FEDERAL TRUST CORPORATION
ENTERS INTO LETTER OF INTENT
WITH RESPECT TO PRIVATE RECAPITALIZATION TRANSACTION;
ANNOUNCES RESTATEMENT OF EARNINGS
Sanford, Florida (PR Newswire) August 11, 2008 -- Federal Trust Corporation
(AMEX: FDT) today announced that it has entered into a non-binding letter of
intent with Sidhu Advisors FDT, LLC, whereby Sidhu Advisors FDT, LLC, or a
newly-formed affiliate, would invest at least $30 million in Federal Trust
Corporation and acquire control of the Company. The proposed transaction remains
subject to entering into a definitive agreement between Federal Trust
Corporation and Sidhu Advisors FDT, LLC and other conditions, including
completion of an updated due diligence review of Federal Trust Corporation by
Sidhu Advisors FDT, LLC. It is expected that the terms of a proposed transaction
would be subject to shareholder approval, as well as approval by the Office of
Thrift Supervision. The letter of intent expires August 25, 2008.
President and Chief Executive Officer Dennis T. Ward stated, "We are extremely
pleased to have received an interest in our company that would enable us to
recapitalize Federal Trust Bank and assure we remain a strong viable financial
institution. We have worked closely with Jay Sidhu. He is familiar with Federal
Trust and we are familiar with his team. We look forward to working with Sidhu
Advisors."
In addition, the Company is restating earnings previously reported for the
quarter ended March 31, 2008, and those previously reported for the six months
ended June 30, 2008. The restatement represents the Company's reassessment of
the operating losses and trends in past due and non-performing loans over the
past five quarters. As a result of this reassessment, the Company determined
that it is more likely than not that the deferred tax asset will not be realized
and therefore the Company recorded a deferred tax asset valuation allowance at
March 31, 2008 of $9.1 million.
The valuation allowance and restatement will have no effect on the regulatory
capital position of Federal Trust Bank, which remains "adequately capitalized"
for regulatory purposes as of both March 31, 2008 and June 30, 2008. While the
valuation allowance will reduce the previously reported earnings, it is a
non-cash charge that has no effect on the Bank's liquidity. After this
restatement, the Company will report a loss of $11.2 million for the three
months ended March 31, 2008, compared to the $2.2 million loss as previously
reported. For the three and six months periods ended June 30, 2008, the revised
losses would be $4.6 million and $15.8 million, respectively, compared to losses
of $2.8 million and $5.1 million as previously reported for these periods. These
results will be reflected in the Company's Quarterly Report on Form 10-Q for the
Quarterly Period Ended June 30, 2008, and an amendment to the Company's
Quarterly Report on Form 10-Q for the Quarterly Period Ended March 31, 2008,
which will be filed on a subsequent date with the Securities and Exchange
Commission.
Federal Trust Corporation is a unitary thrift holding company and is the parent
company of Federal Trust Bank, a federally-chartered, FDIC-insured savings bank.
Federal Trust Bank operates 11 full-service offices in Seminole, Orange,
Volusia, Lake and Flagler Counties, Florida. The Company's Executive and
Administrative Offices are located in Sanford, in Seminole County, Florida.
Sidhu Advisors FDT, LLC is an investment vehicle controlled by Mr. Jay Sidhu.
Mr. Sidhu is the former CEO of Sovereign Bancorp, Inc. Under Mr. Sidhu's
leadership, Sovereign grew from approximately $600 million in assets to
approximately $90 billion in assets and yielded an internal rate of return of
approximately 24.2% for Sovereign's shareholders from 1991 until his departure
in 2006. During a similarly stressed period, Sovereign, under Mr. Sidhu's
leadership, yielded a 6.1x money total return for its shareholders over a
five-year period beginning in 1991. Griffin Financial Group, LLC is serving as
financial advisor to Sidhu Advisors FDT, LLC.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Certain statements in this press release may contain "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, which statements generally can be identified by the use of
forward-looking terminology, such as "may," "will," "expect," "estimate,"
"anticipate," "believe," "target," "plan," "project," or "continue" or the
negatives thereof or other variations thereon or similar terminology, and are
made on the basis of management's plans and current analyses of Federal Trust
Corporation, its business and the industry as a whole. These forward-looking
statements are subject to risks and uncertainties, including, but not limited
to, economic conditions, competition, interest rate sensitivity and exposure to
regulatory and legislative changes. The above factors, in some cases, have
affected, and in the future could affect Federal Trust Corporation's financial
performance and could cause actual results for fiscal 2008 and beyond to differ
materially from those expressed or implied in such forward-looking statements.
Federal Trust Corporation does not undertake to publicly update or revise its
forward-looking statements even if experience or future changes make it clear
that any projected results expressed or implied therein will not be realized.
For further information regarding Federal Trust Corporation, please read the
reports Federal Trust Corporation files with the SEC that are available at
www.sec.gov. Press Releases and other information about Federal Trust
Corporation can be found on PR Newswire at http://www.prnewswire.com or at
Federal Trust's website at http://www.federaltrust.com.
Contact: Dennis T. Ward Gregory E. Smith
President and Chief Executive Officer Chief Financial Officer
(407) 323-1833 (407) 323-1833