a variable board or vice versa.

 

BayCom’s articles of incorporation may be amended by the affirmative vote of the issued and outstanding shares entitled to vote.

     
Dissenters’ Rights
     
All outstanding shares of the capital stock of TIG generally have dissenters’ rights with respect to a business combination or other reorganization requiring their vote under the CBCA.   Under the CGCL, because BayCom common stock is listed on a national securities exchange certified by the DBO, holders of BayCom common stock do not have dissenters’ rights with respect to a business combination or other reorganization requiring their vote, unless their shares are subject to transfer restrictions or are exchanged for merger consideration other than solely securities listed on a national securities exchange certified by the California Commissioner of the Department of Business Oversight and cash in lieu of fractional shares.

 

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DISSENTERS’ RIGHTS

 

Article 113 of the CBCA provides that any TIG shareholder may dissent from the merger and obtain payment of the “fair value” of his, her or its shares as determined in accordance with Article 113 of the CBCA, provided that such shareholder complies with all of the provisions of Article 113. Holders of TIG common stock, whether or not they are entitled to vote on the merger agreement, are entitled to exercise dissenters’ rights.

 

The following is a brief summary of Article 113 of the CBCA which sets forth the procedures for demanding statutory dissenters’ rights. The full text of Article 113 is attached to this proxy statement/prospectus as Appendix C, and we incorporate that text into this proxy statement/prospectus by reference.

 

To be entitled to exercise dissenters’ rights, a TIG shareholder must not vote in favor of the merger agreement and must deliver written notice to TIG prior to the TIG special meeting to vote on the merger agreement of such shareholder’s intent to demand payment for his, her or its shares if the merger is effectuated.

 

If the merger is approved by holders of TIG voting common stock, then, within 10 days after shareholder approval, TIG is obligated to deliver to those shareholders who have not voted in favor of the merger agreement and have notified TIG of their intent to demand payment a written dissenters’ notice. The notice will state that the merger was approved and state the effective date or proposed effective date of the merger; state an address at which TIG will receive payment demands and the address of a place where stock certificates must be deposited; inform holders of uncertificated TIG shares to what extent transfer of the shares will be restricted after the payment demand is received; supply a form for demanding payment, which form shall request a dissenter to state an address to which payment is to be made; set the date by which TIG must receive the payment demand and the certificates for the shares, which date shall not be less than 30 days after the written dissenters’ notice is given by TIG; and be accompanied by a copy of Article 113 of the CBCA. A dissenting shareholder must, by the date set forth in the dissenters’ notice, demand payment and send his, her or its stock certificates to the address provided in the dissenters’ notice. The dissenting shareholders’ payment demand must certify whether the shareholder acquired beneficial ownership of the shares of capital stock before the date such shareholder was informed of the terms of the merger.

 

A shareholder who does not demand payment or deposit his, her or its certificates by the time specified in the dissenters’ notice will not be entitled to payment for his, her or its shares under the dissenters’ rights sections of the CBCA and will instead be entitled to receive the merger consideration.

 

Upon the later of completion of the merger or receipt of the payment demand, TIG will pay each dissenting shareholder who has complied with procedures described in Article 113 of the CBCA the amount that TIG estimates to be the “fair value” of the dissenting shareholder’s shares of stock, plus accrued interest. The payment must be accompanied by the latest audited annual financial statements of TIG, any interim financial statements of TIG, a statement of TIG’s estimate of the “fair value” of the shares, an explanation of how the interest was calculated, a statement of the dissenting shareholder’s right to demand payment if the dissenting shareholder is dissatisfied with the payment and a copy of Article 113 of the CBCA.

 

If (i) the dissenting shareholder believes that the amount paid by TIG is less than the “fair value” of his, her or its shares or that the interest due was incorrectly calculated, (ii) TIG fails to make payment within 60 days after the date set forth in the dissenters’ notice for demanding payment, or (iii) the merger is not completed and TIG does not return the deposited certificates and release the transfer restrictions imposed on uncertificated shares within 60 days after the date set in the dissenters’ notice for demanding payment, then the dissenting shareholder may notify TIG of his, her or its estimate of the “fair value” of his, her or its shares and the amount of interest due and demand payment of his, her or its estimate, less any payment previously received. The dissenting shareholder must notify TIG of his, her or its demand in writing within 30 days after TIG made or offered payment for the dissenting shareholder’s shares.

 

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If within 60 days after receipt by TIG of a demand described in the preceding paragraph, the demand remains unsettled, TIG is required to bring a special proceeding in Colorado state court and petition the court to determine the “fair value” of the shares and accrued interest. TIG is required to make all dissenting shareholders whose demands remain unsettled parties to the special proceeding. Each party to the special proceeding will be served a copy of the petition filed with the court. The court may appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of the “fair value” of the shares. Each dissenting shareholder will be entitled to judgment for the amount, if any, by which the court finds the fair value of his, her or its shares, plus interest, exceeds the amount paid by TIG. If TIG does not bring the special proceeding within such 60-day period, TIG will pay each dissenting shareholder whose claim remains unsettled the amount demanded.

 

Shareholders considering the exercise of dissenters’ rights should be aware that the “fair value” of their shares as determined under Article 113 of the CBCA could be more than, the same as or less than the merger consideration they would receive under the merger agreement if they did not dissent.

 

One condition to BayCom’s obligation to complete the merger is that the total number of dissenting shares must be less than 5.0% of the total number of issued and outstanding shares of TIG common stock.

 

FAILURE TO COMPLY STRICTLY WITH ALL OF THE PROCEDURES SET FORTH IN ARTICLE 113 OF THE CBCA WILL RESULT IN THE LOSS OF A SHAREHOLDER’S DISSENTERS’ RIGHTS. CONSEQUENTLY, ANY SHAREHOLDER WISHING TO EXERCISE DISSENTERS’ RIGHTS IS URGED TO CONSULT LEGAL COUNSEL BEFORE ATTEMPTING TO EXERCISE SUCH RIGHTS. ANY TIG SHAREHOLDER WHO FAILS TO STRICTLY COMPLY WITH ARTICLE 113 OF THE CBCA ATTACHED AS APPENDIX C TO THE PROXY STATEMENT/PROSPECTUS, WILL FORFEIT THE RIGHT TO EXERCISE DISSENTERS’ RIGHTS AND WILL, INSTEAD, RECEIVE THE CONSIDERATION TO BE ISSUED AND PAID IN CONNECTION WITH THE MERGER, AS SET FORTH IN THE MERGER AGREEMENT.

 

LEGAL MATTERS

 

The validity of the common shares offered hereby will be passed upon for BayCom by Silver, Freedman, Taff & Tiernan LLP. Certain U.S. federal income tax consequences relating to the merger will also be passed upon for BayCom by Silver, Freedman, Taff & Tiernan LLP and for TIG by Baird Holm LLP.

 

EXPERTS

 

The consolidated financial statements of BayCom Corp and subsidiary as of and for the year ended December 31, 2018 incorporated by reference in this proxy statement/prospectus from BayCom’s Annual Report on Form 10-K for the year ended December 31, 2018 have been audited by Moss Adams LLP, an independent registered public accounting firm, as stated in their report. Such consolidated financial statements have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

 

The consolidated financial statements of BayCom Corp and subsidiary as of December 31, 2017 and for each of the years in the two-year period ended December 31, 2017 and 2016 have been incorporated by reference from BayCom’s Annual Report on Form 10-K for the year ended December 31, 2018 in reliance upon the report of Vavrinek, Trine, Day & Co., LLP, independent auditor, and upon the authority of said firm as experts in auditing and accounting.

 

WHERE YOU CAN FIND MORE INFORMATION

 

BayCom files annual, quarterly, and current reports, proxy statements and other information with the SEC under the Exchange Act. The SEC maintains a website that contains such reports, proxy statements and other information about public companies, including BayCom’s filings, which can be accessed on the website free of charge. The internet address of that site is www.sec.gov. BayCom’s internet address is www.unitedbusinessbank.com. The information on BayCom’s website is not part of this proxy statement/prospectus. You may obtain copies of the information that BayCom files with the SEC, free of charge, by accessing BayCom’s website at www.unitedbusinessbank.com under the tab “About Us” and then “Investor Relations” and then under “Documents”. Alternatively, these documents, when available, can be obtained free of charge from BayCom upon written request to BayCom Corp, Corporate Secretary, 500 Ygnacio Valley Road, Suite 200, Walnut Creek, CA 94596 or by calling (925) 476-1800.

 

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BayCom filed with the SEC a registration statement on Form S-4 under the Securities Act to register the shares of BayCom common stock to be issued to TIG’s shareholders upon completion of the merger. This proxy statement/prospectus is a part of that registration statement and constitutes a prospectus of BayCom in addition to being a proxy statement of TIG for the TIG special meeting. As permitted by the SEC rules, this proxy statement/prospectus does not contain all of the information that you can find in the registration statement or in the exhibits to the registration statement. The additional information may be inspected and copied as set forth above.

 

TIG does not have a class of securities registered under the Exchange Act, is not subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act and accordingly does not file documents or reports with the SEC.

 

If you are TIG shareholder and have questions about the merger or submitting your proxy, or if you need additional copies of this proxy statement/prospectus or proxy cards, you should contact TIG’s corporate secretary at: TIG Bancorp, 8400 East Crescent Parkway, Suite 100, Greenwood Village, Colorado 80111. If you would like to request documents, please do so by September 9, 2019, to receive them before the TIG special meeting.

 

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

 

The SEC allows BayCom to incorporate by reference information into this proxy statement/prospectus. This means that BayCom can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is an important part of this proxy statement/prospectus, however, any statement contained in this document or in a document incorporated or deemed to be incorporated into this document by reference will be deemed to be modified or superseded for purposes of this document to the extent that a statement contained in this document or in any subsequently filed document that is also incorporated into this document by reference modifies or supersedes such statement. Any such statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this document.

 

This proxy statement/prospectus incorporates by reference the documents set forth below that BayCom has filed previously with the SEC and any additional filings BayCom makes with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act after the date of this proxy statement/prospectus and before the special meeting; provided, however, that this proxy statement/prospectus does not incorporate by reference any documents, portions of documents or other information that is deemed to have been “furnished” and not “filed” with the SEC:

 

· BayCom’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 19, 2019;

 

·the sections of BayCom’s Definitive Proxy Statement for the 2019 Annual Meeting of Shareholders filed with the SEC on May 9, 2019 that are incorporated by reference in BayCom’s Annual Report on Form 10-K for the year ended December 31, 2018;

 

· BayCom’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019 filed with the SEC on May 15, 2019;

 

· BayCom’s Current Reports on Form 8-K, filed with the SEC on May 9, May 28, May 29, June 19, July 1, 2019 and July 26, 2019; and

 

·the description of BayCom common stock, which is registered under Section 12 of the Securities Exchange Act, in BayCom’s Form 8-A filed with the SEC on May 2, 2018, including any subsequently filed amendments and reports updating such description.

 

BayCom Corp has supplied all of the information contained in this proxy statement/prospectus relating to BayCom Corp and United Business Bank. TIG Bancorp has supplied all of the information contained in this proxy statement/prospectus relating to TIG Bancorp and First State Bank of Colorado.

 

You should rely only on the information contained in this proxy statement/prospectus to vote on the proposals to TIG shareholders in connection with the merger. Neither BayCom nor TIG has authorized anyone to provide you with information that is different from what is contained in this proxy statement/prospectus. This proxy statement/prospectus is dated August 8, 2019. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any other date other than such date, and neither the mailing of this proxy statement/prospectus nor the issuance by BayCom of BayCom common stock shares in connection with the merger will create any implication to the contrary.

 

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APPENDIX A

 

 

 

AGREEMENT AND PLAN OF MERGER

 

by and between

 

BAYCOM CORP

 

and

 

TIG BANCORP

 

Dated as of June 28, 2019

 

 

 

 

TABLE OF CONTENTS

 

    Page
PREAMBLE A-1
RECITALS A-1
     
ARTICLE I  THE MERGER A-1
1.1 The Merger A-1
1.2 Effective Time A-1
1.3 Effects of the Merger A-2
1.4 Conversion of Stock A-2
1.5 Incorporation Documents and By-Laws of the Surviving Company A-3
1.6 Directors and Officers A-3
1.7 Additional Actions A-3
1.8 The Bank Merger A-4
1.9 Change in Structure A-4
1.10 Tax Adjustment A-4
ARTICLE II  EXCHANGE OF SHARES A-4
2.1 Exchange Agent A-4
2.2 BayCom to Make Merger Consideration Available A-4
2.3 Exchange of Shares A-5
ARTICLE III  REPRESENTATIONS AND WARRANTIES OF TIG A-7
3.1 Corporate Organization A-7
3.2 Capitalization A-8
3.3 Authority; No Violation A-9
3.4 Consents and Approvals A-10
3.5 Reports A-10
3.6 Financial Statements and Internal Controls A-10
3.7 Broker’s Fees A-12
3.8 Absence of Certain Changes or Events A-12
3.9 Legal Proceedings A-12
3.10 Taxes and Tax Returns A-12
3.11 Employees A-13
3.12 Compliance with Applicable Law A-16
3.13 Certain Contracts A-17
3.14 Agreements with Regulatory Agencies A-18
3.15 Risk Management Instruments A-18
3.16 Environmental Matters A-18
3.17 Investment Securities, and Commodities A-19
3.18 Title A-19
3.19 Intellectual Property A-20
3.20 Related Party Transactions A-20
3.21 State Takeover Laws A-21
3.22 Reorganization A-21
3.23 Opinion of Financial Advisor A-21
3.24 TIG Information A-21
3.25 Loan Portfolio A-21
3.26 Insurance A-22
3.27 Fiduciary Business A-22
3.28 Books and Records A-22
3.29 Indemnification A-23
3.30 Regulatory Approval A-23
3.31 Completeness of Representations A-23

 

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ARTICLE IV  REPRESENTATIONS AND WARRANTIES OF BAYCOM A-23
4.1 Corporate Organization A-23
4.2 Capitalization A-24
4.3 Authority; No Violation A-25
4.4 Consents and Approvals A-25
4.5 Reports A-25
4.6 Financial Statements and Internal Controls A-26
4.7 Absence of Certain Changes or Events A-27
4.8 Legal Proceedings A-27
4.9 Taxes and Tax Returns A-28
4.10 Employees A-28
4.11 SEC Reports A-29
4.12 Compliance with Applicable Law A-29
4.13 Agreements with Regulatory Agencies A-30
4.14 Risk Management Instruments A-30
4.15 Environmental Matters A-30
4.16 Investment Securities and Commodities A-31
4.17 Title A-31
4.18 Intellectual Property A-31
4.19 Reorganization A-32
4.20 BayCom Information A-32
4.21 Loan Portfolio A-32
4.22 Insurance A-33
4.23 Regulatory Approval A-33
4.24 No Financing Contingencies A-33
4.25 Pro Forma Capital Requirements A-33
4.26 Completeness of Representations A-34
ARTICLE V  COVENANTS RELATING TO CONDUCT OF BUSINESS A-34
5.1 TIG Conduct of Businesses Prior to the Effective Time A-34
5.2 TIG Forbearances A-34
5.3 BayCom Conduct of Business Prior to the Effective Time A-37
5.4 BayCom Forbearances A-38
ARTICLE VI  ADDITIONAL AGREEMENTS A-38
6.1 Regulatory Matters A-38
6.2 Access to Information; Current Information A-40
6.3 Shareholder Meeting A-41
6.4 Reservation of Common Stock; Nasdaq Listing A-41
6.5 Employee Matters A-42
6.6 Officers’ and Directors’ Tail Insurance; Indemnification A-43
6.7 No Solicitation A-44
6.8 Notification of Certain Matters A-46
6.9 Correction of Information A-46
6.10 Integration A-46
6.11 Coordination; Integration A-46
6.12 Delivery of Agreements A-46
ARTICLE VII  CONDITIONS PRECEDENT A-47
7.1 Conditions to Each Party’s Obligations A-47
7.2 Conditions to Obligations of BayCom A-47
7.3 Conditions to Obligations of TIG A-48
ARTICLE VIII  TERMINATION AND AMENDMENT A-49
8.1 Termination A-49
8.2 Effect of Termination A-50
8.3 Fees and Expenses A-50

 

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8.4 Termination Fee A-50
8.5 Amendment A-51
8.6 Extension; Waiver A-51
ARTICLE IX  GENERAL PROVISIONS A-51
9.1 Closing A-51
9.2 Nonsurvival of Representations, Warranties and Agreements A-52
9.3 Notices A-52
9.4 Interpretation A-53
9.5 Counterparts A-53
9.6 Entire Agreement A-53
9.7 Governing Law, Jurisdiction, Venue and Construction A-54
9.8 Publicity A-54
9.9 Assignment; Third Party Beneficiaries A-54
9.10 Specific Performance; Time of the Essence A-54
9.11 Disclosure Schedule A-55
9.12 Waiver of Jury Trial A-55
     
SIGNATURES A-56

 

EXHIBITS

 

Exhibit A Form of Voting Agreement
Exhibit B Form of Non-Solicitation, Non-Competition and Non-Disclosure Agreement
Exhibit C Form of Resignation, Non-Competition and Non-Disclosure Agreement
Exhibit D Form of Walker Resignation, Non-Competition and Non-Disclosure Agreement
Exhibit E Form of Bank Agreement of Merger
Exhibit F Third Party Consents

 

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INDEX OF DEFINED TERMS

 

Definition   Page
     
Acceptable Confidentiality Agreement   45
Acquisition Proposal   45
Agreement   1
Bank Merger   4
Bank Merger Certificates   4
Bank Plan of Merger   4
BayCom   1
BayCom Articles   23
BayCom Benefit Plans   28
BayCom Bylaws   23
BayCom Common Stock   2
BayCom Disclosure Schedule   23
BayCom ERISA Affiliate   28
BayCom Leased Properties   31
BayCom Owned Properties   30
BayCom Real Property   31
BayCom Regulatory Agreement   30
BayCom Reports   29
BayCom Restricted Stock Award   24
BayCom Stock Plans   24
BayCom Subsidiary   24
BHC Act   7
California Secretary of State   1
Cancelled Shares   2
Cash Consideration   2
CBC   10
CCAA   1
CDB   10
CFC   1
CGCL   1
Change in Recommendation   45
Claim   44
Closing   51
Closing Date   51
Code   1
Colorado Secretary of State   1
Confidentiality Agreement   41
Covered Employees   42
CRA   23
DBO   10
Disclosure Schedule   55
Dissenting Shares   3
DPC Common Shares   2
Effective Time   1
Enforceability Exception   9
Environmental Laws   18
ERISA   13
Exchange Act   20
Exchange Agent   4
Exchange Agent Agreement   4

 

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Exchange Fund   4
Exchange Ratio   2
Existing Certificate   2
FDIC   8
Federal Reserve Board   10
FHLB   8
Form S-4   10
FSB   4
FSB Call Reports   11
GAAP   7
Governmental Entity   10
Intellectual Property   19
IRS   12
IT Assets   20
Letter of Transmittal   5
Liens   9
Loan Package   36
Loans   21
Material Adverse Effect   7
Merger   1
Merger Consideration   2
Monetary Liens   19
Multiemployer Plan   14
Multiple Employer Plan   14
Multiple Employer Welfare Arrangement   14
Nasdaq   9
Non-Compete Agreement   1
Parties   1
Permitted Encumbrances   19
Previously Disclosed   55
Proxy Statement   10
PTO   42
Regulatory Agencies   10
Requisite Regulatory Approvals   47
Sarbanes-Oxley Act   26
SEC   10
Securities Act   8
SRO   10
Subsidiary   7
Superior Proposal   46
Surviving Bank   4
Surviving Company   1
Takeover Statutes   21
Tax