Sound Federal Bancorp and Peekskill Financial Corporation Agree to
Merge
MAMARONECK, N.Y. and PEEKSKILL, N.Y.--(BUSINESS WIRE)--February 17,
2000--Sound Federal Bancorp (Nasdaq National Market: "SFFS") ("Sound Federal" or
the "Company"), the holding company for Sound Federal Savings and Loan
Association (the "Bank"), and Peekskill Financial Corporation (Nasdaq National
Market: "PEEK") ("Peekskill"), announced today that they have signed a
definitive merger agreement to combine their institutions. As part of the
transaction, Peekskill shareholders will receive $22 per share in cash which
represents 149% of Peekskill's book value per share and 26 times Peekskill's
trailing four quarters diluted earnings per share. The deal is valued at
approximately $41.7 million, including the "in-the-money" portion of outstanding
stock options. Sound Federal anticipates that the transaction will be accretive
to earnings within the first year and will be accretive to cash earnings per
share immediately. Sound Federal currently has three branch locations in
Westchester County and one each in Rockland County, New York and Fairfield
County, Connecticut. Peekskill, through its subsidiary, First Federal Savings
Bank, operates three branches in Northern Westchester County and has total
assets of $212.7 million and total deposits of $152.7 million. On a pro-forma
basis, Sound Federal will have approximately $500.0 million in assets and $420.0
million in deposits.
Bruno J. Gioffre, Sound Federal's Chairman of the Board commented, "This
transaction enables us to grow our franchise by extending our market area to
Northern Westchester County - an area we are familiar with and an area in which
we already have some lending activity. Most importantly, we believe this
transaction will be accretive to earnings by the end of the first year and will
be accretive to cash earnings immediately. This merger also allows us to
leverage the capital that was raised in our common stock offering in 1998. Sound
Federal and First Federal have similar franchises and that will make this
transition an easy one. We both use the same data processing service bureau and
our products and services are closely matched. In addition, we currently
advertise in media that cover the Northern Westchester area so we can leverage
our marketing dollars very effectively. The Northern Westchester area is a fast
growing region and Peekskill's branch locations provide us with a platform to
extend our reach into Southern Putnam county - another rapidly growing market. I
believe that the Board and Management of Peekskill have done a great job for
their stockholders, customers and employees and I would like to thank them for
this opportunity to continue to do the same for ours."
Richard P. McStravick, the Company's Chief Executive Officer, added, "Sound
Federal Savings has operated in Westchester County as a thrift institution for
over 109 years. Our operating philosophy has always been that we are small
enough to know your name and big enough to fill your needs. With the help of
Peekskill's Board of Directors, management and employees, we can continue to
provide the level and quality of service that their customers expect. Our goal
is to make this transition transparent to our new customers. As always, I would
like to thank all of our customers- new and existing- for allowing us to be your
bank."
Eldorus Maynard, Peekskill's Chairman and Chief Executive Officer, stated,
"This transaction is a win-win-win situation. Our stockholders are getting an
excellent price, $22 per share is an 83% increase over yesterday's closing
price. Sound Federal is leveraging its excess capital on a deal which is
expected to be accretive to earnings by the end of the first year, and customers
of both companies will have access to additional services in more locations.
Sound's conservative approach and customer oriented management style will enable
the new entity to continue our community bank atmosphere. We look forward to
being a part of Sound Federal's organization."
The Company expects to complete the acquisition in the third calendar
quarter of 2000.
This press release contains certain forward-looking statements consisting
of estimates with respect to the financial condition, results of operations and
business of the Company, the Bank and Peekskill. These estimates are subject to
various factors that could cause actual results to differ materially from these
estimates. Such factors include (i) the effect that an adverse movement in
interest rates could have on the Bank's net interest income, (ii) customer
preferences, (iii) national and local economic and market conditions, (iv)
higher than anticipated operating expenses and (v) a lower level of or higher
cost for deposits than anticipated. The Company disclaims any obligation to
publicly announce future events or developments that may affect the
forward-looking statements herein.
Contact:
Peekskill Financial Corporation
For further information contact:
William J. LaCalamito
President
(914) 737-2777
or
Sound Federal Bancorp
For further information contact:
Anthony J. Fabiano
Vice President & Chief Financial Officer
(914) 698-6400