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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
Date of Report (Date of earliest event reported) February 6, 1997
SOVEREIGN BANCORP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 0-16533 23-2453088
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Ident. No.)
1130 Berkshire Boulevard, Wyomissing, Pennsylvania 19610
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610) 320-8400
N/A
(Former name or former address, if changed since last report.)
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Item 5. Other Events.
On February 6, 1997, Sovereign Bancorp, Inc. (the "Company")
and Bankers Corp ("Bankers Corp"), of Perth Amboy, New Jersey,
executed an Agreement and Plan of Merger (the "Agreement") for
the Company to acquire Bankers. The terms of the Agreement are
more particularly described in the Company's press release, dated
February 6, 1997, attached hereto as Exhibit 99.1 and
incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(a) Exhibits.
The following exhibit is filed herewith:
99.1 Press Release, dated February 6, 1997, of
Sovereign Bancorp, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
SOVEREIGN BANCORP, INC.
Dated: February 6, 1997
By/s/ Karl D. Gerhart
Karl D. Gerhart,
Chief Financial Officer
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EXHIBIT INDEX
Exhibit Number
99.1 Press Release, dated February 6, 1997,
of Sovereign Bancorp, Inc.
Karl D. Gerhart (610) 320-8437
INTERNET: [email protected]
February 6, 1997 Mark R. McCollom (610) 208-6426
Linda Hagginbothom (610) 320-8498
SOVEREIGN to ACQUIRE
BANKERS CORP
WYOMISSING, PA.....Sovereign Bancorp, Inc.
("Sovereign") (NASDAQ/NMS:SVRN), parent company of Sovereign Bank
(the "Bank"), and Bankers Corp ("Bankers") (NASDAQ/NMS:BKCO), of
Perth Amboy, New Jersey, parent company of Bankers Savings,
announced today the execution of a Definitive Agreement
("Agreement") for Sovereign to acquire Bankers. Bankers is a
$2.5 billion bank holding company whose principal operating
subsidiary operates 15 branches located in Middlesex, Monmouth
and Ocean Counties, New Jersey.
The terms of the Agreement call for Sovereign to exchange
$25.50 in Sovereign common stock for each outstanding share of
Bankers common stock or a total consideration of approximately
$325 million in Sovereign common stock. The price will stay
fixed at $25.50 per Bankers share if Sovereign's average stock
price remains between $11.00 and $16.50 per share (collectively,
the "Collars") during a 15-day pricing period prior to the
closing of the transaction. The pricing reflects 164% of Bankers
stated book value, 167% of Bankers tangible book value and 12.5
times Bankers last twelve months' earnings.
Bankers is a well-capitalized company with a total equity to
total assets ratio of 7.84% at December 31, 1996. Bankers is
also very profitable, reflected by 1996 year-end net operating
income of $26.1 million or $2.04 per share. The strong 1996
earnings produced a return on assets of 1.11% and a return on
equity of 15.5%. Non-performing assets were 1.19% of assets at
December 31, 1996.
"The combination of these two institutions significantly
enhances Sovereign's franchise in New Jersey and will be
accretive to Sovereign's tangible book value and is expected to
be accretive to earnings in 1997 and 1998," stated Jay S. Sidhu,
Sovereign's President and Chief Executive Officer. This
transaction will also enhance Sovereign's capital ratios and
provide an additional $1.6 billion of deposits as a funding
source. "Bankers strong position may also be used to reduce
outstanding borrowings, which will help to expand Sovereign's net
interest margin over time," Sidhu added.
"With the addition of the highly efficient and large deposit
branches, Bankers is a perfect fit with Sovereign's New Jersey
branch network where Sovereign will then have about a
$5.6 billion deposit franchise," Sidhu continued. The
acquisition of Bankers will make Sovereign the 6th largest
depository institution in New Jersey with a deposit share of 4.5%
and increases Sovereign's market share ranking to #1 in Monmouth
County, #2 in Ocean County and #3 in Middlesex County. "These
three counties rank among the fastest growing counties in
New Jersey and we are excited about our dominant market share,"
Sidhu remarked.
"We are very pleased that we have achieved this level of
value for our shareholders. Since our conversion in 1990,
Bankers stock price has increased almost 7.5 times, which is
reflected in the proposed acquisition price," stated Joseph P.
Gemmell, Bankers Chairman, President and Chief Executive Officer.
"Our new partner, Sovereign, has provided long-term value to its
shareholders and we look forward to having our shareholders share
in this success. Sovereign has built an attractive franchise in
a highly desirable market area. Additionally, we believe the
acquisition creates significant opportunities for Bankers
customers through the offering of Sovereign's broader product
base," Gemmell continued.
Upon completion of the Bankers acquisition and other pending
transactions, Sovereign will have assets totaling $12.3 billion,
deposits totaling $7.2 billion and operate over 145 Community
Banking Offices throughout a tri-state network. With a pro forma
market capitalization in excess of $1.2 billion, Sovereign will
become one of the 10 largest thrift holding companies in the
country.
"Based on Bankers outstanding history, we are delighted to
welcome them to Sovereign," commented Sovereign's Chairman,
Richard E. Mohn. "Bankers is a highly efficient company with a
good earnings track record and is a natural fill-in to
Sovereign's existing franchise," Mohn continued.
In connection with the execution of the Agreement, Bankers
granted a stock option to Sovereign to purchase, under certain
conditions, up to 19.9% of Bankers' outstanding shares.
The details relating to the Collars are that if the price of
Sovereign's average stock drops below $11.00 per share during the
pricing period prior to closing, Bankers shareholders would
receive a fixed rate of 2.318 shares (the "Maximum Exchange
Ratio") of Sovereign common stock for each share of Bankers
common stock. Conversely, if Sovereign's average stock price is
$16.50 or higher, Bankers shareholders would receive a fixed rate
of 1.545 shares (the "Minimum Exchange Ratio") of Sovereign
common stock for each share of Bankers common stock.
The values shown above for the Collars, the Maximum Exchange
Ratio and the Minimum Exchange Ratio do not reflect the impact of
the 6-for-5 stock split Sovereign declared January 16, 1997. The
Agreement contains customary anti-dilutive provisions.
Bankers has the right to terminate the Agreement if the
average stock price of Sovereign (as defined in the Agreement)
falls below $10.31 and Sovereign's decline in value is 15%
greater than the percentage decline of a group of similar
financial institutions, unless Sovereign agrees to deliver to
Bankers shareholders Sovereign shares having a minimum value of
$23.90.
Sovereign currently has pending the acquisition of First
State Financial Services, Inc., a $600 million financial
institution in New Jersey. This acquisition is expected to close
in February 1997 and will add 14 Community Banking Offices to
Sovereign Bank's New Jersey divisions. Sovereign will be
supplying First State shareholders with the information relating
to its transaction with Bankers in advance of the February 18,
1997 shareholders meeting and expects to close the First State
acquisition as previously disclosed.
As of December 1996, Sovereign was a $9.4 billion financial
institution with 122 Community Banking Offices serving
New Jersey, eastern Pennsylvania and northern Delaware. On
Wednesday, February 5, 1997, Sovereign's common stock closed at
$13.50 and its preferred stock closed at $71.50.
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