Filed by Banknorth Group, Inc.
(Commission File No. 0-16947)
Pursuant to Rule 425 under the
Securities Act of 1933
Date: August 8, 2002
For Immediate Release
For Further Information, Contact:
At Banknorth Group
Brian Arsenault, SVP, Corporate Communications
207 761-8517
At Warren Bancorp
John R. Putney, President and Chief Executive Officer
978 531-7400
Banknorth Group to Acquire Warren Bancorp;
Values Transaction at $122.6 Million
Portland, Maine, August 8, 2002 - Banknorth Group, Inc. (NASDAQ: BKNG),
announced today that it has signed a definitive agreement to acquire Warren
Bancorp, Inc. (NASDAQ: WRNB), parent company of Warren Five Cents Savings
Bank, for an estimated $122.6 million in cash and stock. The transaction
will provide Banknorth the leading market share in Essex County,
Massachusetts with nearly a 16% deposit market share in the affluent North
Shore county.
At June 30, 2002, Warren Bancorp had total assets of $460 million, total
deposits of $394 million, total loans of $345 million and shareholders'
equity of $44 million. Warren Five Cents Savings Bank operates six banking
offices exclusively in Massachusetts, four in Peabody and one each in Beverly
and North Beverly.
"We continue to execute our plan of acquiring sound banking companies that
extend and enhance our Massachusetts franchise," said William J. Ryan,
Banknorth Chairman, President and Chief Executive Officer. "The Warren
market adds to our already strong franchise in the Boston suburbs and brings
to us a banking tradition with deep roots in the communities it serves."
"Banknorth and Warren Bank are a great fit for North Shore customers who want
community banking to continue. Banknorth, though much larger than Warren,
shares our commitment to the communities it serves," said Stephen G. Kasnet,
Chairman of Warren Bancorp. "We believe that our shareholders will be
excited by this transaction and that our customers will benefit from
Banknorth's extensive branch network and its long list of products and
services."
Banknorth Group, headquartered in Portland, Maine, operates in Massachusetts
as Banknorth Massachusetts. In the past year, Banknorth has previously
acquired Andover Bancorp, MetroWest Bank and Ipswich Bancshares.
The terms of the agreement call for outstanding shares of Warren common stock
to be converted into the right to receive $15.75 per share or a number of
whole shares of Banknorth determined by dividing $15.75 by the average
closing prices of the Banknorth common stock over a specified period, plus
cash in lieu of any fractional share interest.
The terms are subject to election and allocation procedures which are
intended to ensure that 50% of the outstanding Warren common stock will be
converted into the right to receive Banknorth common stock and 50% of the
outstanding Warren common stock will be converted into the right to receive
cash. The transaction is intended to qualify as reorganization for federal
income tax purposes. As a result, the shares of Warren stock exchanged for
Banknorth stock will be transferred on a tax-free basis.
The transaction is valued by Banknorth at 263% of Warren book value per share
at June 30, 2002 and 17.1 times consensus estimated earnings per share of
Warren for 2003.
The transaction is expected to be accretive by one cent per diluted share to
Banknorth earnings in 2003. Transaction costs of $6.2 million are
anticipated.
The definitive agreement has been approved by the Board of Directors of
Banknorth and the Board of Directors of Warren. The transaction is subject to
all required regulatory approvals, the approval by shareholders of Warren and
other customary conditions. The transaction is expected to be completed by
the end of the year with operational integration to follow soon after.
Banknorth Group, Inc. is one of the country's 35 largest commercial banking
companies with total assets of $21.3 billion at June 30, 2002. The Company's
banking subsidiary, Banknorth, NA, operates banking divisions in Connecticut,
Maine, Massachusetts, New Hampshire, New York and Vermont. Banknorth also
operates subsidiaries and divisions in insurance, investment planning, money
management, leasing, merchant services, mortgage banking, government banking
and other financial services.
This press release contains forward-looking statements with respect to the
financial condition, results of operations and business of Banknorth upon
consummation of the acquisition of Warren, including statements relating to:
(a) the estimated cost savings and accretion to reported earnings that will
be realized from the acquisition and (b) the merger charges expected to be
incurred in connection with the acquisition. These forward-looking statements
involve certain risks and uncertainties. Factors that may cause actual
results to differ materially from those contemplated by such forward-looking
statements include, among others, the following possibilities: (1) estimated
cost savings from the acquisition cannot be fully realized within the expected
time frame; (2) revenues following the acquisition are lower than expected;
(3) competitive pressure among depository institutions increases
significantly; (4) costs or difficulties related to the integration of the
businesses of Banknorth and Warren are greater than expected; (5) changes in
the interest rate environment reduce interest margins; (6) general economic
conditions, either nationally or in the markets in which Banknorth will be
doing business, are less favorable than expected; or (7) legislation or
changes in regulatory requirements adversely affect the businesses in which
Banknorth would be engaged.
Banknorth and Warren will be filing relevant documents concerning the merger
with the Securities and Exchange Commission, including a registration
statement on Form S-4 containing a prospectus/proxy statement. WE URGE
INVESTORS TO READ THESE DOCUMENTS BECAUSE THEY CONTAIN IMPORTANT INFORMATION.
Investors will be able to obtain these documents free of charge at the SEC's
website, www.sec.gov. In addition, documents filed with the SEC by Banknorth
will be available free of charge from the Secretary of Banknorth (Carol L.
Mitchell, Secretary, Banknorth Group, Inc., Two Portland Square, P.O. Box
9540, Portland, Maine 04112-9540, telephone (207) 761-8500), and documents
filed with the SEC by Warren will be available free of charge from the Clerk
of Warren (Susan G. Ouellette, Clerk, Warren Bancorp, Inc. 10 Main Street,
Peabody, Massachusetts 01960, telephone (978) 531-7499). The directors and
executive officers of Warren may be deemed to be participants in the
solicitation of proxies to approve the merger. Information about the
directors and executive officers of Warren and ownership of Warren common
stock is set forth in the proxy statement filed by Warren with the SEC on
March 21, 2002. Additional information about the interests of those
participants may be obtained from reading the definitive prospectus/proxy
statement regarding the proposed acquisition when it becomes available.
WARREN INVESTORS SHOULD READ THE PROSPECTUS/PROXY STATEMENT AND OTHER
DOCUMENTS TO BE FILED WITH THE SEC CAREFULLY BEFORE MAKING A DECISION
CONCERNING THE MERGER.
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