----------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE TO
(RULE 14D-100)
TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR 13(E)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 6)
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DIME BANCORP, INC.
(Name of Subject Company (Issuer))
NORTH FORK BANCORPORATION, INC.
(Name of Filing Person (Offeror))
COMMON STOCK, $0.01 PAR VALUE PER SHARE
(Title of Class of Securities)
00025429 Q1
(CUSIP Number of Class of Securities)
JOHN ADAM KANAS
CHAIRMAN, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
NORTH FORK BANCORPORATION, INC.
275 BROAD HOLLOW ROAD
MELVILLE, NEW YORK 11747
(631) 844-1004
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications on behalf of Filing Persons)
Copy to:
WILLIAM S. RUBENSTEIN, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
4 TIMES SQUARE
NEW YORK, NEW YORK 10036
(212) 735-3000
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which
the statement relates:
[x] third-party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: [ ]
This Amendment No. 6 (this "Amendment No. 6") amends and
supplements the Tender Offer Statement on Schedule TO, dated March 15,
2000, as amended (the "Schedule TO"), filed by North Fork Bancorporation,
Inc., a Delaware corporation ("North Fork"), and Fleet Boston Corporation,
a Rhode Island corporation ("FleetBoston"), relating to the offer (the
"Offer") by North Fork to exchange each issued and outstanding share of
common stock, par value $0.01 per share (the "Dime Shares"), of Dime
Bancorp, Inc., a Delaware corporation ("Dime"), for 0.9302 shares of common
stock, par value $0.01 per share (the "North Fork Shares"), of North Fork
and $2.00 in cash, on the terms and subject to the conditions described in
the Prospectus (as defined below).
On March 28, 2000, North Fork filed Amendment No. 1 to its
registration statement on Form S-4 with the Securities and Exchange
Commission relating to the North Fork Shares to be issued to stockholders
of Dime in the Offer (the "Registration Statement"). The terms and
conditions of the Offer are set forth in the preliminary prospectus dated
March 27, 2000, which is a part of the Registration Statement (the
"Prospectus"), and the related Letter of Transmittal, which are annexed to
the Schedule TO as Exhibits (a)(14) and (a)(2), respectively.
ITEM 11. ADDITIONAL INFORMATION.
Item 11 of the Schedule TO is hereby amended and
supplemented as follows:
1. The following section entitled "RISK FACTORS" is inserted before
the section entitled "THE NORTH FORK OFFER" beginning on page 27 of
the Prospectus:
RISK FACTORS
In deciding whether to tender your shares pursuant to the offer,
you should read carefully this prospectus and the documents to which we
refer you. You should also carefully consider the following factors:
IF WE DO NOT SUCCESSFULLY INTEGRATE NORTH FORK'S AND DIME'S OPERATIONS, THE
ANTICIPATED BENEFITS OF THE ACQUISITION OF DIME MAY NOT BE FULLY REALIZED
If we complete the offer and our proposed merger, we will integrate
two companies that have previously operated independently. We have not
previously acquired an organization comparable in size to Dime or where
there is the potential for management to be uncooperative in the
integration process. Although we believe that the integration of Dime's
operations into ours will not present any significant difficulty, there can
be no assurance that we will not encounter difficulties in our
efforts to integrate the operations of Dime with our operations. The
diversion of the attention of management to the integration effort and any
difficulties encountered in combining operations could adversely affect the
combined company's business and results of operations.
With total assets of $23.9 billion and total deposits of $14.3
billion as of December 31, 1999, Dime is both larger than us (we had total
assets of $16.3 billion and total deposits of $9.2 billion on a pro forma
basis as of such date, giving effect to our acquisitions of JSB Financial
and Reliance Bancorp) and larger than any of the thrift institutions that
we have acquired to date. However, we do not believe that asset size in and
of itself is a significant driver of the relative level of difficulty in
integrating an acquired institution. In fact, with respect to size, we
believe that a more relevant factor affecting the difficulty of integrating
an entity is the number of branches to be integrated. Dime's network of
thrift branches consists of 127 offices, compared to our network of 154
branches. Excluding the 17 Dime branches that we have agreed to sell to
FleetBoston, the 110 remaining Dime branches would represent our largest
acquisition to date. By way of comparison, in February of this year we
completed the acquisitions of JSB Financial and Reliance Bancorp, which
together had a total of 42 branches. Although we do not believe Dime's
size, whether in terms of assets, branches or otherwise, will result in any
significant or unique difficulties with respect to our integration efforts,
there can be no assurance that such factors will not present unforeseen
problems in our efforts to integrate the operations of Dime with our
operations.
Although we believe that Dime's banking business (exclusive of
Dime's mortgage banking subsidiary) is fundamentally similar to the
businesses of the thrift institutions that we have acquired previously, we
have not previously acquired a thrift institution with a presence in each
and every separate business line, however small, in which Dime is engaged.
However, excluding Dime's mortgage banking subsidiary (which we expect to
continue to manage as a separate subsidiary), all of Dime's remaining
significant business lines represent businesses in which we are actively
engaged currently, and, in certain cases, with a larger operation than
Dime's. Excluding Dime's mortgage banking subsidiary and Dime's investment
portfolio (which simply represents balance sheet leverage and is not an
actual business), Dime's retail banking operations constitute approximately
70% of Dime's remaining assets and consist mainly of real estate lending
and consumer lending, both of which represent businesses in which we are,
and a majority of our previous acquisition targets were, actively engaged.
Dime's commercial banking operations constitute the other 30% of Dime's
remaining assets and consist of commercial real estate lending and business
lending. At December 31, 1999, Dime's combined commercial real estate and
business loan portfolio was approximately $4.5 billion, while as of the
same date our equivalent loan portfolio was approximately $5.38 billion
(pro forma for JSB and Reliance).
We have never acquired a thrift institution with a significant
mortgage banking operation, nor do we have significant experience managing
a mortgage banking business. However, we have assumed no cost savings or
other integration efficiencies with respect to this segment of Dime's
business, and we would seek to retain the senior management at Dime's
mortgage banking subsidiary following completion of our acquisition of
Dime. Although we do not believe that our lack of experience in acquiring
or managing a mortgage banking operation comparable in size to Dime's will
result in any significant difficulties, there can be no assurance that this
lack of experience will not present unforeseen problems in our efforts to
manage Dime's mortgage banking operations.
THERE IS NO GUARANTEE THAT WE WILL ACHIEVE PROJECTED COST SAVINGS
We have estimated that by combining North Fork and Dime, we could
realize cost savings of approximately $100 million per year (after tax).
Because we were unable to discuss any of our cost savings assumptions or
analyses with management of Dime and because we have had no access to
Dime's internal information about its operations in connection with the
preparation of our cost savings estimates, we have relied on publicly
available information concerning Dime, our general knowledge of the markets
in which we and Dime compete and our past experience with respect to our
own operations and our integration of acquired financial institutions. If
we were permitted access to Dime's internal information about its
operations or if we were able to discuss our assumptions or analyses with
Dime's management, our cost savings estimate might differ. In addition,
although we believe that we have the requisite experience to realize the
estimated cost savings and have achieved comparable cost savings in prior
acquisitions, no assurance can be given that the estimated cost savings
will be achieved or will occur in the time period anticipated. Furthermore,
there can be no assurance that cost savings which are realized will not be
offset by increases in other expenses, other charges to earnings or losses
of revenue, including losses due to problems in integrating the Dime
operations into North Fork.
We expect to realize a significant portion of the cost savings
through a merger of our bank subsidiary, North Fork Bank, and Dime's bank
subsidiary, The Dime Savings Bank of New York, FSB, which will require
additional regulatory approvals. These significant cost savings will not be
realized unless and until we are able to complete the merger of these
entities. Receipt of regulatory approval for this subsidiary merger is not
a condition to the offer or the merger of Dime and North Fork. We currently
intend to file the necessary regulatory applications with the New York
State Banking Department and the Federal Deposit Insurance Corporation in
order to obtain approval of the merger of Dime Savings Bank and North Fork
Bank promptly following completion of the offer. Although we are not aware
of any reason why such approvals will not be obtained in the ordinary
course and within usual and customary time frames so as to permit us to
realize our estimated cost savings in the time period estimated, there can
be no assurance as to whether or when we will obtain such approvals.
THERE IS NO GUARANTEE THAT WE WILL NOT SUFFER NET REVENUE RUN-OFF
In formulating our 2001 earnings estimates, we have not assumed any
net run-off of revenue attributable to our acquisition of Dime. This
assumption is based on our prior acquisition experience, where we have been
able to grow net interest income and non-interest income while achieving
targeted cost savings. In addition, we have not made any decisions with
respect to branch closings because we do not have access to internal
information of Dime from which we would expect to make such decisions.
Accordingly, our earnings estimates do not assume the closure of any Dime
(or North Fork) branches, although we would anticipate that certain
branches will be closed. Based on our experience in prior acquisitions, we
believe that any revenue reduction resulting from any branch closings would
be offset by additional cost savings associated with such branch closings.
If we were permitted access to non-public information regarding Dime's
business plans and operations, our assumption of no net revenue run-off
might differ. Although we intend generally to integrate Dime's operations
and implement our cost savings measures in a manner that is designed to
minimize the loss of revenues, there can be no assurance that some revenue
will not be lost. Factors that could cause a loss of revenues include
unanticipated loss of customers due to a lack of customer acceptance of our
deposit, lending and investment products.
2. The section entitled "REASONS FOR THE NORTH FORK OFFER"
beginning on page 27 of the Prospectus is revised in its
entirety to read as follows:
REASONS FOR THE NORTH FORK OFFER
We believe that our proposed acquisition of Dime represents a
compelling opportunity to enhance value for both Dime and North Fork
stockholders and to create a combined commercial banking franchise with a
more prominent market position in the New York metropolitan area.
Specifically, we estimate that a combination of North Fork and Dime would
result in:
o accretion to North Fork's diluted GAAP earnings per share of
14.9% for 2001;
o accretion to North Fork's diluted cash earnings per share
(i.e., reported earnings before amortization of intangibles)
of 21.2% in 2001;
o an increase in North Fork's pro forma book value as of
December 31, 1999 (giving effect to North Fork's
acquisitions of JSB and Reliance) from $7.34 per share to
$11.27 per share; and
o an increase in North Fork's pro forma tangible book value as
of December 31, 1999 (giving effect to North Fork's
acquisitions of JSB and Reliance) from $5.37 per share to
$5.46 per share.
Since each Dime stockholder would become a North Fork stockholder upon
completion of our offer and the merger, the accretion benefits to North
Fork shares would be enjoyed by Dime stockholders as well. For additional
information concerning our offer, Dime stockholders and others are referred
to our Current Report on Form 8-K filed with the SEC on March 13, 2000,
which includes the investor presentation materials with respect to our
offer and a transcript of the related investor conference call held on
March 6, 2000.
In addition, we believe that the combination of North Fork and Dime
will produce substantial benefits for Dime stockholders, including the
following:
o Significant Premium. Based on April 10, 2000 closing prices,
our offer represents a premium of approximately 57% over the
implied value of the proposed Dime-Hudson merger. Based on
closing prices for North Fork common stock and Hudson common
stock for each trading day since the announcement of our
offer on March 5, 2000 through the date prior to the date of
this document, the value of our offer has represented an
average premium of approximately 39.4% over the implied
value of the proposed Dime-Hudson merger.
o Better Long-Term Growth Prospects. We believe that a
combination of North Fork and Dime has better long-term
growth prospects than the proposed Dime-Hudson merger,
potentially resulting in increased stockholder value over
the long-term. We have a proven history of strong
profitability and growth in stockholder value based on
several common benchmarks used to measure performance. The
tables below set forth figures for certain common
performance and profitability measurements for each of North
Fork, Dime, Hudson, a bank peer group and a thrift peer
group for Dime.
On the basis of total return to shareholders, we have
significantly outperformed Dime, Hudson and the bank and
thrift peer groups.
3 YEARS 5 YEARS 7 YEARS
------- ------- -------
Total Return to Shareholders (1)
- ----------------------------
NORTH FORK 58.3% 333.2% 645.6%
Dime 5.1 100.1 234.0
Hudson 24.4 127.2 225.8
Bank Peer Group (2) 31.3 150.3 178.8
Thrift Peer Group (3) (11.6) 120.5 65.2
A comparison of our operating performance data to operating performance
data of Dime, Hudson and the bank and thrift peer groups demonstrates our
superior operating performance.
1999 1998 1997 1996
---- ---- ---- ----
Return on Average Assets
NORTH FORK 1.92% 2.04% 1.75% 1.43%
Dime 1.11 1.13 0.64 0.62
Hudson 1.27 1.05 1.01 0.90
Bank Peer Group (2) 1.34 1.40 1.39 1.31
Thrift Peer Group (3) 0.88 0.83 0.64 0.72
Return on Average Common Equity
NORTH FORK 27.1% 25.2% 25.2% 19.9%
Dime 16.7 18.1 11.7 12.4
Hudson 20.2 14.0 12.6 10.6
Bank Peer Group (2) 16.8 16.9 17.5 17.0
Thrift Peer Group (3) 17.9 17.8 13.4 14.7
Net Interest Margin
NORTH FORK 4.16% 4.48% 4.42% 4.24%
Dime 2.91 2.68 2.51 2.40
Hudson 4.04 4.10 4.25 4.23
Bank Peer Group (2) 3.89 3.95 4.17 4.20
Thrift Peer Group (3) 2.54 2.57 2.66 2.75
Operating Efficiency Ratio (4)
- --------------------------
NORTH FORK 33.2% 33.7% 37.5% 41.7%
Dime 62.2 63.5 56.7 57.4
Hudson 50.3 55.0 59.0 60.4
Bank Peer Group (2) 51.1 52.4 52.4 53.1
Thrift Peer Group (3) 46.0 51.1 54.1 57.9
- --------------------------
(1) Defined as stock price appreciation plus reinvestment of all
dividends in common stock of the issuer on a pre-tax basis. All
periods end December 31 1999. Source: Bloomberg L.P.
(2) Averages for a Bank Peer Group consisting of Summit Bancorp,
Associated Banc- Corp and M&T Bancorp. These three bank holding
companies, together with North Fork, comprised a bank peer group
utilized in certain analyses performed by Dime's financial advisor
and described in the Joint Proxy Statement/Prospectus dated February
8, 2000 with respect to the proposed Dime-Hudson merger.
(3) Averages for a Thrift Peer Group for Dime consisting of Astoria
Financial Corp., Sovereign Bancorp, Washington Mutual and Golden
State Bancorp, Inc., which represents the peer group for Dime as per
the Dime/Hudson investor presentation dated September 15, 1999 made
in connection with the announcement of the proposed Dime-Hudson
merger.
(4) Defined as noninterest expenses (excluding amortization of
intangibles) divided by noninterest income (excluding securities
gains and losses) plus net interest income, excluding all
nonrecurring items.
Source: SNL Securities and company reports (except data for Total
Return to Shareholders - See note (1) above). Data has been adjusted
for prior acquisitions accounted for as poolings of interests and to
exclude nonrecurring items.
Of course, past performance is not a guarantee of future
results. However, as evidenced from the figures set forth
above, we have consistently achieved strong profitability
and operating results and superior shareholder returns.
o Low Execution Risk. We have acquired nine banking
institutions during the past ten years. The majority of
these institutions were "thrift institutions" whose
businesses focused primarily on gathering consumer deposits
and making residential mortgage loans. We believe that
Dime's banking business (exclusive of Dime's mortgage
banking subsidiary) is fundamentally similar to the
businesses of the majority of institutions that we have
acquired. We believe that our ability to continually lower
our efficiency ratio while integrating acquisitions
demonstrates our ability to manage execution risk and
maintain superior operating returns.
In analyzing the combination with Dime, we assumed that cost
savings of $155 million ($100 million after-tax) would be
phased in by December 31, 2000, representing approximately
50% of our estimate of Dime's 2001 operating expenses
related to its banking operations, approximately 25% of our
estimate of Dime's total 2001 operating expenses and
approximately 15% of our estimate of total non-interest
expense for North Fork and Dime on a combined basis for
2001. In analyzing the anticipated benefits of the
combination with Dime, we have not assumed the realization
of any net revenue enhancements in connection with the
transaction. See note 2 to the table below and see "- Cost
Savings; Revenue Retention" below.
o Improved Cash Dividends. During 1999 Dime paid dividends on
its common stock of $0.23 per share. According to the Joint
Proxy Statement/Prospectus dated February 8, 2000 for the
proposed Dime- Hudson merger (the "Joint Proxy
Statement/Prospectus"), following the proposed Dime-Hudson
merger, Dime stockholders are expected to receive pro forma
equivalent dividends of $0.60 per share (based on the
exchange ratio of .60255 in the proposed Dime-Hudson merger
and the proposed dividend of $1.00 per share that Dime
United expects to pay if the proposed Dime-Hudson merger is
completed). Based on our current annual dividend of $0.72
per share, Dime stockholders would receive a pro forma
equivalent dividend of $0.67, or more than 190% above Dime's
current annual dividend rate and more than 11% above the pro
forma equivalent dividend per Dime share in the proposed
Dime-Hudson merger. In the past five years, on a compounded
basis, we have achieved a 40.1% annual growth rate in our
per share dividend, compared to a 24.9% annual growth rate
for Hudson's per share dividend over the same period. In
addition to the increased dividend, Dime stockholders would
have the opportunity to invest and earn a return on the cash
portion of the consideration to be paid in the offer.
Estimated Pro Forma 2001 Earnings Per Share. The table below sets
forth the computation of our revised estimated 2001 pro forma earnings per
share and cash earnings per share (earnings per share excluding the
amortization of goodwill). We have revised our original pro forma earnings
per share and cash earnings per share estimates based on pro forma
financial information for North Fork and Dime on a combined basis as of and
for the year ended December 31, 1999 and revised mean I/B/E/S 2001 diluted
GAAP earnings per share estimates as of March 31, 2000 of $2.01 for North
Fork and $2.52 for Dime (I/B/E/S is a data service that monitors and
publishes compilations of earnings estimates by selected research
analysts). Using the March 31 mean I/B/E/S stand-alone earnings per share
estimates for North Fork and Dime, and assuming:
o the realization of cost savings as estimated by our management
(see "--Cost Savings; Revenue Retention" below),
o the impact of deleveraging the pro forma balance sheet,
o the foregone net income from the proposed sale of branches to
FleetBoston,
o foregone earnings on cash utilized in the transaction, and
o purchase accounting adjustments on a basis consistent with
the adjustments described in "Notes to Pro Forma Condensed
Combined Financial Statements (Unaudited),"
we estimate that our proposed acquisition of Dime would result in accretion
to our earnings per share and cash earnings per share as set forth in the
table below. Factors that could affect our ability to achieve these results
include, among other things:
o the failure to achieve estimated cost savings in the amounts
or in the time period estimated (see "Risk Factors" and
"--Cost Savings; Revenue Retention"),
o changes in interest rates, which could have an adverse effect on
the combined company's net interest margin and earnings, and
o changes in interest rates, which will affect the fair value
of Dime's financial assets and liabilities, and changes in
the market price of North Fork common stock between March 3,
2000 and the date that the value of the North Fork shares is
determined for purchase accounting purposes, each of which
could result in recognition of higher levels of goodwill and
other intangibles, the amortization of which would reduce
earnings.
In addition, the information in the table below is inherently subject to
significant business, economic and competitive uncertainties and
contingencies, many of which are beyond our control. See "Forward-Looking
Statements." The information in the table below and the related assumptions
are not necessarily indicative of future performance, which may be
significantly less favorable or more favorable than as set forth below.
<TABLE>
<CAPTION>
ESTIMATED 2001
PRO FORMA
NET INCOME
--------------
($ in millions, except
for per share data)
<S> <C>
North Fork Net Income (1)....................................... $ 347
Dime Net Income (1)............................................. 283
-------
Total Net Income................................................ $ 630
=======
After-Tax Adjustments:
Cost Savings (2)............................................. $ 100
Net Revenue Enhancements/Run-off............................. 0
Foregone Earnings on Cash Disbursements (3).................. (12)
Branch Sale to FleetBoston and Deleveraging Impact (4)....... (41)
Incremental Goodwill Amortization and Net Purchase Accounting
Adjustments (5)............................................ (5)
-------
Pro Forma Net Income (6)........................................ $ 672
=======
North Fork Per Share Impact:
Pro Forma Diluted EPS (7).................................... $ 2.31
Stand-Alone Diluted EPS (1).................................. $ 2.01
GAAP Diluted EPS Accretion................................... 14.9%
Goodwill Amortization........................................ $ 78
Pro Forma Diluted Cash EPS (7)............................... $ 2.57
Stand-Alone Diluted Cash EPS................................. $ 2.12
Cash Diluted EPS Accretion................................... 21.2%
- -----------------------
(1) Based on March 31, 2000 mean I/B/E/S diluted GAAP earnings
per share estimates for 2001 of $2.01 for North Fork and
$2.52 for Dime.
(2) Assumes cost savings of $155 million in 2001 (or $100
million after tax), equivalent to approximately 50% of North
Fork's estimate of Dime's 2001 operating expenses related to
its banking operations, approximately 25% of North Fork's
estimate of Dime's total 2001 operating expenses and
approximately 15% of North Fork's estimate of combined total
non-interest expense for North Fork and Dime for 2001. See
"-Cost Savings; Revenue Retention" below.
(3) Reflects foregone earnings on cash disbursements in
connection with the completion of the transaction at an
assumed annual rate of 7.50% pre-tax. Cash disbursements
consist of the $2.00 per Dime share cash component of the
offer, the cash component of transaction costs (see Note 4
to the Pro Forma Condensed Combined Financial Statements
(Unaudited)), and cash used in connection with cashing out
Dime employee stock options and/or purchasing North Fork
common stock in the market to satisfy the exercise of Dime
employee stock options (see note (7) below), net of the $250
million in cash to be received in connection with
FleetBoston's investment in North Fork.
(4) Reflects foregone earnings in an amount equal to assumed
annual net pre-tax return of 2.00% on assets and deposits
related to branches to be sold to FleetBoston (see "The
Offer-Source and Amount of Funds"), and a 1.25% annual
pre-tax margin related to the disposition of $2 billion in
securities and retirement of associated liabilities to
deleverage the balance sheet. Assumes that the sale of Dime
branches to FleetBoston and the balance sheet deleveraging
both will be completed on or prior to 12/31/2000.
(5) Assumes incremental goodwill amortized over 20 years and the
net impact of all purchase accounting adjustments, with
amortization of premium and accretion of discount over the
estimated remaining life of the associated asset or
liability. See "Pro Forma Condensed Combined Financial
Statements (Unaudited)."
(6) Prior to dividends paid on convertible preferred stock
issued to FleetBoston. Does not reflect any special or
non-recurring charges that may be incurred in 2001 in
connection with branch closings or consolidation of
operations of Dime and North Fork. See Note (4) to the Pro
Forma Condensed Combined Financial Statements (Unaudited).
(7) Based on Pro Forma Net Income and 291.0 million shares
outstanding. Incorporates dilutive impact of convertible
preferred stock and stock purchase rights issued to
FleetBoston. Assumes cash out of all "in-the- money" Dime
stock options at the aggregate spread value of such options,
based on the value of our offer as of March 31, 2000, or,
alternatively, the purchase in the market of shares of North
Fork common stock necessary to satisfy exercise of such
options. See Note (2) to the Pro Forma Condensed Combined
Financial Statements (Unaudited). On a pro forma equivalent
basis, Dime shareholders will receive North Fork shares with
estimated 2001 diluted GAAP earnings per share of $2.41
(calculated by multiplying 1.042, the all- stock equivalent
exchange ratio (see "Comparative Per Share Data"), by
estimated North Fork 2001 diluted earnings per share of
$2.31), or approximately 4.4 percent less than the
stand-alone I/B/E/S estimate of Dime's 2001 diluted GAAP
earnings per share of $2.52. The all-stock equivalent
exchange ratio assumes that a Dime stockholder reinvests the
$2.00 cash per share received in the offer in shares of
North Fork common stock on March 31, 2000. Certain Dime
stockholders will realize taxable income on some or all of
the $2.00 cash component of the offer. See "The
Offer-Material United States Federal Income Tax
Consequences."
</TABLE>
Cost Savings; Revenue Retention. Our estimate of cost savings in
connection with our proposed acquisition of Dime is based on our estimate
of the total cost to us to operate Dime's core banking business in 2001 as
part of a combined North Fork- Dime. This estimate was based on various
considerations, including our prior experience in acquiring thrift
institutions, our existing cost structure and our estimate of the direct
costs and marginal back office and lending costs necessary to operate
acquired thrift branches. Because we were unable to discuss any of our cost
savings assumptions or analyses with management of Dime and have had no
access to Dime's internal information about its operations in connection
with the preparation of our cost savings estimates, we have relied on
publicly-available information concerning Dime, our general knowledge of
the markets in which we and Dime compete and our past experience with
respect to our own operations and our integration of acquired financial
institutions.
For purposes of arriving at our estimates, we analyzed Dime's core
banking operations and Dime's mortgage banking subsidiary, North American
Mortgage Company, as separate business segments. We did not assume any cost
savings associated with Dime's mortgage banking business, even though
Dime's own publicly-available information reflects a continued downsizing
of this business.
While we do not have sufficient information with respect to Dime's
operations from which we may determine with precision where we would expect
to derive our estimated cost savings, we have assumed that between 50% and
60% of these cost savings would be derived from reductions in salary
expenses associated with consolidation of executive management and back
office personnel (which generally would include personnel in accounting,
audit, data processing, human resources, lending, marketing and retail
operations and all other employees other than branch employees), between
10% and 15% of these costs savings would be associated with reduced costs
from operation and maintenance of premises and equipment and the remaining
amounts would be derived from the elimination of other redundant expenses
as a result of consolidation of lending and back office operations. This
assumption is based on our experience in prior acquisitions. The precise
areas where cost savings will be obtained will depend on various factors
including the extent to which various functions of Dime are handled
internally or provided by third parties and the extent to which back office
costs are allocated to other areas within Dime.
In recent court papers filed by Dime in connection with certain
pending litigation, Dime has asserted that our estimate of cost savings
related to reductions in salary expenses for executive management and back
office personnel of 50-60% of total estimated cost savings, or $77.5-$93
million, is misleading because Dime estimates that such expenses are less
than $75 million annually. As stated above, we have not had access to any
internal information concerning Dime's business or operations, and, for
that reason, we are unable to determine precisely where our estimated cost
savings would be achieved. Nevertheless, our aggregate cost savings
estimate is based on our prior acquisition experience and our estimate of
the costs to us to operate Dime's core banking business as part of a
combined North Fork-Dime, and, accordingly, we believe our aggregate cost
savings estimate is reasonable.
Our estimate of cost savings of $155 million (or approximately $100
million on an after-tax basis) is equivalent to approximately 50% of our
estimate of Dime's total operating expenses associated with its core
banking operations for 2001 and 25% of our estimate of Dime's total
operating expenses for 2001 on a consolidated basis. Our estimate of the
total operating expenses associated with Dime's core banking operations on
a stand-alone basis for 2001 was based on our estimate of Dime's fourth
quarter operating expenses for its core banking operations, which was then
annualized and grown at an assumed rate to reflect the impact of inflation.
Our estimate of Dime's fourth quarter operating expenses for its core
banking operations was derived from actual revenue, profit and depreciation
and amortization information for Dime, both on a consolidated basis and for
its individual business segments, as published in Dime's Quarterly Reports
on Form 10-Q for the periods ended March 31, 1999, June 30, 1999, and
September 30, 1999, and Dime's Annual Report on Form 10-K for the year
ended December 31, 1999 which Dime filed on March 30, 2000, and an assumed
37% tax rate for Dime. We also reviewed other publicly-available
information published by Dime, including its earnings release with respect
to its operating results for the fourth quarter of 1999 and the full year
1999.
In court papers filed by Dime in connection with its federal
securities law allegations against us and our directors, Dime has asserted
that our cost savings estimates are "completely out of line with recent
comparable bank acquisitions, unprecedented and probably unachievable."
Dime has attempted to support its assertions by pointing out that our
estimated cost savings represent "86% of North Fork's current [1999] core
expense base" and by making unsupported allegations that our costs savings
estimates are "dramatically higher than the most aggressive projections for
recently announced comparable in-market bank or thrift combinations."
We believe that Dime's assertions are nothing more than a deliberate
attempt to distort the facts. Dime's presentation of our cost savings
estimate (which is based on our estimate of Dime's 2001 operating expenses
for its banking business) as a percentage of our own 1999 expense base is
an irrelevant comparison because we are not the company being acquired,
Dime is - and our intention is to impose our cost structure on Dime's
operations. In this regard, we believe it is important to understand that
our historical overhead ratio is among the lowest for any banking
institution in the country. In other words, we have one of the lowest-cost,
most efficient overhead structures of any bank in the United States. In
fact, of the 100 largest banks in the United States based on market
capitalization, we had the lowest overhead ratio in 1999 (Source: SNL
Securities). Accordingly, any amount of estimated cost savings will appear
larger when compared to our already-lean cost base. By comparison, Dime's
overhead ratio is almost twice as high as ours and far higher than the
overhead structure of its own peer group (see the second preceding table
above and note 3 thereto).
More importantly, our targeted cost savings are, in fact, consistent
with the level of estimated cost savings in our previous acquisitions, and
are neither "unprecedented" nor "dramatically higher than the most
aggressive projections" for recently announced comparable transactions, as
evidenced by the two tables below, which reflect the estimated cost savings
for our four most recent public in-market thrift acquisitions and for seven
comparable in-market thrift acquisitions announced in 1998 and 1999 with a
transaction value of $500 million or greater. In fact, two of those
comparable transactions, Roslyn Bancorp/TR Financial Corp. and Astoria
Financial/Long Island Bancorp, involved in-market combinations of two New
York metropolitan-area thrifts where the cost savings estimates amounted to
52% and 50%, respectively, of the acquired company's total operating
expense base. When reviewing the table for comparable in-market thrift
acquisitions, we believe it is important to note the efficiency ratio of
the acquiror compared to the efficiency ratio of the acquired company.
Compared to all the companies in the table, we have the lowest efficiency
ratio and Dime has the highest.
<TABLE>
<CAPTION>
NORTH FORK IN-MARKET ACQUISITIONS-COST SAVINGS ESTIMATES
Date Announced Target Company Purchase Price (1) % Cost Savings (2)
-------------- -------------- ------------------ ------------------
<C> <C> <C> <C>
8/31/99 Reliance Bancorp, Inc. $354.4 52.0%
8/16/99 JSB Financial, Inc. 592.6 66.0
10/7/97 New York Bancorp Inc. 831.6 50.0
7/15/96 North Side Savings Bank 210.0 30.0 to 45.0
- -------------------------
(1) In millions. Source: SNL Securities.
(2) Announced cost savings (pre-tax) as a percentage of target
company's noninterest expense (excluding amortization of
intangibles).
</TABLE>
<TABLE>
<CAPTION>
COMPARABLE IN-MARKET THRIFT ACQUISITIONS-COST SAVINGS ESTIMATES
Efficiency Ratios(3)
-------------------
Date Purchase % Cost
Announced Acquiror Target Price (1) Savings (2) Acquiror Target
--------- -------- ------ ---------- ----------- -------- ------
<C> <C> <C> <C> <C> <C> <C>
8/16/99 North Fork JSB Financial, Inc. $592.6 66.0% 34.4% 47.3%
5/26/98 Roslyn Bancorp TR Financial Corp. 1,114.1 52.0 40.6 45.6
4/3/98 Astoria Financial Long Island Bancorp 1,765.7 50.0 50.3 58.9
3/17/98 Washington Mutual H.F. Ahmanson & Co. 9,907.0 40.0 53.3 54.0
2/5/98 Golden State Bancorp First Nationwide 1,806.0 46.0 55.9 75.7(4)
1/14/98 Fifth Third Bancorp CitiFed Bancorp, Inc. 725.4 40.0 43.3 59.4
1/5/98 Fifth Third Bancorp State Savings Co. 903.3 35.0 43.3 47.5
------
AVERAGE 47.0%
AVERAGE (EXCLUDING NORTH FORK/JSB) 43.8%
3/5/00 NORTH FORK DIME BANCORP $1,993.0 50.0%(5) 33.2% 62.2%
- -------------------------
(1) In millions. Source: SNL Securities.
(2) Announced cost savings (pre-tax) as a percentage of target
company's noninterest expense (excluding amortization of
intangibles).
(3) Efficiency ratio for last twelve months prior to
announcement. Efficiency ratio is the quotient obtained by
dividing noninterest expense (excluding amortization of
intangibles) by net interest income plus noninterest income
(exclusive of nonrecurring items). Source: SNL Securities
and SEC reports.
(4) Efficiency ratio for year ended 12/31/96.
(5) Estimated cost savings represent 50% of our estimate of
Dime's 2001 operating expenses for its banking business
(exclusive of Dime's mortgage banking subsidiary) and 25% of
our estimate of Dime's total 2001 operating expenses.
</TABLE>
We believe that we have the requisite experience to realize the
estimated cost savings and have achieved comparable cost savings in prior
acquisitions, although no assurance can be given that the estimated cost
savings will be achieved or will occur in the time period anticipated. In
addition, cost savings may not be limited to Dime's core banking business
but may include cost savings associated with Dime's mortgage banking
subsidiary as we continue to evaluate this business segment. There can be
no assurance that cost savings realized will not be offset by increases in
other expenses, other charges to earnings or losses of revenue. See "Risk
Factors" and "Forward-Looking Statements."
As indicated in the table above, we have not assumed any net revenue
enhancements in formulating our estimate of 2001 earnings per share. In
addition, we have not assumed any net run-off in revenue attributable to
our acquisition of Dime. This latter assumption is based on our prior
acquisition experience, where we were able to grow net interest income and
non-interest income while achieving targeted cost savings. In addition, we
have not made any decisions with respect to branch closings because we do
not have access to internal information of Dime from which we would expect
to make such decisions. Accordingly, our pro forma 2001 earnings per share
estimate does not assume the closure of any Dime (or North Fork) branches,
although we would anticipate that certain branches will be closed. Based on
our experience in prior acquisitions, we believe that any revenue reduction
that might result from any branch closings would be offset by additional
cost savings associated with such branch closings.
If we were permitted access to non-public information regarding
Dime's business plans and operations, our assumptions of no net revenue
enhancements and no net revenue run-off might differ. We intend generally
to implement our cost savings measures and to integrate the operations of
the two companies in a manner that is designed to minimize the loss of
revenues, although there can be no assurance that some revenue will not be
lost. Factors that could cause a loss of revenues include unanticipated
loss of customers due to a lack of customer acceptance of our deposit,
lending and investment products and services. See "Risk Factors."
We note that we have not previously acquired an organization
comparable in size to Dime or where there is the potential for management
to be uncooperative in the integration process. Although we believe that
the integration of Dime's operations into ours will not present any
significant difficulty, the integration of Dime into North Fork could
result in difficulties that could adversely affect the results of
operations of the combined company. See "Risk Factors" and "Forward-
Looking Statements."
SIGNATURE
After due inquiry and to the best of my knowledge and
belief, each of the undersigned certifies that the information set forth in
this statement relating to it is true, complete and correct.
Dated: April 11, 2000
NORTH FORK BANCORPORATION, INC.
By: /s/ Daniel M. Healy
-------------------------
Name: Daniel M. Healy
Title: Executive Vice President and
Chief Financial Officer
