================================================================================
HUDSON RIVER BANCORP, INC.
&
COHOES BANCORP, INC.
Updated Synopsis of Merger
August 2000
================================================================================
These investment materials may contain forward- looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995 that involve
risk and uncertainty. It should be noted that a variety of factors could cause
the combined company's actual results and experience to differ materially from
the anticipated results or 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.
Cohoes and Hudson River do not undertake, and specifically disclaim, any
obligation to publicly release the results 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 has filed a Registration Statement on Form S-4 concerning the
merger with the United States Securities and Exchange Commission which includes
the joint merger proxy statement/prospectus being provided to shareholders. In
addition, Hudson River and Cohoes each intend to file a Solicitation/
Recommendation statement with the United States Securities and Exchange
Commission in response to any Tender Offer Statements to be filed by TrustCo
Bank Corp NY or Ambanc Holding Co., Inc. WE URGE INVESTORS TO READ THESE
DOCUMENTS BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors are currently
able to obtain the Form S-4 Registration Statement and will be able to obtain
the Solicitation/ Recommendation Statement of each company when filed, free of
charge at the SEC's website, www.sec.gov. In addition, documents filed with the
SEC by Cohoes are 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 are available free of charge from the Secretary of
Hudson River at One Hudson City Centre, Hudson, New York 12534, telephone (518)
828-4600.
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 THROUGH
THE SEC'S WEBSITE FROM THE S-4 REGISTRATION STATEMENT FILED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION ON JUNE 26, 2000, as amended.
[GRAPHIC OMITTED: Map of the counties in which Hudson River Bancorp, Inc. and
Cohoes Bancorp, Inc. operate (Warren, Saratoga, Schenectady,
Albany, Renssalaer, Greene, Columbia and Dutchess) showing
approximately where in each county branch offices of Cohoes
Savings Bank or Hudson River Bank & Trust Company exist.]
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 18
branch offices.
- - A summary of Hudson River's balance sheet and earnings performance as of
June 30, 2000 is as follows:
(in thousands)
Total Assets $1,156,187
Loans, net 822,501
Securities 246,805
Deposits 745,032
Total Equity 200,098
Equity to Assets 17.31%
LTM Earnings $ 10,108
LTM EPS $ .71
LTM ROE 4.96%
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 Cohoes' balance sheet and earnings performance as of June 30,
2000 is as follows:
(in thousands)
Total Assets $727,327
Loans, net 600,413
Securities 95,203
Deposits 494,875
Total Equity 121,504
Equity to Assets 16.71%
LTM Earnings $ 6,077
LTM EPS $ 0.76
LTM ROE 4.77%
TRANSACTION DESCRIPTION - TERM SHEET
================================================================================
Exchange Ratio: Fixed exchange ratio of 1.185 shares of HRBT for each COHB
share.
Value: At deal announcement, the COHB shareholders would have
received $11.04, based on HRBT's closing stock price of
$9.31 on 4/24/00. The aggregate offer would have been
approximately $87.3 million. As of 7/31/00, COHB
shareholders would receive $14.22, based on HRBT's closing
price of $12.00 for an aggregate deal value of $113.1
million.
Ownership Profile: HRBT 62% / COHB 38%
TRANSACTION DESCRIPTION - TERM SHEET
================================================================================
Management: Chairman & CEO: Robinson for first 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.
Board of
Directors
Representation: 6 HRBT members / 6 COHB members
Accounting/
Stock Percentage: Purchase Accounting; 100% Stock
Stock Purchase
Option: Reciprocal standard 19.9% Agreements
TRANSACTION BENEFITS
================================================================================
STRATEGIC:
- Creates a dominant franchise with assets of approximately $1.9
billion and a $293 million market capitalization based on recent
market prices
- 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
TRANSACTION BENEFITS
================================================================================
FINANCIAL:
- Significantly accretive to earnings
- Strong capital position
- Purchase accounting provides flexibility to maintain stock
repurchases
- Increases liquidity
- Identified cost savings of approximately $3.6 million. After
working together as a team, we fully expect cost saves to now
exceed $5.5 million, a 53% increase from our original estimates.
- Revenue enhancements and/or deployment of excess capital/
incremental cash will further enhance financial benefits
STRONG NY MARKET SHARE
================================================================================
Deposit Data & Market Share Information is as of June 30, 1999
Source: SNL Securities, L.P.
County Institution Total Deposits ($millions) 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
STRONG BALANCE SHEET COMPOSITION
================================================================================
Estimated June 30, 2000 Pro Forma Balance Sheet ($ in millions)
Estimated
HRBT COHB Pro Forma
----------- ---------- -----------
Assets $1,156 $727 $1,883
Net Loans 823 600 1,423
Investments 247 95 342
Deposits 745 495 1,240
Borrowings 182 96 278
Tangible Capital 189 122 311
STRONG BALANCE SHEET COMPOSITION
================================================================================
Estimated June 30, 2000 Pro Forma Balance Sheet ($ in millions)
Estimated
HRBT COHB Pro Forma
----------- ---------- -----------
App. Market Capitalization $ 183 $ 110 $ 293
Nonperforming Loans $ 13 $ 4 $ 17
Borrowings/Assets 15.74% 13.20% 14.76%
Tangible Capital/Assets 16.35% 16.70% 16.52%
LLR/Loans 2.43% 0.83% 1.78%
LLR/Nonperforming Loans 158% 124% 146%
ATTRACTIVE EPS ACCRETION
================================================================================
($ in millions, except for per share data)
Est. 2002
-------------
HRBT Estimated Net Income ($ .87)(1) $11.8
COHB Estimated Net Income ($1.00)(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) 2.0
-----
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) Based on management 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)
3/31 6/30
------ ------
Salary & Benefits $1,669 $2,968
Occupancy Expense 104 304
ESOP Expense 616 616
Other Operating Expenses 1,212 1,612
------ ------
Total $3,601 $5,500
Estimated Pre-tax Merger and Restructuring Charges of $6mm
Note: Full phase-in expected in 2001.
REVENUE ENHANCEMENT OPPORTUNITIES
================================================================================
- - Incremental earnings potential through ability to leverage excess capital
- - Trust services
- - Expansion of small business lending
- - Cash management services
- - Expanded legal lending limit
TIMING OF TRANSACTION
================================================================================
- - Transition teams for both banks have been formed and are working on
merger-related issues
- - COHB & HRBT Shareholder votes both occur on August 17, 2000
- - Transaction expected to close in early 4th Quarter, 2000
- - Transaction must close by February 28, 2001
================================================================================
Proposal of TrustCo Bank Corp NY
================================================================================
PEER GROUP ANALYSIS:
TRST - A More Than Fully Valued Currency
================================================================================
LTM Dividend
Assets Tang Eq/ Loans/ --------- Efficiency Market Net Int. ------------ Finc'l
Company State Ticker ($M) Assets Assets ROAA ROAE Ratio Cap ($M) Margin Payout Yield Date
----- ------ ------ -------- ------ --------- ---------- -------- -------- ------------ ------
1 BSB Bancorp, Inc. NY BSBN 2,230.9 6.98 78.72 0.82 11.34 43.68 214.1 4.13 55.87 4.91 Mar-00
2 Harleysville National
Corporation PA HNB 1,683.3 7.74 64.73 1.45 17.56 51.56 214.7 4.37 38.22 3.77 Mar-00
3 Main Street Bancorp, Inc. PA MBN 1,544.9 5.06 45.57 0.21 3.84 70.90 92.9 3.36 186.67 6.54 Jun-00
4 National Penn Bancshares,
Inc. PA NPBC 2,309.8 6.32 69.48 1.28 19.07 58.02 364.6 4.27 49.10 4.03 Jun-00
5 Oriental Financial
Group, Inc. PR OFG 1,751.8 7.43 33.48 1.84 24.89 44.04 243.2 3.41 28.04 4.59 Mar-00
6 Sandy Springs Bancorp,
Inc. MD SASR 1,691.6 5.49 52.76 1.15 16.49 57.73 195.6 4.06 41.49 3.73 Jun-00
7 United National Bancorp NJ UNBJ 2,146.4 5.01 59.46 1.19 19.98 58.26 281.3 3.99 50.24 4.85 Jun-00
8 NBT Bancorp, Inc. NY NBTB 2,101.3 7.94 63.85 0.95 11.18 56.21 198.0 4.45 62.79 6.18 Jun-00
9 U.S.B. Holding Co., Inc. NY UBH 1,790.0 5.72 56.49 1.17 19.86 47.94 235.5 3.75 24.57 2.50 Jun-00
Average: 1,916.7 6.41 58.28 1.12 16.02 54.26 226.7 3.98 59.67 4.57
Median: 1,790.0 6.32 59.46 1.17 17.56 56.21 214.7 4.06 49.10 4.59
TrustCo Bank Corp of NY NY TRST 2,367.1 7.44 57.31 1.69 23.45 37.23 668.1 4.41 80.48 4.85 Jun-00
Peer group includes Mid Atlantic Banks with $1.5 billion - $2.5 billion in
assets and a tangible captial ratio between 5% and 8%
Pricing as of 7/28/00
Source: SNL Securities, L.P.
PEER GROUP ANALYSIS:
TRST - A More Than Fully Valued Currency
================================================================================
Price To Average Weekly % owned by YTD
------------------------------- Daily Volume/ -------------------- Price Finc'l
Company State Ticker Book TangBook Qtr EPS LTM EPS Volume Shares Out Insiders Institution Change Date
----- ------ ----- -------- ------- ------- ------- ---------- -------- ----------- ------ ------
1 BSB Bancorp, Inc. NY BSBN 133.08 134.40 9.32 11.66 20,520 1.00 11.02 39.97 5.84 Mar-00
2 Harleysville National
Corporation PA HNB 179.17 180.47 9.42 9.39 5,160 0.29 5.92 13.16 (8.65) Mar-00
3 Main Street Bancorp, Inc. PA MBN 114.63 114.63 NM 29.58 19,060 0.91 10.52 5.93 (13.29) Jun-00
4 National Penn Bancshares,
Inc. PA NPBC 232.73 241.49 12.89 12.81 6,320 0.18 9.50 12.31 (20.90) Jun-00
5 Oriental Financial
Group, Inc. PR OFG 173.02 173.02 10.33 8.88 8,940 0.35 26.02 6.87 (40.79) Mar-00
6 Sandy Springs Bancorp,
Inc. MD SASR 184.97 223.31 11.61 10.87 4,800 0.25 5.34 5.48 (20.60) Jun-00
7 United National Bancorp NJ UNBJ 221.77 235.71 11.78 11.70 10,300 0.34 6.60 21.14 (25.63) Jun-00
8 NBT Bancorp, Inc. NY NBTB 121.55 121.95 15.72 9.99 40,000 1.08 7.59 18.28 (29.03) Jun-00
9 U.S.B. Holding Co., Inc. NY UBH 207.33 208.7 12.18 12.39 2,240 0.07 35.16 3.70 (15.59) Jun-00
Average: 174.25 181.52 11.66 13.03 13,038 0.50 13.07 14.09 (18.74)
Median: 179.17 180.47 11.70 11.66 8,940 0.34 9.50 12.31 (20.60)
TrustCo Bank Corp of NY NY TRST 375.00 375.00 16.45 17.12 36,640* 0.34 13.00 20.03 (6.60) Jun-00
Peer group includes Mid Atlantic Banks with $1.5 billion - $2.5 billion in
assets and a tangible captial ratio between 5% and 8%
Pricing as of 7/28/00
Source: SNL Securities, L.P.
An average of 7,250 shares repurchased are estimated to be related to the
DRIP program
TrustCo Bank Corp NY
Total Shareholder Return Comparison
================================================================================
Total Shareholder Return -
Price To Holding Period Percentage*
Assets ------------------ ---------------------------------------
Company Ticker ($M) Qtr EPS* TangBook* 3 Year 5 Year 10 Year
------ ------ -------- --------- ----------- ------------ --------------
TrustCo Bank Corp of NY TRST 2,367.1 16.28 375.00 20.6 21.4 23.2
BSB Bancorp, Inc. BSBN 2,230.9 8.35 134.40 (4.1) 12.5 20.7
Commerce Bancorp, Inc. CBH 7,464.1 20.98 405.29 22.4 33.5 28.8
Harleysville National
Corporation HNBC 1,683.3 10.45 180.47 5.5 10.3 14.8
M&T Bank Corporation MTN 21,746.1 12.87 291.42 11.1 22.5 23.4
National Penn Bancshares,
Inc. NPBC 2,309.8 12.42 241.49 5.5 12.5 12.5
NBT Bancorp, Inc. NBTB 2,101.3 16.18 121.95 (12.0) 5.7 10.2
North Fork Bancorporation,
Inc. NFB 14,682.7 7.94 279.00 5.0 23.6 16.9
Sandy Springs Bancorp,
Inc. SASR 1,691.6 12.18 223.31 5.8 9.5 31.2
Summit Bancorp SUB 38,985.1 8.13 178.83 16.8 7.4 12.5
United National Bancorp UNBJ 2,146.4 10.58 235.71 7.8 12.9 15.5
Average: 9,504.1 12.02 229.19 6.4 15.0 18.7
Median: 2,270.3 11.38 229.51 5.7 12.5 16.2
Note: Analysis assumes all dividends are reinvested in security
Pricing as of 7/28/00
Analysis review date: Month ending June 30, 2000
Sources: Bloomberg and SNL Securities, L.P.
Analyst View TRST Stock as Fully-Valued
================================================================================
Last 2000 2001 EPS
Firm Name Recommendation Confirmed EPS Est. EPS Est. Growth
- -------------------------- -------------- --------- -------- -------- ------
First Albany Corp. Neutral 02/07/00 0.76 N/A 10.0%
Corinthian Partners Market Perform 02/09/00 0.78 0.85 10.3%
Sandler O'Neill & Partners Market Perform 07/03/00 0.78 0.85 N/A
Average: $0.77 $0.85 10.2%
Median: $0.78 $0.85 10.2%
High: $0.78 $0.85 10.3%
Low: $0.76 $0.85 10.0%
Lack of Acquisition Expertise Presents
High Level of Execution Risk
================================================================================
Acquisition Asset Size (000) Share Buyback
--------------- ---------------- ---------------------------------
1991 Home and City
Savings Bank $864.8 as needed for retail DRIP program
1992 none as needed for retail DRIP program
1993 none as needed for retail DRIP program
1994 none as needed for retail DRIP program
1995 none as needed for retail DRIP program
1996 none as needed for retail DRIP program
1997 none as needed for retail DRIP program
1998 none as needed for retail DRIP program
1999 none as needed for retail DRIP program
2000 Landmark Financial
Corp $ 26.4 as needed for retail DRIP program
Valuation at Extremely High Levels
================================================================================
- - On a GAAP Earnings basis, TRST trades at a 7 multiple premium to a peer
group of regional banks with assets between $1.5 billion and $3.0 billion
- - TRST is also fully valued on a cash earnings basis, trading at a 6-7
multiple premium to regional peer group
- - On a tangible book value basis, TRST (nearly 4 times book) trades at a
2 multiple premium to regional peers (2 times book)
- - The dividend discount valuation suggests that TRST is overvalued given its
premium valuation and earnings growth prospects
Why the TRST Stock Price
will be Under Pressure
================================================================================
- - Deal initially dilutive to TRST EPS
- - 56% cost savings (of 12/31/99 non-interest expense) announced in
Registration Statement carries substantial integration risk
- - Cost savings implies substantial branch closings. Resulting reduced
customer service will create customer retention issues and disruption to
core franchise
- - TrustCo assumes no customer/revenue runoff in pro forma projections
Why COHB/HRBT Makes Sense
================================================================================
1. Accretive to EPS
2. Merger rationale predicated on growth
3. Minimal disruption to customers and core franchise
4. Moderate dividend payout ratio with substantial potential for dividend
growth
5. Excess captial provides for tremendous growth opportunities and share
repurchases
6. Minimal integration risk/branch overlap
7. "Friendly" merger with similar cultures/philosophies
8. Definitive Agreements in place and all strategic/cultural issues in place
9. Creates $2 billion franchise and a "double dip" opportunity
Why TrustCo Offer Does Not Make Sense
================================================================================
1. Initially dilutive to TRST EPS by 6%
2. Substantial book value dilution to both COHB and HRBT shareholders
3. Predicated on cost savings
4. Substantial disruption to customers/core franchise
5. High dividend payout with low potential for growth
6. Growth constrained by lack of capital
7. High integration risk/revenue runoff
8. "Hostile" merger with culture clash
9. 11 conditions and terms specified as a condition for merger
10. Fully valued TRST currency trading at takeout value makes "double dip"
opportunity unlikely
Why the TRST tender will never occur and
how shareholders could lose
================================================================================
- - Tender of enough shares of COHB/HRBT stock so that, after completion of the
offer, TRST owns at least a majority of the shares of COHB stock (on a
fully diluted basis)
- - Stockholders of COHB/HRBT not having approved the merger of COHB/HRBT
- - Requires valid termination of the proposed COHB/HRBT merger agreement
- - Requires valid termination of the HRBT/COHB option agreement
- - Requires execution of a definitive merger agreement between TRST and
COHB or HRBT
- - Receipt of all required regulatory approvals
- - Effectiveness of registration statement filed by TRST
- - TRST being satisfied that the provisions of Section 203 of the
Delaware General Corporation Law do not apply to TRST offer and the
proposed TRST/COHB or TRST/HRBT merger
- - Approval by TRST stockholders of the issuance of TRST stock for either
offer
- - Receipt of an opinion that the tender offer and subsequent merger
constitute a tax-free reorganization
- - Absence of any prospective material adverse change in the sole judgment
of TRST
Why Ambanc Offer Does Not Make Sense
================================================================================
- - Lack of public filing makes deal or pro forma data difficult to ascertain
- - AHCI offer ($16.50 in cash) represents deal value of $129.3 million
- - As of March 31, 2000 AHCI had assets of $721 million and tangible equity
of $68.1 million
- - AHCI "core franchise" (thrift only) estimated at approximately $500
million
- - Pro forma AHCI/COHB franchise estimated to have a tangible capital ratio
of approximately 4% post merger, which presents significant hurdles to
regulatory approvals. Further, it appears AHCI is assuming HRBT walks
away from its option for no compensation.
- - 4.0% post-merger tangible capital ratio would constrain growth
opportunities for AHCI
- - AHCI 1998 purchase of AFSALA Bancorp is largest acquisition implemented by
AHCI
- - COHB/HRBT management estimates that AHCI would have to raise proceeds via
sale of availble for sale securities at a substantial loss
- - AHCI over the past several years has been seeking to be acquired. COHB had
preliminary discussion but passed after the completion of due diligence.
COHB's last offer in June 2000 was rejected by AHCI.