Smithtown Bancorp, Inc. (NASDAQ: SMTB) and People's United
Financial, Inc. (NASDAQ: PBCT) of Bridgeport, Connecticut today
announced a definitive agreement under which People's United will
acquire Smithtown Bancorp in a cash and stock transaction valued at
approximately $60 million, or $4.00 per share.
Under the agreement, People's United will acquire Smithtown
Bancorp for approximately $30 million in cash and 2.14 million
shares of People's United common stock, valued in the aggregate at
approximately $30 million based on the 5-day average closing price
of People's United common stock for the period ended July 14,
2010.
The definitive agreement has been unanimously approved by the
respective boards of directors of People's United and Smithtown
Bancorp. Smithtown Bancorp will merge into People's United, and
Bank of Smithtown, Smithtown Bancorp's banking subsidiary, will
simultaneously merge into People's United Bank, People's United's
banking subsidiary. The value of the consideration a Smithtown
Bancorp shareholder will receive for each share of Smithtown common
stock is equivalent in the aggregate to 0.1430 shares of People's
United common stock and $2.00 in cash. Smithtown Bancorp
shareholders as of the record date for the special shareholders
meeting to vote on the transaction will be entitled to elect for
each share held whether to receive shares of People's United common
stock or cash, subject to reallocation if either cash or stock is
oversubscribed.
The actual value of the merger consideration to be paid upon
closing to each Smithtown Bancorp shareholder will depend on the
average People's United stock price shortly prior to completion of
the merger, and the exact amount of cash payable per Smithtown
common share and the exact number of shares to be issued per
Smithtown common share will be determined at that time based on the
average People's United stock price, so that each share of
Smithtown Bancorp receives consideration with approximately the
same value. Receipt of People's United common stock is expected to
be tax-free to Smithtown Bancorp shareholders.
The transaction is subject to approval by bank regulatory
authorities and by the shareholders of Smithtown Bancorp. People's
United shareholder approval is not required. The transaction is
expected to close in the fourth quarter 2010.
Smithtown Bancorp's Chairman & Chief Executive Officer Brad
Rock said: "We are pleased to join the People's United family and
look forward to continue serving our communities with the strength
of a very-well capitalized $22 billion financial institution behind
us."
Sandler O'Neill + Partners, L.P. acted as financial adviser to
Smithtown Bancorp, and Sullivan & Cromwell LLP acted as legal
counsel.
With respect to second quarter results, the Company announced a
loss of $29.2 million for the second quarter of 2010, or $1.95 per
fully diluted share. The loss includes a valuation allowance during
the quarter of $15.7 million against the Company's deferred tax
asset at June 30, 2010. The net loss for the six months ended June
30, 2010 was $43.0 million, or ($2.88) per fully diluted share.
For the second quarter, Bank of Smithtown made provisions for
loan losses of $27.5 million. This figure compares to first quarter
provision of $25 million and brings the year to date provisions to
$52.5 million. Net charge offs for the second quarter were $20.7
million, or 4.10% of average loans. Combined with first quarter net
charge offs of $12.3 million, total net charge offs for the six
months ended June 30, 2010 were $33.0 million, or 3.20% of average
loans. The allowance for loan losses was $58.0 million at June 30,
2010, or 2.93% of total loans.
The Bank continued to reduce its commercial real estate
concentration as total loans (including loans held for sale) were
down $63.4 million for the quarter and $129.3 million for the year
to date. The year-to-date reductions include the resolution of
$81.8 million in problem loans as well as $33.1 million in gross
charge-offs. Nonperforming loans ended the second quarter at $227.5
million, or 11.50% of total loans and loans 30-89 days past due
totaled $48.0 million, or 2.43% of total loans. At December 31,
2009, nonperforming loans were $130.2 million, or 6.23%, of total
loans and loans 30-89 days past due were $20.8 million, or .99% of
total loans. Total loans (including loans held for sale) at June 30
were $1.978 billion compared to $2.107 billion at December 31,
2009.
At June 30, 2010, the Company's Tier 1 Leverage capital ratio
was 5.06%, Tier 1 Capital to Total Assets was 5.22%, Tier 1
Risk-Based Capital ratio was 6.66% and the Total Risk-Based Capital
ratio was 9.40%. The Bank's Tier 1 Leverage ratio was 4.97%, Tier 1
Capital to Total Assets was 5.12%, Tier 1 Risk-Based Capital ratio
was 6.54% and the Total Risk-Based Capital ratio was 9.31%. All of
these capital ratios are below the targets set forth in the Consent
Agreement with the FDIC and the New York State Banking
Department.
Mr. Rock concluded: "As our two Companies work through the
process of merging, our ability to serve our valued retail
customers will remain unchanged. Our deposits continue to carry
FDIC insurance up to the maximum limits allowed. In addition to our
deposit base being covered by the traditional FDIC insurance, the
Bank also has insurance on the entire amount of all noninterest
bearing checking accounts through our participation in the FDIC's
Transaction Account Guarantee Program through December 31,
2010."
Bank of Smithtown is a 100 year-old community bank with
approximately $2.3 billion in assets and 30 branches on Long Island
and in Manhattan. The stock of its parent holding company,
Smithtown Bancorp, is traded on the NASDAQ Global Select Market
under the symbol "SMTB."
People's United Financial, Inc., a diversified financial
services company with approximately $22 billion in assets, provides
consumer and commercial banking services through its subsidiary,
People's United Bank, with nearly 300 branches in Connecticut,
Vermont, New Hampshire, Massachusetts, Maine and New York. Through
additional subsidiaries, People's United provides equipment
financing, asset management, brokerage and financial advisory
services, and insurance services.
Additional Information and Where to Find It
In connection with the proposed merger, People's United
Financial, Inc. ("People's") will file with the SEC a Registration
Statement on Form S-4 that will include a Proxy Statement of
Smithtown Bancorp, Inc. ("Smithtown") and a Prospectus of People's,
as well as other relevant documents concerning the proposed
transaction. Shareholders are urged to read the
Registration Statement and the Proxy Statement/Prospectus regarding
the merger 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. You will be able to obtain a free copy of the
Proxy Statement/Prospectus, as well as other filings containing
information about People's and Smithtown at the SEC's Internet site
(http://www.sec.gov). You will also be able to obtain these
documents, free of charge, from People's at www.peoples.com under
the tab "Investor Relations" and then under the heading "Financial
Information" or from Smithtown Bancorp by accessing Smithtown
Bancorp's website at www.bankofsmithtownonline.com under the tab
"Investor Relations" and then under the heading "SEC Filings."
People's and Smithtown and their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from the shareholders of Smithtown in
connection with the proposed merger. Information about the
directors and executive officers of People's is set forth in the
proxy statement for People's' 2010 annual meeting of shareholders,
as filed with the SEC on a Schedule 14A on March 23, 2010.
Information about the directors and executive officers of Smithtown
is set forth in the proxy statement for Smithtown's 2010 annual
meeting of shareholders, as filed with the SEC on a Schedule 14A on
March 12, 2010. Additional information regarding the interests of
those participants and other persons who may be deemed participants
in the transaction may be obtained by reading the Proxy
Statement/Prospectus regarding the proposed merger when it becomes
available. You may obtain free copies of this document as described
in the preceding paragraph.
Forward-Looking Statements
Certain statements contained in this release that are not
statements of historical fact constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Act"), notwithstanding that such statements are not
specifically identified as such. In addition, certain statements
may be contained in our future filings with the Securities and
Exchange Commission, in press releases, and in oral and written
statements made by us or with our approval that are not statements
of historical fact and constitute forward-looking statements within
the meaning of the Act. Examples of forward-looking statements
include, but are not limited to: (i) projections of revenues,
expenses, income or loss, earnings or loss per share, the payment
or nonpayment of dividends, capital structure and other financial
items; (ii) statements of our plans, objectives and expectations or
those of our management or Board of Directors, including those
relating to products or services; (iii) statements of future
economic performance; and (iv) statements of assumptions underlying
such statements. Words such as "believes," "anticipates,"
"expects," "intends," "targeted," "continue," "remain," "will,"
"should," "may" and other similar expressions are intended to
identify forward-looking statements but are not the exclusive means
of identifying such statements.
Forward-looking statements involve risks and uncertainties that
may cause actual results to differ materially from those in such
statements. Factors that could cause actual results to differ from
those discussed in the forward-looking statements include, but are
not limited to: local, regional, national and international
economic conditions and the impact they may have on us and our
customers and our assessment of that impact, changes in the level
of non-performing assets and charge-offs; changes in estimates of
future reserve requirements based upon the periodic review thereof
under relevant regulatory and accounting requirements; the effects
of and changes in trade and monetary and fiscal policies and laws,
including the interest rate policies of the Federal Reserve Board;
inflation, interest rate, securities market and monetary
fluctuations; political instability; acts of war or terrorism; the
timely development and acceptance of new products and services and
perceived overall value of these products and services by users;
changes in consumer spending, borrowings and savings habits;
changes in the financial performance and/or condition of our
borrowers; technological changes; acquisitions and integration of
acquired businesses; the ability to increase market share and
control expenses; changes in the competitive environment among
financial holding companies and other financial service providers;
the quality and composition of our loan or investment portfolio;
the effect of changes in laws and regulations (including laws and
regulations concerning taxes, banking, securities and insurance)
with which we and our subsidiaries must comply; the effect of
changes in accounting policies and practices, as may be adopted by
the regulatory agencies, as well as the Public Company Accounting
Oversight Board, the Financial Accounting Standards Board and other
accounting standard setters; changes in our organization,
compensation and benefit plans; the costs and effects of legal and
regulatory developments, including the resolution of legal
proceedings or regulatory or other governmental inquiries and the
results of regulatory examinations or reviews; greater than
expected costs or difficulties related to the opening of new branch
offices or the integration of new products and lines of business,
or both; and/or our success at managing the risk involved in the
foregoing items.
Forward-looking statements speak only as of the date on which
such statements are made. We undertake no obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which such statement is made, or to reflect the
occurrence of unanticipated events.
SMITHTOWN BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(Dollar amounts in thousands except share data)
June 30, December 31,
2010 2009
------------- -------------
ASSETS
Cash and cash equivalents $ 17,283 $ 18,745
Interest earning deposits with banks 19,844 3,409
------------- -------------
Total cash and cash equivalents 37,127 22,154
Term placements 507 507
Securities available for sale 209,221 397,274
Securities held to maturity (fair value of
$67 and $67, respectively) 33 66
Loans held for sale - 16,450
Loans 1,978,087 2,090,896
Less: allowance for loan losses 57,999 38,483
------------- -------------
Loans, net 1,920,088 2,052,413
Restricted stock, at cost 18,092 18,353
Real estate owned, net 1,130 2,013
Premises and equipment, net 51,421 47,708
Goodwill 3,923 3,923
Intangible assets 494 616
Cash value of company owned life insurance 25,152 24,874
Accrued interest receivable and other assets 39,984 48,579
------------- -------------
Total assets $ 2,307,172 $ 2,634,930
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposits $ 154,946 $ 152,306
Savings, NOW and money market deposits 868,445 999,066
Time deposits of $100,000 or more 439,395 508,632
Other time deposits 361,012 415,024
------------- -------------
Total deposits 1,823,798 2,075,028
Other borrowings 313,480 352,820
Subordinated debentures 56,514 56,351
Accrued interest payable and other
liabilities 17,735 14,976
------------- -------------
Total liabilities 2,211,527 2,499,175
Stockholders' equity
Preferred stock, par value $.01 per share:
Authorized: 1,000,000 shares at June 30,
2010 and December 31, 2009, respectively;
no shares issued or outstanding - -
Common stock, par value $.01 per share:
Authorized: 35,000,000 shares at June 30,
2010 and December 31, 2009, respectively;
17,019,372 and 16,907,346 shares issued at
June 30, 2010 and December 31, 2009,
respectively; 14,967,508 and 14,855,482
shares outstanding at June 30, 2010
and December 31, 2009, respectively 170 169
Additional paid-in capital 82,557 82,318
Retained earnings 21,837 64,820
Treasury stock, at cost, 2,051,864 shares (10,062) (10,062)
------------- -------------
94,502 137,245
Accumulated other comprehensive loss 1,143 (1,490)
------------- -------------
Total stockholders' equity 95,645 135,755
------------- -------------
Total liabilities and stockholders' equity $ 2,307,172 $ 2,634,930
============= =============
SMITHTOWN BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(Dollar amounts in thousands except share data)
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
2010 2009 2010 2009
--------- --------- --------- ---------
Interest income:
Loans $ 26,213 $ 28,043 $ 54,030 $ 53,542
Taxable securities 1,409 843 3,426 1,706
Tax exempt securities 499 147 1,001 195
Interest earning deposits
with banks 22 40 40 126
Other 190 225 434 307
--------- --------- --------- ---------
Total interest income 28,333 29,298 58,931 55,876
Interest expense:
Savings, NOW and money market
deposits 2,148 3,520 4,663 6,649
Time deposits of $100,000 or
more 2,652 3,282 5,538 6,711
Other time deposits 2,468 3,451 5,181 7,268
Other borrowings 2,118 2,262 4,250 4,486
Subordinated debentures 1,018 477 2,026 993
--------- --------- --------- ---------
Total interest expense 10,404 12,992 21,658 26,107
--------- --------- --------- ---------
Net interest income 17,929 16,306 37,273 29,769
Provision for loan losses 27,500 1,800 52,500 3,000
--------- --------- --------- ---------
Net interest income after
provision for loan losses (9,571) 14,506 (15,227) 26,769
Noninterest income:
Revenues from insurance
agency 877 953 1,717 1,875
Service charges on deposit
accounts 638 551 1,260 1,118
Net gain on the sale of
investment securities - - 518 522
Trust and investment services 152 194 349 327
Increase in cash value of
company owned life insurance 153 117 278 233
OTTI loss: -
Total OTTI losses (102) (255) (597) (255)
Portion of loss recognized
in other comprehensive
income 17 - 17 -
--------- --------- --------- ---------
Net impairment losses
recognized in earnings (85) (255) (580) (255)
Other 629 386 1,256 902
--------- --------- --------- ---------
Total noninterest income 2,364 1,946 4,798 4,722
Noninterest expense:
Salaries and employee
benefits 5,319 5,241 10,560 10,047
Occupancy and equipment 3,704 2,780 7,705 5,358
Federal deposit insurance 1,603 1,797 3,261 2,347
Amortization of intangible
assets 61 90 123 181
Valuation allowance for other
real estate owned - - - -
Other 5,155 1,307 7,696 2,670
--------- --------- --------- ---------
Total noninterest expense 15,842 11,215 29,345 20,603
--------- --------- --------- ---------
Income (loss) before income
taxes (23,049) 5,237 (39,774) 10,888
Provision (benefit) for income
taxes 6,165 1,824 3,209 3,859
--------- --------- --------- ---------
Net income (loss) $ (29,214) $ 3,413 $ (42,983) $ 7,029
========= ========= ========= =========
Comprehensive income (loss) $ (27,172) $ 2,308 $ (40,350) $ 5,368
Basic earnings (loss) per share $ (1.95) $ 0.26 $ (2.88) $ 0.56
Diluted earnings (loss) per
share $ (1.95) $ 0.26 $ (2.88) $ 0.56
Selected Financial Data
(in thousands, except per share data)
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
------------------------ ------------------------
2010 2009 2010 2009
----------- ------------ ----------- ------------
Basic earnings per
share $ (1.95) $ 0.26 $ (2.88) $ 0.56
----------- ------------ ----------- ------------
Diluted earnings per
share (1.95) 0.26 (2.88) 0.56
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Assets $ 2,307,172 $ 2,342,115 $ 2,307,172 $ 2,342,115
----------- ------------ ----------- ------------
Loans 1,978,087 1,970,527 1,978,087 1,970,527
----------- ------------ ----------- ------------
Deposits 1,823,798 1,783,339 1,823,798 1,783,339
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Return on Average
Equity (93.12) 9.78 (64.36) 10.78
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Return on Average
Assets (4.92) 0.61 (3.52) 0.66
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Net Interest Margin 3.19 3.06 3.22 2.92
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Efficiency 76.73 60.52 68.77 60.22
----------- ------------ ----------- ------------
Contact: Ms. Judith Barber Corporate Secretary Corporate
Headquarters 100 Motor Parkway, Suite 160 Hauppauge, NY 11788-5138
Direct Dial: 631-360-9304 Direct Fax: 631-360-9380
brock@bankofsmithtown.net
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