PHILADELPHIA, Nov. 2 /PRNewswire-FirstCall/ -- Sovereign Bancorp, Inc.
("Sovereign") (NYSE: SOV), parent company of Sovereign Bank ("Bank"), gave a
presentation today at a Ryan, Beck & Co. banking conference in New York
regarding its recent transactions with Santander Bancorp and Independence
Community Bancorp ("ICBC"). In response to recent questions from investors,
Jay S. Sidhu, Sovereign's Chairman and Chief Executive Officer, outlined
several reasons why these recent transactions will add value for Sovereign's
shareholders:
* Sovereign has a long track record of providing value to its
shareholders. Over the last 10 years, SOV has returned over 213%, 135%
over the past 5 years, and 63% over the past 3 years. This compares to
returns of 123%, 42% and 7%, respectively over the same periods by the
Lehman Brothers Mid-cap Bank Index, which is comprised of 11 banking
companies with similarities to Sovereign.
* Sovereign is issuing equity to Santander at 14.9 times its expected 2005
earnings. This 89 million share offering will generate approximately
$2.4 billion of cash. Santander has also committed to buy up to $1.2
billion of other capital or debt instruments by Sovereign to effect its
acquisition of ICBC.
* The partnership with Santander should result in many financial and
operational benefits for Sovereign, including leveraging Santander's
expertise in technology, marketing, and retail banking, and improving
Sovereign's debt credit ratings
* The company is then using this combined $3.6 billion to acquire ICBC.
This transactions is at ~15.6.x times ICBC's estimated 2006 earnings,
1.6 times book value, and 3.6 times tangible book value. After giving
effect to the market premium at which Sovereign was able to issue equity
to Santander, the net price paid for ICBC was effectively 13.6 times
estimated 2006 earnings, or 12.1 times estimated 2006 earnings after
giving effect to anticipated cost savings. Comparable transactions
(defined as bank and thrift transactions since 2000 between $500 million
and $10 billion in purchase price) in the New York/New Jersey region
have been priced at 18.0 times earnings, 2.8 times book value and 3.4
times tangible book value.
* Unlike many other recently announced transactions, this transaction is
accretive to both GAAP and operating / cash earnings within the first
year.
* The Sovereign franchise is significantly enhanced and the combined
franchise from a geographic coverage perspective could be viewed to
rival that of FleetBoston Financial prior to its acquisition by Bank of
America.
* The company also reported that its corporate governance is better than
98% of banks listed in the S & P 500 index. Also, it has recently taken
steps on its own to restructure its director compensation program. It
also has no preferential loans, and has no preferential business
relationships with any of its non-management directors.
* Two highly respected directors representing the $2.4 billion shareholder
investment by Santander will be joining Sovereign's Board. Also, the
Nominating Committee is considering 1 or 2 other highly qualified
candidates to join Sovereign's Board.
Sidhu concluded by telling the audience that the only goal of these
transactions is to create shareholder value. "Sovereign's management team
will not benefit from these transactions in any way. We will only be rewarded
from these transactions if shareholders are rewarded. Sovereign team members
and directors own over 8% of Sovereign, so there should never be any doubt
that our interests are aligned with those of our shareholders," concluded
Sidhu.
Sovereign Bancorp, Inc., ("Sovereign") (NYSE: SOV), is the parent company
of Sovereign Bank, a $63 billion financial institution with more than 650
community banking offices, over 1,000 ATMs and approximately 10,000 team
members with principal markets in the Northeast United States. Sovereign
offers a broad array of financial services and products including retail
banking, business and corporate banking, cash management, capital markets,
trust and wealth management and insurance. Sovereign is the 19th largest
banking institution in the United States. For more information on Sovereign
Bank, visit http://www.sovereignbank.com or call 1-877-SOV-BANK.
Note:
This press release contains financial information determined by methods
other than in accordance with U.S. Generally Accepted Accounting Principles
("GAAP"). Sovereign's management uses the non-GAAP measure of operating/cash
earnings, and the related per share amount, in their analysis of the company's
performance. This measure, as used by Sovereign, adjusts net income
determined in accordance with GAAP to exclude the effects of special items,
including significant gains or losses that are unusual in nature or are
associated with acquiring and integrating businesses, and certain non-cash
charges. Cash earnings represent net income adjusted for the after-tax
effects of merger-related and integration charges, certain restructuring
charges and the amortization of intangible assets. Since certain of these
items and their impact on Sovereign's performance are difficult to predict,
management believes presentations of financial measures excluding the impact
of these items provide useful supplemental information in evaluating the
operating results of Sovereign's core businesses. These disclosures should
not be viewed as a substitute for net income determined in accordance with
GAAP, nor are they necessarily comparable to non-GAAP performance measures
that may be presented by other companies.
This press release contains statements of Sovereign's strategies, plans,
and objectives, as well as estimates of future operating results for 2005 and
future periods for Sovereign Bancorp, Inc. as well as estimates of financial
condition, operating and cash efficiencies and revenue generation. These
statements and estimates constitute forward-looking statements (within the
meaning of the Private Securities Litigation Reform Act of 1995), which
involve significant risks and uncertainties. Actual results may differ
materially from the results discussed in these forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
general economic conditions, changes in interest rates, deposit flows, loan
demand, real estate values and competition; changes in accounting principles,
policies, or guidelines; changes in legislation or regulation; Sovereign's
ability in connection with any acquisition to complete such acquisition and to
successfully integrate assets, liabilities, customers, systems and management
personnel Sovereign acquires into its operations and to realize expected cost
savings and revenue enhancements within expected time frame; the possibility
that expected one time merger-related charges are materially greater than
forecasted or that final purchase price allocations based on the fair value of
acquired assets and liabilities and related adjustments to yield and/or
amortization of the acquired assets and liabilities at any acquisition date
are materially different from those forecasted; other economic, competitive,
governmental, regulatory, and technological factors affecting the Company's
operations, integrations, pricing, products and services; acts of terrorism or
domestic or foreign military conflicts; and acts of God, including natural
disasters.
Sovereign Bancorp is followed by several market analysts. Please note
that any opinions, estimates, forecasts, or predictions regarding Sovereign
Bancorp's performance or recommendations regarding Sovereign's securities made
by these analysts are theirs alone and do not represent opinions, estimates,
forecasts, predictions or recommendations of Sovereign Bancorp or its
management. Sovereign Bancorp does not by its reference to any analyst
opinions, estimates, forecasts regarding Sovereign's performance or
recommendations regarding Sovereign's securities imply Sovereign's endorsement
of or concurrence with such information, conclusions or recommendations.
SOURCE Sovereign Bancorp, Inc.
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Related links:
http://www.sovereignbank.com
CONTACT:
FINANCIAL: Mark McCollom, +1-610-208-6426,
mmccollo@sovereignbank.com, or Stacey Weikel, +1-610-208-6112,
sweikel@sovereignbank.com, or MEDIA: Ed Shultz, +1-610-378-6159,
eshultz1@sovereignbank.com, all of Sovereign Bancorp, Inc.
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