<PAGE>
FILED PURSUANT TO RULE NO. 424(a)
REGISTRATION NO. 333-24629
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE PROSPECTUS TO +
+WHICH IT RELATES SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF +
+AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE +
+IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO +
+REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED APRIL 18, 1997
PROSPECTUS SUPPLEMENT
TO PROSPECTUS DATED , 1997
$150,000,000
DIME CAPITAL TRUST I
% CAPITAL SECURITIES, SERIES A
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
DIME BANCORP, INC.
-----------
The % Capital Securities, Series A (the "Series A Capital Securities"),
offered hereby represent preferred beneficial interests in Dime Capital Trust
I, a statutory business trust created under the laws of the State of Delaware
(the "Series A Issuer"). Dime Bancorp, Inc., a Delaware corporation (the
"Corporation") and the holding company of The Dime Savings Bank of New York,
FSB (the "Bank" and, together with the Corporation and their consolidated
subsidiaries, the "Company"), will be the owner of all of the beneficial
interests represented by common securities of the Series A Issuer ("Series A
Common Securities" and, collectively with
(Continued on next page)
-----------
SEE "RISK FACTORS" BEGINNING ON PAGE S-4 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE SERIES A CAPITAL SECURITIES.
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS
ASSOCIATION AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH
IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO THE
PUBLIC(1) COMMISSION(2) SERIES A ISSUER(1)(3)(4)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Series A Capital Se-
curity................ $1,000.00 (3) $1,000.00
- --------------------------------------------------------------------------------
Total.................. $150,000,000.00 (3) $150,000,000.00
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Plus accrued Distributions, if any, from , 1997.
(2) The Series A Issuer and the Corporation have each agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended (the "Securities Act"). See
"Underwriting."
(3) In view of the fact that the proceeds of the sale of the Series A Capital
Securities will be invested in the Series A Subordinated Debentures, the
Corporation has agreed to pay to the Underwriters as compensation
("Underwriters' Compensation") for their arranging the investment therein
of such proceeds $ per Series A Capital Security (or $ in the
aggregate). See "Underwriting."
(4) Expenses of the offering which are payable by the Corporation are estimated
to be $ .
-----------
The Series A Capital Securities are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the Underwriters and
certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part. It is
expected that delivery of the Series A Capital Securities will be made in book-
entry form through the facilities of The Depository Trust Company ("DTC") in
New York, New York on or about , 1997, against payment therefor in
immediately available funds.
-----------
MERRILL LYNCH & CO.
BT SECURITIES CORPORATION
LEHMAN BROTHERS
-----------
The date of this Prospectus Supplement is , 1997.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A
CAPITAL SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
(cover page continued)
the Series A Capital Securities, the "Series A Securities"). The Chase
Manhattan Bank is the Property Trustee of the Series A Issuer. The Series A
Issuer exists for the sole purpose of issuing the Series A Securities and
investing the proceeds thereof in $ initial principal amount of % Junior
Subordinated Deferrable Interest Debentures, Series A (the "Series A
Subordinated Debentures"), to be issued by the Corporation. The Series A
Subordinated Debentures will mature on , 2027 (the "Stated Maturity")
(which date may be shortened in certain circumstances as described under
"Certain Terms of Series A Subordinated Debentures--Conditional Right to
Shorten Maturity or Redeem upon a Tax Event or Capital Treatment Event").
Under certain circumstances, the Series A Capital Securities will have a
preference over the Series A Common Securities with respect to cash
distributions and amounts payable on liquidation, redemption or otherwise. See
"Description of Preferred Securities--Subordination of Common Securities" in
the accompanying Prospectus.
Holders of the Series A Capital Securities will be entitled to receive
preferential cumulative cash distributions accruing from , 1997 and
payable semi-annually in arrears on and of each year, commencing
, 1997, at an annual rate equal to % of the Liquidation Amount of
$1,000 per Series A Capital Security ("Distributions"). Subject to certain
exceptions, as described herein, the Corporation has the right to defer
payment of interest on the Series A Subordinated Debentures at any time or
from time to time for a period not exceeding ten consecutive semi-annual
periods with respect to each deferral period (each, an "Extension Period"),
provided that no Extension Period may extend beyond the Stated Maturity of the
Series A Subordinated Debentures. Upon the termination of any such Extension
Period and the payment of all interest then accrued and unpaid (together with
interest thereon at a rate equal to % per annum, compounded semi-annually, to
the extent permitted by applicable law), the Corporation may elect to begin a
new Extension Period subject to the requirements set forth herein. If interest
payments on the Series A Subordinated Debentures are so deferred,
Distributions on the Series A Capital Securities will also be deferred and the
Corporation will not be permitted, subject to certain exceptions described
herein, to declare or pay any cash distributions with respect to the
Corporation's capital stock or debt securities that rank pari passu with or
junior to the Series A Subordinated Debentures. During an Extension Period,
interest on the Series A Subordinated Debentures will continue to accrue (and
the amount of Distributions to which holders of the Series A Capital
Securities are entitled will accumulate) at a rate equal to % per annum,
compounded semi-annually from the relevant payment date for such interest, and
holders of Series A Capital Securities will be required to accrue interest
income for United States federal income tax purposes. See "Certain Terms of
Series A Subordinated Debentures--Option to Defer Interest Payments" and
"Certain Federal Income Tax Consequences--Original Issue Discount."
The Series A Subordinated Debentures are unsecured and subordinated to all
Senior Debt (as defined in the accompanying Prospectus). Substantially all of
the Corporation's existing indebtedness constitutes Senior Debt. Because the
Corporation is a holding company, the right of the Corporation to participate
in any distribution of assets of its subsidiaries, including the Bank, upon
any such subsidiary's liquidation or reorganization or otherwise is subject to
the prior claims of creditors of that subsidiary except to the extent that the
Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the Series A Subordinated Debentures (and, therefore, the Series
A Capital Securities) will be effectively subordinated to all existing and
future liabilities of the Corporation's subsidiaries, and holders thereof
should look only to the assets of the Corporation for payments on the Series A
Subordinated Debentures. See "Description of Subordinated Debentures--
Subordination" in the accompanying Prospectus.
S-2
<PAGE>
(cover page continued)
The Corporation has, through the Series A Guarantee, the Trust Agreement,
the Series A Subordinated Debentures, the Indenture and the Expense Agreement
(each as defined herein), taken together, fully, irrevocably and
unconditionally guaranteed all of the Series A Issuer's obligations under the
Series A Capital Securities. See "Relationship Among the Capital Securities,
the Corresponding Junior Subordinated Debentures, the Expense Agreement and
the Guarantees--Full and Unconditional Guarantee" in the accompanying
Prospectus. The Series A Guarantee of the Corporation guarantees the payment
of Distributions and payments on liquidation or redemption of the Series A
Capital Securities, but only in each case to the extent of funds held by the
Series A Issuer, as described herein (the "Series A Guarantee"). See
"Description of Guarantees" in the accompanying Prospectus. If the Corporation
does not make interest payments on the Series A Subordinated Debentures held
by the Series A Issuer, the Series A Issuer will have insufficient funds to
pay Distributions on the Series A Capital Securities. The Series A Guarantee
does not cover payment of Distributions when the Series A Issuer has
insufficient funds to pay such Distributions. In such event, a holder of
Series A Capital Securities may institute a legal proceeding directly against
the Corporation pursuant to the terms of the Indenture to enforce payment of
amounts equal to such Distributions to such holder. See "Description of Junior
Subordinated Debentures--Enforcement of Certain Rights by Holders of Capital
Securities" in the accompanying Prospectus. The obligations of the Corporation
under the Series A Guarantee and the Series A Subordinated Debentures are
subordinate and junior in right of payment to all Senior Debt of the
Corporation.
The Series A Capital Securities are subject to mandatory redemption, in
whole or in part, upon repayment of the Series A Subordinated Debentures at
maturity or their earlier redemption. The Series A Subordinated Debentures are
redeemable prior to maturity at the option of the Corporation (i) on or after
, 2007, in whole at any time or in part from time to time, (ii) at any time
in whole (but not in part) in certain circumstances upon the occurrence of a
Tax Event or Capital Treatment Event, as described under "Certain Terms of
Series A Subordinated Debentures--Conditional Right to Shorten Maturity or
Redeem upon a Tax Event or Capital Treatment Event," or (iii) on or after
, 2002 in whole (but not in part) in certain circumstances if the
Corporation is not then subject to the Holding Company Capital Rules, as
described under "Risk Factors--Imposition of Holding Company Capital Rules."
For a description of the redemption prices for the Series A Capital Securities
pursuant to clause (i), (ii) or (iii) above, see "Certain Terms of Series A
Capital Securities--Redemption" and "Certain Terms of Series A Subordinated
Debentures--Redemption."
The Corporation will have the right at any time to terminate the Series A
Issuer and cause the Series A Subordinated Debentures to be distributed to the
holders of the Series A Capital Securities in liquidation of the Series A
Issuer. See "Certain Terms of Series A Capital Securities--Liquidation of
Series A Issuer and Distribution of Series A Subordinated Debentures to
Holders."
In the event of the termination of the Series A Issuer, after satisfaction
of liabilities to creditors of the Series A Issuer as required by applicable
law, the holders of the Series A Capital Securities will be entitled to
receive a Liquidation Amount of $1,000 per Series A Capital Security plus
accumulated and unpaid Distributions thereon to the date of payment, which may
be in the form of a distribution of such amount in Series A Subordinated
Debentures, subject to certain exceptions. See "Description of Preferred
Securities--Liquidation Distribution Upon Termination" in the accompanying
Prospectus.
If the Series A Subordinated Debentures are distributed to the holders of
Series A Capital Securities upon the liquidation of the Series A Issuer, the
Corporation will use its best efforts to include the Series A Subordinated
Debentures on such stock exchanges or other automated quotation systems, if
any, on which the Series A Capital Securities are then listed or traded.
The Series A Capital Securities will be represented by global certificates
registered in the name of The Depository Trust Company ("DTC") or its nominee.
Beneficial interests in the Series A Capital Securities will be shown on, and
transfers thereof will be effected only through, records maintained by
participants in DTC. Except as described in the accompanying Prospectus,
Series A Capital Securities in certificated form will not be issued in
exchange for the global certificates. See "Book-Entry Issuance" in the
accompanying Prospectus.
S-3
<PAGE>
The information in this Prospectus Supplement supplements and should be read
in conjunction with the information contained in the accompanying Prospectus.
As used herein, (i) the "Indenture" means the Junior Subordinated Indenture,
as amended and supplemented from time to time, between the Corporation and The
Chase Manhattan Bank, as trustee (the "Debenture Trustee"), (ii) the "Trust
Agreement" means the Amended and Restated Trust Agreement relating to the
Series A Issuer among the Corporation, as Depositor, The Chase Manhattan Bank,
as Property Trustee (the "Property Trustee"), Chase Manhattan Bank Delaware,
as Delaware Trustee (the "Delaware Trustee"), and the Administrative Trustees
named therein (collectively, with the Property Trustee and Delaware Trustee,
the "Issuer Trustees"), (iii) the "Guarantee Agreement" means the Guarantee
Agreement by and between the Corporation, as Guarantor, and The Chase
Manhattan Bank, as Guarantee Trustee, and (iv) the "Expense Agreement" means
the Agreement as to Expenses and Liabilities between the Corporation and the
Series A Issuer. Each of the other capitalized terms used in this Prospectus
Supplement and not otherwise defined in this Prospectus Supplement has the
meaning set forth in the accompanying Prospectus.
Except for the historical information included or incorporated by reference
in this Prospectus, the discussion in this Prospectus contains certain
forward-looking statements that involve risks and uncertainties, such as
statements of the Company's plans, objectives, expectations and intentions.
The cautionary statements made in this Prospectus should be read as being
applicable to all related forward-looking statements wherever they appear in
this Prospectus or in the documents incorporated by reference herein. The
Company's actual results could differ materially from those discussed here.
Factors that could cause or contribute to such differences include those
discussed below, as well as those discussed elsewhere herein or in the
documents incorporated by reference herein.
RISK FACTORS
Prospective purchasers of the Series A Capital Securities should carefully
review the information contained elsewhere in this Prospectus Supplement and
in the accompanying Prospectus and should particularly consider the following
matters. In addition, because holders of Series A Capital Securities may
receive Series A Subordinated Debentures in exchange therefor upon liquidation
of the Series A Issuer, prospective purchasers of Series A Capital Securities
are also making an investment decision with regard to the Series A
Subordinated Debentures and should carefully review all the information
regarding the Series A Subordinated Debentures contained herein.
GENERAL BUSINESS RISKS
The Company's business is subject to various material business risks. For
example, changes in prevailing interest rates can have significant effects on
the Company's business. Some of the risks to which the Company's business is
subject may become more acute in periods of economic slowdown or recession.
During such periods, foreclosures generally increase and could result in an
increased incidence of claims and legal actions against the Company. In
addition, such conditions could lead to a potential decline in demand for the
Company's loan origination services.
INTEREST RATE RISK
The Company realizes its income primarily from the differential or "spread"
between the interest earned on loans and investments and the interest paid on
deposits and borrowings. Net interest spreads are affected by the difference
between the maturities and the repricing characteristics of interest-earning
assets and interest-bearing liabilities. As is typical of most thrift
institutions, the Company's interest-bearing liabilities reprice or mature, on
average, sooner than its interest-earning assets. Additionally, the
characteristics of many of the Company's interest-earning assets (such as pre-
payment options, interest rate caps and similar features) are sensitive to
changes in the level of interest rates. Although the Company utilizes a
variety of techniques in an effort to manage its interest rate risk, the
Company remains subject to a significant level of interest rate risk. In
addition, changes in the relationship between long-term and short-term
interest rates (the "yield curve") can have a significant impact on the
Company's net interest income.
S-4
<PAGE>
COMPETITION
The Company experiences substantial competition both in attracting and
retaining deposits and in making loans. Its most direct competition for
deposits historically has come from other thrift institutions and commercial
banks doing business in the greater New York metropolitan area. However, as
with all banking organizations, the Company has experienced increasing
competition from nonbanking sources. For example, the Company also competes
for funds with mutual funds, corporate and governmental debt securities and
other investment alternatives. The Company's competition for loans comes
principally from other thrift institutions, commercial banks, mortgage banking
companies, consumer finance companies, insurance companies and other
institutional lenders. A number of institutions with which the Company
competes for deposits and loans have significantly greater assets and capital
than the Company.
REGULATION
Each of the Corporation, as a savings and loan holding company, and the
Bank, as a federal savings bank, is subject to significant regulation, which
has materially affected their businesses as well as the businesses of other
banking organizations in the past and is likely to do so in the future.
Statutes and regulations now affecting the Corporation and the Bank may be
changed at any time, and the interpretation of these statutes and regulations
by examining authorities is also subject to change. There can be no assurance
that future changes in the regulations or in their interpretation will not
adversely affect the business of the Company. As a savings and loan holding
company, the Corporation is subject to regulation and examination by the
Office of Thrift Supervision (the "OTS"). As a federal savings association,
the Bank is subject to examination by the OTS, its primary regulator, and the
Federal Deposit Insurance Corporation ("FDIC"), as administrator of the Bank
Insurance Fund (the "BIF") and the Savings Association Insurance Fund (the
"SAIF"). There can be no assurance that the OTS or the FDIC may not, as a
result of such examinations or otherwise, impose various requirements or
regulatory sanctions upon the Bank or the Corporation.
IMPOSITION OF HOLDING COMPANY CAPITAL RULES
From time to time, legislation has been proposed in Congress that, if
adopted, would require federal savings associations, such as the Bank, to
convert to a national or state bank charter. These proposals have expressed
the expectation that, at some time in the future, savings and loan holding
companies, such as the Corporation, may be subjected to a regulatory framework
similar to that for bank holding companies. As a result of the adoption of
such legislation, actions of federal bank regulatory agencies or a merger or
consolidation of the Corporation with a bank holding company, it is possible
that the Corporation could become subject to the holding company-level capital
adequacy guidelines of the Board of Governors of the Federal Reserve System
(the "Federal Reserve") or similar guidelines (collectively, "Holding Company
Capital Rules"). If the Corporation does not become subject to the Holding
Company Capital Rules by , 2002, then the Corporation will have the right,
if certain conditions are met, to redeem the Series A Subordinated Debentures
in whole (but not in part) and thereby cause the mandatory redemption of the
Series A Capital Securities. The Redemption Price in the case of such a
redemption shall equal, for each Series A Capital Security, the Regulatory
Make-Whole Amount (as defined in "Certain Terms of Series A Capital
Securities--Redemption") for a corresponding $1,000 principal amount of Series
A Subordinated Debentures together with accrued distributions to but excluding
the Redemption Date. See "--Tax Event or Capital Treatment Event--Exchange of
Series A Capital Securities for Series A Subordinated Debentures, Shortening
of Maturity of Series A Subordinated Debentures or Redemption" and "Certain
Terms of Series A Capital Securities--Redemption."
S-5
<PAGE>
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE SERIES A GUARANTEE AND THE
SERIES A SUBORDINATED DEBENTURES
The obligations of the Corporation under the Series A Guarantee issued by
the Corporation for the benefit of the holders of Series A Capital Securities
and under the Series A Subordinated Debentures are unsecured and rank
subordinate and junior in right of payment to all Senior Debt of the
Corporation. Substantially all of the Corporation's existing indebtedness
constitutes Senior Debt. Because the Corporation is a holding company, the
right of the Corporation to participate in any distribution of assets of any
subsidiary, including the Bank, upon any such subsidiary's liquidation or
reorganization or otherwise (and thus the ability of holders of the Series A
Capital Securities to benefit indirectly from such distribution), is subject
to the prior claims of creditors of that subsidiary, except to the extent that
the Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the Series A Guarantee and the Series A Subordinated Debentures
will be effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and holders of Series A Subordinated Debentures
should look only to the assets of the Corporation for payments on the Series A
Subordinated Debentures. See "The Corporation." None of the Indenture, the
Series A Guarantee, the Trust Agreement or the Expense Agreement places any
limitation on the amount of secured or unsecured debt, including Senior Debt,
that may be incurred by the Corporation. See "Description of Guarantees--
Status of the Guarantees" and "Description of Junior Subordinated Debentures--
Subordination" in the accompanying Prospectus.
The ability of the Series A Issuer to pay amounts due on the Series A
Capital Securities is solely dependent upon the Corporation making payments on
the Series A Subordinated Debentures as and when required.
OPTION TO DEFER INTEREST PAYMENTS; TAX CONSEQUENCES
So long as no event of default under the Indenture has occurred or is
continuing, the Corporation has the right under the Indenture to defer payment
of interest on the Series A Subordinated Debentures at any time or from time
to time for a period not exceeding ten consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Series A Subordinated Debentures. As a
consequence of any such deferral, semi-annual Distributions on the Series A
Capital Securities by the Series A Issuer will also be deferred (and the
amount of Distributions to which holders of the Series A Capital Securities
are entitled will accumulate additional Distributions thereon at a rate equal
to % per annum, compounded semi-annually from the relevant payment date for
such Distributions) during any such Extension Period. During any such
Extension Period, the Corporation may not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Corporation's capital stock or (ii) make any
payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Corporation that rank pari
passu in all respects with or junior in interest to the Series A Subordinated
Debentures, subject to certain exceptions described herein. See "Certain Terms
of Series A Subordinated Debentures--Option to Defer Interest Payments." Prior
to the termination of any such Extension Period, the Corporation may further
defer the payment of interest, provided that no Extension Period may exceed
ten consecutive semi-annual periods or extend beyond the Stated Maturity of
the Series A Subordinated Debentures. Upon the termination of any Extension
Period and the payment of all interest then accrued and unpaid (together with
interest thereon at an annual rate equal to %, compounded semi-annually from
the interest payment date for such interest, to the extent permitted by
applicable law), the Corporation may elect to begin a new Extension Period
subject to the above requirements. There is no limitation on the number of
times that the Corporation may elect to begin an Extension Period. See
"Certain Terms of Series A Capital Securities--Distributions."
Should an Extension Period occur, a holder of Series A Capital Securities
will be required to recognize income (in the form of original issue discount)
in respect of its pro rata share of the Series A Subordinated Debentures held
by the Series A Issuer for United States federal income tax purposes. As a
result, a holder of Series A Capital Securities will be required to include
such income in gross income for United States federal income tax purposes in
advance of the receipt of cash attributable to such income and will not
receive the cash
S-6
<PAGE>
related to such income from the Series A Issuer if the holder disposes of the
Series A Capital Securities prior to the record date for the payment of
Distributions. See "Certain Federal Income Tax Consequences--Original Issue
Discount" and "--Sale or Redemption of Series A Capital Securities."
The Corporation has no current intention of exercising its right to defer
payments of interest on the Series A Subordinated Debentures. However, should
the Corporation elect to exercise such right in the future, the market price
of the Series A Capital Securities is likely to be affected. A holder that
disposes of its Series A Capital Securities during an Extension Period,
therefore, might not receive the same return on its investment as a holder
that continues to hold its Series A Capital Securities.
TAX EVENT OR CAPITAL TREATMENT EVENT--EXCHANGE OF SERIES A CAPITAL SECURITIES
FOR SERIES A SUBORDINATED DEBENTURES, SHORTENING OF MATURITY OF SERIES A
SUBORDINATED DEBENTURES OR REDEMPTION
Upon the occurrence and continuation of a Tax Event or a Capital Treatment
Event (whether occurring before or after , 2007), the Corporation has the
right, if certain conditions are met, (i) to terminate the Series A Issuer and
cause the Series A Subordinated Debentures to be distributed to the holders of
the Series A Capital Securities in exchange therefor upon liquidation of the
Series A Issuer, (ii) to shorten the maturity of the Series A Subordinated
Debentures to a date not earlier than , 2012, or (iii) to redeem the Series
A Subordinated Debentures in whole (but not in part) within 90 days following
the occurrence of such Tax Event or Capital Treatment Event and thereby cause
a mandatory redemption of the Series A Capital Securities. Any such redemption
shall be at a price equal to the Tax/Capital Make-Whole Amount (as defined in
"Certain Terms of Series A Capital Securities--Redemption") together with
accrued interest to but excluding the date fixed for redemption. See "Certain
Terms of Series A Subordinated Debentures--Conditional Right to Shorten
Maturity or Redeem upon a Tax Event or Capital Treatment Event."
A "Tax Event" means, with respect to Series A Subordinated Debentures held
by the Series A Issuer or another Issuer (as defined in the Prospectus), the
receipt by the Series A Issuer of an opinion of counsel experienced in such
matters to the effect that, as a result of any amendment to, or change
(including any announced proposed change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such proposed change,
pronouncement or decision is announced on or after the date of issuance of the
Series A Capital Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the Series A Issuer is, or within 90 days of the
date of such opinion will be, subject to United States federal income tax with
respect to income received or accrued on the Series A Subordinated Debentures,
(ii) interest payable by the Corporation on the Series A Subordinated
Debentures is not, or within 90 days of the date of such opinion, will not be,
deductible by the Corporation, in whole or in part, for United States federal
income tax purposes or (iii) the Series A Issuer is, or within 90 days of the
date of the opinion will be, subject to more than a de minimis amount of other
taxes, duties or other governmental charges. With respect to Series A
Subordinated Debentures that are no longer held by the Series A Issuer or
another Issuer, "Tax Event" means the receipt by the Corporation of an opinion
of counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced proposed change), in the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which proposed change, pronouncement or decision is announced on or after the
date of issuance of the Series A Subordinated Debentures under the Indenture,
there is more than an insubstantial risk that interest payable by the
Corporation on the Series A Subordinated Debentures is not, or within 90 days
of the date of such opinion will not be, deductible by the Corporation, in
whole or in part, for United States federal income tax purposes (each of the
circumstances referred to in clauses (i), (ii) and (iii) of the preceding
sentence and the circumstances referred to in this sentence being referred to
herein as an "Adverse Tax Consequence").
S-7
<PAGE>
A "Capital Treatment Event" means any time when the Corporation, for any
reason, is subject to the Holding Company Capital Rules and the Corporation is
not entitled to treat an amount equal to the aggregate Liquidation Amount of
the Series A Capital Securities as "Tier 1 Capital" (or the then equivalent
thereof) for purposes of the Holding Company Capital Rules, as then in effect
and applicable to the Corporation. If the Corporation becomes subject to the
Holding Company Capital Rules and the Series A Capital Securities are treated
as "Tier 1 Capital" as described above, then for as long as the Series A
Capital Securities continue to be so treated, the Corporation will not
exercise its right to redeem (or shorten the maturity of, as described below)
the Series A Subordinated Debentures prior to their stated maturity without
having received the prior approval of the Federal Reserve to do so, provided
such approval is then required under applicable Holding Company Capital Rules.
Under current Holding Company Capital Rules, securities similar to the Series
A Capital Securities issued by bank holding companies have been treated as
"Tier 1 Capital."
See "--Possible Tax Law Changes Affecting the Series A Capital Securities"
for a discussion of certain legislative proposals that, if adopted, could give
rise to a Tax Event, which may permit the Corporation to cause a redemption of
the Series A Capital Securities prior to , 2007.
As described above under "--Imposition of Holding Company Capital Rules,"
the Series A Subordinated Debentures may also be redeemed in whole (but not in
part) on or after , 2002 if the Corporation is not then subject to the
Holding Company Capital Rules. See "Certain Terms of Series A Capital
Securities--Redemption."
EXCHANGE OF SERIES A CAPITAL SECURITIES FOR SERIES A SUBORDINATED DEBENTURES
The Corporation will have the right at any time to terminate the Series A
Issuer and, after satisfaction of liabilities to creditors of the Series A
Issuer as required by applicable law, cause the Series A Subordinated
Debentures to be distributed to the holders of the Series A Capital Securities
in exchange therefor upon liquidation of the Series A Issuer. See "Certain
Terms of Series A Capital Securities--Liquidation of Series A Issuer and
Distribution of Series A Subordinated Debentures to Holders."
Under current United States federal income tax law and interpretations, a
distribution of the Series A Subordinated Debentures upon liquidation of the
Series A Issuer should not be a taxable event to holders of the Series A
Capital Securities. However, if a Tax Event were to occur that would cause the
Series A Issuer to be subject to United States federal income tax with respect
to income received or accrued on the Series A Subordinated Debentures, a
distribution of the Series A Subordinated Debentures by the Series A Issuer
could be a taxable event to the Series A Issuer and the holders of the Series
A Capital Securities. See "Certain Federal Income Tax Consequences--
Distribution of the Series A Subordinated Debentures to Holders of the Series
A Capital Securities."
SHORTENING OF STATED MATURITY OF SERIES A SUBORDINATED DEBENTURES
Upon the occurrence of a Tax Event or a Capital Treatment Event, the
Corporation in certain circumstances will have the right to shorten the
maturity of the Series A Subordinated Debentures to a date not earlier than
, 2012 and thereby cause the Series A Capital Securities to be redeemed on
such earlier date. See "Certain Terms of Series A Subordinated Debentures--
Conditional Right to Shorten Maturity or Redeem upon a Tax Event or Capital
Treatment Event."
MARKET PRICES
There can be no assurance as to the market prices for Series A Capital
Securities or Series A Subordinated Debentures that may be distributed in
exchange for Series A Capital Securities upon liquidation of the Series A
Issuer. Accordingly, the Series A Capital Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary
market, or the Series A Subordinated Debentures that a holder of Series A
Capital Securities may receive on liquidation of the Series A Issuer, may
trade at a discount to the price that the investor paid to purchase the Series
A Capital Securities offered hereby. As a result of the existence of the
S-8
<PAGE>
Corporation's right to defer interest payments, the market price of the Series
A Capital Securities (which represent preferred beneficial interests in the
Series A Issuer) may be more volatile than the market prices of other
securities on which original issue discount accrues that are not subject to
such deferrals. See "Certain Terms of the Series A Subordinated Debentures"
and "Description of Junior Subordinated Debentures--Corresponding Junior
Subordinated Debentures" in the accompanying Prospectus.
RIGHTS UNDER THE SERIES A GUARANTEE; DIRECT ACTION
The Series A Guarantee guarantees to the holders of the Series A Capital
Securities the following payments, to the extent not paid by the Series A
Issuer: (i) any accumulated and unpaid Distributions required to be paid on
the Series A Capital Securities, to the extent that the Series A Issuer has
funds on hand available therefor at such time; (ii) the redemption price with
respect to any Series A Securities called for redemption, to the extent that
the Series A Issuer has funds on hand available therefor at such time; and
(iii) upon a voluntary or involuntary dissolution, winding-up or liquidation
of the Series A Issuer (unless the Series A Subordinated Debentures are
distributed to holders of the Series A Capital Securities), the lesser of (a)
the aggregate of the Liquidation Amount and all accumulated and unpaid
Distributions to the date of payment, to the extent that the Series A Issuer
has funds on hand available therefor at such time and (b) the amount of assets
of the Series A Issuer remaining available for distribution to holders of the
Series A Capital Securities. The Series A Guarantee will be qualified as an
indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). The Chase Manhattan Bank will act as the indenture trustee
under the Series A Guarantee (the "Guarantee Trustee") for the purpose of
compliance with the Trust Indenture Act and will hold the Series A Guarantee
for the benefit of the holders of the Series A Capital Securities. The Chase
Manhattan Bank will also act as Debenture Trustee for the Series A
Subordinated Debentures and as Property Trustee under the Trust Agreement.
Chase Manhattan Bank Delaware will act as Delaware Trustee under the Trust
Agreement.
The holders of not less than a majority in aggregate liquidation amount of
the Series A Capital Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Series A Guarantee or to direct the exercise of any
trust power conferred upon the Guarantee Trustee under the Series A Guarantee.
Any holder of the Series A Capital Securities may institute a legal proceeding
directly against the Corporation to enforce its rights under the Series A
Guarantee without first instituting a legal proceeding against the Series A
Issuer, the Guarantee Trustee or any other person or entity. If the
Corporation were to default on its obligation to pay amounts payable under the
Series A Subordinated Debentures, the Series A Issuer would lack funds for the
payment of Distributions or amounts payable on redemption of the Series A
Capital Securities or otherwise, and, in such event, holders of the Series A
Capital Securities would not be able to rely upon the Series A Guarantee for
payment of such amounts. Instead, in the event a Debenture Event of Default
shall have occurred and be continuing and such event is attributable to the
failure of the Corporation to pay interest on or principal of the Series A
Subordinated Debentures on the payment date on which such payment is due and
payable, then a holder of Series A Capital Securities may institute a legal
proceeding directly against the Corporation for enforcement of payment to such
holder of the principal of or interest on such Series A Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Series A Capital Securities of such holder (a "Direct Action"). In
connection with such Direct Action, the Corporation will have a right of set-
off under the Indenture to the extent of any payment made by the Corporation
to such holder of Series A Securities in the Direct Action. Except as
described herein, holders of Series A Securities will not be able to exercise
directly any other remedy available to the holders of the Series A
Subordinated Debentures or assert directly any other rights in respect of the
Series A Subordinated Debentures. See "Description of Junior Subordinated
Debentures--Enforcement of Certain Rights by Holders of Capital Securities"
and "--Debenture Events of Default" and "Description of Guarantees" in the
accompanying Prospectus. The Trust Agreement provides that each holder of
Series A Capital Securities by acceptance thereof agrees to the provisions of
the Series A Guarantee and the Indenture.
LIMITED VOTING RIGHTS
Holders of Series A Capital Securities generally will have limited voting
rights relating only to the modification of the Series A Capital Securities
and the exercise of the Series A Issuer's rights as holder of Series
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<PAGE>
A Subordinated Debentures and the Series A Guarantee. Holders of Series A
Capital Securities will not be entitled to vote to appoint, remove or replace
the Property Trustee, the Delaware Trustee or any Administrative Trustee, and
such voting rights are vested exclusively in the holder of the Series A Common
Securities except, with respect to the Property Trustee and the Delaware
Trustee, upon the occurrence of certain events described in the accompanying
Prospectus. The Property Trustee, the Administrative Trustees and the
Corporation may amend the Trust Agreement without the consent of holders of
Series A Capital Securities to ensure that the Series A Issuer will be
classified for United States federal income tax purposes as a grantor trust or
as other than an association taxable as a corporation unless such action
materially adversely affects the interests of such holders. See "Description
of Capital Securities--Voting Rights; Amendment of Each Trust Agreement" and
"--Removal of Issuer Trustees" in the accompanying Prospectus.
TRADING CHARACTERISTICS OF SERIES A CAPITAL SECURITIES
The Series A Capital Securities have not been listed on a national
securities exchange or the NASDAQ Stock Market. The absence of such a listing
for the Series A Capital Securities could adversely affect the liquidity of
the Series A Capital Securities.
The Series A Capital Securities may trade at prices that do not fully
reflect the value of accrued but unpaid interest with respect to the
underlying Series A Subordinated Debentures. A holder of Series A Capital
Securities that disposes of its Series A Capital Securities between record
dates for payments of Distributions (and consequently does not receive a
Distribution from the Series A Issuer for the period prior to such
disposition) will nevertheless be required to include accrued but unpaid
interest on the Series A Subordinated Debentures through the date of
disposition in income as ordinary income and to add such amount to its
adjusted tax basis in the Series A Capital Securities disposed of. Such a
holder will recognize a capital loss to the extent the amount realized on the
sale (less any amount that is treated as a payment of accrued interest
required to be included in income) is less than its adjusted tax basis.
Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes. See
"Certain Federal Income Tax Consequences--Sale or Redemption of Series A
Capital Securities."
POSSIBLE TAX LAW CHANGES AFFECTING THE SERIES A CAPITAL SECURITIES
On February 6, 1997, the revenue portion of President Clinton's 1997 budget
proposal (the "Budget Proposal") was released. If enacted, the Budget Proposal
would generally deny interest deductions for interest on an instrument issued
by a corporation that has a maximum term of more than 15 years and that is not
shown as indebtedness on the separate balance sheet of the issuer or, where
the instrument is issued to a related party (other than a corporation), where
the holder or some other related party issues a related instrument that is not
shown as indebtedness on the issuer's consolidated balance sheet. The above
described provision of the Budget Proposal is proposed to be effective
generally for instruments issued on or after the date of first Congressional
committee action. If a similar provision were to apply to the Series A
Subordinated Debentures, the Corporation would be unable to deduct interest on
the Series A Subordinated Debentures. Under current law, the Corporation will
be able to deduct interest on the Series A Subordinated Debentures. There can
be no assurances, however, that current or future legislative proposals or
final legislation will not affect the ability of the Corporation to deduct
interest on the Series A Subordinated Debentures. Such a change could give
rise to a Tax Event, which in certain circumstances would permit the
Corporation to terminate the Series A Issuer and cause the Series A
Subordinated Debentures to be distributed to the holders of the Series A
Capital Securities in exchange therefor upon liquidation of the Series A
Issuer, to shorten the maturity of the Series A Subordinated Debentures to a
date not earlier than , 2012 or to cause a redemption of the Series A
Capital Securities. See "Certain Terms of Series A Subordinated Debentures--
Conditional Right to Shorten Maturity or Redeem Upon a Tax Event or Capital
Treatment Event" and "--Redemption" in this Prospectus Supplement and
"Description of Preferred Securities--Redemption or Exchange" in the
accompanying Prospectus. See also "Certain Federal Income Tax Consequences--
Possible Tax Law Changes."
S-10
<PAGE>
THE SERIES A ISSUER
The Series A Issuer is a statutory business trust created under the laws of
the State of Delaware by the (i) execution of a trust agreement between the
Corporation, as Depositor, and Chase Manhattan Bank Delaware, as Delaware
Trustee, and (ii) the filing of a certificate of trust with the Delaware
Secretary of State on April 4, 1997. The Series A Issuer's business and
affairs are conducted by the Issuer Trustees: The Chase Manhattan Bank, as
Property Trustee, Chase Manhattan Bank Delaware, as Delaware Trustee, and two
individual Administrative Trustees who are employees or officers of or
affiliated with the Corporation. The Series A Issuer exists for the exclusive
purposes of (i) issuing and selling the Series A Securities, (ii) using the
proceeds from the sale of Series A Securities to acquire Series A Subordinated
Debentures issued by the Corporation, and (iii) engaging in only those other
activities necessary or incidental thereto (such as registering the transfer
of the Series A Capital Securities). Accordingly, the Series A Subordinated
Debentures will be the sole assets of the Series A Issuer, and payments under
the Series A Subordinated Debentures will be the sole revenue of the Series A
Issuer. All of the Series A Common Securities will be owned by the
Corporation. The Series A Common Securities will rank pari passu, and payments
will be made thereon pro rata, with the Series A Capital Securities, except
that upon the occurrence and continuance of an event of default under the
Trust Agreement resulting from an Event of Default under the Indenture, the
rights of the Corporation, as holder of the Series A Common Securities, to
payment in respect of Distributions and payments upon liquidation, redemption
or otherwise will be subordinated to the rights of the holders of the Series A
Capital Securities. See "Description of Preferred Securities--Subordination of
Common Securities" in the accompanying Prospectus. The Corporation will
acquire Series A Common Securities in an aggregate liquidation amount equal to
3% of the total capital of the Series A Issuer. The Series A Issuer has a term
of 55 years, but may terminate earlier as provided in the Trust Agreement. The
principal executive office of the Series A Issuer is 589 Fifth Avenue, New
York, New York 10017, Attention: Gene C. Brooks, and its telephone number is
(212) 326-6170. See "The Issuers" in the accompanying Prospectus.
It is anticipated that the Series A Issuer will not be subject to the
reporting requirements under the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
S-11
<PAGE>
THE CORPORATION
This information is qualified in its entirety by the detailed information,
definitions and financial statements appearing elsewhere herein or
incorporated herein by reference.
GENERAL
The Corporation is the holding company for the Bank, a federally-chartered
savings bank. At December 31, 1996, the Company had total assets of $18.9
billion, total stockholders' equity of $1.0 billion, and total deposits of
$12.9 billion. The Company's core business activities include consumer
financial services, mortgage banking, commercial and multifamily real estate
lending, consumer lending, and business banking.
The Bank is a member of the BIF of the FDIC, with approximately 68% of its
deposits assessable by the BIF and approximately 32% of its deposits
assessable by the SAIF of the FDIC, in each case insured up to applicable
limits. The Bank is subject to regulation, examination and supervision by the
OTS, as its primary regulator, and the FDIC, as the administrator of the BIF
and the SAIF.
The Corporation has its principal executive offices at 589 Fifth Avenue, New
York, New York 10017, telephone number (212) 326-6170.
CONSUMER FINANCIAL SERVICES
The Company's consumer financial services include deposit products and
related services, securities brokerage services and insurance products. These
products and services are delivered through the Company's multi-channel
distribution network, which also serves as a vehicle for delivering products
and services related to the Company's other business activities, including
mortgage banking, consumer lending and business banking. During 1996, the
Company expanded its bank-by-phone capabilities, and as a result, most
services are now available 24 hours a day and seven days a week.
The Company's principal deposit-gathering market is the greater New York
metropolitan area, in which it operates 85 branches, consisting of 37 branches
in New York City, 23 branches in Long Island, 7 branches in Westchester and
Rockland counties in New York, and 18 branches in New Jersey. The Company also
operates one branch in Florida. In addition, the Company's deposit gathering
network includes over 100 automated teller machines owned by the Company. The
Company attracts deposits by offering a broad selection of deposit instruments
and programs, including consumer and commercial demand accounts, savings
accounts, money market accounts, time deposit accounts, individual retirement
and Keogh accounts, and automatic payroll and Social Security deposit
programs.
The Company provides insurance and securities brokerage services through
wholly-owned insurance and brokerage subsidiaries. The services provided by
the Company's securities brokerage subsidiary, Dime Securities of New York,
Inc. ("Dime Securities"), a registered broker-dealer, consist primarily of the
execution of securities transactions, on an agency basis, solely upon the
order and for the accounts of its customers. In addition, Dime Securities
provides standardized and individualized investment and financial planning
advice to individuals or entities. Products sold by Dime Securities, which are
not BIF- or SAIF-insured, include: mutual funds; government, corporate and
municipal bonds; equity securities and equity options; variable annuities; and
unit investment trusts.
Various subsidiaries of the Bank sell certain tax-deferred annuities and
life and disability insurance products issued by specified insurance
companies. In addition to sales by the Company's branch-based sales force,
life and disability insurance products are sold through direct mail marketing
and telemarketing programs.
The Company also offers Savings Bank Life Insurance ("SBLI") in New York
through its customer representatives and direct mail marketing programs. The
Company administers the SBLI program and is
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<PAGE>
reimbursed for expenses. However, the Company does not share in premiums or
surplus, which are maintained separately from its assets and liabilities, and
is not liable under any SBLI policy.
MORTGAGE BANKING
The Company's mortgage banking activities include production of one-to-four
family first mortgage loans and cooperative apartment loans ("residential
property loans"), sales of loans into the secondary market and loan servicing.
A key component of the Company's continuing business strategy is to expand its
mortgage banking activities by focusing on a multi-regional approach, which
consists of strengthening existing operations in its core lending area of New
York, New Jersey and Connecticut and controlled growth into markets outside of
that core lending area. In connection therewith, the Company, in the fourth
quarter of 1995, acquired the residential property loan origination businesses
of National Mortgage Investments Co., Inc., a Georgia-based mortgage banking
company, and James Madison Mortgage Company, a Virginia-based mortgage banking
company (the "National and Madison Acquisitions"). During 1996, these two
operations accounted for approximately $1 billion, or 39%, of the Company's
residential property loan originations. In addition to residential property
loan production offices in its core lending area, the Company currently
maintains offices in Arizona, Florida, Georgia, Illinois, Louisiana, Maryland,
Pennsylvania, South Carolina, and Virginia.
During the fourth quarter of 1996, the Company began a restructuring of its
mortgage banking operations, including new executive management, the
relocation of its mortgage banking headquarters from Uniondale, New York to
Tampa, Florida and various strategic initiatives designed to, among other
things, enhance the efficiencies of such operations and further strengthen the
Company's residential property loan production capabilities through the
establishment of additional regional loan origination offices and an expansion
of its correspondent-purchase activities.
During 1996, the Company originated $2.7 billion of residential property
loans. Of such originations, $1.9 billion were originated through approved
mortgage brokers and $0.8 billion resulted from direct originations through
the Company's branches, sales force and direct marketing. The Company, during
1996, also acquired $0.3 billion of residential property loans through
purchase activities. Of this amount, bulk purchases amounted to $0.2 billion
and correspondent purchases totaled $0.1 billion.
At December 31, 1996, the Company serviced residential property loans with
outstanding balances of $18.0 billion, including $7.0 billion of loans in its
own portfolio and $11.0 billion of loans owned by others.
COMMERCIAL AND MULTIFAMILY REAL ESTATE LENDING
First mortgage loans secured by commercial and multifamily real estate are
currently made by the Company principally in its core lending area. During
1996, the Company originated $154.2 million of commercial first mortgage loans
and $168.0 million of multifamily first mortgage loans. At December 31, 1996,
approximately half of the Company's $1.9 billion portfolio of commercial and
multifamily first mortgage loans was secured by multifamily properties.
As a result of the acquisition of BFS Bankorp, Inc. and its wholly-owned
subsidiary Bankers Federal Savings FSB (together, "BFS"), the Company's
portfolio of multifamily first mortgage loans will increase significantly. At
December 31, 1996, BFS had approximately $561 million of multifamily first
mortgage loans, as well as approximately $17 million of commercial first
mortgage loans. For a further discussion of the pending acquisition of BFS,
see "Merger and Acquisition Activities." In order to leverage existing
capabilities, increase production and provide geographic diversity, the
Company recently opened commercial and multifamily first mortgage loan
production offices in Philadelphia, Pennsylvania and Fairfax, Virginia.
CONSUMER LENDING
The Company's consumer loan portfolio, the principal balances of which
amounted to $723.7 million at year-end 1996, includes adjustable- and fixed-
rate home equity loans, automobile loans and lease financing,
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<PAGE>
manufactured home loans, boat loans, unsecured and secured personal loans,
property improvement loans, government-guaranteed student loans, loans secured
by deposits, and unsecured revolving and overdraft checking loans. Home equity
loans represented approximately 70% of the Company's total consumer loan
portfolio at December 31, 1996. During 1996, the Company's consumer loan
originations amounted to $373.4 million.
The Company's strategy with respect to consumer lending is to increase loan
production by marketing consumer loan products through its branch network and
expanding the use of telemarketing and direct response channels, as well as
cross-selling home equity loan products to its existing and new residential
first mortgage customers.
BUSINESS BANKING
The Company originates business loans principally to finance seasonal
working capital needs, expansion, renovation, and equipment purchases. During
1997, the Company intends to concentrate its business lending efforts on
companies with up to $25 million in annual sales and is seeking to build
relationships with such businesses by providing them with certain additional
banking services, including deposit and cash management products.
MERGER AND ACQUISITION ACTIVITIES
On January 13, 1995, Anchor Bancorp, Inc. and Anchor Savings Bank FSB
("Anchor Savings" and, together with Anchor Bancorp, Inc., "Anchor") were
merged with and into the Corporation and the Bank, respectively, with the
Corporation and the Bank being the surviving entities. Anchor Savings, on
August 12, 1994, had acquired all of the outstanding common stock and
preferred stock of The Lincoln Savings Bank, FSB ("Lincoln") and immediately
thereafter, Lincoln was merged with and into Anchor Savings. In addition,
during the fourth quarter of 1995, the Company consummated the National and
Madison Acquisitions.
In December 1996, the Corporation entered into a definitive agreement to
acquire BFS for approximately $92 million in cash. It is expected that the
transaction will be accounted for under the purchase method of accounting. At
December 31, 1996, BFS had total assets of $650.5 million, loans receivable,
net, of $586.8 million, substantially all of which were multifamily first
mortgage loans, and deposits of $453.5 million. The acquisition of BFS is
expected to be consummated during the second quarter of 1997.
BALANCE SHEET RESTRUCTURING PLAN
During 1996, a key component of the Company's operating strategy was to
continue implementation of a balance sheet restructuring plan (the "Balance
Sheet Restructuring Plan"), which was announced at the end of 1995. The
Balance Sheet Restructuring Plan was designed to, among other things, enable
the Company to improve its net interest margin, primarily by selling certain
relatively-lower yielding mortgage-backed securities ("MBS"), and provide the
Company with greater flexibility in adjusting to varying interest rate
environments. During 1996, the Company, in connection with the Balance Sheet
Restructuring Plan, sold $2.0 billion of securities and incurred a net loss of
$8.1 million. The proceeds of such sales were, in large part, used to repay
borrowed funds, the costs of which are generally more volatile than the
Company's deposits.
S-14
<PAGE>
DIME BANCORP, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth in summary form, certain financial data for
each of the years in the five-year period ended December 31, 1996. These
selected consolidated financial data are qualified in their entirety by the
detailed information and the consolidated financial statements of the
Corporation and notes thereto included in documents incorporated by reference
in this Prospectus Supplement and should be read in conjunction therewith. See
"Incorporation of Certain Documents By Reference" in the accompanying
Prospectus. The consolidated financial statements for each of the years in the
five-year period ended December 31, 1996 have been audited by KPMG Peat
Marwick LLP, independent certified public accountants; and the related
auditors' report for the three-year period ended December 31, 1996 refers to a
change in accounting method for goodwill. For purposes of this presentation,
the results provided for each of the years ended December 31, 1993 and 1992
include Anchor's results at or for its fiscal year ended June 30th of the
subsequent calendar year.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- --------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
DATA:
Interest income......... $ 1,350,698 $ 1,357,131 $ 1,136,862 $ 980,111 $1,243,664
Interest expense........ 889,403 947,505 707,785 589,939 753,288
----------- ----------- ----------- --------- ----------
Net interest income..... 461,295 409,626 429,077 390,172 490,376
Provision for loan
losses................. 41,000 39,650 55,799 95,489 103,684
----------- ----------- ----------- --------- ----------
Net interest income
after provision for
loan losses............ 420,295 369,976 373,278 294,683 386,692
----------- ----------- ----------- --------- ----------
Non-interest income:
Banking service fees... 27,373 22,325 19,953 19,269 18,677
Loan servicing fees,
net................... 30,356 30,452 28,213 30,001 32,270
Securities and
insurance brokerage
fees.................. 21,064 15,532 16,885 22,336 22,111
Net (losses) gains on
sales activities...... (12,716) (12,415) 2,925 36,606 28,544
Other.................. 12,391 10,273 11,291 14,313 17,112
----------- ----------- ----------- --------- ----------
Total non-interest
income................. 78,468 66,167 79,267 122,525 118,714
----------- ----------- ----------- --------- ----------
Non-interest expense:
General and
administrative
expense............... 292,795 285,901 294,474 294,755 323,122
SAIF recapitalization
assessment............ 26,280 -- -- -- --
Other real estate owned
expense, net.......... 10,072 12,892 11,013 77,393 50,204
Amortization of
mortgage servicing
rights................ 11,872 12,107 9,664 19,884 26,650
Restructuring and
merger-related
expense............... 3,504 15,331 58,258 4,000 3,000
----------- ----------- ----------- --------- ----------
Total non-interest
expense................ 344,523 326,231 373,409 396,032 402,976
----------- ----------- ----------- --------- ----------
Minority interest-
preferred stock
dividends of
subsidiary............. -- -- 11,433 1,312 --
----------- ----------- ----------- --------- ----------
Income before income tax
expense (benefit),
extraordinary item and
cumulative effect of a
change in accounting
principle.............. 154,240 109,912 67,703 19,864 102,430
Income tax expense
(benefit).............. 49,984 47,727 (53,138) (68,959) 41,642
----------- ----------- ----------- --------- ----------
Income before
extraordinary item and
cumulative effect of a
change in accounting
principle.............. 104,256 62,185 120,841 88,823 60,788
Extraordinary item-loss
on early extinguishment
of debt................ -- -- -- -- (2,760)
Cumulative effect of a
change in accounting
principle for goodwill,
securities available
for sale and mortgage
servicing rights,
respectively........... -- -- (92,887) (1,187) (7,066)
----------- ----------- ----------- --------- ----------
Net income.............. $ 104,256 $ 62,185 $ 27,954 $ 87,636 $ 50,962
=========== =========== =========== ========= ==========
Net income attributable
to common stock........ $ 104,256 $ 62,185 $ 27,954 $ 87,636 $ 39,403
=========== =========== =========== ========= ==========
</TABLE>
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<PAGE>
DIME BANCORP, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA (CONTINUED)
<TABLE>
<CAPTION>
AT OR FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
PRIMARY AND FULLY
DILUTED EARNINGS PER
COMMON SHARES:
Primary:
Income before
extraordinary item and
cumulative effect of a
change in accounting
principle............. $ 0.96 $ 0.57 $ 1.12 $ 0.91 $ 0.89
Extraordinary item..... -- -- -- -- (0.05)
Cumulative effect of a
change in accounting
principle............. -- -- (0.86) (0.01) (0.13)
----------- ----------- ----------- ----------- -----------
Net Income............. $ 0.96 $ 0.57 $ 0.26 $ 0.90 $ 0.71
=========== =========== =========== =========== ===========
Fully Diluted:
Income before
extraordinary item and
cumulative effect of a
change in accounting
principle............. $ 0.95 $ 0.57 $ 1.12 $ 0.91 $ 0.89
Extraordinary item..... -- -- -- -- (0.05)
Cumulative effect of a
charge in accounting
principle............. -- -- (0.86) (0.01) (0.13)
----------- ----------- ----------- ----------- -----------
Net Income............. $ 0.95 $ 0.57 $ 0.26 $ 0.90 $ 0.71
=========== =========== =========== =========== ===========
AVERAGE COMMON SHARES
OUTSTANDING (IN
THOUSANDS):
Primary................. 109,097 109,742 107,668 97,153 55,344
Fully diluted........... 109,249 109,682 107,700 97,367 55,386
FINANCIAL CONDITION DATA
AT DECEMBER 31:
Total assets............ $18,870,108 $20,326,620 $19,647,937 $18,098,984 $16,680,405
Securities available for
sale................... 2,589,572 4,070,865 530,714 658,204 898,279
Securities held to
maturity............... 4,363,971 5,085,736 8,609,897 8,159,747 6,678,036
Loans receivable........ 10,738,057 9,830,313 9,351,622 7,906,573 7,629,100
Allowance for loan
losses................. 106,495 128,295 170,383 157,515 248,429
Deposits................ 12,856,739 12,572,203 12,811,269 11,091,362 13,039,885
Borrowed funds.......... 4,815,191 6,614,552 5,758,734 5,850,575 2,888,269
Stockholders' equity.... 1,022,337 976,530 905,125 904,982 635,843
ASSET QUALITY AT
DECEMBER 31:
Non-performing assets... $ 244,845 $ 315,800 $ 415,866 $ 641,743 $ 1,010,877
Non-performing assets to
total assets........... 1.30% 1.55% 2.12% 3.55% 6.06%
Non-accrual loans to
loans receivable....... 1.78 2.60 3.66 3.68 10.19
Allowance for loan
losses to loans
receivable............. 0.99 1.31 1.82 1.99 3.26
Allowance for loan
losses to non-accrual
loans.................. 55.58 50.29 49.84 54.14 31.97
OTHER DATA:
Book value per common
share(1)............... $ 9.76 $ 9.03 $ 8.43 $ 8.48 $ 8.79
Tangible book value per
common share(1)........ 9.67 8.94 8.39 7.59 6.81
Net interest margin for
the year............... 2.40% 2.07% 2.36% 2.47% 2.91%
Return on average
assets................. 0.52 0.30 0.15 0.53 0.29
Return on average
stockholders' equity... 10.36 6.56 3.25 11.02 8.21
Average stockholders'
equity to average
assets................. 5.05 4.62 4.57 4.82 3.52
Stockholders' equity to
total assets........... 5.42 4.80 4.61 5.00 3.81
Loans serviced for
others................. $11,036,624 $ 9,514,560 $ 8,713,047 $ 8,265,354 $ 9,039,183
</TABLE>
- --------
Notes:
(1) For 1995, 1994 and 1993, the computation assumes the exercise of a warrant
issued to the FDIC in July 1993 to acquire 8.4 million shares of the
Corporation's common stock at $0.01 per share. This warrant actually was
exercised in May 1996.
S-16
<PAGE>
USE OF PROCEEDS
All the proceeds from the sale of Series A Capital Securities will be
invested by the Series A Issuer in Series A Subordinated Debentures. The
Corporation intends that the proceeds from the sale of such Series A
Subordinated Debentures will be added to its general corporate funds and will
be used for general corporate purposes.
ACCOUNTING TREATMENT
For financial reporting purposes, the Series A Issuer will be treated as a
subsidiary of the Corporation and, accordingly, the accounts of the Series A
Issuer will be included in the consolidated financial statements of the
Corporation. The Series A Capital Securities will be presented as a separate
line item in the consolidated balance sheets of the Corporation, entitled
"Guaranteed Preferred Beneficial Interests in Corporation's Junior
Subordinated Deferrable Interest Debentures" and appropriate disclosures about
the Series A Capital Securities, the Series A Guarantee and the Series A
Subordinated Debentures will be included in the notes to the consolidated
financial statements. For financial reporting purposes, the Corporation will
record Distributions payable on the Series A Capital Securities as an expense
in the consolidated statements of income.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation and its subsidiaries as of December 31, 1996 and as adjusted to
give effect to the consummation of the offering of the Series A Capital
Securities. The following data should be read in conjunction with the
consolidated financial statements and notes thereto of the Corporation and its
subsidiaries incorporated herein by reference.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Total Long-term Debt................................ $ 906,514 $ 906,514
Guaranteed Preferred Beneficial Interests in
Corporation's Junior Subordinated Deferrable
Interest Debentures(a)............................. -- 150,000
Stockholders' Equity:
Common Stock...................................... 1,083 1,083
Additional Paid-In Capital........................ 914,386 914,386
Retained Earnings................................. 158,956 158,956
Treasury Stock, at Cost........................... (51,498) (51,498)
Net Unrealized Gain on Securities Available for
Sale, Net of Related Income Taxes................ 22 22
Unearned Compensation............................. (612) (612)
Total Stockholders' Equity...................... 1,022,337 1,172,927
---------- ---------
Total Capitalization.......................... $1,928,851 $
========== =========
</TABLE>
- --------
(a) As described herein, the assets of the Series A Issuer will be
$154,639,175 of % Series A Subordinated Debentures, issued by the
Corporation to the Series A Issuer. The Series A Subordinated Debentures
will mature on , 2027 (which date may be shortened to a date not
earlier than , 2012 in certain circumstances as described under
"Certain Terms of Series A Subordinated Debentures--Conditional Right to
Shorten Maturity or Redeem upon a Tax Event or Capital Treatment Event"
upon the occurrence of a Tax Event or a Capital Treatment Event if certain
conditions are met). The Corporation owns all of the Series A Common
Securities of the Series A Issuer, which accrue distributions at the rate
of % per annum.
S-17
<PAGE>
CERTAIN TERMS OF SERIES A CAPITAL SECURITIES
GENERAL
The following summary of certain terms and provisions of the Series A
Capital Securities supplements the description of the terms and provisions of
the Capital Securities set forth in the accompanying Prospectus under the
heading "Description of Preferred Securities," to which description reference
is hereby made. This summary of certain terms and provisions of the Series A
Capital Securities, which describes the material provisions thereof, does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the Trust Agreement. The form of the Trust Agreement has been
filed as an exhibit to the Registration Statement of which this Prospectus
Supplement and accompanying Prospectus form a part.
DISTRIBUTIONS
The Series A Capital Securities represent beneficial interests in the Series
A Issuer, and Distributions on the Series A Capital Securities will be payable
at an annual rate equal to % of the stated Liquidation Amount of $1,000,
payable semi-annually in arrears on and of each year (each a
"Distribution Date"), to the holders of the Series A Capital Securities at the
close of business on the fifteenth day (whether or not a Business Day (as
defined in the accompanying Prospectus)) next preceding the relevant
Distribution Date. Distributions will accumulate from , 1997. The first
Distribution Date for the Series A Capital Securities will be , 1997. The
amount of Distributions payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. In the event that any Distribution
Date is not a Business Day, then payment of the Distributions payable on such
date will be made on the next succeeding day that is a Business Day (and
without any additional Distributions or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the date such payment
was originally payable. The Paying Agent for the Series A Capital Securities
shall initially be The Chase Manhattan Bank. See "Description of Preferred
Securities--Distributions" in the accompanying Prospectus.
So long as no event of default under the Indenture has occurred and is
continuing, the Corporation has the right under the Indenture to defer payment
of interest on the Series A Subordinated Debentures at any time or from time
to time for a period not exceeding ten consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Series A Subordinated Debentures. As a
consequence of any such deferral of interest payments by the Corporation,
semi-annual Distributions on the Series A Capital Securities will also be
deferred by the Series A Issuer during any such Extension Period.
Distributions to which holders of the Series A Capital Securities are entitled
will accumulate additional Distributions thereon at a rate per annum equal to
% thereof, compounded semi-annually from the relevant Distribution Date.
The term "Distributions" as used herein shall include any such additional
Distributions. During any such Extension Period, the Corporation may not (i)
declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the
Corporation's capital stock or (ii) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Corporation that rank pari passu in all respects with or
junior in interest to the Series A Subordinated Debentures, subject to certain
exceptions described herein. See "Certain Terms of Series A Subordinated
Debentures--Option to Defer Interest Payments." Prior to the termination of
any such Extension Period, the Corporation may further defer the payment of
interest on the Series A Subordinated Debentures, provided that no Extension
Period may exceed ten consecutive semi-annual periods or extend beyond the
Stated Maturity of the Series A Subordinated Debentures. Upon the termination
of any such Extension Period and the payment of all interest then accrued and
unpaid (together with interest thereon at a rate equal to % per annum,
compounded semi-annually, to the extent permitted by applicable law), the
Corporation may elect to begin a new Extension Period. There is no limitation
on the number of times that the Corporation may elect to begin an Extension
Period. See "Certain Federal Income Tax Consequences--Original Issue
Discount."
S-18
<PAGE>
The Corporation has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series A
Subordinated Debentures.
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Series A
Subordinated Debentures, whether at Stated Maturity or upon earlier redemption
as provided in the Indenture, the proceeds from such repayment or redemption
shall be applied by the Property Trustee to redeem a Like Amount (as defined
in the accompanying Prospectus) of the Series A Securities, upon not less than
30 nor more than 60 days notice prior to the date fixed for repayment or
redemption, at a redemption price, with respect to the Series A Capital
Securities (the "Redemption Price"), equal to the aggregate Liquidation Amount
of such Series A Capital Securities plus accumulated and unpaid Distributions
thereon to the date of redemption (the "Redemption Date") and the related
amount of the premium, if any, paid by the Corporation upon the concurrent
redemption of such Series A Subordinated Debentures. If less than all of the
Series A Subordinated Debentures are to be repaid or redeemed on a Redemption
Date, then the proceeds from such repayment or redemption, including any
premium paid by the Corporation, shall be allocated to the redemption pro rata
of the Series A Capital Securities and the Series A Common Securities.
The Corporation has the right to redeem the Series A Subordinated Debentures
(i) on or after , 2007, in whole at any time or in part from time to time,
(ii) at any time, in certain circumstances as described under "Certain Terms
of Series A Subordinated Debentures--Conditional Right to Shorten Maturity or
Redeem upon a Tax Event or Capital Treatment Event," in whole (but not in
part), within 90 days following the occurrence of a Tax Event or a Capital
Treatment Event, or (iii) on or after , 2002, in certain circumstances
as described under "Risk Factors--Imposition of Holding Company Capital
Rules," in whole (but not in part), if the Corporation is not then subject to
the Holding Company Capital Rules. A redemption of the Series A Subordinated
Debentures would cause a mandatory redemption of Series A Capital Securities
and Series A Common Securities.
The Redemption Price, in the case of a redemption under (i) above, shall
equal the following prices, expressed as percentages of the Liquidation
Amount, together with accrued and unpaid Distributions to but excluding the
Redemption Date, if redeemed during the 12-month period beginning :
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2007...........................................................
2008...........................................................
2009...........................................................
2010...........................................................
2011...........................................................
2012...........................................................
2013...........................................................
2014...........................................................
2015...........................................................
2016...........................................................
</TABLE>
and at 100% on or after , 2017.
The Redemption Price, in the case of a redemption under (ii) above, shall
equal, for each Series A Capital Security, the Tax/Capital Make-Whole Amount
for a corresponding $1,000 principal amount of Series A Subordinated
Debentures together with accrued Distributions to but excluding the Redemption
Date. The "Tax/Capital Make-Whole Amount" shall be equal to the greater of (i)
100% of the principal amount of such Series A Subordinated Debentures or (ii)
as determined by a Quotation Agent (as defined below) as of the Redemption
Date, the sum of the present values of the principal amount and premium
payable as part of the
S-19
<PAGE>
Redemption Price with respect to an optional redemption of such Series A
Subordinated Debentures on , 2007, together with scheduled payments of
interest from the Redemption Date to , 2007 (the "Remaining Life"), in each
case discounted to the Redemption Date on a semi-annual basis (assuming a 360-
day year consisting of 30-day months) at the Adjusted Tax/Capital Treasury
Rate (as defined below).
The Redemption Price, in the case of a redemption under (iii) above, shall
equal, for each Series A Capital Security, the Regulatory Make-Whole Amount
for a corresponding $1,000 principal amount of Series A Subordinated
Debentures together with accrued Distributions to but excluding the Redemption
Date. The "Regulatory Make-Whole Amount" shall be equal to the greater of (i)
100% of the principal amount of such Series A Subordinated Debentures or (ii)
as determined by a Quotation Agent as of the Redemption Date, the sum of the
present values of the principal amount and premium payable as part of the
Redemption Price with respect to an optional redemption of such Series A
Subordinated Debentures on , 2007, together with scheduled payments of
interest for the Remaining Life, in each case discounted to the Redemption
Date on a semi-annual basis (assuming a 360-day year consisting of 30-day
months) at the Adjusted Regulatory Treasury Rate (as defined below).
"Adjusted Regulatory Treasury Rate" means, with respect to any Redemption
Date, the Treasury Rate (as defined below) plus %.
"Adjusted Tax/Capital Treasury Rate" means, with respect to any
Redemption Date, the Treasury Rate (as defined below) plus (i) % if such
Redemption Date occurs on or before , 1998 or (ii) % if such
Redemption Date occurs after , 1998.
"Treasury Rate" means (i) the yield, under the heading which represents
the average for the immediately prior week, appearing in the most recently
published statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury Constant
Maturities," for the maturity corresponding to the Remaining Life (if no
maturity is within three months before or after the Remaining Life, yields
for the two published maturities most closely corresponding to the
Remaining Life shall be determined and the Treasury Rate shall be
interpolated or extrapolated from such yields on a straight-line basis,
rounding to the nearest month) or (ii) if such release (or any successor
release) is not published during the week preceding the calculation date or
does not contain such yields, the rate per annum equal to the semi-annual
equivalent yield to maturity of the Comparable Treasury Issue, calculated
using a price for the Comparable Treasury Issue (expressed as a percentage
of its principal amount) equal to the Comparable Treasury Price for such
redemption date. The Treasury Rate shall be calculated on the third
Business Day preceding the Redemption Date.
"Comparable Treasury Issue" means, with respect to any Redemption Date,
the United States Treasury security selected by the Quotation Agent as
having a maturity comparable to the Remaining Life that would be utilized,
at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the Remaining Life. If no United States Treasury security has a
maturity which is within a period from three months before to three months
after , 2007, the two most closely corresponding United States
Treasury securities shall be used as the Comparable Treasury Issue, and the
Treasury Rate shall be interpolated and extrapolated on a straight-line
basis, rounding to the nearest month using such securities.
"Quotation Agent" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated and its successors; provided, however, that if the foregoing
shall cease to be a primary United States Government securities dealer in
New York City (a "Primary Treasury Dealer"), the Corporation shall
substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Debenture Trustee after
consultation with the Corporation.
S-20
<PAGE>
"Comparable Treasury Price" means (i) the average of five Reference
Treasury Dealer Quotations for such Redemption Date, after excluding the
highest and lowest such Reference Treasury Dealer Quotations, or (ii) if
the Debenture Trustee obtains fewer than three such Reference Treasury
Dealer Quotations, the average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as
determined by the Debenture Trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Debenture Trustee by such
Reference Treasury Dealer at 5:00 p.m., New York City time, on the third
Business Day preceding such Redemption Date.
LIQUIDATION OF SERIES A ISSUER AND DISTRIBUTION OF SERIES A SUBORDINATED
DEBENTURES TO HOLDERS
The Corporation will have the right at any time to liquidate the Series A
Issuer and cause the Series A Subordinated Debentures to be distributed to the
holders of the Series A Capital Securities in exchange therefor upon
liquidation of the Series A Issuer.
Under current United States federal income tax law, a distribution of Series
A Subordinated Debentures in exchange for Series A Capital Securities should
not be a taxable event to holders of the Series A Capital Securities. Should
there be a change in law, a change in legal interpretation, a Tax Event or
other circumstances, however, the distribution of the Series A Subordinated
Debentures could be a taxable event to holders of the Series A Capital
Securities. See "Certain Federal Income Tax Consequences--Distribution of
Series A Subordinated Debentures to Holders of Series A Capital Securities."
If the Corporation elects to liquidate the Series A Issuer and thereby
causes the Series A Subordinated Debentures to be distributed to holders of
the Series A Capital Securities in exchange therefor upon liquidation of the
Series A Issuer, the Corporation shall continue to have the right to redeem
the Series A Subordinated Debentures in circumstances as described under
"Certain Terms of Series A Subordinated Debentures--Redemption."
LIQUIDATION VALUE
The amount payable on the Series A Capital Securities in the event of any
liquidation of the Series A Issuer is $1,000 per Series A Capital Security
plus accumulated and unpaid Distributions, which may be in the form of a
distribution of a Like Amount in Series A Subordinated Debentures, subject to
certain exceptions. See "Description of Preferred Securities--Liquidation
Distribution Upon Termination" in the accompanying Prospectus.
REGISTRATION OF SERIES A CAPITAL SECURITIES
The Series A Capital Securities will be represented by global certificates
registered in the name of DTC or its nominee. Beneficial interests in the
Series A Capital Securities will be shown on, and transfers thereof will be
effected only through, records maintained by Participants in DTC (as defined
in the accompanying Prospectus). Except as described below and in the
accompanying Prospectus, Series A Capital Securities in certificated form will
not be issued in exchange for the global certificates. See "Book-Entry
Issuance" in the accompanying Prospectus.
A global security shall be exchangeable for Series A Capital Securities
registered in the names of persons other than DTC or its nominee only if (i)
DTC notifies the Series A Issuer that it is unwilling or unable to continue as
a depositary for such global security and no successor depositary shall have
been appointed, or if at any time DTC ceases to be a clearing agency
registered under the Exchange Act, at a time when DTC is required to be so
registered to act as such depositary, (ii) the Series A Issuer in its sole
discretion determines that such global security shall be so exchangeable, or
(iii) there shall have occurred and be continuing an event of default under
the Indenture with respect to the Series A Subordinated Debentures. Any global
security that is
S-21
<PAGE>
exchangeable pursuant to the preceding sentence shall be exchangeable for
definitive certificates registered in such names as DTC shall direct. It is
expected that such instructions will be based upon directions received by DTC
from its Participants with respect to ownership of beneficial interests in
such global security. In the event that Series A Capital Securities are issued
in definitive form, such Series A Capital Securities will be in denominations
of $1,000 and integral multiples thereof and may be transferred or exchanged
at the offices described below.
Payments on Series A Capital Securities represented by a global security
will be made to DTC, as the depositary for the Series A Capital Securities. In
the event Series A Capital Securities are issued in certificated form, the
Liquidation Amount and Distributions will be payable, the transfer of the
Series A Capital Securities will be registrable, and Series A Capital
Securities will be exchangeable for Series A Capital Securities of other
denominations of a like aggregate Liquidation Amount, at the corporate trust
office of the Property Trustee in New York, New York, or at the offices of any
paying agent or transfer agent appointed by the Administrative Trustees,
provided that payment of any Distribution may be made at the option of the
Administrative Trustees by check mailed to the address of the persons entitled
thereto or by wire transfer. In addition, if the Series A Capital Securities
are issued in certificated form, the record dates for payment of Distributions
will be the 15th day of the month in which the relevant Distribution payment
is scheduled to be made. For a description of DTC and the terms of the
depositary arrangements relating to payments, transfers, voting rights,
redemptions and other notices and other matters, see "Book-Entry Issuance" in
the accompanying Prospectus.
CERTAIN TERMS OF SERIES A SUBORDINATED DEBENTURES
GENERAL
The following summary of certain terms and provisions of the Series A
Subordinated Debentures supplements the description of the terms and
provisions of the Junior Subordinated Debentures set forth in the accompanying
Prospectus under the heading "Description of Junior Subordinated Debentures,"
to which description reference is hereby made. The summary of certain terms
and provisions of the Series A Subordinated Debentures set forth below, which
describes the material provisions thereof, does not purport to be complete and
is subject to, and is qualified in its entirety by reference to, the
Indenture. The form of Indenture has been filed as an exhibit to the
Registration Statement of which this Prospectus Supplement and accompanying
Prospectus form a part.
Concurrently with the issuance of the Series A Capital Securities, the
Series A Issuer will invest the proceeds thereof, together with the
consideration paid by the Corporation for the Series A Common Securities, in
the Series A Subordinated Debentures issued by the Corporation. The Series A
Subordinated Debentures will bear interest at an annual rate equal to % of
the principal amount thereof, payable semi-annually in arrears on and
of each year (each, an "Interest Payment Date"), commencing , 1997,
to the person in whose name each Series A Subordinated Debenture is
registered, subject to certain exceptions, at the close of business on the
fifteenth day (whether or not a Business Day) next preceding such Interest
Payment Date. It is anticipated that, until the liquidation, if any, of the
Series A Issuer, the Series A Subordinated Debentures will be held in the name
of the Property Trustee in trust for the benefit of the holders of the Series
A Securities. The amount of interest payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months. In the event that any
Interest Payment Date is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the date such payment
was originally payable. Accrued interest that is not paid on the applicable
Interest Payment Date will bear additional interest on the amount thereof (to
the extent permitted by law) at a rate per annum equal to % thereof,
compounded semi-annually from the relevant Interest Payment Date. The term
"interest" as used herein shall include semi-annual interest payments,
interest on semi-annual interest payments not paid on the applicable Interest
Payment Date and Additional Sums (as defined below), as applicable.
S-22
<PAGE>
The Series A Subordinated Debentures will be issued as a series of junior
subordinated deferrable interest debentures under the Indenture. The Series A
Subordinated Debentures will mature on , 2027. Such maturity may be
shortened by the Corporation in certain circumstances upon the occurrence of a
Tax Event or a Capital Treatment Event as described under "--Conditional Right
to Shorten Maturity or Redeem upon a Tax Event or Capital Treatment Event."
The Series A Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Debt of the Corporation.
See "Description of Junior Subordinated Debentures--Subordination" in the
accompanying Prospectus. Substantially all of the Corporation's existing
indebtedness constitutes Senior Debt. Because the Corporation is a holding
company, the right of the Corporation to participate in any distribution of
assets of any subsidiary, including the Bank, upon such subsidiary's
liquidation or reorganization or otherwise (and thus the ability of holders of
the Series A Capital Securities to benefit indirectly from such distribution),
is subject to the prior claims of creditors of that subsidiary, except to the
extent that the Corporation may itself be recognized as a creditor of that
subsidiary. Accordingly, the Series A Subordinated Debentures will be
effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and holders of Series A Subordinated Debentures
should look only to the assets of the Corporation for payments on the Series A
Subordinated Debentures. The Indenture does not limit the incurrence or
issuance of other secured or unsecured debt of the Corporation, including
Senior Debt, whether under the Indenture or any existing or other indenture
that the Corporation may enter into in the future or otherwise. See
"Description of Junior Subordinated Debentures--Subordination" in the
accompanying Prospectus.
OPTION TO DEFER INTEREST PAYMENTS
So long as no event of default under the Indenture has occurred and is
continuing, the Corporation has the right under the Indenture at any time or
from time to time during the term of the Series A Subordinated Debentures to
defer payment of interest on the Series A Subordinated Debentures for a period
not exceeding ten consecutive semi-annual periods with respect to each
Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Series A Subordinated Debentures. At the end of such
Extension Period, the Corporation must pay all interest then accrued and
unpaid on the Series A Subordinated Debentures (together with interest on such
unpaid interest at an annual rate equal to %, compounded semi-annually from
the relevant Interest Payment Date, to the extent permitted by applicable
law). During an Extension Period, interest will continue to accrue and holders
of Series A Subordinated Debentures (or holders of Series A Capital Securities
while such series is outstanding) will be required to accrue interest income
for United States federal income tax purposes. See "Certain Federal Income Tax
Consequences--Original Issue Discount."
During any such Extension Period, the Corporation may not (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock or
(ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Corporation (including
other Junior Subordinated Debentures) that rank pari passu in all respects
with or junior in interest to the Series A Subordinated Debentures (other than
(a) repurchases, redemptions or other acquisitions of shares of capital stock
of the Corporation in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of
capital stock of the Corporation (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of any exchange or conversion of any class or series of the
Corporation's capital stock (or any capital stock of a subsidiary of the
Corporation) for any class or series of the Corporation's capital stock or of
any class or series of the Corporation's indebtedness for any class or series
of the Corporation's capital stock, (c) the purchase of fractional interests
in shares of the Corporation's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (d) any declaration of a dividend in connection with any
stockholder's rights plan, or the issuance of rights, stock or other property
under any stockholder's rights plan, or the redemption or repurchase of rights
pursuant thereto, or (e) any dividend in the form of stock, warrants, options
or other rights where the dividend stock or the stock issuable upon exercise
S-23
<PAGE>
of such warrants, options or other rights is the same stock as that on which
the dividend is being paid or ranks pari passu with or junior to such stock).
Prior to the termination of any such Extension Period, the Corporation may
further defer the payment of interest on the Series A Subordinated Debentures,
provided that no Extension Period may exceed ten consecutive semi-annual
periods or extend beyond the Stated Maturity of the Series A Subordinated
Debentures. Upon the termination of any such Extension Period and the payment
of all interest then accrued and unpaid (together with interest thereon at a
rate equal to % per annum compounded semi-annually, to the extent permitted
by applicable law), the Corporation may elect to begin a new Extension Period
subject to the above requirements. No interest shall be due and payable during
an Extension Period, except at the end thereof. The Corporation must give the
Property Trustee, the Administrative Trustees and the Debenture Trustee notice
of its election to begin such Extension Period at least one Business Day prior
to the earlier of (i) the date interest on the Series A Subordinated
Debentures would have been payable except for the election to begin such
Extension Period or (ii) the date the Administrative Trustees are required to
give notice to any applicable stock exchange or automated quotation system on
which the Series A Capital Securities are then listed or quoted or to holders
of Series A Subordinated Debentures of the record date or (iii) the date such
interest is payable, but in any event not less than one Business Day prior to
such record date. The Debenture Trustee shall give notice of the Corporation's
election to begin a new Extension Period to the holders of the Series A
Subordinated Debentures. There is no limitation on the number of times that
the Corporation may elect to begin an Extension Period. See "Description of
Junior Subordinated Debentures--Option to Defer Interest Payments" in the
accompanying Prospectus.
ADDITIONAL SUMS
If the Series A Issuer is required to pay any additional taxes, duties or
other governmental charges as a result of a Tax Event, the Corporation will
pay as additional amounts on the Series A Subordinated Debentures such amounts
("Additional Sums") as shall be required so that the Distributions payable by
the Series A Issuer shall not be reduced as a result of any such additional
taxes, duties or other governmental charges.
REDEMPTION
The Series A Subordinated Debentures are redeemable prior to maturity at the
option of the Corporation (i) on or after , 2007, in whole at any time or
in part from time to time, (ii) at any time, in certain circumstances as
described under "Certain Terms of Series A Subordinated Debentures--
Conditional Right to Shorten Maturity or Redeem upon a Tax Event or Capital
Treatment Event," in whole (but not in part) within 90 days following the
occurrence of a Tax Event or a Capital Treatment Event, or (iii) on or after
, 2002, in certain circumstances as described under "Risk Factors--
Imposition of Holding Company Capital Rules," in whole (but not in part) if
the Corporation is not then subject to the Holding Company Capital Rules. The
proceeds of any such redemption will be used by the Series A Issuer to redeem
the Series A Securities.
The Redemption Price, in the case of a redemption under (i) above, shall
equal the following prices, expressed as percentages of the principal amount,
together with accrued and unpaid interest to but excluding the Redemption
Date, if redeemed during the 12-month period beginning :
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2007...........................................................
2008...........................................................
2009...........................................................
2010...........................................................
2011...........................................................
2012...........................................................
2013...........................................................
2014...........................................................
2015...........................................................
2016...........................................................
</TABLE>
and at 100% on or after , 2017.
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<PAGE>
The Redemption Price, in the case of a redemption under (ii) or (iii) above,
shall be equal to the Tax/Capital Make-Whole Amount or the Regulatory Make-
Whole Amount, respectively (each as defined under "Certain Terms of Series A
Capital Securities--Redemption"), together with accrued and unpaid interest
thereon to but excluding the Redemption Date.
DISTRIBUTION OF SERIES A SUBORDINATED DEBENTURES
As described under "Certain Terms of Series A Capital Securities--
Liquidation of Series A Issuer and Distribution of Series A Subordinated
Debentures to Holders," under certain circumstances involving the termination
of the Series A Issuer, Series A Subordinated Debentures may be distributed to
the holders of the Series A Capital Securities in exchange therefor upon
liquidation of the Series A Issuer after satisfaction of liabilities to
creditors of the Series A Issuer as provided by applicable law. If distributed
to holders of Series A Capital Securities, the Series A Subordinated
Debentures will initially be issued in the form of one or more global
securities and DTC, or any successor depositary for the Series A Capital
Securities, will act as depositary for the Series A Subordinated Debentures.
It is anticipated that the depositary arrangements for the Series A
Subordinated Debentures would be substantially identical to those in effect
for the Series A Capital Securities. If Series A Subordinated Debentures are
distributed to the holders of Series A Capital Securities in exchange therefor
upon liquidation of the Series A Issuer, the Corporation will use its best
efforts to include the Series A Subordinated Debentures on such stock
exchanges or automated quotation system, if any, on which the Series A Capital
Securities are then listed or quoted. There can be no assurance as to the
market price of any Series A Subordinated Debentures that may be distributed
to the holders of Series A Capital Securities.
CONDITIONAL RIGHT TO SHORTEN MATURITY OR REDEEM UPON A TAX EVENT OR CAPITAL
TREATMENT EVENT
If a Tax Event or a Capital Treatment Event occurs and either (i) in the
opinion of counsel to the Corporation experienced in such matters, there would
in all cases, after effecting the termination of the Series A Issuer and the
distribution of the Series A Subordinated Debentures to the holders of the
Series A Capital Securities in exchange therefor upon liquidation of the
Series A Issuer, be more than an insubstantial risk that an Adverse Tax
Consequence (as defined in "Risk Factors--Tax Event or Capital Treatment
Event--Exchange of Series A Capital Securities for Series A Subordinated
Debentures, Shortening of Maturity of Series A Subordinated Debentures or
Redemption") would continue to exist, (ii) in the reasonable determination of
the Corporation, there would in all cases, after effecting the termination of
the Series A Issuer and distribution of the Series A Subordinated Debentures
to the holders of the Series A Capital Securities in exchange therefor upon
liquidation of the Series A Issuer, be more than an insubstantial risk that
the Corporation will not be entitled to treat an amount equal to the
Liquidation Amount of the Series A Capital Securities as "Tier 1 Capital" (or
the equivalent thereof, if applicable) or (iii) the Series A Subordinated
Debentures are not held by the Series A Issuer, then the Corporation shall
have the right (a) to shorten the Stated Maturity of the Series A Subordinated
Debentures to the minimum extent required, but in any event to a date not
earlier than , 2012 (the action referred to in this clause (a) being
referred to herein as a "Maturity Advancement"), such that, in the opinion of
counsel to the Corporation experienced in such matters, after advancing the
Stated Maturity, interest paid on the Series A Subordinated Debentures will be
deductible for United States federal income tax purposes, or (b) if either (x)
in the opinion of counsel to the Corporation experienced in such matters,
there would in all cases, after affecting a Maturity Advancement, be more than
an insubstantial risk that an Adverse Tax Consequence would continue to exist
or (y) in the reasonable determination of the Corporation, there would in all
cases, after effecting a Maturity Advancement, be more than an insubstantial
risk that the Corporation will not be entitled to treat an amount equal to the
Liquidation Amount of the Series A Capital Securities as "Tier 1 Capital" (or
the equivalent thereof, if applicable) for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Corporation, to redeem the Series A Subordinated Debentures, in whole but not
in part, at any time within 90 days following the occurrence of the Tax Event
or Capital Treatment Event at a Redemption Price equal to the Tax/Capital
Make-Whole Amount. See "Certain Terms of Series A Capital Securities--
Liquidation of Series A Issuer and Distribution of Series A Subordinated
Debentures to Holders" and "--Redemption" and "Certain Terms of Series A
Subordinated Debentures--General" and "--Redemption."
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<PAGE>
Holders of Series A Capital Securities should consult their own tax advisors
regarding the tax consequences to them of a Maturity Advancement.
See "Certain Federal Income Tax Consequences--Possible Tax Law Changes" for
a discussion of certain legislative proposals that, if adopted, could give
rise to a Tax Event, which may permit the Corporation to shorten the Stated
Maturity of the Series A Subordinated Debentures or to cause a redemption of
the Series A Capital Securities prior to , 2007.
REGISTRATION OF SERIES A SUBORDINATED DEBENTURES
The Series A Subordinated Debentures will be represented by global
certificates registered in the name of DTC or its nominee. Beneficial
interests in the Series A Subordinated Debentures will be shown on, and
transfers thereof will be effected only through, records maintained by
Participants in DTC. Except as described below and in the accompanying
Prospectus, Series A Subordinated Debentures in certificated form will not be
issued in exchange for the global certificates. See "Book-Entry Issuance" in
the accompanying Prospectus.
A global security shall be exchangeable for Series A Subordinated Debentures
registered in the names of persons other than DTC or its nominee only if (i)
DTC notifies the Corporation that it is unwilling or unable to continue as a
depositary for such global security and no successor depositary shall have
been appointed, or if at any time DTC ceases to be a clearing agency
registered under the Exchange Act, at a time when DTC is required to be so
registered to act as such depositary, (ii) the Corporation in its sole
discretion determines that such global security shall be so exchangeable, or
(iii) there shall have occurred and be continuing an event of default under
the Indenture with respect to the Series A Subordinated Debentures. Any global
security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for definitive certificates registered in such names as DTC shall
direct. It is expected that such instructions will be based upon directions
received by DTC from its Participants with respect to ownership of beneficial
interests in such global security. In the event that Series A Subordinated
Debentures are issued in definitive form, such Series A Subordinated
Debentures will be in denominations of $1,000 and integral multiples thereof
and may be transferred or exchanged at the offices described below.
Payments on Series A Subordinated Debentures represented by a global
security will be made to DTC, as the depositary for the Series A Subordinated
Debentures. In the event Series A Subordinated Debentures are issued in
certificated form, principal and interest will be payable, the transfer of the
Series A Subordinated Debentures will be registrable, and Series A
Subordinated Debentures will be exchangeable for Series A Subordinated
Debentures of other denominations of a like aggregate principal amount, at the
corporate office of the Debenture Trustee in New York, New York, or at the
offices of any paying agent or transfer agent appointed by the Corporation,
provided that payment of interest may be made at the option of the Corporation
by check mailed to the address of the persons entitled thereto or by wire
transfer. In addition, if the Series A Subordinated Debentures are issued in
certificated form, the record dates for payment of interest will be the 15th
day of the last month of each semi-annual period. For a description of DTC and
the terms of the depositary arrangements relating to payments, transfers,
voting rights, redemptions and other notices and other matters, see "Book-
Entry Issuance" in the accompanying Prospectus.
CERTAIN TERMS OF SERIES A GUARANTEE
The Series A Guarantee guarantees to the holders of the Series A Capital
Securities the following payments, to the extent not paid by the Series A
Issuer: (i) any accumulated and unpaid Distributions required to be paid on
the Series A Capital Securities, to the extent that the Series A Issuer has
funds on hand available therefor at such time; (ii) the Redemption Price with
respect to any Series A Capital Securities called for redemption, to the
extent that the Series A Issuer has funds on hand available therefor at such
time; and (iii) upon a voluntary or involuntary dissolution, winding-up or
liquidation of the Series A Issuer (unless the Series A Subordinated
Debentures are distributed to holders of the Series A Capital Securities), the
lesser of (a) the aggregate of the
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Liquidation Amount and all accumulated and unpaid Distributions to the date of
payment, to the extent that the Series A Issuer has funds on hand available
therefor at such time, and (b) the amount of assets of the Series A Issuer
remaining available for distribution to holders of the Series A Capital
Securities after payment of creditors of the Series A Issuer as required by
applicable law. The Series A Guarantee will be qualified as an indenture under
the Trust Indenture Act. The Chase Manhattan Bank will act as the Guarantee
Trustee for the purpose of compliance with the Trust Indenture Act and will
hold the Series A Guarantee for the benefit of the holders of the Series A
Capital Securities. The Chase Manhattan Bank will also act as Debenture
Trustee for the Series A Subordinated Debentures and as Property Trustee.
Chase Manhattan Bank Delaware will act as Delaware Trustee.
The holders of not less than a majority in aggregate Liquidation Amount of
the Series A Capital Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect to the Series A Guarantee or to direct the exercise of any
trust power conferred upon the Guarantee Trustee under the Series A Guarantee.
Any holder of the Series A Capital Securities may institute a legal proceeding
directly against the Corporation to enforce its rights under the Series A
Guarantee without first instituting a legal proceeding against the Series A
Issuer, the Guarantee Trustee or any other person or entity. If the
Corporation were to default on its obligation to pay amounts payable under the
Series A Subordinated Debentures, the Series A Issuer would lack funds for the
payment of Distributions or amounts payable on redemption of the Series A
Capital Securities or otherwise, and, in such event, holders of the Series A
Capital Securities would not be able to rely upon the Series A Guarantee for
payment of such amounts. Instead, if any event of default under the Indenture
shall have occurred and be continuing and such event is attributable to the
failure of the Corporation to pay interest or premium, if any, on or principal
of the Series A Subordinated Debentures on the applicable Interest Payment
Date, then a holder of Series A Capital Securities may institute a Direct
Action against the Corporation pursuant to the terms of the Indenture for
enforcement of payment to such holder of the principal of or interest or
premium, if any, on such Series A Subordinated Debentures having a principal
amount equal to the aggregate Liquidation Amount of the Series A Capital
Securities of such holder. In connection with such Direct Action, the
Corporation will have a right to set-off under the Indenture to the extent of
any payment made by the Corporation to such holder of Series A Securities in
the Direct Action. Except as described herein, holders of Series A Capital
Securities will not be able to exercise directly any other remedy available to
the holders of the Series A Subordinated Debentures or assert directly any
other rights in respect of the Series A Subordinated Debentures. See
"Description of Guarantees" in the accompanying Prospectus. The Trust
Agreement provides that each holder of Series A Capital Securities by
acceptance thereof agrees to the provisions of the Series A Guarantee, the
Expense Agreement and the Indenture.
ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
(a "Plan") subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), should consider the fiduciary standards of ERISA in the
context of the Plan's particular circumstances before authorizing an
investment in the Series A Capital Securities. Accordingly, among other
factors, the fiduciary should consider whether the investment would satisfy
the prudence and diversification requirements of ERISA and would be consistent
with the documents and instruments governing the Plan.
Section 406 of ERISA and Section 4975 of the Internal Revenue Code of 1986,
as amended (the "Code"), prohibit Plans, as well as individual retirement
accounts and Keogh plans subject to Section 4975 of the Code (also "Plans"),
from engaging in certain transactions involving "plan assets" with persons who
are "parties in interest" under ERISA or "disqualified persons" under the Code
("Parties in Interest") with respect to such Plan. A violation of these
"prohibited transaction" rules may result in an excise tax or other
liabilities under ERISA and/or Section 4975 of the Code for such persons,
unless exemptive relief is available under an applicable statutory or
administrative exemption. Employee benefit plans that are governmental plans
(as defined in Section 3(32) of ERISA), certain church plans (as defined in
Section 3(33) of ERISA) and foreign plans (as described in Section 4(b)(5) of
ERISA) are not subject to the requirements of ERISA or Section 4975 of the
Code.
S-27
<PAGE>
Under a regulation (the "Plan Assets Regulation") issued by the United
States Department of Labor (the "DOL"), the assets of the Series A Issuer
would be deemed "plan assets" of a Plan for purposes of ERISA and Section 4975
of the Code if "plan assets" of the Plan were used to acquire an equity
interest in the Series A Issuer and no exception were applicable under the
Plan Assets Regulation. An "equity interest" is defined under the Plan Assets
Regulation as any interest in an entity other than an instrument which is
treated as indebtedness under applicable local law and which has no
substantial equity features and specifically includes a beneficial interest in
a trust.
Pursuant to an exception contained in the Plan Assets Regulation, the assets
of the Series A Issuer would not be deemed to be "plan assets" of investing
Plans if, immediately after the most recent acquisition of any equity interest
in the Series A Issuer, less than 25% of the value of each class of equity
interests in the Series A Issuer were held by Plans, other employee benefit
plans not subject to ERISA or Section 4975 of the Code (such as governmental,
church and foreign plans), and entities holding assets deemed to be "plan
assets" of any Plan (collectively, "Benefit Plan Investors"), or if the Series
A Capital Securities were "publicly-offered securities" for purposes of the
Plan Assets Regulation. No assurance can be given that the value of the Series
A Capital Securities held by Benefit Plan Investors will be less than 25% of
the total value of such Series A Capital Securities at the completion of the
initial offering or thereafter, and no monitoring or other measures will be
taken with respect to the satisfaction of the conditions to this exception. In
addition, the Series A Capital Securities will be deemed "publicly-offered
securities" for the purposes of the Plan Asset Regulations only if owned by
100 or more investors independent of the Series A Issuer and each other. No
assurance can be given that the Series A Capital Securities would be
considered to be "publicly-offered securities" under the Plan Assets
Regulation. All of the Series A Common Securities will be purchased and
initially held by the Corporation.
Certain transactions involving the Series A Issuer could be deemed to
constitute direct or indirect prohibited transactions under ERISA and Section
4975 of the Code with respect to a Plan if the Series A Capital Securities
were acquired with "plan assets" of such Plan and the assets of the Series A
Issuer were deemed to be "plan assets" of Plans investing in the Series A
Issuer. For example, if the Corporation is a Party in Interest with respect to
an investing Plan, extensions of credit between the Corporation and the Series
A Issuer (as represented by the Series A Subordinated Debentures and the
Guarantee) would likely be prohibited by Section 406(a)(1)(B) of ERISA and
Section 4975(c)(1)(B) of the Code, unless exemptive relief were available
under an applicable administrative exemption (see below). In addition, if the
Corporation were considered to be a fiduciary with respect to the Series A
Issuer as a result of certain powers it holds (such as the powers to remove
and replace the Property Trustee and the Administrative Trustees), certain
operations of the Series A Issuer, including the optional redemption or
acceleration of the Series A Subordinated Debentures, could be considered to
be prohibited transactions under Section 406(b) of ERISA and Section
4975(c)(1)(E) of the Code. IN ORDER TO AVOID SUCH PROHIBITED TRANSACTIONS,
EACH INVESTING PLAN, BY PURCHASING THE SERIES A CAPITAL SECURITIES, WILL BE
DEEMED TO HAVE DIRECTED THE SERIES A ISSUER TO INVEST IN THE SERIES A
SUBORDINATED DEBENTURES AND TO HAVE APPOINTED THE PROPERTY TRUSTEE.
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief if required for direct or indirect
prohibited transactions that may arise from the purchase or holding of the
Series A Capital Securities if assets of the Series A Issuer were deemed to be
"plan assets" of Plans investing in the Series A Issuer as described above.
Those class exemptions are PTCE 96-23 (for certain transactions determined by
in-house asset managers), PTCE 95-60 (for certain transactions involving
insurance company general accounts), PTCE 91-38 (for certain transactions
involving bank collective investment funds), PTCE 90-1 (for certain
transactions involving insurance company separate accounts), and PTCE 84-14
(for certain transactions determined by independent qualified asset managers).
Because the Series A Capital Securities may be deemed equity interests in
the Series A Issuer for purposes of applying ERISA and Section 4975 of the
Code, the Series A Capital Securities may not be purchased or held by any
Plan, any entity whose underlying assets include "plan assets" by reason of
any Plan's investment in the entity (a "Plan Asset Entity") or any person
investing "plan assets" of any Plan, unless such purchaser or holder
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<PAGE>
is eligible for the exemptive relief available under PTCE 96-23, 95-60, 91-38,
90-1, or 84-14 or another applicable exemption. Any purchaser or holder of the
Series A Capital Securities or any interest therein will be deemed to have
represented by its purchase and holding thereof that it either (a) is not a
Plan or (b) is eligible for the exemptive relief available under PTCE 96-23,
95-60, 91-38, 90-1, or 84-14 or another applicable exemption with respect to
such purchase or holding. If a purchaser or holder of the Series A Capital
Securities that is a Plan or a Plan Asset Entity elects to rely on an
exemption other than PTCE 96-23, 95-60, 91-38, 90-1, or 84-14, the Corporation
and the Series A Issuer may require a satisfactory opinion of counsel or other
evidence with respect to the availability of such exemption for such purchase
and holding.
DUE TO THE COMPLEXITY OF THESE RULES AND THE PENALTIES THAT MAY BE IMPOSED
UPON PERSONS INVOLVED IN NON-EXEMPT PROHIBITED TRANSACTIONS, IT IS
PARTICULARLY IMPORTANT THAT FIDUCIARIES OR OTHER PERSONS CONSIDERING
PURCHASING THE SERIES A CAPITAL SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS"
OF ANY PLAN CONSULT WITH THEIR COUNSEL REGARDING THE POTENTIAL CONSEQUENCES IF
THE ASSETS OF THE SERIES A ISSUER WERE DEEMED TO BE "PLAN ASSETS" AND THE
AVAILABILITY OF EXEMPTIVE RELIEF UNDER PTCE 96-23, 95-60, 91-38, 90-1, OR 84-
14 OR ANY OTHER APPLICABLE EXEMPTION.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal United States federal income tax
consequences of the purchase, ownership and disposition of Series A Capital
Securities. This summary only addresses the federal income tax consequences to
a person that acquires Series A Capital Securities on their original issue at
their original offering price and that is (i) an individual citizen or
resident of the United States, (ii) a corporation or partnership organized in
or under the laws of the United States or any state thereof or the District of
Columbia, (iii) an estate the income of which is subject to United States
federal income tax regardless of source or (iv) a trust if (A) a court within
the United States is able to exercise primary supervision over the
administration of the trust and (B) one or more United States trustees have
the authority to control all substantial decisions of the trust (collectively,
a "United States Person"). This summary does not address all tax consequences
that may be applicable to a United States Person that is a beneficial owner of
Series A Capital Securities, nor does it address the tax consequences to (i)
persons that are not United States Persons, (ii) persons that may be subject
to special treatment under United States federal income tax law, such as
banks, insurance companies, thrift institutions, regulated investment
companies, real estate investment trusts, tax-exempt organizations and dealers
in securities or currencies, (iii) persons that will hold Series A Capital
Securities as part of a position in a "straddle" or as part of a "hedging,"
"conversion" or other integrated investment transaction for United States
federal income tax purposes, (iv) persons whose functional currency is not the
United States dollar or (v) persons that do not hold Series A Capital
Securities as capital assets.
The statements of law or legal conclusion set forth in this summary
constitute the opinion of Sullivan & Cromwell, counsel to the Corporation and
the Series A Issuer. This summary is based upon the Code, Treasury
regulations, Internal Revenue Service (the "IRS") rulings and pronouncements
and judicial decisions now in effect, all of which are subject to change at
any time. Such changes may be applied retroactively in a manner that could
cause the tax consequences to vary substantially from the consequences
described below, possibly adversely affecting a beneficial owner of Series A
Capital Securities. In particular, certain tax law changes have been proposed
that could adversely affect the Corporation's ability to deduct interest on
the Series A Subordinated Debentures, which may in turn permit the Corporation
to cause a redemption of the Series A Capital Securities. See "--Possible Tax
Law Changes." The authorities on which this summary is based are subject to
various interpretations, and it is therefore possible that the federal income
tax treatment of the purchase, ownership and disposition of Series A Capital
Securities may differ from the treatment described below.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE UNITED STATES FEDERAL
TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF SERIES A
CAPITAL SECURITIES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX
LAWS.
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CLASSIFICATION OF THE SERIES A SUBORDINATED DEBENTURES AND THE SERIES A ISSUER
Under current law and assuming compliance with the terms of the Trust
Agreement, the Series A Issuer will not be classified as an association
taxable as a corporation for United States federal income tax purposes. As a
result, each beneficial owner of Series A Capital Securities (a
"Securityholder") will be required to include in its gross income its pro rata
share of the interest income, including original issue discount, paid or
accrued with respect to the Series A Subordinated Debentures whether or not
cash is actually distributed to the Securityholders. See "--Original Issue
Discount." The Series A Subordinated Debentures will be classified as
indebtedness of the Corporation for United States federal income tax purposes.
ORIGINAL ISSUE DISCOUNT
Under the Indenture, the Corporation has the right to defer the payment of
interest on the Series A Subordinated Debentures at any time or from time to
time for a period not exceeding ten consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Series A Subordinated Debentures. Because of
this option, all interest payable on the Series A Subordinated Debentures will
be treated as "original issue discount" ("OID") for federal income tax
purposes. Accordingly, a Securityholder will recognize income (in the form of
OID) on a daily basis under a constant yield method over the term of the
Series A Subordinated Debentures (including during any Extension Period),
regardless of the receipt of cash with respect to the period to which such
income is attributable. (Subsequent uses of the term "interest" in this
summary shall include income in the form of OID.) The amount of OID that
accrues in any semi-annual period (other than during an Extension Period) will
equal approximately the amount of the interest that accrues on the Series A
Subordinated Debentures in that semi-annual period at the stated interest
rate.
In the event that the interest payment period is extended, Securityholders
will include interest in gross income in advance of the receipt of cash, and
any Securityholders who dispose of the Series A Capital Securities prior to
the record date for the payment of Distributions following such Extension
Period will include interest in gross income but will not receive any cash
related thereto from the Series A Issuer. Any amount of OID included in a
Securityholder's gross income (whether or not during an Extension Period) will
increase such Securityholder's tax basis in its Series A Capital Securities,
and the amount of Distributions received by a Securityholder will reduce such
Securityholder's tax basis in its Series A Capital Securities.
DISTRIBUTION OF SERIES A SUBORDINATED DEBENTURES TO HOLDERS OF SERIES A
CAPITAL SECURITIES
Under current law, a distribution by the Series A Issuer of the Series A
Subordinated Debentures as described under the caption "Certain Terms of
Series A Capital Securities--Liquidation of Series A Issuer and Distribution
of Series A Subordinated Debentures to Holders" will be non-taxable and will
result in the Securityholder receiving directly its pro rata share of the
Series A Subordinated Debentures previously held indirectly through the Series
A Issuer, with a holding period and aggregate tax basis equal to the holding
period and aggregate tax basis such Securityholder had in its Series A Capital
Securities before such distribution. If, however, the liquidation of the
Series A Issuer were to occur because the Series A Issuer is subject to United
States federal income tax with respect to income accrued or received on the
Series A Subordinated Debentures, the distribution of Series A Subordinated
Debentures to Securityholders by the Series A Issuer would be a taxable event
to the Series A Issuer and each Securityholder, and each Securityholder would
recognize gain or loss as if the Securityholder had exchanged its Series A
Capital Securities for the Series A Subordinated Debentures it received upon
the liquidation of the Series A Issuer. A Securityholder will include interest
in income in respect of Series A Subordinated Debentures received from the
Series A Issuer in the manner described above under""--Original Issue
Discount."
SALE OR REDEMPTION OF SERIES A CAPITAL SECURITIES
A Securityholder that sells (including a redemption for cash) Series A
Capital Securities will recognize gain or loss equal to the difference between
its adjusted tax basis in the Series A Capital Securities and the amount
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realized on the sale of such Series A Capital Securities. Such gain or loss
generally will be a capital gain or loss (except to the extent any amount
realized is treated as a payment of accrued interest with respect to such
Securityholder's pro rata share of the Series A Subordinated Debentures
required to be included in income) and generally will be a long-term capital
gain or loss if the Series A Capital Securities have been held for more than
one year.
The Series A Capital Securities may trade at a price that does not
accurately reflect the value of accrued but unpaid interest with respect to
the underlying Series A Subordinated Debentures. A Securityholder who disposes
of its Series A Capital Securities between record dates for payments of
distributions thereon (and consequently does not receive a Distribution from
the Series A Issuer for the period prior to such disposition) will be required
to include in income as ordinary income accrued but unpaid interest on the
Series A Subordinated Debentures to the date of disposition and to add such
amount to its adjusted tax basis in its Series A Capital Securities. To the
extent the selling price (which may not fully reflect the value of accrued but
unpaid interest) is less than the Securityholder's adjusted tax basis (which
will include accrued but unpaid interest), such holder will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax
purposes.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest income paid and OID accrued on the Series A Capital
Securities held of record by United States Persons (other than corporations
and other exempt Securityholders) will be reported to the IRS. "Backup"
withholding at a rate of 31% will apply to payments of interest to nonexempt
United States Persons unless the Securityholder furnishes its taxpayer
identification number in the manner prescribed in applicable Treasury
regulations, certifies that such number is correct, certifies as to no loss of
exemption from backup withholding and meets certain other conditions.
Payment of the proceeds from the disposition of Series A Capital Securities
to or through the United States office of a broker is subject to information
reporting and backup withholding unless the holder or beneficial owner
establishes an exemption from information reporting and backup withholding.
Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required information
is furnished to the IRS on a timely basis.
It is anticipated that income on the Series A Capital Securities will be
reported to holders on Form 1099 and mailed to holders of the Series A Capital
Securities by January 31 following each calendar year.
POSSIBLE TAX LAW CHANGES
On February 6, 1997, the Budget Proposal was released. If enacted, the
Budget Proposal would generally deny interest deductions for interest on an
instrument issued by a corporation that has a maximum term of more than 15
years and that is not shown as indebtedness on the separate balance sheet of
the issuer or, where the instrument is issued to a related party (other than a
corporation), where the holder or some other related party issues a related
instrument that is not shown as indebtedness on the issuer's consolidated
balance sheet. The above-described provision of the Budget Proposal is
proposed to be effective generally for instruments issued on or after the date
of first Congressional committee action. If a similar provision were to apply
to the Series A Subordinated Debentures, the Corporation would be unable to
deduct interest on the Series A Subordinated Debentures. Under current law,
the Corporation will be able to deduct interest on the Series A Subordinated
Debentures. There can be no assurance, however, that current or future
legislative proposals or final legislation will not affect the ability of the
Corporation to deduct interest on the Series A Subordinated Debentures. Such a
change could give rise to a Tax Event, which in certain circumstances would
permit the Corporation to terminate the Series A Issuer and cause the Series A
Subordinated Debentures to be distributed to the holders of the Series A
Capital Securities in exchange therefor upon liquidation of the Series A
Issuer, to shorten the maturity of the
S-31
<PAGE>
Series A Subordinated Debentures to a date not earlier than , 2012 or to
cause a redemption of the Series A Capital Securities, as described more fully
under "Certain Terms of Subordinated Debentures--Conditional Right to Shorten
Maturity or Redeem Upon a Tax Event or Capital Treatment Event" and "Certain
Terms of Series A Capital Securities--Redemption." If legislation were enacted
that affected the Corporation's ability to deduct interest expense on the
Series A Subordinated Debentures, it is unclear whether an exercise by the
Corporation of its right to shorten the maturity of the Series A Subordinated
Debenture or to distribute the Series A Subordinated Debentures to
Securityholders following a Tax Event or a Capital Treatment Event would be a
taxable event to the Securityholders.
UNDERWRITING
Subject to the terms and conditions of an underwriting agreement between the
Underwriters, the Series A Issuer and the Corporation (the "Underwriting
Agreement"), the Corporation and the Series A Issuer have agreed that the
Series A Issuer will sell to each of the Underwriters named below, and each of
such Underwriters has severally agreed to purchase from the Series A Issuer,
the respective number of Series A Capital Securities set forth opposite its
name below:
<TABLE>
<CAPTION>
NUMBER OF
SERIES A
CAPITAL
UNDERWRITER SECURITIES
----------- ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..........................................
BT Securities Corporation......................................
Lehman Brothers Inc............................................
-------
Total..................................................... 150,000
=======
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all the Series A Capital
Securities offered hereby, if any are taken.
The Underwriters propose to offer the Series A Capital Securities in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement and in part to certain securities
dealers at such price less a concession of $ per Series A Capital Security.
The Underwriters may allow, and such dealers may reallow, a concession not in
excess of $ per Series A Capital Security to certain brokers and dealers.
After the Series A Capital Securities are released for sale to the public, the
offering price and other selling terms may from time to time be varied by the
Underwriters.
In view of the fact that the proceeds from the sale of the Series A Capital
Securities will be used to purchase the Series A Subordinated Debentures
issued by the Corporation, the Underwriting Agreement provides that the
Corporation will pay as Underwriters' compensation for the Underwriters'
arranging the investment therein of such proceeds an amount of $ per Series
A Capital Security for the accounts of the several Underwriters.
Because the National Association of Securities Dealers, Inc. ("NASD") is
expected to view the Series A Capital Securities offered hereby as interests
in a direct participation program, the offering is being made in compliance
with Rule 2810 of the NASD's Conduct Rules. Offers and sales of Series A
Capital Securities will be made only to (i) "qualified institutional buyers,"
as defined in Rule 144A under the Securities Act; (ii) institutional
"accredited investors," as defined in Rule 501(a)(1)-(3) of Regulation D under
the Securities Act or (iii) individual investors for whom an investment in
non-convertible non-investment grade preferred securities is appropriate. The
Underwriters may not confirm sales to any accounts over which they exercise
discretionary authority without prior written approval of the transaction by
the customer.
The Corporation and the Series A Issuer have agreed that, during the period
beginning from the date of the Underwriting Agreement and continuing to and
including the later of (i) the termination of trading restrictions on the
Series A Capital Securities, as determined by the Underwriters, and (ii) 30
days after the closing date,
S-32
<PAGE>
they will not offer, sell, contract to sell or otherwise dispose of any Series
A Capital Securities, any other beneficial interests in the assets of any
Issuer, or any preferred securities or any other securities of any Issuer or
the Corporation that are substantially similar to the Series A Capital
Securities, including any guarantee of such securities, or any securities
convertible into or exchangeable for or representing the right to receive
preferred securities or any such substantially similar securities of either
any Issuer or the Corporation, without the prior written consent of the
Underwriters, except for the Series A Capital Securities offered in connection
with this offering.
The Series A Capital Securities are a new issue of securities with no
established trading market. The Underwriters have advised the Corporation and
the Series A Issuer that they intend to make a market in the Series A Capital
Securities, but are not obligated to do so and may discontinue market making
at any time without notice. No assurance can be given as to the liquidity of
the trading market for the Series A Capital Securities.
During and after the offering, the Underwriters and selling group members
and their respective affiliates may purchase and sell the Series A Capital
Securities in the open market. These transactions may include overallotment
and stabilizing transactions and purchases to cover short positions created by
the Underwriters in connection with the offering. The Underwriters also may
impose a penalty bid, whereby selling concessions allowed to broker-dealers in
respect of the Series A Capital Securities sold in the offering may be
reclaimed by the Underwriters if such securities are repurchased by the
Underwriters in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Series A
Capital Securities, which may be higher than the price that might otherwise
prevail in the open market; and these activities, if commenced, may be
discontinued at any time. These transactions may be effected in the over-the-
counter market or otherwise.
The Corporation and the Series A Issuer have agreed to indemnify the several
Underwriters against, or contribute to payments that the Underwriters may be
required to make in respect of, certain liabilities, including liabilities
under the Securities Act.
Certain of the Underwriters or their affiliates have provided from time to
time, and expect to provide in the future, investment or commercial banking
services to the Corporation and its affiliates, for which such Underwriters or
their affiliates have received or will receive customary fees and commissions.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Series A
Capital Securities, the enforceability of the Trust Agreement and the
formation of the Series A Issuer will be passed upon by Richards, Layton &
Finger, One Rodney Square, P.O. Box 551, Wilmington, Delaware 19899, Special
Delaware Counsel to the Corporation and the Series A Issuer. The validity of
the Series A Guarantee and the Series A Subordinated Debentures will be passed
upon for the Corporation by Sullivan & Cromwell, 125 Broad Street, New York,
New York 10004, and for the Underwriters by Cleary, Gottlieb, Steen &
Hamilton, One Liberty Plaza, New York, New York 10006.
S-33
<PAGE>
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESEN-
TATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE PRO-
SPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE PRO-
SPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS SUP-
PLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURI-
TIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEI-
THER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE
MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLI-
CATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE.
----------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Risk Factors............................................................. S-4
The Series A Issuer...................................................... S-11
The Corporation.......................................................... S-12
Dime Bancorp, Inc. and Subsidiaries
Selected Consolidated Financial Data.................................... S-15
Use of Proceeds.......................................................... S-17
Accounting Treatment..................................................... S-17
Capitalization........................................................... S-17
Certain Terms of Series A Capital Securities............................. S-18
Certain Terms of Series A Subordinated Debentures........................ S-22
Certain Terms of Series A Guarantee...................................... S-26
ERISA Considerations..................................................... S-27
Certain Federal Income Tax Consequences.................................. S-29
Underwriting............................................................. S-32
Validity of Securities................................................... S-33
PROSPECTUS
Available Information.................................................... 3
Incorporation of Certain Documents by Reference.......................... 4
The Corporation.......................................................... 5
The Issuers.............................................................. 6
Use of Proceeds.......................................................... 7
Description of Junior Subordinated Debentures............................ 7
Description of Preferred Securities...................................... 18
Book-Entry Issuance...................................................... 30
Description of Guarantees................................................ 32
Relationship Among the Preferred Securities, the Corresponding Junior
Subordinated Debentures, the Expense Agreements and the Guarantees...... 34
Plan of Distribution..................................................... 36
Validity of Securities................................................... 37
Experts.................................................................. 37
</TABLE>
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$150,000,000
DIME CAPITAL TRUST I
% CAPITAL SECURITIES,
SERIES A
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
DIME BANCORP, INC.
-----------------------
PROSPECTUS SUPPLEMENT
-----------------------
MERRILL LYNCH & CO.
BT SECURITIES CORPORATION
LEHMAN BROTHERS
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