Filed by Banknorth Group, Inc.
(Commission File No. 0-16947)
Pursuant to Rule 425 under the
Securities Act of 1933
Date: August 22, 2002
For Immediate Release
For Further Information, Contact:
At Banknorth Group
Brian Arsenault, SVP, Corporate Communications
207 761-8517
At American Financial Holdings
Sheri C. Pasqualoni
Executive Vice President, American Savings Bank
860 827-2585
Banknorth Group to Acquire American Financial and
Expand Company's Connecticut Presence Nearly Four-Fold
(A Conference Call on Banknorth's acquisition of American Financial will be
held tomorrow, August 23, 2002, at 8:30 a.m. Eastern Time. Dial in number
for USA and Canada is 877 585-2577, passcode is 5381770. International dial
in number is 706 679-7449, passcode is 5381770. A replay of the conference
call will be available approximately one hour after the completion of the
call. The replay dial in number for USA and Canada is 800 642-1687, passcode
is same as live call. The international replay dial in number is 706 645-9291,
passcode is same as live call. A live webcast of the presentation and webcast
replay are available at www.banknorth.com, Investor Relations.
The presentation to be utilized in the Conference Call is available at the
Company's web site www.banknorth.com. Go to Investor Relations page, select
the Presentations bar.)
Portland, Maine, August 22, 2002 - Banknorth Group, Inc. (NASDAQ: BKNG),
announced today that it has signed a definitive agreement to acquire American
Financial Holdings, Inc. (NASDAQ: AMFH) and nearly quadruple its size in
Connecticut. American Financial is the $2.9 billion parent company of
American Savings Bank and recent acquirer of American Bank of Connecticut.
The transaction is valued at approximately $709.3 million in cash and stock.
Banknorth Group currently operates a $1 billion banking division in
Connecticut (inclusive of the end of the month closing of its acquisition of
Bancorp Connecticut, Inc.) and is a $21.3 billion banking and financial
services holding company with operations also in Maine, Massachusetts, New
Hampshire, Vermont and upstate New York.
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At June 30, 2002, American Financial, with 34 branches in central Connecticut,
had total deposits of $1.9 billion, total loans of $1.7 billion and
shareholders' equity of $443.6 million. The transaction will improve
Banknorth's Connecticut market position from 14th to 5th, from a 1% deposit
share to a better than 4% deposit share. The transaction is particularly
notable in important Hartford County, where Banknorth's market share will
improve from 7th to 3rd.
"We are very excited to take this giant step in the development of our market
presence in Connecticut," said William J. Ryan, Banknorth Chairman, President
and Chief Executive Officer. "American Financial has the kind of deep
community banking roots that we seek in our acquisitions. It's a great
company that helps us continue our efforts to become a major banking and
financial services provider in Connecticut."
"Our Board carefully considered the interests of our shareholders, customers,
employees and the community and determined that Banknorth Group was an ideal
merger partner," said Robert T. Kenney, American Financial Holdings Chairman,
President and Chief Executive Officer. "As an organization, we have
accomplished so much and operated at a very high level of performance;
however our future growth potential was limited. It was important for us to
team up with an institution that is committed to building on our successes -
an institution that shares our commitment to superior personal service and
will be able to offer our customers an even wider array of banking services
to meet their needs."
Mr. Kenney also noted that the American Savings Foundation established by
American Savings Bank in 1995 would "continue to operate as an independent
community resource to meet the needs of our area communities." The foundation
had $72 million in assets at June 30, 2002.
Banknorth Group, headquartered in Portland, Maine, operates in Connecticut as
Banknorth Connecticut. The Company previously acquired Glastonbury Bank &
Trust and will close the acquisition of Southington Savings Bank on August 31,
2002. Banknorth's acquisition strategy in the past year has emphasized
Connecticut and Massachusetts, building out from the Company's traditional
northern New England strongholds in Maine, New Hampshire and Vermont, where
it has a combined leading market share.
Under the terms of the agreement, American Financial shareholders can elect
to receive either $32.00 or 1.22 shares of Banknorth common stock for each
share of American Financial stock they own, plus cash in lieu of any
fractional share interest. Elections will be subject to allocation
procedures which are intended to ensure that 50% of the American Financial
common stock outstanding immediately prior to the completion of the
transaction will be converted into shares of Banknorth common stock.
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The transaction is intended to qualify as a reorganization for federal income
tax purposes. As a result, the shares of American Financial stock exchanged
for Banknorth stock will be transferred on a tax-free basis.
The transaction is valued at 161% of American Financial book value per share
at June 30, 2002 and 16.5 times consensus estimated earnings per share of
American Financial for 2003, based on a $32.00 per share cash price.
The definitive agreement has been approved by the Boards of Directors of
Banknorth and American Financial. The transaction is subject to all required
regulatory approvals, the approval by shareholders of American Financial and
other customary conditions. The transaction is expected to be completed in
the first quarter of 2003 with operational integration to follow soon after.
Banknorth Group, Inc. is one of the country's 35 largest commercial banking
companies with total assets of $21.3 billion at June 30, 2002. The Company's
banking subsidiary, Banknorth, NA, operates banking divisions in Connecticut,
Maine, Massachusetts, New Hampshire, New York and Vermont. Banknorth also
operates subsidiaries and divisions in insurance, investment planning, money
management, leasing, merchant services, mortgage banking, government banking
and other financial services.
This press release contains forward-looking statements with respect to the
financial condition, results of operations and business of Banknorth upon
consummation of the acquisition of American Financial, including statements
relating to: (a) the estimated cost savings and accretion to reported
earnings that will be realized from the acquisition and (b) the merger charges
expected to be incurred in connection with the acquisition. These
forward-looking statements involve certain risks and uncertainties. Factors
that may cause actual results to differ materially from those contemplated by
such forward-looking statements include, among others, the following
possibilities: (1) estimated cost savings from the acquisition cannot be
fully realized within the expected time frame; (2) revenues following the
acquisition are lower than expected; (3) competitive pressure among depository
institutions increases significantly; (4) costs or difficulties related to
the integration of the businesses of Banknorth and American Financial are
greater than expected; (5) changes in the interest rate environment reduce
interest margins; (6) general economic conditions, either nationally or in
the markets in which Banknorth will be doing business, are less favorable
than expected; or (7) legislation or changes in regulatory requirements
adversely affect the businesses in which Banknorth would be engaged.
Banknorth and American Financial will be filing relevant documents concerning
the merger with the Securities and Exchange Commission, including a
registration statement on Form S-4 containing a prospectus/proxy statement.
WE URGE INVESTORS TO READ THESE DOCUMENTS BECAUSE THEY CONTAIN IMPORTANT
INFORMATION. Investors will be able to obtain these documents free of charge
at the SEC's website, www.sec.gov. In addition, documents filed with the SEC
by Banknorth will be available free of charge from the Secretary of Banknorth
(Carol L. Mitchell, Secretary, Banknorth Group, Inc., Two Portland Square,
P.O. Box 9540, Portland,
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Maine 04112-9540, telephone (207) 761-8500), and documents filed with the SEC
by American Financial will be available free of charge from the Secretary of
American Financial (Richard J. Moore, Secretary, American Financial Holdings,
Inc., 102 West Main Street, New Britain, Connecticut 06051, telephone (877)
677-2634). The directors and executive officers of American Financial may be
deemed to be participants in the solicitation of proxies to approve the
merger. Information about the directors and executive officers of American
Financial and ownership of American Financial common stock is set forth in
the proxy statement filed by American Financial with the SEC on (March 27,
2002). Additional information about theinterests of those participants may be
obtained from reading the definitive prospectus/proxy statement regarding the
proposed acquisition when it becomes available. AMERICAN FINANCIAL INVESTORS
SHOULD READ THE PROSPECTUS/PROXY STATEMENT AND OTHER DOCUMENTS TO BE FILED
WITH THE SEC CAREFULLY BEFORE MAKING A DECISION CONCERNING THE MERGER.