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
---------------------------
Date of report (Date of earliest event reported): July 18, 1998
DIME COMMUNITY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-27782 11-3297463
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
209 Havemeyer Street, Brooklyn, New York 11211
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (718) 782-6200
None
(Former name or former address, if changed since last report)
<PAGE>
Items 1 through 4, 6, 8 & 9. Not Applicable
Item 5. Other Events.
On July 18, 1998, Dime Community Bancshares, Inc., a Delaware corporation
(the "Company"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") by and between the Company and Financial Bancorp, Inc., a Delaware
corporation ("Financial"). The Merger Agreement provides, among other things,
that Financial will be merged with and into the Company, with the Company being
the surviving corporation (the "Merger").
Pursuant to the Merger Agreement, each share of common stock of Financial
issued and outstanding at the Effective Time (as defined in the Merger
Agreement) will be converted into the right to receive, at the election of the
holder thereof, either shares of the Company's common stock, par value $0.01 per
share ("Company Common Stock"), equal to $40.50 or cash in an equivalent amount
provided, however, that 50% of Financial Common Stock must be exchanged for
Company Common Stock and 50% of Financial Common Stock must be exchanged for
cash. The price will stay fixed at $40.50 in Company Common Stock if the
Company's Average Closing Price (as defined in the Merger Agreement) remains
between $22.95 and $31.05. If the Company's Average Closing Price is less than
$22.95, then Financial's shareholders shall receive a fixed rate of 1.7647
shares of Company Common Stock for each share of Financial Common Stock.
Conversely, if the Company's if the Company's Average Closing Price is greater
than $31.05, then Financial's shareholders shall receive a fixed rate of 1.3043
shares of the Company Common Stock for each share of Financial Common Stock. The
Merger Agreement contains customary anti-dilution provisions.
Financial has the right to terminate the Merger Agreement if the Company's
Average Closing Price is less than $20.25 per share, unless the Company elects
to increase the consideration to be received by Financial shareholders pursuant
to the Merger Agreement to equal shares of Company Common Stock having a minimum
value of $38.12.
Consummation of the Merger is subject to the satisfaction of certain
conditions, including approval of the shareholders of Financial and approval of
the appropriate regulatory agencies.
In connection with the Merger Agreement, the Company and Financial granted
to the Company a stock option pursuant to the Stock Option Agreement, dated as
of July 18, 1998 (the "Stock Option Agreement"), pursuant to which the Company
may purchase up to 19.9% of Financial's issued and outstanding shares of common
stock, upon the terms and conditions stated therein. The Stock Option Agreement
granted to the Company provides that the total profit to the Company from the
value of the stock option may not exceed $4 million. The Merger Agreement also
includes a termination fee payable to the Company of $1 million, under certain
similar circumstances.
This Current Report on Form 8-K may contain certain forward-looking
statements regarding the Company's acquisition of Financial, including cost
savings to be realized, earnings accretion, transaction charges and other
opportunities following the acquisition which are based
<PAGE>
on management's current expectations regarding economic, legislative and
regulatory issues. The factors which may cause future results to vary materially
include, but are not limited to, general economic conditions, changes in
interest rates, deposit flows, loan demand, real estate values, and competition;
changes in accounting principles, policies, or guidelines; changes in
legislation or regulation; and other economic, competitive, governmental,
regulatory, and technological factors affecting each company's operations,
pricing, products and services.
The Company and Financial publicly announced the Merger in a press release
dated July 20, 1998, a copy of which is attached hereto as Exhibit 99.1.
2
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits. The following Exhibits are filed as part of this report:
Exhibit No. Description
----------- -----------
2.1 Agreement and Plan of Merger, dated as of
July 18, 1998, by and between Dime
Community Bancshares, Inc. and Financial
Bancorp, Inc.*
4.1 Stock Option Agreement, dated as of July 18,
1998, by and between the Dime Community
Bancshares, Inc. and Financial Bancorp, Inc.*
99.1 Press Release issued on July 20, 1998.
99.2 Analyst Presentation.
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* To be filed by amendment
3
<PAGE>
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 hereunto duly authorized.
DIME COMMUNITY BANCSHARES, INC.
By: /s/ Kenneth J. Mahon
------------------------------------
Kenneth J. Mahon
Executive Vice President
and Chief Financial Officer
Dated: July 20, 1998
4
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EXHIBIT INDEX
Exhibit Description
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2.1 Agreement and Plan of Merger, dated as of
July 18, 1998, by and between Dime
Community Bancshares, Inc. and Financial
Bancorp, Inc.*
4.1 Stock Option Agreement, dated as of July
18, 1998, by and between Dime
Community Bancshares, Inc. and Financial
Bancorp, Inc.*
99.1 Press Release issued on July 20, 1998.
99.2 Analyst Presentation.
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* To be filed by amendment
5
EXHIBIT 99.1
<PAGE>
NEWS RELEASE
CONTACTS: CONTACTS:
Kenneth A. Ceonzo P. James O'Gorman
Dime Community Bancshares, Inc. Valarie M. Swaya
(718) 782-6200 extension 279 Financial Bancorp, Inc.
(718) 729-5002
DIME COMMUNITY BANCSHARES, INC. TO ACQUIRE FINANCIAL BANCORP, INC.
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Second "In-Market" Acquisition Brings Market Share and Substantial Cost Savings
Brooklyn, NY, July 20, 1998. Dime Community Bancshares, Inc. ("Dime Community")
(Nasdaq: DCOM), and Financial Bancorp, Inc. ("Financial Bancorp") (Nasdaq: FIBC)
jointly announced today that they have entered into a definitive agreement
pursuant to which Dime Community will acquire Financial Bancorp, a federally
chartered savings bank holding company, for a purchase price valued at $40.50
per common share. Financial Bancorp is headquartered in Queens county, New York,
one of the most densely populated counties in the country, and has five branches
(four of which are located in Queens county), and $340 million in assets. Upon
completion of the acquisition, Financial Bancorp's wholly owned subsidiary,
Financial Federal Savings Bank will merge into Dime Community's wholly owned
subsidiary, The Dime Savings Bank of Williamsburgh. The transaction was
unanimously approved by the boards of directors of Dime Community and Financial
Bancorp.
Under the terms of the agreement, holders of Financial Bancorp common stock will
receive cash or shares of Dime Community common stock pursuant to an election,
proration and allocation procedure subject to holders of 50% of the Financial
Bancorp shares receiving cash and 50% receiving stock. The number of shares of
stock any Financial Bancorp stockholder receives will be determined based upon
an exchange ratio designed to produce a value of $40.50 per share when Dime
Community stock has a market value during a pricing period specified in the
agreement of between $22.95 and $31.05. The maximum exchange ratio is 1.7647 and
the minimum exchange ratio is 1.3043. To the extent that the market value of
Dime Community common stock during the pricing period exceeds $31.05 or is less
than $22.95, the per share value of the consideration to be received by
Financial Bancorp stockholders in the merger, whether in cash or stock, will
increase or decrease, respectively. The total transaction value is estimated to
be approximately $74 million, which is approximately 2.6 times Financial
Bancorp's tangible book value at June 30, 1998.
The assets of the combined entity, on a pro-forma basis as of March 31, 1998,
would total $2.0 billion. The transaction is expected to be accretive to both
reported and cash earnings of Dime Community. Financial Bancorp currently serves
over 15,000 households and will bring the total number of households served by
Dime Community to over 63,000. Dime Community
<PAGE>
anticipates cost savings of 50% of Financial Bancorp's expense base, and no
branch closures are anticipated as a result of the acquisition.
Commenting on the transaction, Mr. Vincent F. Palagiano, Chairman and Chief
Executive Officer of Dime Community, stated "I am quite pleased to announce the
Company's second strategic in-market acquisition in approximately two years. The
successful integration of our previous acquisition of Conestoga Bancorp, Inc.
and our strong contribution to tangible capital through cash earnings since the
Conestoga acquisition have served as the catalyst for our acquisition of
Financial Bancorp. The acquisition of Financial Bancorp strengthens our current
banking franchise, and we are confident that it will enhance shareholder value
and provide long-term benefits for our shareholders, customers and,
particularly, the communities which Dime Community and Financial Bancorp both
currently serve. We will be working closely with Financial Bancorp's Board of
Directors, who we will retain in an advisory role, and hope to continue to build
upon the strong relationships they have developed within our local communities."
Mr. Peter S. Russo, Chairman of the Board of Financial Bancorp, commented, "We
are extremely pleased to be joining forces with one of New York's leading
Savings Banks. It will combine two strong, like-minded institutions that are
customer and community focused. Our affiliation represents an excellent
opportunity to enhance our stockholders' value, and deliver more services to our
customers, and the communities we serve."
In connection with the transaction, Financial Bancorp has granted Dime Community
an option to purchase 19.9% of Financial Bancorp's currently outstanding common
stock under certain conditions. In addition, there is a provision for a
termination fee payable to Dime Community under certain similar circumstances.
The transaction will be accounted for as a purchase and will not affect Dime
Community's ability to repurchase shares under its current stock repurchase
program. The transaction is expected to close in early 1999 and is subject to
approval of the stockholders of Financial Bancorp, Inc., approval of the Office
of Thrift Supervision and the satisfaction of certain other conditions. Merrill
Lynch & Co. acted as financial advisor and rendered a fairness opinion to Dime
Community, and Sandler O'Neill and Partners, L.P. acted as financial advisor and
rendered a fairness opinion to Financial Bancorp.
Financial Bancorp, Inc. is the parent holding company for Financial Federal
Savings Bank, an FDIC-insured savings institution. Dime Community Bancshares,
Inc., is the holding company for The Dime Savings Bank of Williamsburgh, a
community-oriented financial institution providing financial services and loans
for housing within its market areas. The Bank maintains its headquarters in the
Williamsburgh section of the borough of Brooklyn, and thirteen additional
offices in the boroughs of Brooklyn, Queens, and The Bronx, and in Nassau
County. The Bank's deposits are insured up to the maximum allowable amount by
the Federal Deposit Insurance Corporation. More information on the Company and
Bank can be found on our Internet website at www.dimewill.com.
<PAGE>
This news release contains forward looking statements with respect to the
financial condition, results of operations and business of Dime Community
Bancshares, Inc. ("Dime Community") and Financial Bancorp, Inc. ("Financial
Bancorp") and assuming the consummation of the acquisition, a combined Dime
Community and Financial Bancorp, including statements relating to: (i) the cost
savings and revenue enhancements and accretion to reported earnings that will be
realized from the acquisition; and (ii) the restructuring 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 other things, the following possibilities: (i) expected cost
savings from the acquisition cannot be fully realized or realized within the
expected time; (ii) revenues following the acquisition are lower than expected;
(iii) competitive pressure among depository institutions increases
significantly; (iv) costs related to the integration of the business of Dime
Community and Financial Bancorp are greater than expected; (v) changes in the
interest rate environment reduces interest margins; (vi) general economic
conditions, either nationally or in the states which the combined company will
be doing business, are less favorable than expected; (vii) legislation or
regulatory requirements or changes adversely affect the business in which the
combined company will be engaged; and (viii) changes may occur in the securities
market.
NOTE: AN INFORMATION PACKAGE REGARDING THE TRANSACTION WILL BE MADE AVAILABLE AT
DIME COMMUNITY'S WEBSITE www.dimewill.com.
EXHIBIT 99.2
<PAGE>
Dime Community Bancshares, Inc.
Acquisition of
Financial Bancorp, Inc.
July 20, 1998
<PAGE>
================================================================================
Forward Looking Information
================================================================================
This presentation contains forward looking statements with respect to the
financial condition, results of operations and business of Dime Community
Bancshares, Inc. ("Dime Community") and Financial Bancorp, Inc. ("Financial
Bancorp") and assuming the consummation of the acquisition, a combined Dime
Community and Financial Bancorp, including statements relating to: (i) the cost
savings and revenue enhancements and accretion to reported earnings that will be
realized from the acquisition; and (ii) the restructuring 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 other things, the following possibilities: (i) expected cost
savings from the acquisition cannot be fully realized or realized within the
expected time; (ii) revenues following the acquisition are lower than expected;
(iii) competitive pressure among depository institutions increase significantly;
(iv) costs related to the integration of the business of Dime Community and
Financial Bancorp are greater than expected; (v) changes in the interest rate
environment reduces interest margins; (vi) general economic conditions, either
nationally or in the states in which the combined company will be doing
business, are less favorable than expected; (vii) legislation or regulatory
requirements or changes adversely affect the business in which the combined
company will be engaged; and (viii) changes may occur in the securities market.
[LOGO] DIME SAVINGS BANK OF WILLIAMSBURGH
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Transaction Summary
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Transaction Type: Acquisition
Mix of Consideration: 50% cash, 50% stock(a)
Accounting Treatment: Purchase Accounting
Transaction Value: $40.50 per share; approximately $74 million
Transaction Multiples:
Recent NYC
Transactions(b)
---------------
Price/Book Value 2.56x 3.94x
Price/Tangible Book Value 2.57x 3.95x
Price/LTM EPS (June 30) 25.51x 26.43x
Core Deposit Premium 20.70% 41.08%
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(a) Stock portion will be reissued out of treasury shares.
(b) New York City transactions announced since July 1, 1997: Roslyn's
acquisition of TR Financial, Astoria Financial's acquisition of Long Island
Bancorp, and North Fork's acquisition of New York Bancorp.
[LOGO] DIME SAVINGS BANK OF WILLIAMSBURGH
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Transaction Summary (cont'd)
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<TABLE>
<S> <C>
Implied Exchange Ratio : 1.5502x on stock portion(1)
Pricing Collar: Dime will deliver $40.50 in stock based on Dime
(stock portion of consideration) prices between $22.95 and $31.05
Walkaway: 25% absolute decline in Dime Community's stock
price ($20.25); Dime Community at its option can
provide $38.12 in value to complete the
transaction
Synergies: Approximately $2.7 million pre-tax
(approximately 50% of Financial Bancorp's
operating expenses.)
Restructuring Charge: Approximately $3.9 million after-tax
Due Diligence: Completed
Expected Closing: Late fourth quarter 1998/Early first quarter 1999
</TABLE>
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(1) Based on Dime's closing stock price on July 17, 1998.
[LOGO] DIME SAVINGS BANK OF WILLIAMSBURGH
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Strategic Rationale
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o Low risk in - market transaction offering significant cost savings.
o GAAP and Cash EPS accretive.
> a 2% accretive to GAAP earnings in fiscal year ended June 30, 2000
> a 8% accretive to cash earnings in fiscal year ended June 30, 2000
o Enhances Dime Community's franchise in Queens and Brooklyn.
o Adds stable, low-cost core deposit base.
o Improves projected GAAP returns on assets and equity and cash returns on
tangible equity.
o Purchase accounting allows Dime Community to continue, subject to certain
limitations, its existing share repurchase program.
o Continues Dime Community's leveraging of excess capital.
[LOGO] DIME SAVINGS BANK OF WILLIAMSBURGH
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Overview of Financial Bancorp
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o Headquartered in Long Island City, New York.
o Operates four full service branches in Queens and one in Brooklyn.
o Converted to a federally chartered stock savings association on August 17,
1994 and to a federally chartered stock savings bank on October 20, 1994.
o Community-oriented institution engaged in attracting retail deposits and
originating residential and commercial mortgage loans.
[LOGO] DIME SAVINGS BANK OF WILLIAMSBURGH
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Attractive Pro Forma Franchise*
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(Dollars in Thousands)
[MAP The map illustrates the location of Dime Community's and Financial
Bancorp's combined branches in the Queens, Kings and Nassau counties and the
Bronx.]
------------------------------------------
Dime Community Pro Forma
------------------------------------------
County Deposits Branches
------ -------- --------
Queens $480,298 7
Kings 434,868 7
Nassau 303,259 5
Bronx 44,447 1
------------------------------------------
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* Deposit balances as of March 31, 1998.
[LOGO] DIME SAVINGS BANK OF WILLIAMSBURGH
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Pro Forma Balance Sheet
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At June 30, 1998
(Dollars in Thousands)
At June 30, 1998
----------------------------------- Dime Community
Dime Community Financial Bancorp Pro Forma (a)
-------------- ----------------- --------------
Balance Sheet
Assets $1,623,926 $340,999 $1,964,925
Net Loans 938,046 191,822 1,129,868
Reserves 12,543 1,616 17,159
Intangibles 24,028 114 72,061
Deposits 1,038,342 229,027 1,267,369
Common Equity 186,349 28,730 223,169
Capital Adequacy
Equity/Assets 11.48% 8.43% 11.36%
Tangible Equity/Assets 10.15 8.39 7.98
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(a) Reflects an after-tax restructuring charge of $3.9 million and an increase
in reserves for loan losses of $3.0 million pre-tax.
[LOGO] DIME SAVINGS BANK OF WILLIAMSBURGH
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Attractive Deposit Base (a)
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(Dollars in Thousands)
<TABLE>
<CAPTION>
Dime Community Financial Bancorp Pro Forma
---------------------- --------------------- ------------------------
Total Percent Total Percent Total Percent
---------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
CDs $ 611,336 59.1% $ 123,097 53.8% $ 734,433 58.2%
Savings 339,972 32.9 67,386 29.5 407,358 32.3
Money Markets 30,878 3.0 18,970 8.3 49,848 3.9
NOW 17,530 1.7 7,000 3.1 24,530 1.9
Checking 34,538 3.3 12,165 5.3 46,703 3.7
---------- ----- ---------- ----- ---------- -----
Total $1,034,254 100.0% $ 228,618 100.0% $1,262,872 100.0%
========== ===== ========== ===== ========== =====
</TABLE>
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(a) Deposit balances as of March 31,1998.
[LOGO] DIME SAVINGS BANK OF WILLIAMSBURGH
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Loan Portfolio Composition(a)
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(Dollars in Thousands)
<TABLE>
<CAPTION>
Dime Community Financial Bancorp Pro Forma
---------------------- --------------------- ------------------------
Total Percent Total Percent Total Percent
---------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
1 - 4 Family $ 135,988 15.3% $ 140,933 81.0% $ 276,921 26.1%
Multi-Family 656,988 74.0 14,141 8.1 671,129 63.2
Other Mortgage 90,024 10.1 18,029 10.4 108,053 10.2
Consumer 2,464 0.3 479 0.3 2,943 0.2
Other 2,850 0.3 353 0.2 3,203 0.3
---------- ----- ---------- ----- ---------- -----
Total $ 888,314 100.0% $ 173,935 100.0% $1,062,249 100.0%
========== ===== ========== ===== ========== =====
</TABLE>
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(a) Loan balances as of March 31, 1998.
[LOGO] DIME SAVINGS BANK OF WILLIAMSBURGH
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Expected Synergies
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(Dollars in Thousands)
o 66% of the projected pre-tax synergies will be achieved in FY1999 and 100%
in FY2000
Total
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Staff $1,682
Computer Services 216
Advertising 107
Occupancy 22
Other 630
------
Annual Savings $2,657
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Percent of Financial Bancorp Expenses 50%
-----------------------------------------------------------
Additional Expense Savings
ESOP & RRP Expense $472
[LOGO] DIME SAVINGS BANK OF WILLIAMSBURGH
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Restructuring Charge
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($ in thousands, after-tax)
Change-of-Control Contracts $ 595
RRP Payout 629
Directors Plan 320
Additional Reserve 1,620
Tax Deduction on Stock Options Cash Out (1,732)
Other Restructuring Charge 2,464
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Total $ 3,896
=======
[LOGO] DIME SAVINGS BANK OF WILLIAMSBURGH
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Prior Acquisition Experience
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o On June 26, 1996 Dime Community completed the acquisition of Conestoga
Bancorp, a $479 million in assets thrift headquartered in Roslyn, New York.
o Conestoga systems were converted to those of Dime Community within one week
of closing.
o Actual cost savings equaled 50% of Conestoga overhead, in excess of the
target of 40%.
o Dime Community has increased Conestoga's deposits per branch from an
average of $49 million to $60 million.
[LOGO] DIME SAVINGS BANK OF WILLIAMSBURGH
