Exhibit 99.2
Dated: June 13, 2003
Sovereign to Acquire First Essex Bancorp, Inc.
Philadelphia and Andover, Mass., June 13 . . . Sovereign
Bancorp, Inc. ("Sovereign") (NYSE: SOV), parent company of
Sovereign Bank, and First Essex Bancorp, Inc. ("First Essex")
(NASDAQ: FESX) jointly announced today the execution of a
definitive agreement (the "Agreement") for Sovereign to acquire
First Essex. First Essex is a $1.8 billion bank holding company
headquartered in Andover, Massachusetts, which operates 20
community banking offices throughout 2 counties in Massachusetts
and 3 counties in southern New Hampshire.
The transaction, valued at approximately $400 million, will
produce a top 3 market share position in all of the communities
First Essex operates in Massachusetts and a top 4 market share
position in several New Hampshire communities. Additionally,
Sovereign will add a solid small business and middle market
corporate banking team, which currently manages a portfolio of
$433 million in loans throughout First Essex's footprint.
"We are very excited about this deal. This deal represents our
best opportunity to expand and attract new customers in these
markets. This deal achieves a #1 market share in two of
Sovereign's identified desirable markets, Lowell, MA and Salem,
NH. First Essex has a very similar business strategy to
Sovereign, and is run by an excellent management team,"
commented Jay S. Sidhu, Sovereign's Chairman and Chief Executive
Officer. "The acquisition meets all of the criteria we have
recently stated that must be present in any acquisition: it is
accretive to incremental EPS (defined as proforma earnings
divided by net new shares issued), although not large enough to
change our corporate EPS targets; it is accretive to certain
capital ratios, other capital ratios will be restored within one
quarter; it is an in-market, fill-in transaction, small in size
relative to Sovereign and will not distract our company from its
2003 and 2004 operating targets; and it complements our
strengths as a deposit gathering franchise and as a solid small
business and middle market corporate bank," continued Sidhu.
"We are very pleased to join with an organization that will
continue to serve our employees, customers and communities with
the same care and commitment characteristic of First Essex,"
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stated Leonard A. Wilson, First Essex Chairman and Chief
Executive Officer. "I have followed Jay Sidhu and Sovereign for
years and have been very impressed with their business strategy
and execution. As a competitor, I have also been impressed with
their New England team led by John Hamill and Joe Campanelli who
I have worked with in the past. This is one of the reasons we
decided to do this transaction with Sovereign. We are also
pleased to be able to offer our stockholders an opportunity to
exchange their First Essex stock into Sovereign stock or cash to
best manage their own personal finances," Wilson concluded.
Under the terms of the agreement, stockholders of First Essex
will be entitled to receive $48.00 in cash, 2.9250 shares of
Sovereign common stock, or a combination thereof per share,
subject to election and allocation procedures which are intended
to ensure that, in the aggregate, 50% of the First Essex shares
will be exchanged for Sovereign common stock and 50% will be
exchanged for cash, except in certain circumstances. The
transaction is valued at 256% of First Essex book value per
share and 286% of tangible book value per share at March 31,
2003 or 18.5 times LTM earnings and 16.3 times consensus
estimated earnings per share of First Essex for 2004. Including
fully phased in cost savings, the transaction value is 11.8
times 2004 earnings.
The merger is subject to approval by various regulatory agencies
and First Essex stockholders. Sovereign anticipates that the
transaction will close in the first quarter of 2004. Sandler
O'Neill & Partners, L.P. and Foley Hoag LLP are acting as
advisors for First Essex. Stevens & Lee is acting as legal
counsel for Sovereign.
A presentation that reviews this transaction is available at
www.sovereignbank.com =>Investor Relations=>News=>Corporate
Presentations.
Sovereign Bancorp, Inc., ("Sovereign") (NYSE: SOV - News),
headquartered in Philadelphia, Pennsylvania, is the parent
company of Sovereign Bank, a $41 billion financial institution
with 525 community banking offices, nearly 1,000 ATMs and about
8,000 team members in Connecticut, Massachusetts, New Hampshire,
New Jersey, New York, Pennsylvania, and Rhode Island. Sovereign
Bank is one of the top 25 largest banking institutions in the
United States. For more information on Sovereign Bank, visit
www.sovereignbank.com or call 1-877-SOV-BANK.
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First Essex Bancorp, Inc. Andover, Massachusetts is the holding
company of First Essex Bank of Lawrence, Massachusetts. First
Essex Bank has eleven full-service banking offices in northern
Massachusetts and nine in southern New Hampshire. At March 31,
2003 the Company had total assets of $1.8 billion and deposits
of $1.4 billion. Deposits at First Essex Bank are insured up to
the applicable limits by the Federal Deposit Insurance
Corporation (FDIC), and all deposits in excess of the FDIC
limits are insured in full by the additional coverage provided
by the Depositors Insurance Fund (DIF). First Essex investors
seeking more information on this transaction may contact William
Burke, Chief Financial Officer, at 978-623-8003.
Note:
This press release contains financial information determined by
methods other than in accordance with U.S. Generally Accepted
Accounting Principles ("GAAP"). Sovereign's management uses the
non-GAAP measures of Operating Earnings and Cash Earnings in
their analysis of the company's performance. These measures
typically adjust net income determined in accordance with GAAP
to exclude the effects of special items, including significant
gains or losses that are unusual in nature or are associated
with acquiring and integrating businesses, and certain non-cash
charges. Operating earnings in 2003 and beyond represents net
income adjusted for the after-tax effects of merger- related and
integration charges and the loss on early extinguishment of
debt. Cash earnings are operating earnings adjusted to remove
the after-tax effect of amortization of intangible assets and
stock-based compensation expense associated with stock options,
restricted stock, bonus deferral plans and ESOP awards. Since
certain of these items and their impact on Sovereign's
performance are difficult to predict, management believes
presentations of financial measures excluding the impact of
these items provide useful supplemental information in
evaluating the operating results of Sovereign's core businesses.
These disclosures should not be viewed as a substitute for net
income determined in accordance with GAAP, nor are they
necessarily comparable to non-GAAP performance measures, which
may be presented by other companies.
This press release contains statements of Sovereign's
strategies, plans, and objectives, as well as estimates of
future operating results for 2003 and beyond for Sovereign
Bancorp, Inc. as well as estimates of financial condition,
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operating efficiencies and revenue generation. These statements
and estimates constitute forward-looking statements (within the
meaning of the Private Securities Litigation Reform Act of
1995), which involve significant risks and uncertainties.
Actual results may differ materially from the results discussed
in these forward-looking statements. Factors that might cause
such a difference include, but are not limited to, general
economic conditions, changes in interest rates, deposit flows,
loan demand, real estate values and competition; changes in
accounting principles, policies, or guidelines; changes in
legislation or regulation; and other economic, competitive,
governmental, regulatory, and technological factors affecting
the Company's operations, pricing, products and services.
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