-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UNuOjChUsk1K2PoHCFjufF78LDpbAsMrFW1ZBWQnTqxaAJ7Mup/vXJc6bgxGuzeM BwcCOGNU85Lpp30WvBknPQ== 0001047469-98-027811.txt : 19980721 0001047469-98-027811.hdr.sgml : 19980721 ACCESSION NUMBER: 0001047469-98-027811 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980720 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980720 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEOPLES HERITAGE FINANCIAL GROUP INC CENTRAL INDEX KEY: 0000829750 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 010437984 STATE OF INCORPORATION: ME FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-16947 FILM NUMBER: 98668766 BUSINESS ADDRESS: STREET 1: ONE PORTLAND SQ STREET 2: P O BOX 9540 CITY: PORTLAND STATE: ME ZIP: 04112 BUSINESS PHONE: 2077618500 MAIL ADDRESS: STREET 1: P O BOX 9540 CITY: PORTLAND STATE: ME ZIP: 04112-9540 8-K 1 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 July 20, 1998 - -------------------------------------------------------------------------------- (Date of earliest event reported) Peoples Heritage Financial Group, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Maine 0-16947 01-0437984 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) P.O. Box 9540, One Portland Square, Portland, Maine 04112-9540 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (207) 761-8500 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 1 Item 5. Other Events On July 20, 1998, Peoples Heritage Financial Group, Inc. ("PHFG") announced that it and SIS Bancorp, Inc. (the "Company") had entered into an Agreement and Plan of Merger, dated as of July 20, 1998 (the "Agreement"), which sets forth the terms and conditions pursuant to which the Company would be merged with and into Peoples Heritage Merger Corp., a wholly-owned subsidiary of PHFG (the "Merger"). The Agreement provides, among other things, that as a result of the Merger, each outstanding share of common stock of the Company (subject to certain exceptions) will be converted into the right to receive 2.25 shares of PHFG's common stock, plus cash in lieu of any fractional share interest. Consummation of the Merger is subject to a number of conditions, including, but not limited to, (i) the approval of the Agreement and the Merger by the shareholders of the Company and (ii) the receipt of requisite regulatory approvals. Pursuant to the Agreement, the Company's Massachusetts-based banking subsidiary, Springfield Institution for Savings, will be merged into PHFG's Massachusetts-based banking subsidiary, Family Bank, FSB. It is PHFG's current intention to conduct business in the market areas in which Springfield Institution for Savings conducted business prior to such bank merger under the name Springfield Institution for Savings. The Company's other banking subsidiary, Connecticut-based Glastonbury Bank and Trust Company, will be held as a separate institution. Pursuant to the Agreement, one director of the Company will become a director of PHFG and F. William Marshall, Jr., the Company's President and Chief Executive Officer, will become an executive officer of PHFG and Vice Chairman of PHFG's Senior Management Committee. In connection with the Agreement, PHFG and the Company entered into a Stock Option Agreement, dated as of July 20, 1998, pursuant to which the Company granted PHFG an option (the "Option") to purchase up to 1,385,383 shares of the Company's common stock (subject to adjustment as set forth therein), which represents 19.9% of the Company's outstanding shares of common stock, at a purchase price of $44.00 per share (subject to adjustment as set forth therein). The Option will become exercisable upon the occurrence of certain events, as specified in the Stock Option Agreement, none of which has occurred as of July 20, 1998. The press release issued by PHFG and the Company with respect to the announcement of the transaction described herein is attached hereto as Exhibit 99.1 and is hereby incorporated herein by reference in its entirety. Also attached as Exhibit 99.2 and incorporated herein by reference are certain forward-looking statements made by PHFG in connection with a presentation given by PHFG to investment analysts on July 20, 1998. The press release and the portions of the analyst presentation incorporated herein by reference contain forward-looking statements with respect to the financial condition, results of operations and business of PHFG upon consummation of the Merger, including statements relating to: (a) the estimated cost savings and accretion to reported earnings that will be realized from the Merger; (b) the estimated impact on revenues of the Merger, and (c) the restructuring charges 2 expected to be incurred in connection with the Merger. 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 Merger cannot be fully realized within the expected time frame; (2) revenues following the Merger are lower than expected; (3) competitive pressure among depository institutions increases significantly; (4) costs or difficulties related to the integration of the businesses of PHFG and the Company 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 PHFG will be doing business, are less favorable than expected; or (7) legislation or changes in regulatory requirements adversely affect the businesses in which PHFG would be engaged. On July 20, 1998, PHFG also issued a press release announcing its earnings for the three and six months ended June 30, 1998. A copy of this press release is attached hereto as Exhibit 99.3 and is hereby incorporated by reference herein in its entirety. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Not applicable. (b) Not applicable. (c) The following exhibits are included with this Report: Exhibit 99.1 Press Release, dated July 20, 1998 Exhibit 99.2 Portions of Analysts Presentation Exhibit 99.3 Press Release, dated July 20, 1998 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PEOPLES HERITAGE FINANCIAL GROUP, INC. By: /s/ Peter J. Verrill ----------------------- Name: Peter J. Verrill Title: Executive Vice President, Chief Financial Officer and Treasurer Date: July 20, 1998 4 EX-99.1 2 EX-99.1 EXHIBIT 99.1 FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION: AT PEOPLES HERITAGE FINANCIAL GROUP BRIAN ARSENAULT, VICE PRESIDENT, CORPORATE COMMUNICATIONS (207) 761-8517 AT SIS BANCORP TING CHANG, VICE PRESIDENT, INVESTOR RELATIONS (413) 748-8271 PEOPLES HERITAGE TO ACQUIRE SIS BANCORP EXTENDS FRANCHISE INTO WESTERN MASSACHUSETTS AND CONNECTICUT Portland, Maine, July 20, 1998 -- Peoples Heritage Financial Group, Inc. (NASDAQ:PHBK), a multi-state bank and financial services holding company headquartered in Portland, Maine, has reached a definitive agreement to acquire Springfield, Massachusetts-based SIS Bancorp, Inc. (NASDAQ:SISB). The acquisition will create a $12 billion banking company, materially enhance Peoples' Massachusetts banking franchise and extend it into the western part of the state. Peoples will also gain its initial presence in Connecticut through SIS's Glastonbury Bank & Trust Company. Under the terms of the merger agreement, shareholders of SIS will receive 2.25 shares of Peoples Heritage common stock for each whole share of SIS common stock plus cash in lieu of any fractional share. Approximately 16.8 million shares of Peoples Heritage common stock will be issued in the transaction, including shares issuable upon the exercise of substitute stock options. The exchange will be tax free and accounted for as a pooling of interests. Based on a closing price of Peoples Heritage common stock of $25 7/16 per share on July 17, 1998, the deal is valued at $427.7 million and SIS shareholders will receive $57.23 of Peoples Heritage common stock for each share of SIS common stock. The price equates to 3.13 times the book value of SIS at March 31, 1998 and 21.4 times SIS estimated 1999 earnings. "We continue to grow as planned, contiguous to our existing franchise through the acquisition of another strong community bank," said William J. Ryan, Chairman, President and Chief Executive Officer of Peoples Heritage. His comments were echoed by F. William Marshall, Jr., President and Chief Executive Officer of SIS: "An essential factor in our decision to move forward on this opportunity is Peoples Heritage's strong commitment to serving local communities." Mr. Marshall will continue to serve as president and chief executive officer of SIS and will be named Vice Chairman of the Executive Management Committee of Peoples Heritage Financial Group. Under the terms of the agreement, SIS Bank will continue to operate under its own name. Glastonbury Bank & Trust Company, recently acquired by SIS, will continue to operate as a Connecticut bank. The agreement is subject to the receipt of the approval of the shareholders of SIS and requisite regulatory approvals. It is anticipated that the transaction will be completed by the end of 1998. As part of the agreement, SIS gave Peoples Heritage an option to purchase 19.9 percent of its outstanding common stock under certain circumstances. Peoples Heritage has $9.8 billion in assets and operates 194 branches through its three banking subsidiaries: Peoples Heritage Bank with Maine's leading deposit market share, Bank of New Hampshire with that state's leading deposit market share, and Family Bank in Massachusetts. The acquisition of SIS will increase the number of the Company's banking offices in Massachusetts to 56 and create its first banking presence in Connecticut with eight offices, mostly in central Connecticut. SIS has assets of $1.8 billion and the leading market share in Hampden County in Massachusetts. Peoples Heritage will have the eighth largest deposit market share in Massachusetts following completion of the transaction. A conference call on the acquisition announcement and Peoples' second quarter earnings, also announced today, will be held at 10 a.m. eastern time. (end) 2 EX-99.2 3 EX-99.2 EXHIBIT 99.2 - -------------------------------------------------------------------------------- Peoples Heritage Financial Group Makes Strategic Acquisition of SIS Bancorp - -------------------------------------------------------------------------------- Peoples Heritage Financial Group SIS Bancorp Strategic Rationale - -------------------------------------------------------------------------------- Compelling strategic fit - - Extends New England's largest and most profitable community banking franchise into Western Massachusetts and Central Connecticut - - Continues top market share standard of performance - - Brings new business lines to SIS markets and customers; e.g., indirect auto, public finance, trust and insurance Financially strong transaction - - Accretive to EPS and ROE within the first year - - Increases earnings growth - - Positive projections based on conservative assumptions High probability of success - - PHBK proven integration skills applied to clean, well- managed company - - Pricing consistent with industry trends - -------------------------------------------------------------------------------- Peoples Heritage Financial Group SIS Bancorp Transaction Summary - -------------------------------------------------------------------------------- Fixed Exchange Ratio: 2.25 PHBK shares for each SISB share Price Per Share: $57.23 per SISB share* Transaction Value: $427.7 million Accounting / Tax Treatment: Pooling of Interests / Tax Free Exchange Lock-up Option: 19.9% Due Diligence: Completed Expected Closing: Late 1998 Caps / Collars: None One-Time Merger Costs: $15.8 million (after tax) Management Considerations: SISB President Marshall to join PHBK senior management team, one SISB Director to PHBK Holding Company Board
* Based on PHBK's price of $25 7/16 on July 17, 1998 - -------------------------------------------------------------------------------- Peoples Heritage Financial Group SIS Bancorp Transaction Multiples - -------------------------------------------------------------------------------- Recent PHBK Price Per Share: $25.4375 Exchange Ratio: 2.25 PHBK/SISB Implied Price Per SISB Share: $57.23 Price / Stated 3/31/98 Book Value Per Share: 313% Price / 1998 IBES Estimated Earnings Per Share: 23.4 x Price / 1999 IBES Estimated Earnings Per Share: 21.4 x Premium to Recent Market Price: 27%
- -------------------------------------------------------------------------------- Peoples Heritage Financial Group SIS Bancorp Peoples Heritage - A History of Impressive Growth - --------------------------------------------------------------------------------
Pro Forma for SIS Bancorp 12/31/92 3/31/98 CAGR 3/31/98 CAGR Total Assets (MMs) $ 2,340 $10,031 31.9% $11,822 36.1% Total Loans $ 1,660 $ 6,315 29.0% $ 7,153 32.1% Total Deposits $ 1,897 $ 6,963 28.1% $ 8,268 32.4% Shareholder's Equity $ 189 $ 745 29.4% $ 860 33.5% Market Capitalization $ 81 $ 2,252 88.4% $ 2,662 94.5%
- -------------------------------------------------------------------------------- Peoples Heritage Financial Group SIS Bancorp Strengthens The Leading New England Community Bank Franchise - -------------------------------------------------------------------------------- - - Largest New England based community banking company. - - SIS fills in important markets in Massachusetts and significantly enhances franchise. - - Strong market share in combined Hampshire and Hampden counties in Massachusetts complements Family Bank dominance in its markets - - $11.8 billion in assets. - - $8.3 billion in deposits. - - Diversified $7.3 billion loan portfolio. - - #1 deposit market share in Maine. - - #1 deposit market share in New Hampshire. - - #8 deposit market share in Massachusetts. - - Adds Connecticut presence with Glastonbury Bank & Trust. - -------------------------------------------------------------------------------- Peoples Heritage Financial Group SIS Bancorp Building a More Powerful Franchise - -------------------------------------------------------------------------------- Map - -------------------------------------------------------------------------------- Peoples Heritage Financial Group SIS Bancorp Peoples Heritage Financial Group and SIS Bancorp Locations - -------------------------------------------------------------------------------- Map - -------------------------------------------------------------------------------- Peoples Heritage Financial Group SIS Bancorp Positive Impact on Financial Performance - -------------------------------------------------------------------------------- - - Increases earnings per share by 3 cents in 2000 - - Anticipated cost savings of 25% of SIS operating expenses - - Revenue enhancements of $2.3 million in 1999 and $4.7 million in 2000 - - Increases market capitalization to $2.66 billion - - SIS funding costs are lower than Peoples Heritage - -------------------------------------------------------------------------------- Peoples Heritage Financial Group SIS Bancorp Major Community Bank in New England - --------------------------------------------------------------------------------
Company Total Assets Market Cap States of Operation - ----------------------------- ------------ ---------- ------------------- Peoples Heritage Financial Group $11,825 $2,665 MA, ME, NH, CT Peoples Bank $ 9,150 $2,241 CT Webster Financial Corp $ 9,100 $1,284 CT UST Corporation $ 5,509 $1,176 MA Banknorth Group Inc. $ 2,956 $ 610 MA, NH, VT Vermont Financial Services $ 2,063 $ 368 MA, NH, VT Chittenden Corp $ 1,994 $ 516 MA, VT
- -------------------------------------------------------------------------------- Peoples Heritage Financial Group SIS Bancorp Diversified Loan Portfolio - --------------------------------------------------------------------------------
Peoples SIS Pro Forma % of Loans (3/31/98) Heritage (1) Bancorp Combined Total - --------------- ------------ ------- -------- ----- Residential Mortgages $2,338,831 $279,388 $2,618,219 36% Consumer (2) 1,818,626 171,037 1,989,663 27% Commercial Mortgages 1,409,598 188,273 1,597,871 22% C & I 837,682 221,877 1,059,559 15% - ----- ------- ------- --------- -- Total Loans $6,404,737 $860,575 $7,265,312
(1) Includes CFX (2) SIS consumer loans are only home equity loans - -------------------------------------------------------------------------------- Peoples Heritage Financial Group SIS Bancorp Diversified Deposit Base - --------------------------------------------------------------------------------
Peoples SIS Pro Forma % of Deposits (3/31/98) Heritage (1) Bancorp Combined Total - ------------------ ------------ ------- --------- ----- CDs $ 3,141,749 $ 556,948 $ 3,698,697 45% Savings 1,105,641 219,232 1,324,873 16% Money Market / NOW 1,641,719 355,964 1,997,683 24% Demand 1,073,944 177,258 1,251,202 15% - ------ --------------- ----------- ------------ ----- Total Deposits $ 6,963,053 $ 1,309,402 $ 8,272,455 --------------- ----------- ------------ --------------- ----------- ------------
(1) Includes CFX - -------------------------------------------------------------------------------- Peoples Heritage Financial Group SIS Bancorp Pro Forma Balance Sheet Data - --------------------------------------------------------------------------------
Peoples SIS Pro Forma Heritage (1) Bancorp Combined ------------ ----------- ------------ Total Loans $ 6,404,737 $ 860,575 $ 7,265,312 Loan Loss Reserve 89,454 23,239 112,693 Intangible Assets 125,900 -- 125,900 Total Assets $10,030,947 $ 1,793,968 $ 11,824,915 ----------- ----------- ------------ ----------- ----------- ------------ Total Deposits $ 6,963,053 $ 1,309,402 $ 8,272,455 ----------- ----------- ------------ ----------- ----------- ------------ Shareholders' Equity $ 744,610 $ 128,185 857,034 ----------- ----------- ------- ----------- ----------- ------- Shares Outstanding (3/31/98) 88,358 6,970 104,041 Book Value Per Share $8.43 $18.39 $8.24 Tangible Book Value Per Share $7.00 $18.39 $7.03
(1) Includes CFX Corp., acquired April 10, 1998. (2) Includes $15.8 million after tax merger adjustment. - -------------------------------------------------------------------------------- Peoples Heritage Financial Group SIS Bancorp Earnings Per Share Analysis - --------------------------------------------------------------------------------
1999 Estimate 2000 Estimate ------------- ------------- Operating Earnings (1): Dollars Per Share Dollars Per Share ------- --------- ------- --------- Peoples Heritage $154,447 $1.71 $169,892 $1.88 SIS Bancorp 18,770 20,741 After-Tax Synergies and Cost Savings (2) 7,712 7,982 After-Tax Revenue Enhancements (3) 2,283 4,734 ----- ----- Pro Forma Operating Earnings $183,212 $1.72 $203,310 $1.91 Net Earnings Accretion / (Dilution) 0.47% 1.28% Pro Forma Diluted Shares 106,645 106,737
(1) 1999 earnings based on IBES consensus; 2000 assumes growth of approximately 10% (2) Assumes 25% cost savings (3) Revenue enhancements come from customer service fees, improved net interest margin and new business lines - -------------------------------------------------------------------------------- Peoples Heritage Financial Group SIS Bancorp Additional Opportunities - -------------------------------------------------------------------------------- - - Conservative consolidation savings - - Additional operating revenue opportunities: - Customer growth - Increased fee income - Margin expansion - - Deployment of surplus capital - -------------------------------------------------------------------------------- Peoples Heritage Financial Group SIS Bancorp Executive Summary - -------------------------------------------------------------------------------- - - Transaction is consistent with Peoples Heritage acquisition strategy . - Acquire well managed, quality companies. - Acquire companies in attractive markets - - SIS has built a strong franchise in Massachusetts and a growing franchise in Connecticut. - Transaction significantly improves PHBK's market share in Massachusetts and provides entry into Connecticut - - Pricing is consistent with premiums paid for companies with SIS's financial performance. - PHBK shareholders will benefit from EPS accretion and ROE improvement during the first year of combined operation. - - Solidifies PHBK's position as the largest and most profitable New England Community bank. - -------------------------------------------------------------------------------- Peoples Heritage Financial Group SIS Bancorp Note on Forward Looking Information - -------------------------------------------------------------------------------- This presentation contains forward looking information for Peoples Heritage Financial Group and SIS Bancorp on a stand alone basis and a pro forma combined basis. Actual results may vary materially from the forward looking statements. Factors which could result in material variations from forward looking statements include, but are not limited to: changes in interest rates which could affect net interest margins and net interest income; delays in cost savings measures or a failure to realize anticipated cost savings; competitive factors which could affect noninterest income, costs of deposits, and interest income; and general economic conditions which could negatively affect the volume of loan originations, the amount of loan losses and levels of noninterest income. - -------------------------------------------------------------------------------- Peoples Heritage Financial Group SIS Bancorp EX-99.3 4 EX-99.3 EXHIBIT 99.3 FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION, CONTACT: BRIAN ARSENAULT, VICE PRESIDENT, CORPORATE COMMUNICATIONS (207) 761-8517 RECORD QUARTERLY OPERATING EARNINGS AT PEOPLES HERITAGE Portland, Maine, July 20 , 1998 -- Peoples Heritage Financial Group, Inc. (NASDAQ:PHBK) today announced record quarterly operating earnings of $32.4 million, or 36 cents per diluted share, for the second quarter ended June 30, 1998, up 27 percent from net earnings of $25.5 million, or 29 cents per diluted share for the same quarter a year ago. "We are gratified that we continue to generate record earnings," said William J. Ryan, Company Chairman, President and Chief Executive Officer. "The record operating earnings reflect both strong internal earnings growth and a continuation of our history of solid acquisitions." The quarter ended June 30, 1998 reflected for the first time additional operating earnings from the acquisition of CFX Corporation, completed on April 10, 1998. All numbers were restated for the CFX acquisition. Earnings per share numbers reflect the Company's two-for-one stock split on May 28, 1998. Additionally, second quarter net income was affected by one-time after-tax charges of $24.0 million related to the acquisition of CFX. As a result of those one-time charges, net income for the quarter ended June 30, 1998 was $8.3 million, or 9 cents per diluted share. Both net interest income and noninterest income for the second quarter ended June 30, 1998 were up substantially over the same quarter a year ago, restated for the CFX acquisition. Net interest income for the quarter ended June 30 ,1998 rose 8 percent to $90.8 million over the same quarter a year ago, reflecting particularly heavy growth in mortgage lending and strong growth in commercial and consumer loans as well. Noninterest income for the quarter ended June 30, 1998 increased by 50 percent to $26.9 million as compared to $17.9 million for the second quarter of 1997. Gains in mortgage banking fees because of strong mortgage volumes, increases from trust and investment services and the addition of income from the Company's insurance subsidiary, Morse, Payson & Noyes Insurance, acquired in late 1997, were key factors in the strong noninterest income growth. The quarter also saw strong performance in several key operating ratios. Return on average equity for the quarter ended June 30, 1998, on an operating basis, was a record 17.84%. Return on average assets for the quarter ended June 30, 1998, on an operating basis, was 1.33%, up from 1.27% for the same quarter a year ago. The Company's operating efficiency ratio achieved a new quarterly low of 55.98% for the quarter ended June 30, 1998. The Company's book value per share was $8.27 at June 30, 1998 based on 87,565,134 shares outstanding. Shareholders' equity at June 30, 1998 was $724.0 million. Peoples Heritage Financial Group is a $9.8 billion multi-state banking and financial services holding company headquartered in Portland, Maine. The Company's Maine banking subsidiary, Peoples Heritage Bank, operates 75 banking offices throughout the state and holds Maine's number one deposit market share. Bank of New Hampshire, the Company's New Hampshire banking subsidiary, operates 84 branches and enjoys New Hampshire's top deposit market share. Family Bank, operating primarily in northeastern and central Massachusetts with four offices in southern New Hampshire, currently has 31 Massachusetts branches. The Company will soon expand its Massachusetts banking franchise and enter Connecticut for the first time with the acquisition of SIS Bancorp, headquartered in Springfield, Massachusetts, announced today. A conference call on second quarter earnings and the acquisition announcement will be held at 10 a.m. eastern time today. To participate, dial 888 850-2440, confirmation code 502251. (end) 2 -----END PRIVACY-ENHANCED MESSAGE-----