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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
April 30, 1998
Date of Report (Date of earliest event reported)
HUDSON CHARTERED BANCORP, INC.
(Exact name of registrant as specified in its charter)
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New York 1-13213 14-1668718
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
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P.O. Box 310, Route 55
LaGrangeville, New York 12540
(914) 471-1711
(Address of principal executive offices, including zip code,
and telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events.
Attached hereto as Exhibit 99.1 is a copy of a press release issued by
Hudson Chartered Bancorp, Inc. ("Hudson Chartered") on April 27, 1998 regarding
Hudson Chartered's earnings for the first quarter of 1998. Attached to the press
release are certain selected unaudited financial data of the company.
On April 9, 1998, Hudson Chartered filed a Registration Statement on
Form S-4 (No. 333-49793) (the "Registration Statement") relating to the shares
of common stock, par value $0.80 per share, of Hudson Chartered to be issued to
holders of common stock, par value $1.00 per share, of Progressive Bank, Inc.
("Progressive") in connection with the proposed merger of equals with
Progressive. On April 14, 1998, Hudson Chartered filed definitive proxy
solicitation materials, including a definitive proxy statement (the "Proxy
Statement"), to be used in connection with Hudson Chartered's annual meeting of
shareholders. On April 16, 1998, a 424(b)(3) prospectus was filed with respect
to the Registration Statement and in connection with Progressive's annual
meeting of shareholders (the "Prospectus"). Attached hereto as Exhibit 99.2 is
an Opinion of Keefe, Bruyette & Woods, Inc. that corrects certain scrivener's
errors contained in the Opinion included as Appendix C to the Prospectus and
included as Appendix B to the Proxy Statement.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
The exhibits listed in the Exhibit Index are filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Hudson Chartered has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HUDSON CHARTERED BANCORP, INC.
By: /s/ T. Jefferson Cunningham III
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T. Jefferson Cunningham III
Chairman and Chief Executive Officer
Date: April 30, 1998
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EXHIBIT INDEX
Location in
Sequentially
Numbered Copy
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23.1 Consent of Keefe, Bruyette & Woods, Inc. 4
99.1 Press Release of Hudson Chartered 5
99.2 Opinion of Keefe, Bruyette & Woods, Inc. 9
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Exhibit 23.1
CONSENT OF KEEFE, BRUYETTE & WOODS, INC.
We hereby consent to the inclusion of our opinion letter to the Board
of Directors of Hudson Chartered Bancorp, Inc. ("Hudson Chartered") contained in
this Current Report on Form 8-K, which is incorporated by reference into the
Registration Statement on Form S-4 of Hudson Chartered (No. 333-49793). In
giving such consent, we do not admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended (the "Act"), or the rules and regulations of the Securities and Exchange
Commission thereunder (the "Regulations"), nor do we admit that we are experts
with respect to any part of such Registration Statement within the meaning of
the term "experts" as used in the Act or the Regulations.
/s/ Keefe, Bruyette & Woods, Inc.
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Keefe, Bruyette & Woods, Inc.
April 29, 1998
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Exhibit 99.1
HUDSON CHARTERED BANCORP, INC.
REPORTS FIRST QUARTER 1998 EARNINGS OF $2.1 MILLION.
RESULTS, EXCLUDING MERGER RELATED EXPENSES,
UP 10.4% OVER SAME PERIOD LAST YEAR
LaGrangeville, New York
April 27, 1998
Hudson Chartered Bancorp, Inc. (AMEX; HCK) today reported net income for the
first quarter of 1998 of $2.1 million ($.29 per diluted share). Excluding the
after-tax effect of merger related expenses of $263,000, net income was
$2,362,000, or $.32 per diluted share. These results compare to the Company's
net income for the first quarter of 1997 of $2,139,000 ($.29 per diluted share).
For the first quarter of 1998, excluding merger related expenses, the Company's
return on average assets was 1.27% (vs. 1.23% for the first quarter of 1997) and
its return on average equity was 13.27% (vs. 13.11% for the same quarter of
1997). (Comparative per share data for 1997 has been restated to reflect a three
for two stock split in October 1997.)
Mr. T. Jefferson Cunningham III, Chairman, said, "We are pleased with our
underlying first quarter performance. For the quarter, higher net interest
income and somewhat lower provisioning expense more than offset a modest decline
in other income, while all other operating expenses (excluding merger related
expenses) did not exceed those incurred in the first quarter of 1997.
"In the meantime, our proposed merger with Progressive Bank, Inc. has made
significant progress. All necessary regulatory consents have been received,
proxy statements have been distributed, and we will seek shareholder approval of
the merger at our Annual Meeting on May 21, 1998. The post-merger consolidated
organization structure and product lines have been agreed (down to and including
every department of the Bank) as have the consolidated loan and deposit product
lines. Decisions have been made on consolidating six branch offices and the
affected customers notified. Assuming shareholder approval, we expect to merge
our two companies in early July. We remain optimistic about the prospects for
our merger and the opportunities to further enhance shareholder value."
Net interest income for the first quarter of 1998 of $8.0 million was up 3.9%
over the $7.7 million for the first quarter of 1997, while the Company's first
quarter taxable equivalent net interest margin was 4.92% vs. 5.02% in 1997. The
provision for loan losses of $600,000 was $100,000 less than for the first
quarter of 1997, reflecting the Company's lower level of non-performing assets
and charge-offs relative to the first quarter of 1997. While non-interest income
for the first quarter of 1998, at $1.5 million, was $100,000 less than the first
quarter of 1997, total non-interest expense for the quarter (excluding pre-tax
merger related expenses of $280,000) of $5.4 million was held at the same level
as experienced in the first quarter of last year.
As of March 31, 1998, total consolidated assets were $763.2 million, up
approximately $31.6 million over year end 1997. While cash and cash equivalents
grew by $18 million and investment securities by $16 million, period-end net
loan balances declined by less than 1% to $454.5 million. Quarter-end deposits
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of $684.4 million were up approximately $30.3 million over year-end 1997,
principally reflecting seasonal growth in municipal account balances.
At quarter-end, the Company's non-performing loans and OREO, totaling $3.9
million, were little changed from the prior year-end figures, while net loan
charge-offs for the first quarter of 1998, at $.3 million, were well below the
$.6 million for the first quarter of 1997. At March 31, 1998, the Company's loan
loss reserve stood at 2.1% of total loans and at 305% of non-performing loans,
while the Company's ratio of total non-performing assets to total assets was
.52%, all little changed from the strong ratios at year-end 1997.
Consolidated shareholders' equity at quarter-end was $72 million, up $1.6
million over year-end 1997. The Company's retained earnings for the quarter
($1.0 million) were complimented by $.7 million of stock issuance proceeds which
included $.3 million issued in connection with the purchase of land for the
Company's Newburgh branch and normal issuances under the Company's stock option
plans and dividend reinvestment plan, offset slightly ($.1 million) by the
decrease in unrealized gains, after tax, in the market value of the Company's
available-for-sale investment portfolio. The ratio of shareholders' equity to
total assets remained strong at quarter-end standing in excess of 9.4%.
Hudson Chartered Bancorp, Inc. is the parent company for FIRST NATIONAL BANK OF
THE HUDSON VALLEY, the largest independent commercial bank in the mid-Hudson
valley. From its 22 branches in Dutchess, Ulster, Orange and Putnam counties,
First Hudson Valley Bank offers individual, business and municipal customers a
full range of loan and deposit products and trust and investment services. The
common stock of Hudson Chartered Bancorp, Inc. is publicly traded on the
American Stock Exchange under the symbol "HCK".
FOR FURTHER INFORMATION, PLEASE CONTACT:
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John Charles VanWormer, President OR T. Jefferson Cunningham III, Chairman
914-437-4303 914-437-4305
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HUDSON CHARTERED BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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<CAPTION>
March 31, December 31, March 31,
1998 1997 1997
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ASSETS
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NET LOANS $454,533 $457,707 $441,746
SECURITIES 214,392 198,579 184,017
CASH & CASH EQUIVALENTS 64,682 46,475 46,458
OTHER ASSETS 29,557 28,763 30,410
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TOTAL ASSETS $763,164 $731,524 $702,631
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LIABILITIES & STOCKHOLDERS' EQUITY
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NON-INTEREST BEARING DEPOSITS $144,398 $151,002 $134,848
INTEREST BEARING DEPOSITS 540,038 503,103 496,407
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TOTAL DEPOSITS 684,436 654,105 631,255
OTHER LIABILITIES 6,725 7,061 6,065
STOCKHOLDERS' EQUITY 72,003 70,358 65,311
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $763,164 $731,524 $702,631
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COMMON SHARES OUTSTANDING* 7,109,000 7,076,000 7,098,000
BOOK VALUE PER SHARE* $10.13 $9.94 $9.20
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CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
THREE MONTHS ENDED MARCH 31,
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1998 1997
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GROSS INTEREST INCOME $13,404 $12,692
INTEREST EXPENSE 5,378 4,965
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NET INTEREST INCOME 8,026 7,727
PROVISION FOR LOAN LOSSES 600 700
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NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 7,426 7,027
SERVICE CHARGES, COMMISSIONS & FEES 905 1,020
TRUST INCOME 220 163
SECURITY & LOAN SALE GAINS 105 33
OTHER INCOME 246 361
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TOTAL NON-INTEREST INCOME 1,476 1,577
GROSS OPERATING INCOME 8,902 8,604
SALARIES & BENEFITS 3,048 3,020
OCCUPANCY & EQUIPMENT 1,031 1,069
MERGER RELATED EXPENSES 280
OTHER EXPENSES 1,331 1,327
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TOTAL NON-INTEREST EXPENSE 5,690 5,416
INCOME BEFORE INCOME TAXES 3,212 3,188
INCOME TAXES 1,113 1,049
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NET INCOME $ 2,099 $ 2,139
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MEMO:
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INCOME BEFORE TAXES (PRE-MERGER EXPENSES) $3,492
INCOME TAXES (PRE-MERGER EXPENSES) 1,130
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NET INCOME (EXCLUDING MERGER EXPENSES) $2,362
======
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WEIGHTED AVERAGE BASIC COMMON SHARES* 7,094,000 7,103,000
WEIGHTED AVERAGE FULLY DILUTED COMMON SHARES* 7,325,000 7,338,000
AS REPORTED:
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BASIC EARNINGS PER COMMON SHARE* $0.30 $0.30
DILUTED EARNINGS PER COMMON SHARE* $0.29 $0.29
RETURN ON ASSETS 1.13% 1.23%
RETURN ON EQUITY 11.80% 13.11%
NET INTEREST MARGIN (TAX EQUIVALENT) 4.92% 5.02%
EXCLUDING MERGER EXPENSES:
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BASIC EARNINGS PER COMMON SHARE $0.33 $0.30
DILUTED EARNINGS PER COMMON SHARE $0.32 $0.29
RETURN ON ASSETS 1.27% 1.23%
RETURN ON EQUITY 13.27% 13.11%
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* DATA ADJUSTED FOR 50% STOCK DIVIDEND DECLARED SEPTEMBER 25, 1997
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Exhibit 99.2
[Letterhead of Keefe, Bruyette & Woods, Inc.]
April 10, 1998
The Board of Directors
Hudson Chartered Bancorp, Inc.
Route 55
LaGrangeville, NY 12540
Members of the Board:
You have requested our opinion as investment bankers as to the
fairness, from a financial point of view, to the common stockholders of Hudson
Chartered Bancorp, Inc. ("HCK") of the exchange ratio in the proposed merger
("the Merger") of Progressive Bank, Inc.("PSBK") with HCK pursuant to the
Agreement and Plan of Reorganization (the "Merger Agreement") dated December 16,
1997 between HCK and PSBK. It is our understanding that the Merger will be
structured as a pooling of interests under generally accepted accounting
principles and will be a tax-free reorganization under the Internal Revenue
Code.
As is more specifically set forth in the Merger Agreement, upon
consummation of the Merger, each outstanding share of the common stock of PSBK,
par value $1.00 per share ("PSBK Common Stock"), except for certain shares held
by PSBK and HCK, will be converted into and exchanged for 1.82 (the "Exchange
Ratio") shares of HCK ("HCK Common Stock"), $.80 par value per share.
Keefe, Bruyette & Woods, Inc. ("Keefe Bruyette"), as part of its
investment banking business, is continually engaged in the valuation of bank
holding companies and banks, thrift holding companies and thrifts and their
securities in connection with mergers and acquisitions, underwriting, private
placements, competitive bidding processes, market making as a NASD market maker,
and valuations for various other purposes. As specialists in the securities of
banking companies we have experience in, and knowledge of, the valuation of
banking enterprises. In the ordinary course of our business as a broker-dealer,
we may, from time to time, trade the securities of PSBK or HCK, for our own
account, and for the accounts of our customers and, accordingly, may at any time
hold a long or short position in such securities. To the extent we have any such
positions as of the date of this opinion it has been disclosed to HCK. KBW has
served as financial advisor to HCK in the negotiation of the Merger Agreement
and in rendering this fairness opinion and will receive a fee from HCK for those
services.
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In arriving at our opinion, we have reviewed, analyzed and relied upon
material bearing upon the financial and operating condition of PSBK and HCK
and the Merger, including among other things, the following:
i. Reviewed the Merger Agreement;
ii. Reviewed certain historical financial and other information concerning
HCK for the four years ending December 31, 1997, including HCK's Annual
Report to Stockholders and Annual Reports on Forms 10-K, and interim
quarterly reports on Form 10-Q;
iii. Reviewed certain historical financial and other information concerning
PSBK for the four years ending December 31, 1997, including PSBK's
Annual Report to Stockholders and Annual Reports on Forms 10-K, and
interim quarterly reports on Form 10-Q;
iv. Reviewed and studied the historical stock prices and trading volumes of
the common stock of both HCK and PSBK;
v. Held discussions with senior management of HCK and PSBK with respect to
their past and current financial performance, financial condition and
future prospects;
vi. Reviewed certain internal financial data, projections and other
information of HCK and PSBK, including financial projections prepared
by management;
vii. Analyzed certain publicly available information of other financial
institutions that we deemed comparable or otherwise relevant to our
inquiry, and compared HCK and PSBK from a financial point of view with
certain of these institutions;
viii. Reviewed the financial terms of certain recent business combinations in
the banking industry that we deemed comparable or otherwise relevant to
our inquiry; and
ix. Conducted such other financial studies, analyses and investigations and
reviewed such other information as we deemed appropriate to enable us
to render our opinion.
In conducting our review and arriving at our opinion, we have relied
upon the accuracy and completeness of all of the financial and other information
provided to us or publicly available and we have not assumed any responsibility
for independently verifying the accuracy or completeness of any such
information. We have relied upon the management of HCK and PSBK as to the
reasonableness and achievability of the financial and operating forecasts and
projections (and the assumptions and bases therefor) provided to us, and we have
assumed that such forecasts and projections reflect the best currently available
estimates and judgments of such managements and that such forecasts and
projections will be realized in the amounts and in the time periods currently
estimated by such managements. We are not experts in the independent
verification of the adequacy of allowances for loan and lease losses and we have
assumed that the current and projected aggregate reserves for loan and lease
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losses for HCK and PSBK are adequate to cover such losses. We did not make or
obtain any independent evaluations or appraisals of any assets or liabilities of
HCK, PSBK, or any of their respective subsidiaries nor did we verify any of
HCK's or PSBK's books or records or review any individual loan or credit files.
We have considered such financial and other factors as we have deemed
appropriate under the circumstances, including, among others, the following: (i)
the historical and financial position and results of operations of HCK and PSBK;
(ii) the assets and liabilities of HCK and PSBK; and (iii) the nature and terms
of certain other merger transactions involving banks and bank holding companies.
We have also taken into account our assessment of general economic, market and
financial conditions and our experience in other transactions, as well as our
experience in securities valuation and knowledge of the banking industry
generally. Our opinion is necessarily based upon conditions as they exist and
can be evaluated on the date hereof and the information made available to us
through the date hereof.
Based upon and subject to the foregoing, it is our opinion that, as of
the date hereof, the Exchange Ratio is fair, from a financial point of view, to
HCK and its stockholders.
Very truly yours,
/s/ Keefe, Bruyette & Woods, Inc.
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Keefe, Bruyette & Woods, Inc.
