<PAGE>
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) March 13, 2000
NORTH FORK BANCORPORATION, INC.
(Exact Name of Registrant as Specified in Charter)
- ---------------------------- ------------------------ -------------------
DELAWARE 1-10458 36-3154608
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
275 Broad Hollow Road Melville, New York 11747
(Address of Principal Executive Offices) (Zip Code)
(Registrant's Telephone Number, Including Area Code) (516) 844-1004
<PAGE>
ITEM 5. OTHER EVENTS
North Fork Bancorporation, Inc., a Delaware corporation ("North Fork") announced
on March 5, 2000 its intention to commence an offer to exchange 0.9302 of North
Fork common stock and $2.00 in cash for each outstanding share of common stock
of Dime Bancorp, Inc., a Delaware Corporation ("Dime") including the associated
preferred share purchase rights issued pursuant to the Dime Stockholder
protection rights plan. This current report on Form 8-K includes (1) certain
presentation materials first available to investors on March 6, 2000 and (2)
transcript of North Fork conference call which took place on Monday, March 6,
2000.
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
(c) Exhibits
99.1 Presentation materials for investors first available on
March 6, 2000.
99.2 Transcript of North Fork Bancorporation, Inc. conference call
which took place on Monday, March 6, 2000 at 11:00 AM Eastern
Time.
<PAGE>
SIGNATURE
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 hereunder duly authorized.
Dated: March 13, 2000
NORTH FORK BANCORPORATION, INC.
By: /s/ Daniel M. Healy
-------------------------------------
Name: Daniel M. Healy
Title: Executive Vice President
and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
99.1 Presentation materials for investors first available on
March 6, 2000.
99.2 Transcript of North Fork Bancorporation, Inc. conference call
which took place on Monday, March 6, 2000 at 11:00 AM Eastern
Time.
<PAGE>
NORTH FORK BANCORPORATION (NYSE: NFB) [NFB LOGO]
- -------------------------------------------------------------------------------
A better alternative for
DIME BANCORP SHAREHOLDERS
Offered by
NORTH FORK BANCORPORATION
March 6, 2000
- --------------------------------------------------------------------------------
Conference Call Logistics
You are invited to participate in a North Fork Bancorporation CONFERENCE CALL on
MONDAY, MARCH 6, AT 11:00 A.M. EASTERN TIME.
On the call, John A. Kanas, Chairman, President and Chief Executive Officer of
North Fork will discuss North Fork Bancorporation's exchange offer for Dime
Bancorp. A question and answer session will follow the formal presentation.
The call will begin promptly at 11:00 a.m. To ensure your participation in the
entire call, please call (800) 967-7185 (toll-free in the United States) or
(719) 457-2634 (International callers) between 10:45 a.m. and 10:55 a.m. EST.
The call will be recorded, and will be available for playback beginning at 2
p.m. Eastern time until 8:00 p.m. on Friday March 10th by dialing (719) 457-0820
or (888) 203-1112, confirmation #192561.
- --------------------------------------------------------------------------------
1
<PAGE>
FORWARD LOOKING STATEMENTS [NFB LOGO]
- -------------------------------------------------------------------------------
o This document contains forward-looking statements concerning the financial
condition, results of operations and business of North Fork Bancorporation,
Inc. ("North Fork" or "NFB") following the consummation of its proposed
acquisition of Dime, the anticipated financial and other benefits of such
proposed acquisition and the plans and objectives of North Fork's
management following such proposed acquisition , including, without
limitation, statements relating to: (A) the cost savings expected to result
from the proposed acquisition, (B) anticipated results of operations of the
combined company following the proposed acquisition, (C) projected earnings
per share of the combined company following the proposed acquisition, and
(D) the restructuring charges estimated to be incurred in connection with
the proposed acquisition. Generally, the words "will," "may," "should,"
"continue," "believes," "expects," "anticipates" or similar expressions
identify forward-looking statements. These forward-looking statements
involve certain risks and uncertainties. Factors that could cause actual
results to differ materially form those contemplated by the forward-looking
statements include, among others, the following factors: (1) cost savings
expected to result from the proposed acquisition may not be fully realized
or realized within the expected time frame; (2) operating results following
the proposed acquisition may be lower than expected; (3) competitive
pressure among financial services companies may increase significantly; (4)
costs or difficulties related to the integration of the businesses of North
Fork and Dime may be greater than expected; (5) adverse changes in the
interest rate environment may reduce interest margins or adversely affect
asset values of the combined company; (6) general economic conditions,
whether nationally or in the market areas in which North Fork and Dime
conduct business, may be less favorable than expected; (7) legislation or
regulatory changes may adversely affect the businesses in which North Fork
and Dime are engaged; or (8) adverse changes may occur in the securities
markets.
2
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PROPOSAL TO DIME BANCORP SHAREHOLDERS [NFB LOGO]
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
Price o $17.00 per DME share
Exchange o 0.9302 shares of NFB plus
(Fixed Common Stock Exchange Ratio) $2.00 in cash for each share of DME
Premium over HU Proposal o 41% over implied value of DME shares
to be received in DME - HU merger
Tax and Accounting Treatment o Partially tax-free exchange -
Purchase Accounting
Pro Forma Ownership o 58% NFB, 35% DME, 7% FBF*
Regulatory Approvals o Customary
Conditions o DME shareholders vote against
Hudson United Bancorp merger
proposal
o Valid termination of DME - HU merger
agreement
o DME Directors approve exchange
offer
Anticipated Closing o Third Quarter 2000
</TABLE>
* Assuming full conversion of warrants and preferred stock to be purchased by
FleetBoston Financial as more fully described on page 4.
3
<PAGE>
FLEETBOSTON INVESTMENT [NFB LOGO]
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
Convertible Perpetual o $250 million
Preferred Stock and Rights
Preferred Features o 7 1/2% annual dividend, non-cumulative,
payable quarterly
o Convertible into NFB common stock at
$18.69 per share
o Callable at par by NFB after third
anniversary of issue date
o Qualifies as Tier 1 Capital
Stock Purchase Rights o 7.5 million shares of NFB common stock
at $17.88
o 10 year term
Standstill o FBF for 2 years
Branch Purchase o FBF to purchase $2 billion of DME
deposits for 8% premium
(17 Locations on Long Island and
Manhattan)
Conditions o Contingent upon closing of the NFB
exchange offer
</TABLE>
4
<PAGE>
PRO FORMA BALANCE SHEET AND EARNINGS ESTIMATES [NFB LOGO]
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dec. 31, 1999 (in millions, NFB DME PRO FORMA
except per share amounts) Stand Alone (1) Stand Alone COMBINED (2)
- ---------------------------- --------------- ----------- ------------
<S> <C> <C> <C>
Assets $ 16,321 $ 23,921 $ 36,663
Investments 6,269 4,178 6,548
Loans, net of unearned 8,857 15,207 24,064
Deposits 9,189 14,261 21,450
Borrowings 5,230 7,594 10,824
Capital Securities 244 152 397
Preferred Stock -- -- 250
Stockholders' Equity 1,268 1,516 3,195
Goodwill 360 531 1,275
Stated Book Value $ 7.27 $ 11.75(4)
Tangible Book Value 5.21 7.51(4)
2001E Per Share Accretion
---------
EPS - Diluted (3) $ 2.02 $ 2.27 12.6%
Cash Earnings per share 2.13 2.52 18.5
Leverage Ratio 7.40%(4)
Tang. Cm. Equity / Tang. Assets 5.59 (4)
</TABLE>
(1) Pro forma for Reliance and JSB acquisitions.
(2) Pro forma combined reflects assumptions detailed in Appendix on page 16.
(3) Based on 2001 IBES estimates.
(4) Pro forma book value and capital ratios as of December 31, 2000, solely for
presentation purposes.
5
<PAGE>
DME SHAREHOLDERS GET..... [NFB LOGO]
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o Immediate premium and better long-term growth prospects
o 35% ownership in a combined commercial banking franchise with $21.5 billion
in deposits having a prominent market position in most of the New York
Metropolitan area
o To own a significant part of one of the industry's top 50 commercial bank
franchises with industry leading returns
- 1999 ROA 1.92%, ROE 27.05%
o A highly focused management team with a large equity stake and a proven
track record in acquisitions
o Improved cash dividends
o Reduced reliance on earnings from the mortgage banking business
6
<PAGE>
NFB SHAREHOLDERS GET..... [NFB LOGO]
- -------------------------------------------------------------------------------
o A transaction that is GAAP and Cash EPS accretive
o A transaction that is tangible book value accretive
o A larger and more prominent institution with stronger market share
o A significant increase in core deposits
o A unique relationship with FleetBoston
o An opportunity to dramatically grow our commercial banking business in
New York City
o A high performing and "well capitalized" company
7
<PAGE>
WHAT DME SHAREHOLDERS MUST DO......... [NFB LOGO]
- -------------------------------------------------------------------------------
o Vote against the proposed DME-HU merger prior to the March 15, 2000 special
shareholder meeting
o Urge DME Board of Directors to preserve your opportunity to consider the
North Fork proposal
o Encourage the DME Board of Directors to remove all obstacles and allow for
a negotiated transaction with NFB
8
<PAGE>
PROCESS/TIMING [NFB LOGO]
- -------------------------------------------------------------------------------
o NFB distributes proxy statement and exchange offer prospectus
o DME shareholders vote NO
o DME - HU terminate merger agreement
o NFB obtains regulatory approvals
o DME Board approves exchange offer and enters into merger agreement with NFB
o Exchange of NFB shares and cash for DME shares, close second step merger
o Closing - 3th Quarter 2000
9
<PAGE>
SUMMARY [NFB LOGO]
- -------------------------------------------------------------------------------
o Provides immediate premium to DME shareholders
o Earnings accretive
o Creates a more competitive and focused banking franchise
o Creates value for all shareholders
o Opportunity to lever upon FleetBoston expertise
o Avoids complicated MOE issues
o An executable transaction, consistent with NFB's strategy
10
<PAGE>
ADDITIONAL NORTH FORK INFORMATION [NFB LOGO]
- -------------------------------------------------------------------------------
o Investors and security holders are advised to read North Fork's proxy
statement with respect to North Fork's solicitation of proxies against the
proposed Dime Bancorp, Inc. / Hudson United Bancorp merger, filed today
with the Securities Exchange Commission, and North Fork's registration
statement with respect to its exchange offer for Dime common stock, when it
becomes available, because each of these documents contains, or will
contain, important information. Investors and security holders may obtain a
free copy of the proxy statement, the exchange offer registration statement
(when available) and other documents filed by North Fork with the SEC at
the SEC's Internet web site at www.sec.gov. The proxy statement, the
exchange offer registration statement (when available) and such other
documents may also be obtained for free from North Fork by directing such
request to: North Fork Bancorporation, Inc., 275 Broad Hollow Road,
Melville, New York, 11747, Attention: Corporate Secretary, telephone (516)
844-1004.
o North Fork, its directors and executive officers and certain other persons
may be deemed "participants" in North Fork's solicitation of proxies from
Dime shareholders. A detailed list of the names, affiliations and interests
of the participants in the solicitation is contained in a statement on
Schedule 14A filed today by North Fork with the Securities and Exchange
Commission.
11
<PAGE>
NORTH FORK BANCORPORATION, INC. (NYSE: NFB) [NFB LOGO]
- -------------------------------------------------------------------------------
APPENDIX
12
<PAGE>
BETTER BANKING FRANCHISE [NFB LOGO]
- --------------------------------------------------------------------------------
Branches
Manhattan 9 Mercer 1
Suffolk 87 Somerset 1
Nassau 55 Warren 1
Queens 44 Morris 1
Bronx 11 Essex 1
Kings 31 Hudson 1
Richmond 5 Passaic 8
Monmouth 1 Sussex 1
Middlesex 4 Bergen 8
o Largest independent bank in the
Metro New York area
o Strong position versus all
competitors
o Opportunity to dramatically
impact commercial business in
New York market
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
NFB/DME NO.
MARKET DEPOSIT RANK BRANCHES #1 #2 #3 #4 #5
- ------ ------- ---- -------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NY Markets in $18,938 5 268 Chase Citigroup Bank of NY HSBC NFB / DME
Which We Operate(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Kings County 4,187 1 31 NFB / DME Chase HSBC Greenpoint Citigroup
Queens County 3,219 2 44 Chase NFB / DMF Citigroup Astoria Greenpoint
Suffolk County(4) 3,867 2 87 Fleet NFB / DME Chase Astoria ABN AMRO
Nassau County(4) 3,547 4 55 Chase Fleet Greenpoint NFB / DME ABN AMRO
Northern New Jersey 1,449 10 18 Summit First Union Fleet Hudson(2) Valley Ntl.
Manhattan(4) 816 10 9 Chase Citigroup Bank of NY HSBC ABN AMRO
Westchester County 744 7 8 Chase Bank of NY Citigroup HSBC First Union
Bronx 634 5 11 Chase Citigroup Emigrant(3) HSBC NFB / DME
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Source: SNL Branch Migration Database
(1) NY MSA, excluding Putnam County and Rockland County and including Suffolk
County, Nassau County and Northern New Jersey.
(2) Hudson City Savings Bank.
(3) Emigrant Bancorp.
(4) Reflects sale by NFB/DME of 7 branches in Suffolk, 5 branches in Nassau and
5 branches in Manhattan to FBF.
13
<PAGE>
IMPACT ON DEPOSIT MIX [NFB LOGO]
- --------------------------------------------------------------------------------
NORTH FORK BANK PRO FORMA
--------------- ---------
DDA 18% 1.6 B DDA 15% 3.3 B
TERM 36% 3.3 B TERM 43% 9.2 B
SAV/NOW/MMDA 46% 4.3 B SAV/NOW/MMDA 42% 9.0 B
Core Deposits - $5.9 B (64%) Core Deposits - $12.3 B (57%)
Total Deposits - $9.2 B Total Deposits - $21.5 B
As of 12/31/99.
Pro Forma for Reliance and JSB acquisitions.
14
<PAGE>
IMPACT ON LOANS [NFB LOGO]
- --------------------------------------------------------------------------------
NORTH FORK BANK PRO FORMA
--------------- ---------
COMMERCIAL MTG 15% COMMERCIAL MTG 12%
MULTI-FAMILY MTG 36% MULTI-FAMILY MTG 21%
RESIDENTIAL MTG 31% RESIDENTIAL MTG 46%
CONSUMER 9% CONSUMER 14%
COMMERCIAL 8% COMMERCIAL 7%
CONSTRUCTION 1% CONSTRUCTION less than 1%
Total Loans - $8.9 B Total Loans - $24.1 B
As of 12/31/99.
Pro Forma for Reliance and JSB acquisitions.
15
<PAGE>
PRO FORMA FINANCIAL INFORMATION AND ASSUMPTIONS [NFB LOGO]
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
Aggregate Consideration o $2.0 billion: 108 million shares
of NFB and $233 million in cash
Purchase Accounting o $915 million in goodwill, amortized
over 20 years
o Net assets adjusted to estimated fair value
De-leveraging o Assumed $2 billion at a 75bps spread, after tax
2000 / 2001 DME EPS Estimate o $2.34 / $2.46 per IBES
2000 / 2001 NFB EPS Estimate o $1.82 / $2.02 per IBES
FBF Investment o $250 million in convertible preferred
stock issued to FBF
O 7.5 million stock purchase rights
Branch Sale o $2.0 billion in deposits sold to FBF
at an 8% deposit premium, reducing goodwill
Estimated Cost Savings o $100 million after tax, or approximately 15%
of combined company overhead
Merger Expenses o $200 million after tax, included in goodwill
Revenue Enhancements o None assumed
</TABLE>
16
<PAGE>
NORTH FORK YEAR-END RESULTS (NYSE:NFB) [NFB LOGO]
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ending Dec. 31,
-----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Earnings per Share - Diluted $1.62 $1.46
- Cash 1.68 1.52
Cash Dividends - Regular $0.63 $0.50
- Special -- 0.15
Net Income (000s) $220,369 $206,576
Net Interest Margin 4.16% 4.48%
Return on Assets 1.92 2.04
Return on Equity 27.05 25.22
Core Efficiency 34.3 35.0
Actual Shares Outstanding (millions) 128.4 141.1
Total Assets (000s) $16,321,060(1) $10,679,556
Market Capitalization (000s) (1) $2,842,660 --
</TABLE>
(1) Pro Forma for JSB/Reliance acquisitions.
17
<PAGE>
This is a transcription of a North Fork Bancorporation conference call
which took place on Monday, March 6, 2000 at 11:00 AM Eastern Time. The
conference call is available for playback by dialing (719) 457-0820 or (888)
203-1112, confirmation #192561.
Operator: Please stand by. Good day everyone welcome to the North Fork
Bank conference call. Today's conference is being recorded. For opening remarks
and introductions I would like to turn the conference over to Mr. John Kanas,
Chairman, President and Chief Executive Officer at North Fork Bank. Please go
ahead sir:
John A. Kanas: Good morning everyone this is John Kanas at North Fork.
I understand we have about 350 people on the line. We are going to, as we
normally do, go through the investor presentation that I believe most of you
have in front of you page by page. It will take about 15 minutes and then we
will, of course, open for questions at the end, many of which will be touched on
along the way. I should start by saying that it should be obvious that this is a
little bit different from
<PAGE>
some of our transactions in the past and there are some sensitivities here on
the legal side. So, although I will be myself and I will be candid and give you
direct answers, there may be some questions that some of you ask that I won't be
able to answer and I will have to beg your understanding. We have Gene McQuade
who is the CFO of Fleet on the line and will be available as well.
Starting with the meat of the presentation on page 3 the title slide
says "Proposal to Dime Bankcorp Shareholders". By now you probably all have seen
this information. It's virtually out of the press release. It's a bid that
equates to $17 dollars, a combination of stock and cash. It is a premium over
what the implied value of what Dime was in the merger last week. This is a
purchase accounting transaction which would be partially tax-free of course on a
pro forma basis. The Dime shareholders would end up owning 35% of the new
company. The North Fork about 58 and if Fleet were to exercise everything give
or take 7%. The regulatory approvals are customary and the conditions are a
little different here obviously. The Dime shareholders have to vote against the
current merger proposal with Hudson United and then they have to have a valid
termination agreement. Rather they have to terminate their merger agreement and
the Dime directors have to approve an exchange offer with us. If all that takes
place on the time table that we think is practical, it's possible to close this
deal late in the third quarter of this year.
2
<PAGE>
On the FleetBoston slide, slide number 4, just to run through that
quickly, Fleet is putting up $250 million in a convert, that's preferred
convert, with a 7 1/2% dividend. It is non-cumulative. It qualifies as tier one
capital. The convert price is $18.69. It's callable in part by North Fork after
the third anniversary. On the warrant side it's 7 1/2 million shares of North
Fork common with a ten year term and that's up 10% which is $17.88 which is the
call on the warrants. There's a stand still agreement between North Fork and
Fleet for two years and although it's not on the slide, obviously there's an
agreement between North Fork and Fleet that Fleet will not put a bid in on the
Dime or the Dime/Hudson United deal. If we win, Fleet will purchase about $2
billion worth of the existing Dime deposits from us at an 8% deposit premium -
that's 17 locations. It breaks down that they get 5 locations in Manhattan and
12 on Long Island. Dime has about a billions dollars worth of deposits in
Manhattan which is the market that we think is the most coveted so we're
splitting that about in half. Each of us get about a half billion dollars worth
of deposits and the conditions are of course conditioned upon North Fork
succeeding. There's a flip side to the Fleet deal which we didn't put in the
merger, rather in the press release. If at some time and if this for any reason
if North Fork pulls out of this process, and advises Fleet that we're pulling
out it would release Fleet to be able to go in if it chose to do so and bid for
either the Dime or the Dime/Hudson deal together and if they should be
successful, then they would sell to North Fork that
3
<PAGE>
same half a billion dollars worth of deposits in Manhattan that we get if we win
and also $2 1/2 million dollars. So North Fork gets the Manhattan branches if we
win or if it should come to pass that Fleet were to become a bidder here and
they were to win.
The pro forma balance sheet, I guess, is pretty self explanatory. I
should say to you that it takes into consideration the sale of the $2 billion
dollars to Fleet and also a scenario where we shrink that balance sheet, the
borrowings and the securities, by an additional $2 billion dollars. So you can
see that investments, you can see that on the investment line, investments of
6.2 and 4.1, obviously don't equal 6.5 but we've shrunk both the Fleet
acquisition and the next part of the shrink out of that line. Loans end up being
about 24 billion, deposits are 21 1/2, borrowings of 10.8. We end up with total
stockholders equity of just about $3.2 billion and goodwill of a billion 275.
The stated book value in this deal pro forma would be $1,175 and the tangible
$750. I'll talk more to you about the results of the deal on book value as we go
along. Based on our modeling, that would result in North Fork's IBES estimates
in the year 2001 rising from $2.02 on a GAAP basis to $2.27 or accretion of
about 12 1/2% and on a cash basis from 213 to 152 or accretion of about 18 1/2%,
this would give us leverage ratio 740 and tangible common equity assets of about
560. This is all, I should remind you, this pro forma includes obviously the
recent acquisitions that North Fork made of both Reliance and JSB Financial.
4
<PAGE>
Slide number 6, "Dime Shareholders Get", I guess it's obvious that they
get an immediate premium and we believe a better long term growth story based on
our historic performance in this market. We view this, although Dime is a little
bit larger, it is exactly like every other thrift that we have succeeded in
transforming into a commercial bank platform. The only difference is that Dime
has branches that we believe are more perfectly located to provide even greater
growth in the commercial side. Dime would end up with 35% ownership in this
banking franchise having about $21 billion in deposits and that would be the
ownership - I'm bragging a little here - I think we said this twice - a
significant ownership here in one of the top 50 banks in the country. Most of
you are aware that North Fork has industry leading returns. It returned 27% last
year and 192 on assets, 27% on equity. We also think that Dime shareholders get
the benefit of a very highly focused management team who have a large equity
stake and a proven track record of executing acquisitions exactly like this one.
They get improved cash dividends and they get reduced reliance on the earnings
from the mortgage banking business. We think that's an important piece of this
and later on I'll get to some of our assumptions in our model with respect to
the mortgage business.
"North Fork Shareholders Get", on page 7. This is a slide that may look
familiar to some of you because some of these points we've made many times
before. This is a transaction that if it occurs as we've suggested is GAAP and
cash
5
<PAGE>
accretive and significantly bigger than any GAAP or cash accretion we've ever
gotten in any transaction we've ever done. It is accretive to tangible book.
We've never talked a great deal in the past about the strategic importance of
the pro forma balance sheet because we've generally rolled up smaller
institutions, but we believe that this now becoming a much larger, much more
prominent institution is strategically important in addition to the obvious
economic advantages that we have set forth. There's a big increase in core
deposits. We've developed what we think is a unique relationship with
FleetBoston. To cut off some of the questions on that, these companies have
known each other well up to 25 years. I've known Mr. Murray for 25 years. We
have great respect for them. I hope it's mutual and we are very pleased to have
been able to make this relationship with them and think that it serves us very
well and certainly hopefully them as well. We think this provides North Fork
shareholders with an opportunity to have part in a company that can dramatically
grow as a commercial banking franchise business in New York City. We've had,
some of you know the North Fork story. We announced that we were going to New
York City on a de novo basis starting about two years ago based on the
experience we had with one branch we happened to get when we bought Extebank and
our story at that time was, and continues to be, that we thought that the
Manhattan market in particular and to just a little bit less extent the Brooklyn
market had been over consolidated by the major mergers between Chase and
Manyhany and Chemical and
6
<PAGE>
more recently even further consolidated by the HSBC/Republic deal and by virtue
of the fact that Bank of New York is quite frankly focused elsewhere; Citibank
is focused elsewhere and it has left a very interesting opportunity for
commercial bank growth in New York. Well, the results so far for North Fork are
that in less than three years and during that time having had only two branches
open, one on 37th Street and one on 72nd Street, that already in that time we
have over $400 million in deposits there. The commercial component of those
deposits represents almost 20% of the entire bank and that's from a deposit from
a branch chain of 154 branches. So, we are growing at warp speed in Manhattan
and we view this as a very important growth market for us and we think, quite
frankly that Fleet shares our excitement about Manhattan and I believe is
getting some similar results themselves in that market. So, that's a changing
market and it's changing fairly dramatically. And finally, of course, we think
that North Fork shareholders continue to hold a stake in high performing and
very well capitalized company.
Page 8 of course, "What Dime Shareholders Must Do" and this is the crux
of the matter I suppose. They must vote against the proposed merger for which a
vote is scheduled on March 15th. If that were to happen they must urge the Dime
board to preserve their opportunity to consider our offer and they should
encourage the Dime board to remove all obstacles and allow for negotiated
transaction. In short this is now in the hands of the shareholders. We have read
with great interest and
7
<PAGE>
listened intently to some of the comments that institution shareholders have
made about this deal and about other deals that have either taken place or have
been proposed not only in this market but in other markets and we share their
contempt for some of these deals that don't look very promising and obviously
that was a strong motivator in providing the impetus to get us to go forward. We
certainly would rather have done this on a negotiated basis but that has been
precluded by the terms of their deal.
On slide 9, sort of a process and timing slide here. North Fork first
we distribute the proxy statement and an exchange offer which we expect will be
out this week. We're hoping that the Dime shareholders based on that offer will
vote down the merger and then the termination agreement would take place which
can't take place until I believe June 30th unless they negotiate something ahead
of time. We would obtain, during that time, the regulatory approvals. Dime board
would approve the exchange offer and enter into an agreement with us. We would
actually do the exchange and close the second step merger and hopefully close in
the third quarter or late in the third quarter next year.
The summary of this deal is that it provides an immediate premium, this
is slide 10 to Dime shareholders. Its earnings accretive in a very significant
way to the new company. It creates a very competitive and highly focused banking
franchise that we have proven that is a model that is efficient and works. It
creates
8
<PAGE>
value for all shareholders. It provides the new company an opportunity to
leverage up on Fleet's experience. I do not have to remind you that Fleet and
their people are widely regarded as very good operators in the mortgage banking
business and that was the part of this transaction that made for the synergies
with us and Fleet and we certainly think in summary that taking this choice
would avoid the complications of the proposed MOE that many of you are very
familiar with and that many people have been very vocal in talking about, both
privately and publicly. We think it's an executable transaction, very easy on
our side for the bank piece and it is entirely and wholly consistent with the
strategy that we've been using now since 1987. North Fork has bought 12 or 13
thrifts in that time period and has continued to build momentum in driving
shareholder returns by basically taking these thrift branches and over time
converting them to commercial bank platforms and over time converting the asset
and liability mix on the balance sheet of these institutions so that we drive a
higher margin and a higher amount of non-interest income.
Slide 11 you can read at your leisure and going to Slide 13 which is an
appendix to those of you who like to look at maps you can see that that is a
piece of New Jersey which is new territory for North Fork. There is about $3
billion dollars worth of New Jersey deposits in the mix of the Dime here and the
numbers that are attached to the boroughs and the counties that say Suffolk 87
and Nassau 55 and Queens 44, these pro forma combining our existing branches and
their existing
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branches. I should remind you on Long Island that Dime was a successful bidder
recently for the Key Bank branches that were mostly in Suffolk County and those
are right in the heart of North Fork territory out here. On a pro forma basis,
North Fork/Dime would have first market share in Brooklyn, it would be second in
Queens and Suffolk - in Queens it would be second behind Chase and in Suffolk
second behind Fleet and it would have the fourth largest market share in Nassau
County and that's in order of rank, Chase first, Fleet second and Greenpoint,
third. In the Bronx I guess we'd be in fifth position and we begin to get on the
board here in the Manhattan market with a 10th ranking of market shares. So with
the exception of the New Jersey piece, excuse me I've got a cold, with the
exception of the New Jersey piece, this is an acquisition that is entirely
within the footprint of North Fork's existing franchise and lends itself very
well to our cost saving models and our management style.
On slide 14 you can see the impact on the deposit mix. Obviously it
brings down the DDA components slightly but if you pay attention to the numbers
it increases it dramatically from about $1.6 billion to about $3.3. Term
deposits go up a little bit from 36 to 43% which is very typical whenever we
acquire thrift and the percentage of savings now on money market accounts goes
down a little from 46 to 42. But our experience and those of you who've ever
seen our investor presentations we begin working on that immediately and our
first goal which is the goal that all of
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our incentive plans for employees are geared toward is to begin to change that
deposit mix and work on being able to grow the margin as a result.
Slide 15 shows you the impact on loans. North Fork is a relatively big
player in residential mortgages and multi-family loans already with 31%
residential and 36% multi. It would drive the residential component to about
46%. It would take commercial down from 15 to 12, take multi family down from 36
to 21. Consumer would actually go up. Dime also was a successful bidder in about
a billion dollars worth of car paper that it bought from Citibank recently. So
that's reflected in there. Commercial component would stay roughly the same and
neither bank has an appreciable amount of construction loans so that exposure
wouldn't change.
So, sort of a wrap up here before I summarize the pro forma financial
information and the assumptions, this is about a $2 billion deal made up of 108
million shares of North Fork and $233 million dollars. It is a purchase
accounting deal as I said earlier so there would be $915 million in good will
which we're taking over 20 years. We have marked the balance sheet to market in
a very conservative way. We are de-leveraging. As I said earlier, we are taking
$2 billion dollars off and at a spread of about 75 basis points which is what we
calculate it to be. We've taken, for the purposes of our model, we've taken the
most recent estimates that Dime has put out which I believe were about 266 a
share and we reduced them to 246 and we
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also of course increased our expenses by the cost of the Fleet investment. I
might stop here and say if you wanted to turn this apple around and look at it
from the back side, if this transaction were taking place now as a deposit
premium, the deposit premium that North Fork would be paying for the Dime
deposits is a little over 7%. We've also in our model sold the $2 billion
dollars worth of branches to Fleet and taken back an 8% deposit premium from
them which reduces our goodwill. We've estimated cost savings of about $100
million dollars or about 15% of the combined companies overhead. I should give
you the postscript on that. For the purposes of our model we have assumed zero
cost saves in the mortgage company. We are, those of you who know us, know that
we have never gone around saying that we thought mortgage companies were the
best things to buy but I will say that of mortgage companies that North American
has distinguished itself and is a very well run institution. We know Rick Morrow
through Fleet and directly and we think he does a good job over there although
we do think that once we get into this there are opportunities that are not
evident right now. We think there are more opportunities but the cost saves, so
that you understand, are coming strictly out of the bank. To sort of frame that
for you, North Fork runs, this is on a pro forma basis into 2001, North Fork
runs 154 branches of a commercial bank fully loaded with all the executives,
comps and all of the back office necessary to run a commercial bank for around
$200 million and Dime spends pro forma a little over $300 million to run 126
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branches of a thrift. So, we have great confidence in that cost saves number
based on our prior experiences and based on the public information that we've
been able to see on the Dime. We think there's about $200 million in merger
expenses which is of course included in that good will figure. A lot of that is
severance agreements which falls out of arrangements with Dime employees that
are already contractually in place. That's about $108 million dollars of that
and further we have assumed, for the purposes of our model, zero revenue
enhancements and additionally which is not on your slide we have assumed zero
tax efficiencies. So, it's got the cost of the Fleet deal. Its got a lower
estimate of earnings as a result of shrinking the balance sheet. Its got very
reasonable cost assumptions. And further, we should say before somebody asks the
questions, we have, in our models for the purposes of coming up with these
numbers, we have taken a stab at what we think the mortgage company will earn in
that year. I should start by saying it earned from what we could tell, about $50
million dollars in 1999. We've modeled at making a little less than half of that
in the year 2001. So that's in the model. I should also say that in our worst
case scenario, we take the mortgage companies earning down to zero, and even
taking the mortgage companies earnings down to zero, which is basically wiping
out the $25 million dollars we put into our model, it still is GAAP accretive
around 7% to us and cash accretive almost 15. We have again, no revenue
enhancements and we've
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reduced Dime's estimates of earnings for that year to what we think is a
reasonable level.
Page 17, for those of you who have not seen it, is a look at North
Fork's year end results, which many of you are familiar with and that I believe,
concludes what I have to say. Let me take a minute to turn this over to the
operator to give you instructions as to how you go ahead and ask questions.
Operator: Thank you Sir. Today's question and answer session will be
conducted electronically. If you would like to ask a question, press the star or
asterisk key followed by the number one on your telephone key pad. We'll take
your questions in the order that you signal us. And take as many questions as
time permits. Once again, to ask a question, press star one. We will pause just
a moment to assemble our roster.
Operator: Our first question will come from Jeff Gendell, with Tontine
Partners.
Jeff Gendell: Hi, John, Jeff Gendell of Tontine. I want to thank you
first of all, because I think all of us long suffering Dime shareholders needed
this and I for one am going to vote emphatically for you and just as a
commentary, I don't think there is any Dime shareholder in the world with a
brain that is not going to vote for this. But, I do have two questions, if I may
ask on this presentation, and I just
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want to make a couple of things clear. On some of the discussion, on your
filing, that - has your filing come out today with the SEC?
John A. Kanas: It's being filed today Jeff.
Jeff Gendell: Ok, what can North Fork do to solicit no votes. I guess I
am not fully aware of SEC rules when you are kind of doing something like this.
Can you go out and solicit no votes for the Dime?
John A. Kanas: We are certainly allowed to talk to the Dime
shareholders. Remember that I said earlier that we would have rather taken a
different approach here. But unfortunately, the Dime management and board have
their hands tied and they are involved in a contract which we have no right to
interfere with. So we are certainly permitted to talk to Dime shareholders. Let
me clarify the timing thing here too. We don't have to wait until June 30th . I
mean if they don't get their shareholder vote, they can - they and Hud Co could
conceivably agree to terminate their agreement way before that.
Jeff Gendell: Ok. Great. I just wanted to make sure that you could
actively seek, because I wasn't sure about those rules. The second thing is that
there are some hints in here about North American Mortgage. As I recall, it's
about half the expenses of Dime. Can you elaborate, for example, - I don't know
if you can - but can elaborate, can you joint venture this, would you be
interested in selling this,
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or are you going to take it and put it into your operation and see how it works
before you take other action.
John A. Kanas: That's a good question. One of the reasons why we
selected Fleet to help us with this, is because of their experience and we've
obviously discussed this with them in some detail. The proper answer, Jeff, is
that we don't know enough about that company right now to make a decision,
obviously, as to what we are going to do with it ultimately. We can tell you
that we've had conversations with several people who have expressed interest in
various pieces of this company and/or the whole thing. We don't have a contract
in our hand, and I am not saying we would sell it, if we did have a contract in
our hand, but we can reduce our exposure in that business in any number of ways
that we've already had a large number of discussions about. But it would be
early to say. I'll say it again that, you know, based on the price that we're
paying here, and based on the fact that mortgage companies are probably at a
very low ebb right now because of the interest rate structure that this thing
bears taking a good look at. And you're right by the way, on the expense side,
on a pro forma basis, Dime is spending about $300 million on the Bank and in
round numbers about $450 million on G and A at the Mortgage Company, but I think
$150 of that is amortization, so if you'd split it down, it's about $300 for the
Mortgage Company and about $300 for the Bank. But I should emphasize
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that we put very little earnings of the Mortgage Company into this thing, in our
models.
Jeff Gendell: Ok. Great. Terrific. One last thing. When you were
discussing Manhattan in your statement, there, are there any other deposit bases
in Manhattan that would be of interest or would you still consider the de novo
side?
John A. Kanas: It's really interesting, we've got three branches up and
running and we have commitments to open four more, the leases are signed and
people are actually ripping apart properties and painting buildings, so we will
have seven on our own by year end or about first quarter of next year, and if we
are successful here, this would give us one more for a total of eleven, which is
sort of what we think, we need somewhere between 10 and 15 branches in the net
to cover the market adequately. And the answer is yes, there are other
franchises, but not as many as you would think. It is a very weird market in the
last time I saw these numbers, and I'm going to be wrong by some amount but it's
give or take $300 billion dollars worth of deposits in Manhattan and Chase has,
give or take about $70 billion of that. So it falls off very very dramatically
after you get past Chase, so it's one of those unusual things where it is truly
highly over concentrated. There's about 150 or 160 banks in Manhattan - 160
something, I think. Most of them are very tiny institutions, so we would be
unique in size in Manhattan and I think one of the
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reasons we're doing so well is because we are unique in size and are able to
operate very well in that market.
Jeff Gendell: Great, thanks a lot, we're all behind you. We really
appreciate it.
John A. Kanas: Thank you, we need to hear that kind of comments very
encouraging. It's been three very very long weekends for us and our advisers and
this has been a painful decision on our part.
Operator: The next question, John Wright with George West Associates.
John Wright: Yes, I was wondering if you could describe your assessment
of the Dime shareholder base. I am looking at 13-F filings. I may be incomplete
here, but it does not look like there's a huge institutional base that you could
draw from. Do you need a proactive leader here? Or what are your hopes here?
John A. Kanas: We'll give you round numbers here. It looks to us like,
roughly the ten largest shareholders could very easily swing this thing. There
are eleven companies that own 30% of the company. And that's not counting what
North Fork owns and North Fork owns about 700,000 shares - I'm just sort of
reading to you off my Bloomberg screen and I don't know if its right - but it
shows Wellington at about 7%, JP Morgan at a little over 5, First Manhattan a
little under
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five, I'm sorry, First Manhattan is about 4 1/2 , Franklin Mutual Shares, at
about 2 1/4, David Green at almost 2, and Hancock, etc., and Jeff Gendell who
spoke earlier who's also over a million. Institutions own, again, according to
the screen, 66% of this company, so we think we're not going to have to go out
to 25,000 people here.
John Wright: Do you have enough time?
John A. Kanas: Yes.
John A. Kanas: Well good luck to you.
John A. Kanas: Thank you. You're a big shareholder of ours, by the way,
and we appreciate it and we would be happy to spend some time with you going
over this in more detail if you'd like.
Operator: The next question will come from Arthur Stamen, with First
Manhattan.
Arthur Stamen: Good Morning. I don't have a question John but I just
wanted to - I'm similar to Jeff Gendell, I just wanted to thank you on the part
of a big Dime stockholder - you know we didn't like this deal from the start. We
looked at the proxy and we looked at all the self serving golden parachutes and
goodies that the Dime people were getting and we like the deal even less after
we got the proxy and so we're enthusiastic that you're coming in on a deal that
makes a lot of sense for the North Fork stockholders and we're large North Fork
stockholders as well, and this looks like a win-win for us twice. It looks like
maybe you'd get us out of a bad
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deal in Dime and make North Fork a bigger stronger company at the same time. So,
lots of luck.
John A. Kanas: Thank you Art. We - it's probably as good a time as any
to deliver a speech that I've given so much over the last six months that I'm
hearing myself give it in my sleep. And it goes something like this. And quite
frankly, it has a lot to do with the spirit behind this offer and I won't speak
for Fleet here. But I would be surprised if they didn't feel the same way and
that is this - I've been in North Fork for 30 years and I own a lot of stock, so
I'm a big bank shareholder like many of you are. And I've been suffering along
with the rest of you, this absolute malaise over the last 18 months or 2 years
and my view of this is that there are two very good reasons why bank stocks are
under pressure today and they're very different. One of them is that the
interest rate cycle is moving up and that these are sort of at macroeconomic
issues that we can't control. Credit quality is at an all time high. We are
certainly in the mature stages of the longest running economic expansion in the
history of our country. So there's good reason for investors to believe that
maybe the good news for bank stocks is behind us, at least for this cycle and I
appreciate that very much and what can I say, we're a bank and that's what we
are, and we, like everybody, will be victim to general economic conditions and
if you don't like bank stocks for that reason, I fully understand it and
shouldn't bother, this one or anyone. But there is another, and I think a
superceding reason, why bank
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stocks are down more than they need to be and that is because at almost every
level of size, in almost every market in this country, there have been some very
value destructive deals that have taken place and frankly, our view is that they
have led the investor investing public to lose confidence in bank managements
and I don't need to name names but you can all think of a couple of big ones
that didn't work out and a couple of medium sized ones that didn't work out and
certainly right here in this market, we've seen a couple of smaller ones that
didn't work out and shareholders are paying that price. We go around a long time
and many of you have met us and heard us talk and we say to people, "you know I
don't get it, we make 30% return on equity last quarter, we do everything right,
everybody stands up and applauds all of our acquisitions and tells us they love
what we do, why are we selling at an APE" and the answer comes back the same,
and they say,"well, you know we love you but we're afraid you're going to do a
dumb deal like some of the dumb deals we've seen done in this industry." And I
don't blame people for worrying about that, and so somebody has to speak up
about these deals that don't make a great deal of sense. So win lose or draw
here, what we're saying to you is we think there is a big difference between
banks. We think there's a big difference between bank managements and we're not
going to go out and make a dumb deal. Ever. Now or ever. And, there's a lot of
people around that feel that way. Quite frankly, our associate in this deal,
Fleet, has a history similar to ours and a success record similar to ours, and
they're
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suffering with it, so we're painted with this brush unless and until the market
starts to differentiate between good deals and bad deals, and I view this as
bank stock's opportunity to speak up loud and clear. Sorry for the speech. I am
ready for another question.
Operator: That next question will come from Jackie Reeves with Putnam
Lovell.
Jackie Reeves: Hi, John, just a quick comment which I think you just
alluded to in the value destruction comment - the number of deals that you've
done over the past - since 1987 that have been initiated in this fashion, I'm
curious as to that number? And then with respect to additional risks that you
think that this deal may carry that some others don't, especially if some of the
other deals were enacted from both sides going into it with a very positive
attitude. What is some of the additional risks that you think you might face?
John A. Kanas: Jackie the first part of your question, I mean if I read
that right, you're asking if we've ever done an unsolicited offer before. We've
not.
Jackie Reeves: Right. Ok.
John A. Kanas: So we've never done this before. With respect to the
risk issues, I mean I think they are self-evident. This is big. And, so
generally speaking, the larger the deal, the tougher it is to integrate. We've
spent a lot of time looking at that - that is the negative side. The positive
side is, now speaking for
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Dime, the bank itself, it is a very simple, although it has been made to look
complicated. It is a very simple company. It is a thrift in a very traditional
sense. It takes deposits and it makes mortgage loans, has a very small
commercial department, very small consumer department, so there's no skill set
necessary to run the Dime that isn't already going on at that level or larger
right here at North Fork. Sort of another interesting thing is because of the
dislocations in the banking industry today, and because we believe there is a
lot of very strong management people within the Dime, that if they were properly
administered and properly led, it could do a much better job of running that
institution for us. I think size, is, on my screen at least, if I were looking
this strictly from a stand point of risk, I'd say size is one and if we didn't
have some ability to do something with this mortgage company, I'd say that would
be a very big risk too, but I believe that we have those bases covered in any
number of ways. Thank you.
Operator: Next up from Keep Managers is Bill Ruben.
Bill Ruben: Hi John. Question about Gene McQuade being on the line, I
presume he is still there, just curious what FleetBoston's opinion is on this
situation.
Eugene M. McQuade: John, I am on the line and hello Bill. Obviously, we
liked the situation, or we wouldn't be in it. As John said earlier, he and Terry
have been friends for 25 years. I've known Dan for probably 20 years. We see
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a lot of similarities in how we both run our companies. We think North Fork is a
very very well managed bank. One with superior returns. One with extraordinary
management. A terrific integrator of banks. We've had an opportunity to work
with them on this deal. We're very impressed with what we have seen in terms of
their strategic as well as financial skills we have had an ability to get behind
some of their numbers and quite honestly, we think this is a stronger
transaction that we've seen in a long while.
Bill Ruben: And as far as Fleet's involvement, what benefits would
accrue to Fleet?
Eugene M. McQuade: Well Bill I think there's a couple benefits here.
One, we already got a pretty good sized franchise down in the metropolitan area.
We've had about $10 billion dollars, today, this would up our deposits by about
20%. I think the thing that interests us are a couple. One, the growth
opportunities down there is clearly a market that has just great vibrance and
certainly we're interested in the growth. But secondly, and John referenced it
earlier, we like consolidating markets and John went through the consolidation
going on in both the boroughs and out on Long Island and quite honestly in order
to fuel that growth and in order to make the kinds of profits you need, you need
those kind of consolidating markets. So, from our standpoint, it's a great
opportunity to further lever our position in the metropolitan area and the area
that we entered when we bought NatWest five years
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ago or so, it gives us, as John said, a unique relationship with North Fork. We
really like what they do. We like their returns. We like their operating style.
We like their integration abilities. We think financially, quite honestly as I
looked at this, and I've been through the numbers on all sides, I think this is
a triple win situation. It is a win for the North Fork shareholders. A win for
the Dime shareholders. It is also a win for the Fleet shareholders. You don't
see many of those deals.
Bill Ruben: Ok thank you.
Operator: And next, we'll hear from Mark Fitzgibbon with Sandler
O'Neill.
Mark Fitzgibbon: Hi John. I had two questions this morning. First, I
know you have a long standing relationship with the folks at Fleet. I'm curious
sort of what was the genesis of the arrangement with Fleet, who approached who?
Second, I wondered if you could give us some indication whether or not you had
conversations with the folks at Dime, either before or after the merger of Hud
Co was announced.
John A. Kanas: On the first point, Mark, I called Fleet myself and the
genesis of the idea was down here in Melville and spoke with initially Terry and
then later with Gene and the rest of the management group at Fleet. And, I don't
think it took very long for actually, after we got into a room together, it
didn't take very long for either of us to see that this was even a better idea
than we once viewed it as.
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Especially as we started to talk about what our common goals were in this market
and the fact that Fleet had a positive view toward this market as we did. So, it
became a no brainer, quite frankly, to bring them in to help us with this. With
respect to the other question, we really - we talk to people all the time and
fifteen years I guess - everybody talks to everybody in this market but we are
not commenting on any prior conversations.
Mark Fitzgibbon: Thank you.
Operator: And next up is Vivek Sharma with JP Morgan.
Vivek Sharma: Good morning. Could you talk a little bit or give us
anything more specific that you could do to mitigate the integration risks. This
is just following up on the earlier question. Given the hostile nature of the
deal, would you he be willing to talk about things like - more specifically a
little bit.
John A. Kanas: You should remember that our proposal is subject to the
execution of a merger agreement between Dime and North Fork and one must make
the presumption that at some point if we get that far, and if Dime ever is able
to talk to us about this, that there would be an opportunity for a great deal of
dialog between the two companies. With respect to the integration risks, we all
heard the nightmare stories and we all remember the Wells Fargo and the First
Interstate and all these things. We're very aware of what's happening there.
Frankly, all of those nightmarish events took place after the deal closed. It
had nothing to do with the
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way they originated and the guys that blow the integration, blow it after they
close and try to integrate. That's a long way off for us and we have plenty of
time to consider. We're pretty good at the pure integration part from a back
office stand point. We closed Reliance on February 28th, I think and converted
it over that weekend and literally from a Friday to a Monday made a seamless
conversion. We closed on Jamaica last weekend and we'll integrate that before
the middle of March. So, it is a skill set that, I think most people would agree
and we certainly feel, is very strong here at North Fork. The other part - one
of the reasons that I think that we have done so well and we've managed to keep
the deposits in these institutions is that at North Fork today there are around
sixty different incentive compensation plans that we manage for our employees
and frankly, when we get questions about our efficiency ratio and our returns,
we move quickly to discuss the fact that our people are highly incentive on a
compensation line and when we do mergers, we have specific incentive plans that
we put into place for the employees of the target company so that they can enjoy
some of the economic success early on and all of those plans really run toward
them keeping their customers. So, to the extent that a branch manager loses 10%
of her deposits, she didn't make any money, but to the extent that he or she is
able to keep those deposits in place or even grow them, there's an opportunity
for them to do very well financially. I think it's pretty well known in the
industry that we do that. We've got that down to a science. It has worked 12 out
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of 12 times for us when we've done it and the integration of the Dime would be
no different. Remember that in terms of size, North Fork is 154 branches and
Dime is 126 and there's a lot of overlap. So, although Dime has always, at least
to me, appeared larger than life, the bank piece isn't really that big. If you
take the borrowings off and take a look at the pure deposit side, and the
relative simplicity of their business lines, it's just a matter of doing more of
the same thing that we've done for many years.
Vivek Sharma: If I can just follow up with a different question. The
costs of deposits in Manhattan, what have you assumed in your competition, or do
you have a number and following from that, how did you come up with the 8%
premium?
John A. Kanas: We haven't done an analysis of the cost of the Dime
deposits in Manhattan separately from the deposits elsewhere. What I can say,
and we're really not concerned about that because we begin changing the deposit
mix quickly after we own these things. I can tell you this, that our experience
is that our bank runs about 17% interest free deposit mix to total deposits
bank-wide. But in the combination of our three Manhattan offices, we're running
a little bit over 50% interest free demand balances so the deposit mix
ultimately gets a lot better in the Manhattan market than we can find it
anywhere else. I forgot the second part of your question, what was it?
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Vivek Sharma: How do you get to the 8% premium, particularly if you do
get the 50%, isn't 8% premium pretty low? I mean particularly when I contrasted
what Fleet just got from Sovereign.
John A. Kanas: We negotiated that with Fleet, obviously there's no
magic to that, and I should remind you that the premium that they would pay us
if we win is equal to the premium that we would pay them if they ultimately win
this thing if it should go that far. So we just think that that's a fair number
and we think that Fleet did a particularly good job at negotiating the Sovereign
deal.
Vivek Sharma: Thanks.
Operator: And we'll hear now from Rich Savone with Putnam Investments.
Adam Ilfilter: Yes, this is Adam Ilfilter. Actually two questions.
First you mentioned the overlap in the branches. Could you give an estimate of
what you expect from branch closures? And then, secondly, I know you included
zero revenue expansion within your model, is that your best estimate as far as
the opportunities that you have there?
John A. Kanas: It's too soon Adam to give you a number on the branches.
I can tell you this - and I'm going by memory here. When we looked at buying the
Key Bank branches on Long Island, that Dime ultimately bought, we felt that Key
had more than half overlaps with North Fork so that's a starting point, and
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that was in the twenties I think - in terms of number. So it's way too soon to
say, there's not a great deal of overlap in the boroughs, although there is some
and obviously there's none in Manhattan because we'd like to add those and of
course nothing in New Jersey. The second part of your question was?
Adam Ilfilter: Revenue expansion opportunities?
John A. Kanas: We know, we always get revenue expansion. We usually get
tax efficiencies in our deals and we've gotten them in every deal we've ever
done. We've looked at what the Dime is doing. We know, I shouldn't say that, we
are very confident that there's a significant amount of revenue enhancement
opportunity, but quite frankly, owing to the nature of this kind of a deal and
to the fact that there are other risks involved when we were appraising this
thing from a standpoint of our risk, we wanted to be as absolutely conservative
as we could be, so sure, we'll pick up more but I couldn't put a number on it
yet.
Adam Ilfilter: Thanks.
Operator: The next question will come from Salomon Smith Barney's,
Jason Goldberg.
Jason Goldberg: Thanks John. Most of my questions have been addressed.
Just to follow up on Reliance and Jamaica Savings, what were your assumed costs
savings in those transactions and how much have you realized to date?
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John A. Kanas: About 50% of cost savings on both and we're right on
target.
Jason Goldberg: Thank you.
Operator: The next question will come from Luka Ipolito with Chesapeake
Partners.
Luka Ipolito: First of all another big thank you. You've covered most
of my questions but if you could touch on a couple more of the regulatory and
process issues. First of all, Dime is incorporated in Delaware but domiciled in
New York. To your knowledge, is there any way that they could try to use New
York laws to sort of, as part of their defense, and then secondly, did I
understand correctly that you would want to do a two-step process here?
John A. Kanas: Let me give you a short answer to that and I'd be more
happy to talk to you about that in more detail. There are no - our view of this
and our lawyers' view of this and our adviser's view of this is that with
respect to the regulatory approval of this, there is nothing more, on the
regulatory side this is no more complicated than any deal that we or a lot of
other people have ever done. This is a simple regulatory approval process and we
don't think that there's anything particularly ominous about that piece of this
transaction. So, it really is - remember our deal is - our proposal is subject
to the negotiation of a merger agreement and
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within that all we're asking for is the same reps and warranties that they gave
to or propose to give to Hudson United.
Luka Ipolito: Ok and then secondly if you could just explain just a
little bit more how the exchange offer process works. Your intention would be to
close this all at once and then you would have a back end merger if you don't
get 100%. Or are you planning a two-step process? I didn't quite understand
that.
John A. Kanas: You know, without going into too much of this detail,
remember, I'm going to repeat it again. Our hope is that the Dime shareholders
will vote this down and that they will come and negotiate a merger agreement
with us and that would avoid any of that conversation.
Luka Ipolito: Excellent. Thank you.
John A. Kanas: Could you tell me how many more we got lined up here?
Operator: I'm sorry sir, what was that?
John A. Kanas: How many more do you have lined up?
Operator: We have no further questions.
John A. Kanas: Oh great. That's good because I'm getting tired.
Operator: Mr. Kanas please proceed with any closing remarks.
John A. Kanas: I'm not going to repeat my speech other than to say I've
spoken to many of you over the years and we have shared our concerns about
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these kind of things in the past. We put it in your hands. This is bank
investors opportunity to speak. We need your help. We need you to support us in
this. We need you to support our proposal and without that, this will fail. So
we have spent our nickel and our intentions are absolute and we are resolute.
So, give us a hand if you can. Thank you very much.
Operator: And that will conclude today's tele-conference. We thank you
for joining us.
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