EXHIBIT 99.1
Sovereign Bancorp News Release
For Immediate Release CONTACT:
Dennis S. Marlo 610-320-8437
Internet: DMARLO@Sovereignbank.com
September 8, 1998
Mark R. McCollom 610-208-6426
Wendel T. Breithaupt 609-844-3100
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Corporate Headquarters: 1130 Berkshire Blvd, Wyomissing, PA
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SOVEREIGN to ACQUIRE PEOPLES BANCORP, INC.
WYOMISSING, PA...Sovereign Bancorp, Inc. ("Sovereign")
(NASDAQ/NMS:SVRN), parent company of Sovereign Bank, and Peoples
Bancorp Inc. ("Peoples") (NASDAQ/TSBS), jointly announced today
the execution of a definitive agreement ("Agreement") for
Sovereign to acquire Peoples. Peoples is a $875 million bank
holding company headquartered in Lawrenceville, New Jersey whose
principal operating subsidiary operates 14 community banking
offices in Mercer, Burlington, and Ocean counties, New Jersey.
Sovereign anticipates that this transaction will be about 25%
accretive to tangible book value, 10% accretive to GAAP book and
1.25% accretive to capital, while also accretive to earnings in
1999.
The terms of the Agreement call for a fixed exchange, without
collars, of 0.80 shares of Sovereign common stock for each
outstanding share of Peoples common stock. If the transaction
would have closed on Friday, September 4, 1998, based on
Sovereign's closing price, Peoples' shareholders would have
received approximately $400 million in value of Sovereign common
stock. Peoples may elect to terminate the transaction at the
closing, if Sovereign's common stock price decreases below $11.00
per share and such decrease exceeds, by 10% or more, the decrease
of price derived form a peer group index. The pricing reflects
about 116% of stated book value and about a 12% deposit premium.
The merger is subject to approval by various regulatory agencies
and Peoples' shareholders. Sovereign anticipates that the
transaction will close early in the second quarter of 1999 and
will be accounted for as a pooling-of-interests. Sovereign also
anticipates recording a one-time after tax merger-related charge
of about $13 million at the closing of the transaction.
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Peoples is a highly capitalized, clean institution with an
excellent track record. At June 30, 1998, Peoples had $340
million in equity and a ROA of about 1.30%. Peoples excess
capital also provides Sovereign with an equity capital that may
have been needed for the purchase of the CoreStates/First Union
branches and related assets and liabilities. Sovereign Bancorp's
pro forma tangible equity to asset ratio, after giving effect to
the Peoples transaction is expected to be about 5.255 and its
GAAP equity to asset ratio will be in excess of 7.00%.
In addition to providing capital and significantly increasing
book value, the acquisition of Peoples is expected to add to
Sovereign's franchise value and pro forma earnings. The fourteen
Peoples branches are strategically located in the Princeton-
Lawrenceville-Trenton markets and Burlington and Ocean counties
plus provide a meaningful presence in three affluent central New
Jersey counties. After the completion of the transaction,
Sovereign's deposit market share would rank #2 in Mercer county,
#3 in Ocean county, and #6 in Burlington county.
Peoples is expected to add $500 million to Sovereign's total
deposits and increase Sovereign's loan portfolio by $430 million.
Over 23% of the loan portfolio consists of loans to small and
medium-size businesses, while another 13% consists of consumer
loans. The loan portfolio aligns with Sovereign's mission of
targeting small and medium-sized businesses as well as retail
lending. In addition, Peoples' conservative asset quality
philosophy mirrors Sovereign's focus on this critical success
factor. Peoples maintains superior asset quality with a non-
performing assets to total assets ratio of only 0.55% at June 30,
1998. Peoples also operates a profitable full service trust
operation that Sovereign plans to expand throughout the market
area.
"The addition of Peoples if perfectly timed with our acquisition
of $2.1 billion of deposits and $800 million of loans from
CoreStates/First Union, making the combined acquisitions
accretive to both GAAP and cash earnings. It also significantly
improves our pro forma capital ratios and transforms the balance
sheet," stated Jay S. Sidhu, Sovereign's President and Chief
Executive Officer. "Pro forma for all pending acquisitions, our
capital ratio is expected to be approximately 7.00% by the end of
1998. We expect the combined Peoples/CoreStates transaction to
be accretive to Sovereign's earnings following the closing of the
transactions," Sidhu continued.
"We are very excited about our merger with Sovereign and this
strategic alliance will provide our customers the benefit of
expanded products and services offered by a larger bank while
retaining the community bank culture", said Wendell T.
Breithaupt, President and CEO of Peoples Bancorp. "We have very
similar styles and an identical commercial bank focus",continued
Breithaupt.
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Mr. Breithaupt has many years of banking experience in the New
Jersey market and was very instrumental in the growth and
performance of Peoples. Mr. Breithaupt will occupy a key
executive leadership position in New Jersey with responsibilities
for mergers and acquisitions in New Jersey, as well as overall
executive management of New Jersey operations.
After giving pro forma effect to the Peoples acquisition,
Sovereign will have assets totaling $21.9 billion, deposits
totaling $12.8 billion, loans of about $12.0 billion and operate
approximately 300 community banking offices throughout the tri-
state network.
On September 4, 1998, Sovereign completed its acquisition of 93
branches from CoreStates/First Union. This acquisition added
about $2.1 billion of deposits and approximately $800 million of
commercial and consumer loans to Sovereign's franchise.
Sovereign is a pro forma $21.9 billion bank holding company and
the third largest bank headquartered in Pennsylvania, with
approximately 300 community banking offices servicing eastern
Pennsylvania, northern Delaware, and New Jersey. Sovereign's
closing price of its common stock on Friday, September 4, 1998
was $13.1250 per share. <PAGE 3>