Filed by: First Niagara Financial Group, Inc.
Pursuant to Rule 425 under the Securities Act of 1933 and
deemed filed pursuant to rule 14a-12 under
the Securities Exchange Act of 1934
Subject Company: First Niagara Financial Group, Inc.
Commission File No.: 000-23975
Date: April 2, 2004
First Niagara Financial Group, Inc. to Acquire Hudson River Bancorp, Inc.
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Combined entity will rank second in market share in the Capital Region
Transaction Expected to be 13% Accretive to 2005 E.P.S.
LOCKPORT, NY and HUDSON, NY -- The Boards of Directors of First Niagara
Financial Group, Inc. (NASDAQ: FNFG) and Hudson River Bancorp, Inc. (NASDAQ:
HRBT) jointly announced today that they have signed a definitive Merger
Agreement under which Hudson River Bancorp, Inc. will merge into First Niagara.
Headquartered in Hudson, New York, Hudson River Bancorp, Inc. is the holding
company for the Hudson River Bank & Trust Company and the Hudson River
Commercial Bank.
The transaction will give First Niagara the number two deposit market position
in the Capital Region with more than 12% of all deposits. The combined entity
will serve customers through a network of over 110 banking centers in 24
counties across upstate New York and have total assets of approximately $7.8
billion.
Under the terms of the Agreement, each share of Hudson River Bancorp stock will
be valued at approximately $19.63, based on First Niagara's closing stock price
of $13.87 on April 1, 2004. Hudson River stockholders will be entitled to elect
to receive merger consideration in shares of First Niagara stock, cash, or a
combination of stock and cash. The aggregate merger consideration is comprised
of approximately 35.7 million shares of First Niagara common stock and
approximately $125.0 million in cash. The actual value of the merger
consideration to be paid upon closing will depend on the average stock price for
First Niagara just prior to the completion of the merger. The mix of cash and
stock received by each Hudson River stockholder will also be determined at that
time to ensure that each share of Hudson River stock receives equal
consideration. Hudson River stock options will be exchanged for First Niagara
stock upon completion of the merger if not previously exercised.
Including the estimated economic value of outstanding Hudson River options, the
aggregate purchase price will be approximately $620.0 million. The acquisition
is anticipated to be accretive to First Niagara's estimated 2005 earnings per
share by approximately 13%, including anticipated cost savings, which are
expected to total 28% of Hudson's current non-interest expense.
In announcing the transaction, Paul J. Kolkmeyer, president and CEO of First
Niagara Financial Group, Inc. and First Niagara Bank, said, "This transaction
significantly strengthens our market position in the Capital Region which has a
strong demographic profile relative to other upstate New York markets. Customers
will benefit from the expanded range of products and services of our combined
entity while enjoying the convenience of our more than 60 locations in the
region. This transaction is a tremendous complement to our acquisition of Troy
Financial Corporation which was completed in January 2004, and will provide us
with an even stronger platform to execute our customer-focused strategy.
"Like First Niagara, Hudson River Bank & Trust Company is a community bank that
has had tremendous success built on a solid foundation of customer and community
commitment. We look forward to what we can accomplish together."
President and CEO of Hudson River Bancorp, Inc., Carl A. Florio, will continue
to provide leadership as First Niagara's Eastern New York Regional President.
Commenting on the merger agreement Florio said, "This transaction represents
excellent value for Hudson River Bancorp shareholders. I am extremely proud of
our fine organization and its 154 year legacy of customer and community service.
First Niagara is an outstanding organization that shares our passion for
customer service and dedication to improving the quality of life in the
communities we serve. We are both community banks with long and proud histories.
I also look forward to what our two organizations can jointly accomplish."
Two Hudson River Bancorp, Inc. board members will join First Niagara Financial
Group's Board of Directors. The remaining Hudson River Bancorp board members
will continue to offer guidance to First Niagara as members of its Eastern New
York Advisory Council.
While some operations are remaining in Hudson, cost efficiencies have been
identified within this acquisition and some management, support and
administrative positions will be eliminated. It is also anticipated that several
branch locations within the region will be consolidated after the transaction
closes. Employees who are affected by the operational changes will be offered
opportunities to post for positions within First Niagara for which they are
qualified.
The Hudson River Bank & Trust Company Foundation will not be affected in any way
by this transaction.
The acquisition, which has been unanimously approved by the boards of directors
of First Niagara and Hudson River, is subject to the approval of First Niagara
Financial Group and Hudson River Bancorp's stockholders and the approval of bank
regulatory authorities, as well as other customary conditions. The Merger
Agreement provides for breakup fees if the Agreement is terminated under certain
circumstances.
First Niagara was advised by the investment banking firm of Ryan Beck & Co. and
the law firm of Luse, Gorman, Pomerenk & Schick. Hudson River Bancorp was
advised by the investment banking firm of Sandler, O'Neill & Partners, L.P. and
the law firm of Silver, Freedman and Taff.
About First Niagara- First Niagara Financial Group, Inc., through its wholly
owned subsidiary First Niagara Bank, has assets of $4.9 billion and deposits of
$3.3 billion. First Niagara Bank is a full-service, community-oriented bank that
provides financial services to individuals, families and businesses through 68
banking centers, a loan production office, several financial services
subsidiaries and 92 ATMs throughout New York State. First Niagara's range of
products includes personal and business checking, savings, business loan and
mortgage products, cash management services, investment alternatives, lease
financing and trust services. The Company offers an expanded product line, which
includes commercial and personal insurance and investment advisory services.
About Hudson River Bancorp- Hudson River Bancorp, Inc. is the holding company
for the Hudson River Bank & Trust Company and the Hudson River Commercial Bank.
Founded in 1850, the bank has 50 offices, 64 ATMs and is a full-service
financial services organization offering a wide variety of business and consumer
banking products and services. As of December 31, 2003, Hudson River Bancorp had
assets of $2.6 billion, deposits of $1.8 billion and equity of $273.4 million.
Conference Call - First Niagara will be hosting a conference call concerning the
acquisition announcement. It will be held at 10 a.m. Eastern Standard Time on
Friday, April 2, 2004. Interested parties should call (877) 709-8150.
Participants can call as early as 9:45 a.m. and a replay will be available for
seven days following the call at (877) 660-6853. The replay account number is
6340. The replay conference number is 100337. A copy of the presentation will be
available on First Niagara's website at www.fnfg.com.
Forward-Looking Statements - This news release contains certain forward-looking
statements about the proposed merger of First Niagara Financial Group, Inc. and
Hudson River Bancorp, Inc. These include statements regarding the anticipated
consummation date of the transaction, anticipated cost savings and anticipated
future results. Forward-looking statements can be identified by the fact that
they do not relate strictly to historical or current facts. They often include
words like "believe," "expect," "anticipate," "estimate" and "intend" or future
or conditional verbs such as "will," "would," "should," "could" or "may."
Certain factors that could cause actual results to differ materially from
expected results include delays in completing the merger, difficulties in
achieving cost savings or in achieving such savings within the expected time
frame, difficulties in integrating First Niagara Financial Group, Inc. and
Hudson River Bancorp, Inc., increased competitive pressures, changes in the
interest rate environment, changes in general economic conditions, legislative
and regulatory changes that adversely affect the businesses in which First
Niagara Financial Group, Inc. and Hudson River Bancorp, Inc. are engaged and
changes in the securities markets.
This press release does not constitute an offer of securities. The proposed
transaction will be submitted to First Niagara Financial Group and Hudson River
Bancorp's stockholders for their consideration. Each company will file a proxy
statement and other relevant documents concerning the proposed transaction with
the SEC. Stockholders of both companies are urged to read the proxy statements
when they become available and any other relevant documents filed with the SEC,
as well as any amendments or supplements to those documents, because they will
contain important information. You will be able to obtain free copies of the
proxy statements as well as other filings containing information about First
Niagara Financial Group and Hudson River Bancorp, at the SEC's Internet site
(www.sec.gov). Copies of the proxy statements and the SEC filings that will be
incorporated by reference in the proxy statements can be obtained, without
charge, by directing a request to First Niagara Financial Group, Investor
Relations, Christopher J. Thome, P.O. Box 514, Lockport, NY 14095-0514. (716)
625-7645 or to Hudson River Bancorp, Investor Relations, Carl Florio, One Hudson
City Centre, Hudson, New York, 12534, (518) 828-4600 ext. 4302.
The directors, executive officers and certain other members of management of
First Niagara Financial Group and Hudson River Bancorp may be participants in
soliciting proxies in favor of the merger from the stockholders of their
respective companies. Information about the directors and executive officers of
First Niagara Financial Group and their ownership of First Niagara Financial
Group common stock is set forth in the proxy statement, dated April 2, 2004, for
First Niagara Financial Group's 2004 annual meeting of stockholders as filed
with the SEC on a Schedule 14A. Information about the directors and executive
officers of Hudson River Bancorp and their ownership of Hudson River Bancorp's
common stock is set forth in the proxy statement, dated July 17, 2003, for
Hudson River Bancorp's 2003 annual meeting of stockholders as filed with the SEC
on a Schedule 14A. Additional information regarding the interests of these
participants may be obtained by reading the proxy statement regarding the
proposed transaction when it becomes available.
First Niagara Officer Contacts
Paul J. Kolkmeyer........................... President and CEO
John Koelmel................................ Executive Vice President and CFO
Christopher J. Thome........................ Reporting and Investor Relations Manager
(716) 625-7645
chris.thome@fnfg.com
Leslie G. Garrity........................... Public Relations and Corporate Communications Manager
(716) 625-7528
leslie.garrity@fnfg.com
Hudson River Bancorp Officer Contacts
Carl A. Florio.............................. President and CEO
Timothy E. Blow............................. Chief Financial Officer
(518) 828-4600 ext.4351
tblow@hudsonriverbank.com
Corporate Information
First Niagara Financial Group, Inc. Hudson River Bancorp, Inc
6950 South Transit Road One Hudson City Centre
P.O. Box 514 Hudson, New York
Lockport, New York 14095-0514 Telephone (800) 724-2476
Telephone (800) 201-6621 www.hudsonriverbank.com
www.fnfg.com
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FirstNiagara
Financial Group, Inc.
Acquisition of
Hudson River Bancorp, Inc.
An Expanded Presence
in the Capital Region
April 2, 2004
2
Forward-Looking Statements
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During the course of this presentation, we may make projections or other
forward-looking statements regarding future events or the future financial
performance of the Company. We wish to caution you that such statements are just
predictions, and that actual events or results may differ materially. We refer
you to the documents the Company files from time to time with the Securities and
Exchange Commission, specifically the Company's last filed Form 10-K and Form
10-Q. These documents contain and identify important factors that could cause
the actual results to differ materially from those contained in our projections
or forward-looking statements.
The proposed transaction will be submitted to the stockholders of First Niagara
Financial Group, Inc. and Hudson River Bancorp, Inc. for their consideration.
First Niagara and Hudson River will each file a proxy statement and other
relevant documents concerning the proposed transaction with the SEC.
Stockholders are urged to read the proxy statement when it becomes available and
any other relevant documents filed with the SEC, as well as any amendments or
supplements to those documents, because they will contain important information.
The proxy statement, as well as other filings containing information about First
Niagara Financial Group, Inc. and Hudson River Bancorp, Inc., can be obtained
without charge from the SEC's Internet site (www.sec.gov). Copies of the proxy
statement and the SEC filings that will be incorporated by reference in the
proxy statement can be obtained, without charge, by directing a request to First
Niagara Financial Group, Inc., Investor Relations, Christopher J. Thome, P.O.
Box 514, Lockport, NY 14095-0514. (716) 625-7645 or to Hudson River Bancorp,
Inc., Investor Relations, Carl A. Florio, (518) 828-4600, One Hudson City
Centre, Hudson, NY 12534.
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3
Forward-Looking Statements
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First Niagara Financial Group, Inc. and its directors and executive officers may
be deemed to be participants in the solicitation of proxies from the
stockholders of First Niagara Financial Group, Inc., in connection with the
merger. Information about the directors and executive officers of First Niagara
Financial Group, Inc., and their ownership of First Niagara Financial Group,
Inc., common stock is set forth in the proxy statement, dated April 2, 2004, for
First Niagara Financial Group's 2004 annual meeting of stockholders, as filed
with the SEC on a Schedule 14A. Additional information regarding the interests
of these participants may be obtained by reading the proxy statement regarding
the proposed transaction when it becomes available.
Hudson River Bancorp, Inc. and its directors and executive officers may be
deemed to be participants in the solicitation of proxies from the stockholders
of Hudson River Bancorp, Inc., in connection with the merger. Information about
the directors and executive officers of Hudson River Bancorp, Inc., and their
ownership of Hudson River Bancorp, Inc., common stock is set forth in the proxy
statement, dated July 17, 2003, for Hudson River Bancorp's 2003 annual meeting
of stockholders, as filed with the SEC on a Schedule 14A. Additional information
regarding the interests of these participants may be obtained by reading the
proxy statement regarding the proposed transaction when it becomes available.
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4
Agenda
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>> Strategic Rationale & Overview
>> Key Transaction Considerations
>> Transaction Summary
>> Pro Forma Measures
>> Summary Comments
>> Discussion
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5
Strategic Rationale
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>> Creates a premier franchise in the Capital Region
o Significantly expands the franchise in higher growth markets
o #2 in market share with 12% of all deposits
o Improves core deposit base
>> Expedites market growth/penetration
o Leverages existing market presence obtained from Troy acquisition
o Expands our platform for customer focused service
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Strategic Rationale
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>> Enhances financial performance
o Expands opportunities for revenue growth
o Provides incremental cost savings and branch consolidation
opportunities
o Results in immediate earnings accretion
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Hudson River Bancorp Profile
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>> Location: Greater Capital Region in and
around Albany, N.Y.
>> Market Area: Counties of Albany, Columbia,
Dutchess, Fulton, Greene, Montgomery,
Rensselaer, Saratoga, Schenectady,
Schoharie
>> Banking Centers: 50, serving ten counties
>> ATMs: 64
>> Employees: 700
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Hudson River Bancorp Profile
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(at or for the twelve months ended December 31, 2003)
>> Assets $2.6 billion
>> Loans $1.6 billion
>> Deposits $1.8 billion
>> Diluted EPS $1.07
>> Net Interest Margin 3.75%
>> Efficiency Ratio 50.5%
>> Non-performing Assets/ 0.79%
Total Assets
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9
Hudson River Bancorp Profile
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(as of and for the twelve months ended December 31, 2003)
>> ROE 11.66%
>> ROTE 16.03%
>> ROA 1.22%
>> Tangible Equity/Tangible Assets 8.09%
>> Total Equity/Total Assets 10.6%
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10
First Niagara
Current Locations
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[MAP OMITTED]
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11
Combined Branch Locations
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[MAP OMITTED]
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12
Capital Region Locations
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[MAP OMITTED]
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13
Key Transaction Considerations
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Premier Capital Region Franchise
>> Pro forma market share of 12% - #2 in 10 county region
>> Increased customer convenience
o 63 banking centers
o 77 ATMs
o State of the art call center
o On-line banking and bill payment
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14
Key Transaction Considerations
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Pro Forma Market Presence
Market Market # Banking Total Deposit
County Position Share Centers Market
- -------------------------------------------------------------- -------------
Albany #5 7% 16 $9.4 billion
Saratoga #7 8% 6 $2.4 billion
Schenectady #3 11% 6 $2.2 billion
Rensselaer #1 34% 10 $1.8 billion
Columbia #1 57% 7 $923 million
Montgomery #1 45% 6 $692 million
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15
Key Considerations - Deposit Mix
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HRBT (at 12/31/03)
[PIE CHART]
[The following table was depicted as a Pie Chart in the printed materials.]
Core Deposits 66%
Time Deposits 34%
FNFG (at 1/31/04)
[PIE CHART]
[The following table was depicted as a Pie Chart in the printed materials.]
Core Deposits 63%
Time Deposits 37%
Pro Forma deposits of $5.1 billion
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16
Key Considerations - Lending Mix
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HRBT (at 12/31/03)
[PIE CHART]
[The following table was depicted as a Pie Chart in the printed materials.]
Commercial Real Estate & Business 35%
Consumer 8%
Residential Mortgage 57%
FNFG (at 2/29/04)
[PIE CHART]
[The following table was depicted as a Pie Chart in the printed materials.]
Commercial Real Estate & Business 48%
Consumer 14%
Residential Mortgage 38%
Pro Forma loans of $4.7 billion
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Transaction Summary - Pricing
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>> Consideration 80% Stock/20% Cash
>> Cash Consideration $124.8 million *
>> Stock Consideration (shares) 35.7 million *
>> Expected Closing January 2005
>> Due Diligence Completed
>> Termination Fee $24 million
* To be finalized at closing.
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Transaction Summary - Pricing
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>> Aggregate Transaction Value $620 million
>> Implied Purchase Price (4/1/04) $19.63/share
>> Price to LTM EPS 18.4x
>> Price to 2005 Estimated EPS 15.7x
>> Price to 2005 Estimated EPS with A/T Synergies 13.1x
>> Price to Stated Book Value 201%
>> Price to Tangible Book Value 270%
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Transaction Summary - Economics
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>> Accretive to 2005 EPS by approximately 13%
>> Internal Rate of Return of 12%
>> Ongoing cost savings of approximately 28% of Hudson River non-interest
expenses
>> Merger related charges of $26 million after tax
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Transaction Summary - Structure
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>> Operating Structure: HRBT absorbed
into FNFG
>> Management and Staff: CEO to continue as
Regional Executive
>> Board Representation: Two seats
>> Required Approvals: Normal regulatory;
HRBT stockholders
FNFG stockholders
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21
Pro Forma Summary
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(in millions) FNFG HRBT Pro Forma
(1/31/04) (12/31/03) (at closing)
--------- ---------- ------------
Assets $4,930 $2,579 $7,813
Stockholders' Equity $ 932 $ 273 $1,450
Equity/Assets 18.90% 10.59% 18.56%
Tang. Equity/Tang. Assets 12.82% 8.09% 9.56%
Leverage Ratio 12.10% 7.43% 9.51%
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Anticipated Performance Measures
(Pro Forma 2005)
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>> Earnings Accretion 13.5%
>> Return on Equity 6.3%
>> Return on Tangible Equity 13.1%
>> Efficiency Ratio 54.2%
>> Book Value $12.11
>> Tangible Book Value $5.62
>> Market Capitalization (at April 1, 2004) $1.66 billion
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Summary Comments
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>> Strengthens Eastern New York franchise and Upstate New York market
position
>> Provides significant increase in share of market with strong relative
demographics
>> Expands senior management team
>> Furthers our strategic vision
>> Continues the effective deployment of capital from "second-step" offering
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FirstNiagara
Financial Group, Inc.
Discussion
April 2, 2004