SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
September 3, 1999
HUDSON RIVER BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 000-24187 14-1803212
(State or other (SEC File Number) (IRS Employer
jurisdiction of Identification
incorporation) No.)
One Hudson City Centre, Hudson, New York, 12534
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(518) 828-4600
N/A
(Former name or former address, if changed since last report)
<PAGE>
This amendment to the September 3, 1999 Current Report on Form 8-K of
Hudson River Bancorp, Inc. (the "Company") is filed for the purpose of including
the pro forma financial information required by Item 7(b).
Forward-Looking Statements
When used in this filing or future filings by the Company with the
Securities and Exchange Commission, in the Company's press releases or other
public or shareholder communications, or in oral statements made with the
approval of an authorized executive officer, the words or phrases "will likely
result", "are expected to", "will continue", "is anticipated", "estimate",
"project", "believe", or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. In addition, certain disclosures and information
customarily provided by financial institutions are inherently based upon
predictions of future events and circumstances. Furthermore, from time to time,
the Company may publish other forward-looking statements relating to such
matters as anticipated financial performance, business prospects, and similar
matters.
The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements. In order to comply with the terms of the
safe harbor, the Company notes that a variety of factors could cause the
Company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in the Company's
forward-looking statements. Some of the risks and uncertainties that may affect
the operations, performance, development and results of the Company's business,
the interest rate sensitivity of its assets and liabilities, and the adequacy of
its allowance for loan losses, include but are not limited to the following:
a. Deterioration in local, regional, national or global economic
conditions which could result, among other things, in an increase in
loan delinquencies, a decrease in property values, or a change in the
housing turnover rate;
b. Changes in market interest rates or changes in the speed at which
market interest rates change;
c. Changes in laws and regulations affecting the financial services
industry;
d. Changes in competition;
e. Changes in consumer preferences; and
f. Uncertainties relating to the impact of the Year 2000 on the Company,
its suppliers, borrowers and depositors.
The Company wishes to caution readers not to place undue reliance on any
forward-looking statements, which speak only as of the date made, and to advise
readers that various factors, including those described above, could affect the
Company's financial performance and could cause the Company's actual results or
circumstances for future periods to differ materially from those anticipated or
projected.
The Company does not undertake, and specifically disclaims any
obligations, to publicly release the result of any revisions that may be made to
any forward-looking statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.
Item 2. Acquisition or Disposition of Assets.
As previously reported, on September 3, 1999, the Company completed its
acquisition of SFS Bancorp, Inc. ("SFS") pursuant to an Agreement and Plan of
Merger dated May 17, 1999 ("Agreement"). Pursuant to the Agreement, SFS was
merged with and into the Company and SFS's wholly owned subsidiary, Schenectady
Federal Savings BAnk ("SFSB") was merged with and into the Company's wholly
owned subsidiary, Hudson River Bank & Trust Company, upon which SFS and SFSB
ceased to exist.
The Company paid $25.10 in cash for each share outstanding of SFS common
stock. The acquisition was accounted for under the purchase method of
accounting. Accordingly, assets acquired and liabilities assumed were recorded
at the estimated fair value, and any excess of the total acquisition cost over
the estimated fair value of the net assets acquired was recorded as goodwill.
The Company utilized primarily long- term debt with maturities ranging from one
to five years to fund the acquisition.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of businesses acquired.
The consolidated financial statements of SFS Bancorp, Inc. (Commission
File No. 000- 25994) required by this item have been previously reported with
the Commission and are contained in SFS's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1998 and Quarterly Report on Form 10-QSB for the
quarterly period ended June 30, 1999.
(b) Pro forma financial information
The following unaudited pro forma condensed combined financial statements
("pro forma financial statements") are based on the historical financial
statements of Hudson River Bancorp, Inc. and SFS Bancorp, Inc. and have been
prepared to illustrate the effect of the acquisition.
The following unaudited pro forma condensed combined balance sheet as of
June 30, 1999 is based on the unaudited historical consolidated balance sheets
of the Company and SFS at that date, assuming that the acquisition had been
consummated on June 30, 1999 and accounted for using the purchase method of
accounting.
The unaudited pro forma condensed combined income statements reflect the
combination of the historical results of operations of the Company and SFS for
the year ended March 31, 1999 and for the three months ended June 30, 1999. The
unaudited pro forma condensed combined income statements give effect to the
acquisition using the purchase method of accounting and assume that (1) the
acquisition occurred as of the beginning of the respective periods presented,
and (2) the amount of initial goodwill equaled the amount reflected in the
unaudited pro forma condensed combined balance sheet as of June 30, 1999.
These pro forma financial statements should be read in conjunction with
the historical consolidated financial statements and related notes contained in
the Company's June 30, 1999 Form 10-Q and March 31, 1999 Form 10-K; and in SFS's
June 30, 1999 Form 10- QSB and December 31, 1998 Form 10-KSB, which are
incorporated by reference in the Company's Current Report on Form 8-K filed
September 16, 1999.
As noted above, the acquisition will be accounted for using the purchase
method of accounting. Accordingly, the pro forma adjustments made for the
purpose of preparing the pro forma financial statements are based upon current
estimates regarding the amount of goodwill (which represents the excess of the
total acquisition cost over the estimated fair value of the net assets acquired)
that will arise from the acquisition and the period over which such goodwill
will be amortized. The $9.1 million of goodwill, as reflected in the unaudited
pro forma condensed combined balance sheet, represents an estimate of the excess
of the total acquisition cost over the estimated fair value of the net assets
acquired based upon currently available information. In the opinion of the
Company's management, the estimates used in the preparation of these pro forma
financial statements are reasonable under the circumstances.
The combined company expects to achieve benefits from the acquisition
including operating cost savings and revenue enhancements. These pro forma
financial statements do not reflect any potential cost savings or revenue
enhancements that are expected to result from the combination of the operations
of the Company and SFS other than the elimination of expenses related to SFS's
Employee Stock Ownership and Recognition and Retention Plan and, accordingly,
may not be indicative of the results of future operations. No assurances can be
given with respect to the ultimate level of cost savings or revenue enhancements
to be realized. As a result, these pro forma financial statements are not
necessarily indicative of either the results of operations or financial
condition that would have been achieved had the acquisition in fact occurred on
the dates indicated, nor do they purport to be indicative of the results of
operations or financial condition that may be achieved in the future by the
combined company.
<PAGE>
<TABLE>
<CAPTION>
Unaudited Pro Forma Condensed Combined Balance Sheet
Hudson River Bancorp, Inc. and SFS Bancorp, Inc.
At June 30, 1999
HUDSON RIVER SFS PRO FORMA FOOTNOTE PRO FORMA
BANCORP, INC. BANCORP, INC. ADJUSTMENTS REFERENCE COMBINED
------------ ------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS)
ASSETS
Cash and cash equivalents $ 12,312 $ 3,293 $ 15,605
Securities available for
sale, at fair value 215,017 20,504 8,976 1 244,497
Securities held to maturity 18,785 8,947 (8,947) 1 18,785
Federal Home Loan Bank of
New York stock, at cost 3,299 1,466 4,765
Loans receivable 603,807 141,955 (99) 2 745,663
Allowance for loan losses (15,736) (990) (16,726)
---------- --------- --------- ----------
Net loans receivable 588,071 140,965 (99) 728,937
---------- --------- --------- ----------
Accrued interest receivable 5,290 1,105 6,395
Premises and equipment, net 16,738 2,109 (102) 3 18,745
Other real estate owned and
repossessed property 1,683 187 1,870
Goodwill and other intangibles 3,174 -- 9,064 4 12,238
Other assets 8,670 555 1,578 5 10,803
---------- --------- --------- ----------
Total assets $ 873,039 $ 179,131 $ 10,470 $1,062,640
========== ========= ========= ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Liabilities:
Deposits 598,743 151,635 233 6 750,611
Securities sold under
agreements to repurchase 1,263 --- 1,263
Short-term borrowings 44,900 100 45,000
Long-term debt --- 600 33,301 7 33,901
Mortgagors' escrow balances 6,683 1,863 8 8,546
Other liabilities 9,684 1,199 670 11,553
---------- --------- --------- ----------
Total liabilities 661,273 155,397 34,204 850,874
Total shareholders' equity 211,766 23,734 (23,734) 9 211,766
---------- --------- --------- ----------
Total liabilities
and shareholders'
equity $ 873,039 $ 179,131 $ 10,470 $1,062,640
========== ========= ========= ==========
</TABLE>
See accompanying notes to the unaudited pro forma condensed combined financial
statements.
<PAGE>
<TABLE>
<CAPTION>
Unaudited Pro Forma Condensed Combined Income Statement
Hudson River Bancorp, Inc. and SFS Bancorp, Inc.
For the Year Ended March 31, 1999
Hudson River SFS Pro Forma Footnote Pro Forma
Bancorp, Inc. Bancorp, Inc. Adjustments Reference Combined
------------- ------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
(In thousands, except per share data)
Interest and dividend income:
Interest and fees on loans $ 47,503 $ 10,668 $ 7 2 $ 58,178
Securities available for sale 9,997 746 926 1 11,669
Securities held to maturity 3,095 932 (932) 1 3,095
Federal funds sold 1,054 207 1,261
Securities purchased under agreements
to resell 1,662 -- 1,662
Federal Home Loan Bank of New
York stock 215 95 310
-------- -------- -------- --------
Total interest and dividend
income 63,526 12,648 1 76,175
-------- -------- -------- --------
Interest expense:
Deposits 25,844 6,702 (233) 6 32,313
Securities sold under agreements to
repurchase 3 -- 3
Short-term borrowings 153 -- 153
Long-term debt -- 16 1,998 7 2,014
-------- -------- -------- --------
Total interest expense 26,000 6,718 1,765 34,483
-------- -------- -------- --------
Net interest income 37,526 5,930 (1,764) 41,692
Provision for loan losses 7,341 105 7,446
-------- -------- --------
Net interest income after
provision for loan losses 30,185 5,825 (1,764) 34,246
-------- -------- -------- --------
Other operating income:
Service charges on deposit accounts 1,274 183 1,457
Loan servicing income 199 -- 199
Net securities transactions 36 -- 36
Net gain on sales of loans held for sale 65 -- 65
Other income 844 2,282 3,126
-------- -------- -------- --------
Total other operating income 2,418 2,465 -- 4,883
-------- -------- -------- --------
Other operating expenses:
Compensation and benefits 10,982 2,660 (291) 10 13,351
Occupancy 1,498 621 (3) 3 2,116
Equipment 1,647 199 1,846
Other real estate owned and
repossessed property expenses 1,013 35 1,048
Legal and other professional fees 600 262 862
Postage and item transportation 718 48 766
Charitable foundation contribution 5,200 -- 5,200
Goodwill and other intangibles
amortization 252 -- 604 4 856
Other expenses 4,702 833 58 11 5,593
-------- -------- --------
Total other operating
expenses 26,612 4,658 368 31,638
-------- -------- -------- --------
Income before income tax expense 5,991 3,632 (2,132) 7,491
Income tax expense 2,184 1,468 (611) 5 3,041
-------- -------- -------- --------
Net income $ 3,807 $ 2,164 $ (1,521) $ 4,450
======== ======== ======== ========
Basic earnings per share $ 0.17 12 $ 0.21
======== ========
Diluted earnings per share $ 0.17 12 $ 0.21
======== ========
</TABLE>
See accompanying notes to the unaudited pro forma condensed combined financial
statements.
<PAGE>
<TABLE>
<CAPTION>
Unaudited Pro Forma Condensed Combined Income Statement
Hudson River Bancorp, Inc. and SFS Bancorp, Inc.
For the Three Months Ended June 30, 1999
Hudson River SFS Pro Forma Footnote Pro Forma
Bancorp, Inc. Bancorp, Inc. Adjustments Reference Combined
------------- ------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
(In thousands, except per share data)
Interest and dividend income:
Interest and fees on loans $ 12,931 $2,597 $ 2 2 $15,530
Securities available for sale 3,516 257 155 1 3,928
Securities held to maturity 322 156 (156) 1 322
Federal funds sold - 30 30
Securities purchased under
agreements to resell - - -
Federal Home Loan Bank of New
York stock 55 25 80
--------- ------ ---- -------
Total interest and dividend
income 16,824 3,065 1 19,890
--------- ------ ---- -------
Interest expense:
Deposits 5,760 1,519 (58) 6 7,221
Securities sold under
agreements to repurchase 6 -- 6
Short-term borrowings 473 -- 473
Long-term debt -- 9 500 7 509
--------- ------ ---- -------
Total interest expense 6,239 1,528 442 8,209
--------- ------ ---- -------
Net interest income 10,585 1,537 (441) 11,681
Provision for loan losses 1,700 15 1,715
--------- ------ ---- -------
Net interest income after
provision for loan losses 8,885 1,522 (441) 9,966
--------- ------ ---- -------
Other operating income:
Service charges on deposit
accounts 332 45 377
Loan servicing income 37 -- 37
Net securities transactions 79 -- 79
Net gain on sales of loans
held for sale -- -- --
Other income 144 34 178
--------- ------ ---- -------
Total other operating income 592 79 -- 671
--------- ------ ---- -------
Other operating expenses:
Compensation and benefits 3,098 661 (6) 10 3,753
Occupancy 387 152 (1) 3 538
Equipment 590 47 637
Other real estate owned and
repossessed property expenses 403 3 406
Legal and other professional fees 232 63 295
Postage and item transportation 179 10 189
Goodwill and other intangibles
amortization 91 -- 151 4 242
Other expenses 1,321 296 15 11 1,632
--------- ------ ---- -------
Total other operating expenses 6,301 1,232 159 7,692
--------- ------ ---- -------
Income before income tax expense 3,176 369 (600) 2,945
Income tax expense 1,115 200 (180) 5 1,135
--------- ------ ---- -------
Net income $ 2,061 $ 169 $(420) $1,810
========= ====== === =======
Basic earnings per share $ 0.13 12 $ 0.12
========= =======
Diluted earnings per share $ 0.13 12 $ 0.12
========= =======
</TABLE>
See accompanying notes to the unaudited pro forma condensed combined financial
statements.
<PAGE>
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements
Hudson River Bancorp, Inc. and SFS Bancorp, Inc.
1 Represents the reclassification of SFS's securities held to maturity
portfolio as securities available for sale, at estimated fair market value,
together with a reclassification of the related interest income. The
estimated fair market value adjustment (premium) is assumed to have a life
of 5 years. The adjustment is assumed to amortize on a straight line basis
over this time period into interest on securities available for sale.
2 Represents the estimated fair market value adjustment relating to the loan
portfolio. The estimated life of this portfolio is assumed to be 15 years.
The adjustment is assumed to amortize on a straight line basis over this
time period into interest and fees on loans.
3 Represents the estimated fair market value adjustment relating to premises
and equipment. The estimated life of these assets is assumed to be 30
years. The adjustment is assumed to amortize on a straight line basis over
this time period into occupancy expenses.
4 Represents the estimate of the excess of the total direct acquisition costs
over the estimated fair value of the net assets acquired based upon
currently available information. Goodwill is expected to be amortized on a
straight line basis over 15 years.
5 Represents the estimated income tax effects of the estimated purchase
accounting adjustments. The estimated income tax effect is assumed to be
at a marginal rate of 40%. The income tax effect is reflected in tax
expense during the period that the related purchase accounting adjustments
(other than the amortization of non-deductible goodwill) are assumed to be
amortized.
6 Represents the estimated fair market value adjustment relating to deposits.
The life of these liabilities is assumed to be 12 months. The adjustment is
assumed to amortize on a straight line basis over this time period as a
reduction of interest expense on deposits.
7 Represents the estimated borrowings to be obtained in order to fund this
transaction. The amount includes $25.10 paid for each outstanding share of
SFS stock as of the transaction date (1,207,755 shares), settlement of
123,785 outstanding stock options, settlement of most employment agreements
triggered by the change in control of SFS, and amounts due to attorneys,
accountants, advisors, and other third party consultants in relation to
this transaction. These borrowings are assumed to be long-term in maturity
(in excess of 1 year) and at an assumed rate of 6.00%.
8 Represents an estimated liability in relationship to settlement of certain
employment agreements in conjunction with the closing of the transaction.
9 Represents the elimination of SFS's equity as of the date of the
transaction.
10 Represents the assumed reduction of SFS expenses related to SFS's Employee
Stock Ownership Plan and Recognition and Retention Plan as these plans will
be necessarily eliminated given the nature of the consideration utilized in
the transaction (cash). The amount also includes estimated amounts payable
under stay bonus agreements. These bonus payments would be expensed as
incurred, which is assumed to be within 3 months of the closing date.
11 Represents expenses associated with a 3 year noncompete agreement. Expenses
will be recognized over the period of the agreement.
12 Weighted average shares outstanding are assumed to be 16,302,368 for the
year ended March 31, 1999, and 15,293,786 for the three months ended June
30, 1999. The effect of potential common shares outstanding is
antidilutive, and therefore it is excluded from this pro forma. Net income
of the Company prior to July 1, 1998 is not included in the calculations of
earnings per share for the year ended March 31, 1999.
<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 thereunto duly authorized.
HUDSON RIVER BANCORP, INC.
Date: November 12, 1999 By: /s/Carl A. Florio
-------------------------
Carl A. Florio
President and Chief
Executive Officer
Date: November 12, 1999 By: /s/Timothy E. Blow
-------------------------
Timothy E. Blow, Chief
Financial Officer (Principal
Accounting Officer)
