HUDSON RIVER BANCORP, INC. AND COHOES BANCORP, INC.
TO COMBINE IN MERGER OF EQUALS
Hudson River Bancorp, Inc. (Nasdaq-NNM: HRBT) ("Hudson River") and
Cohoes Bancorp, Inc. (Nasdaq-NNM: COBI) ("Cohoes"), two of the largest Capital
District-based savings banks in the Greater Albany area, announced today a
definitive agreement to merge their respective holding companies and banking
operations in a merger of equals to form one of the strongest savings banks in
the region. The combined banking operations will have approximately $1.9 billion
in total assets and a market capitalization in excess of $230 million. Upon
completion of the merger, the combined holding company will be called
Cohoes-Hudson Bancorp, Inc. ("Cohoes-Hudson") and the bank will be called Hudson
River Bank & Trust Company. The combined banking operation will have a total of
38 branches throughout the counties of Columbia, Rensselaer, Albany,
Schenectady, Dutchess, Greene and Warren.
The agreement provides that the common shareholders of Cohoes will
receive 1.185 shares of Hudson River common stock for each Cohoes common share
in a tax-free exchange. Hudson River will issue approximately 9.4 million shares
of stock to complete the merger, which will be accounted for under the purchase
method of accounting. Following the merger, the former Hudson River and Cohoes
shareholders will each own approximately 62% and 38% of the combined company,
respectively. The merger, which has been approved by the Boards of Directors of
both Hudson River and Cohoes, is valued at approximately $87.3 million based on
the market price of Hudson River common stock as of the close of trading on
April 24, 2000. Based on the April 24, 2000 market price of Cohoes common stock,
the exchange ratio results in an implied price for each Cohoes share of
approximately $11.04.
It is anticipated that the merger will result in annual pre-tax cost
savings of approximately $3.4 million by the end of the combined companies'
first full year of operations, or approximately 7% of the combined companies'
operating costs, and will create an expanded revenue base. It is currently
anticipated that all branches will remain open post-merger.
The transaction is expected to be immediately accretive to both
companies' earnings per share in 2000. This will be accomplished as a
consequence of the synergies of consolidating operations, without regard to
revenue enhancements. Management believes that this transaction should
significantly enhance the combined company's future earnings per share growth
rate.
Cohoes-Hudson's new Board of Directors will be comprised of equal
numbers of directors from both companies. Executive management positions will be
filled by Harry Robinson of Cohoes, Chairman and Chief Executive Officer, Carl
Florio of Hudson River, President, Richard Ahl of Cohoes, Chief Operating
Officer, Timothy Blow of Hudson River, Chief Financial Officer and Sidney
Richter of Hudson River, Senior Lending Officer. Harry L. Robinson, the
President and Chief Executive Officer of Cohoes, will serve as Chairman for six
years and Chief Executive Officer for an initial term of three years. After the
third anniversary of the effective date of the merger, a transition will occur
such that Carl A. Florio and Harry L. Robinson will be co-Chief Exectuive
Officers for six months, after which time Mr. Florio will be the sole Chief
Executive Officer. The transition phase is expected to occur over a six-month
period.
Carl A. Florio, Hudson River's President and Chief Executive Officer,
said, "We believe the transaction will be beneficial to the shareholders of both
institutions. Hudson River and Cohoes complement each other extraordinarily
well. The addition of Cohoes's 21-office branch network supplements our recent
acquisition of Schenectady Federal Savings and its 4 branch offices in
Schenectady County and further enhances our strategy for market expansion and
product diversification. Our proven retail strategy and our products and
services should add significant value to Cohoes's extensive retail network."
Harry L. Robinson, President and Chief Executive Officer of Cohoes,
summarized the announcement, "This transaction fits our existing strategy
perfectly. We had embarked on a series of efforts designed to strengthen
Cohoes's retail franchise. As a combined entity, we will be able to accelerate
that process substantially. The transaction preserves the earnings momentum and
capital growth that existed for us before the merger."
Both men observed that the combined company will be well capitalized,
with an equity to asset ratio in excess of 15%. The combined company will
continue Hudson River's strategies of market expansion while focusing on
integrating the products and services offered by both companies throughout the
branch network. In addition to market expansion, the structure of the
transaction using the purchase method of accounting will leave intact the
combined companies' ability to enhance shareholder value through stock
repurchase programs.
In connection with the merger agreement, Hudson River and Cohoes have
granted each other options to purchase up to 19.9% of the outstanding shares of
each other's common stock under certain circumstances in the event the
transaction is terminated.
The merger is expected to be completed before the end of calendar 2000,
subject to regulatory approval and ratification by Hudson River and Cohoes
shareholders.
Hudson River Bancorp, Inc., Hudson, New York, with 17 branch offices,
had $1.1 billion in assets and $749 million in deposits as of March 31, 2000.
Cohoes Bancorp, Inc., Cohoes, New York, with 21 branch offices, had
$704 million in assets and $492 million in deposits as of March 31, 2000.
FORWARD LOOKING STATEMENTS
When used in this press release or other public shareholder
communications, or in oral statements made with the approval of an authorized
executive officer, the words or phrases "will likely result," "are expected to,"
"will continue," "is anticipated," "estimate," "project," "significantly" or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. The Company
wishes to caution readers not to place undue reliance on any forward-looking
statements, which speak only as of the date made, and to advise readers that
various factors including regional and national economic conditions, changes in
levels of market interest rates, credit risks of lending activities and
competitive and regulatory factors could affect the Bank's financial performance
and could cause the Company's actual results for future periods to differ
materially from those anticipated or projected.
The Company does not undertake, and specifically disclaims, any
obligation to publicly release the result of any revisions which may be made to
any forward-looking statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.
Hudson River and Cohoes will be filing relevant documents concerning
the merger with the Securities and Exchange Commission ("SEC"). WE URGE
INVESTORS TO READ THESE DOCUMENTS BECAUSE THEY CONTAIN IMPORTANT INFORMATION.
Investors will be able to obtain the documents free of charge at the SEC's
website, www.sec.gov. In addition, documents filed with the SEC by Cohoes will
be available free of charge from the Secretary of Cohoes at 75 Remsen Street,
Cohoes, New York 12047, telephone (518) 233-6500. Documents filed with the SEC
by Hudson River will be available free of charge from the Secretary of Hudson
River at One Hudson City Centre, Hudson, New York 12534, telephone (518)
828-4600. INVESTORS SHOULD READ THE JOINT PROXY STATEMENT/PROSPECTUS CAREFULLY
BEFORE MAKING A DECISION CONCERNING THE MERGER.
Cohoes and Hudson River and their respective directors and executive
officers may be deemed to be participants in the solicitation of proxies to
approve the Merger. INFORMATION ABOUT THE PARTICIPANTS MAY BE OBTAINED FROM THE
RESPECTIVE COMPANIES.
================================================================================
Hudson River Bancorp, Inc.
&
Cohoes Bancorp, Inc.
Synopsis of Merger
April 25, 2000
================================================================================
These investor materials contain forward-looking statements that involve
risk and uncertainty. It should be noted that a variety of factors could cause
the compined company's acutal results and experience to differ materially form
the anticipated results or other expectations expressed in the combined
company's forward-looking statements.
The risks and uncertainties that may affect the operations, performance,
development, growth projections and results of the combined company's business
include, but are not limited to, the growth of the economy, interest rate
movements, timely development by the combined company of technology enhancements
for its products and operating systems, the impact of competitive products,
services and pricing, customer based requirements, Congressional legislation,
acquisition cost savings and revenue enhancements and similar matters. Readers
of this report are cautioned not to place undue reliance on forward-looking
statements which are subject to influence by the named risk factors and
unanticipated future events. Actual results, accordingly, may differ materially
from management expectations.
[Map of Combined Market Area of Cohoes Savings Bank and Hudson River Bank and
Trust Company]
TRANSACTION BENEFITS
================================================================================
STRATEGIC:
- Creates a dominant franchise with assets of approximately $1.8
billion and a $230mm market capitalization
- Expands core market area and creates critical mass in upstate New
York with a strong local presence
- Enhances ability to compete and widens product range through a
broadened customer base with similar demographics
- Provides an additional platform for further growth
FINANCIAL:
- Significantly accretive to earnings
- Strong capital position
- Purchase acct. provides flexibility to maintian stock repurchases
- Increases liquidity
- Identified cost savings of approximately $3.6 million
- Revenue enhancements and/or deployment of excess capital/
incremental cash will further enhance financial benefits
DESCRIPTION OF HUDSON RIVER (HRBT)
================================================================================
- - Headquartered in Hudson, NY, the company provides full-service banking, as
well as investment management, trust and commercial services through its
subsidiary, Hudson River Bank & Trust Company. The company operates 17
branch offices.
- - A summary of the bank's balance sheet and earnings performance as of March
31, 2000 is as follows:
(in thousands)
Total Assets: $1,149,547
Loans, net: 804,247
Securities: 255,549
Deposits: 748,563
Total Equity: 200,723
Equity to Assets: 17.46%
LTM Earnings: 9,526
LTM EPS: $.65
LTM ROE: 5.09%
DESCRIPTION OF COHOES BANCORP (COHB)
================================================================================
- - Unitary holding company headquartered in Cohoes, NY. Its principal
subsidiary, Cohoes Savings Bank, operates 21 banking locations throughout
the NY upstate region.
- - A summary of the bank's balance sheet and earnings performance as of March
31, 2000 is as follows:
(in thousands)
Total Assets: $704,414
Loans, net: 577,442
Securities: 97,321
Deposits: 491,508
Total Equity: 121,136
Equity to Assets: 17.20%
LTM Earnings: $ 6,056
LTM EPS: $ 0.72
LTM ROE: 4.58%
STRONG NY MARKET SHARE
================================================================================
Deposit Data & Market Share Information is as of June 30, 1999
Source: SNL Securities, L.P.
County Institution Total Deposits ($000) Market Share %
- ----------- --------------- --------------------- --------------
Albany HRBT $ 38 .62%
COHB 321 5.32
------ -----
Pro Forma 359 5.94
Columbia HRBT 457 59.22
Dutchess HRBT 24 .84
Greene COHB 1 .17
Rensselaer HRBT 63 4.08
COHB 57 3.71
------ -----
Pro Forma 119 7.79
Saratoga COHB 48 2.87
Schenectady HRBT 176 8.51
COHB 24 1.18
------ -----
Pro Forma 200 9.69
Warren COHB 7 .71
TRANSACTION DESCRIPTION - TERM SHEET
================================================================================
Exchange Ratio: Fixed exchange ratio of 1.185 shares of HRBT for each COHB
share.
Value: COHB shareholders receive $11.04, based on HRBT's closing
stock price of $9.31 through 4/24/00. The aggregate offer is
approximately $87.3 million.
Ownership Profile: HRBT 62% / COHB 38%
Management: Chairman & CEO: Robinson for next 36 mos.
President: Florio
On the third anniversary, CEO position shared between
Robinson and Florio, for a six month transition. Then
Florio is sole CEO and Robinson continues as chairman.
BOD Representation: 6 HRBT members / 6 COHB members
Accounting/
Stock Percentage: Purchase Accounting; 100% Stock
Stock Purchase
Option: Reciprocal standard 19.9% Agreements
STRONG BALANCE SHEET COMPOSITION
================================================================================
Estimated March 31, 2000 Pro Forma Balance Sheet
($ in millions)
Estimated
HRBT COHB Pro Forma
----------- ---------- -----------
Assets $1,149 $704 $1,853
Loans 804 577 1,381
Investments 255 97 352
Deposits 749 491 1,240
Borrowings 151 80 231
Tangible Capital 189 121 300
App. Market Capitalization 146 84 230
Borrowings/Assets 13.14% 11.36% 12.40%
Tangible Capital/Assets 16.62% 17.20% 15.88%
LLR Loans 2.38% 1.84% 1.48%
ATTRACTIVE EPS ACCRETION
================================================================================
($ in millions, except for per share data)
Est. 2002
-------------
HRBT Estimated Net Income ($ .99)(1) $11.8
COHB Estimated Net Income ($1.11)(1) 6.9
-----
Total Estimated Net Income 18.7
After-Tax Cost Savings ($3.6 Pre-Tax) 2.3
After-Tax Earnings on Incremental Cash/ Capital 0
Revenue Enhancements 0
Purchase Accounting Adjustments (2) 2
-----
Pro Forma Net Income $23.0
=====
Estimated Pro Forma FD Shares 23.3
-----
Pro Forma EPS $0.98
=====
HRBT EPS Accretion 13%
COHB EPS Accretion 16%
(1) I/B/E/S estimates unavailable for fiscal year 2002. Based on managements'
expectations.
(2) Includes amortization of negative goodwill generated in transaction plus
any balance sheet mark to markets.
COST SAVING ANALYSIS
================================================================================
Non Interest Expense (In Thousands)
- -------------------------------- --------------
Salary & Benefits $1,669
Occupancy Expense 104
ESOP Expense 616
Other Operating Expenses 1,212
------
Total $3,601
Estimated Pre-tax Merger and Restructuring Charges of $6mm
Note: Full phase in expected in 2001.
REVENUE ENHANCEMENT OPPORTUNITIES
================================================================================
- - Incremental earnings potential through ability to leverage excess capital
- - Trust services
- - Expansion of small business lending
- - Cash management services
- - Expanded legal lending limit