1
EXHIBIT 99.1
SOVEREIGN BANCORP
News Release
FOR IMMEDIATE RELEASE CONTACT:
Jay Sidhu (SVRN) (610) 320-8416
Karl D. Gerhart (SVRN) (610) 320-8437
Mark R. McCollom (SVRN) (610) 208-6426
Dennis S. Marlo (MLBC) (610) 526-6290
Brian M. Hartline (MLBC) (610) 526-6270
- --------------------------------------------------------------------------------
Corporate Headquarters: 1130 Berkshire Blvd., Wyomissing, PA
- --------------------------------------------------------------------------------
SOVEREIGN TO ACQUIRE
ML BANCORP, INC.
WYOMISSING, PA., Sovereign Bancorp, Inc. ("Sovereign")
(NASDAQ/NMS:SVRN), parent company of Sovereign Bank, and ML Bancorp, Inc. ("ML
Bancorp") (NASDAQ/:MLBC), parent company of Main Line Bank, announced today the
execution of a Definitive Agreement ("Agreement") for Sovereign to acquire ML
Bancorp. ML Bancorp is a $2.2 billion bank holding company whose principal
operating subsidiary operates 29 branches located in the suburbs of
Philadelphia, Pennsylvania.
The terms of the Agreement call for Sovereign to exchange 1.67 shares
of Sovereign common stock for each outstanding share of ML Bancorp common stock
or a total consideration of approximately $345 million in Sovereign common
stock. The exchange ratio will stay fixed at 1.67 shares of Sovereign common
stock per ML Bancorp share if Sovereign's average stock price remains between
$13.80 and $18.67 per share (collectively, the "Collars") during a 20-day
pricing period as set forth in the Agreement. If Sovereign's average stock
price is outside the lower or upper Collars then the price is fixed for ML
Bancorp's shareholders at $23.05 and $31.18 per share, respectively, subject to
adjustment under certain conditions. The pricing reflects 202% of ML Bancorp's
stated book value, 215% of ML Bancorp tangible book value and 17.4 times ML
Bancorp projected 1998 earnings.
ML Bancorp operates a solid mortgage banking operation with a $4.4
billion loan servicing portfolio for others and $500 million in 1996 loan
originations, in addition to an extensive community banking franchise. In
addition, ML Bancorp's asset quality philosophy mirrors Sovereign's focus on
this critical success factor. ML Bancorp maintains superior asset quality with
a non-performing assets to total assets ratio of only 0.46%, a strong loan loss
reserve to total loans of 1.71%, and loan loss reserves to non-performing loans
of 193% at June 30, 1997.
"The combination of these two institutions significantly enhances
Sovereign's franchise in the affluent and growing communities of the
Philadelphia suburbs, and is expected to be immediately accretive to
Sovereign's book value, tangible book value, and accretive to Sovereign's
earnings, within 12 months following the consummation of the transaction,"
2
stated Jay S. Sidhu, Sovereign's President and Chief Executive Officer. "This
transaction solidifies Sovereign's Pennsylvania, New Jersey, and Delaware
branch networks and creates a $2.4 billion deposit franchise in Pennsylvania
with strong core deposits. Proforma for this acquisition, Sovereign will have
the #4 deposit market share in southeastern Pennsylvania," Sidhu continued.
"Our strategic affiliation with Sovereign provides our shareholders
and customers with a unique opportunity to continue our vision of becoming a
significant financial services provider in Southeastern Pennsylvania, as well
as a significant contributor to Sovereign's franchise value and future earnings
growth," stated Dennis S. Marlo, ML Bancorp, Inc.'s President and Chief
Executive Officer.
Upon completion of this transaction, Mr. Marlo will become a member of
Sovereign Bank's Board of Directors and the President of the division of
Sovereign Bank responsible for the Sovereign Bank's Pennsylvania and Delaware
branch network.
Proforma for the ML Bancorp acquisition and other pending
transactions, Sovereign will have assets totalling $17.0 billion, deposits
totaling $8.6 billion and operate over 170 Community banking offices throughout
the tri-state network. With a pro forma market capitalization in excess of
$2.0 billion, Sovereign will become the 6th largest thrift holding company in
the country.
"The addition of this 29 branch network is a perfect fit with
Sovereign's Pennsylvania branch network," commented Sovereign's Chairman,
Richard E. Mohn. "ML Bancorp is a natural fill-in to Sovereign's existing
franchise and will provide Sovereign unique opportunities in an extremely
desirable market," Mohn continued.
In connection with the execution of the Agreement, ML Bancorp granted
a stock option to Sovereign to purchase, under certain conditions, up to 19.9%
of ML Bancorp's outstanding shares.
ML Bancorp has the right to terminate the Agreement if the average
stock price of Sovereign (as defined in the Agreement) falls below $12.18 and
Sovereign's decline in value is 10% greater than the percentage decline of a
group of similar financial institutions.
The merger is subject to approval of various regulatory agencies and
of both ML Bancorp and Sovereign shareholders. Sovereign anticipates that the
transaction will close in the first quarter of 1998 and will be accounted for
as a pooling of interests. Sovereign also anticipates recording a one-time
after tax merger-related charge of $12.4 million at the closing of the
transaction.
On July 2, 1997, Sovereign announced the signing of a definitive
agreement to acquire the Automobile Finance Division ("the Division") of Fleet
Financial Group, Inc. The Division consists of approximately $2.0 billion of
indirect auto loans, dealer floor plan
-2-
3
plans, and loans to automobile leasing companies. The Division has business
relationships with over 2,000 automotive dealerships and serves approximately
225,000 customers through New Jersey, New York, and New England.
On August 31, 1997, Sovereign closed its previously announced
acquisition of Bankers Corp., a $2.6 billion bank holding company headquartered
in Perth Amboy, New Jersey. Sovereign is a pro forma $17.2 billion bank
holding company with over 170 community banking offices serving eastern
Pennsylvania, northern Delaware and New Jersey. The fourth largest bank
headquartered in Pennsylvania, Sovereign's closing price of its common stock on
Thursday, September 18, 1997 was $16.4375 per share and its preferred stock
closed at $99.75 per share.
-3-