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STL > SEC Filings for STL > Form 8-K on 13-Sep-2013All Recent SEC Filings

Show all filings for STERLING BANCORP

Form 8-K for STERLING BANCORP


13-Sep-2013

Other Events


Item 8.01. Other Events

These supplemental disclosures to the definitive joint proxy statement (the "Proxy Statement") filed by Provident New York Bancorp ("Provident") and Sterling Bancorp (the "Company") with the United States Securities and Exchange Commission (the "SEC"), on August 13, 2013 and first mailed to the Company's stockholders on or about August 16, 2013, are being made to update certain information and to respond to certain allegations made by plaintiffs in the stockholder litigation relating to the Agreement and Plan of Merger (the "Merger Agreement"), dated as of April 3, 2013, by and between the Company and Provident. Defined terms used but not defined herein have the meanings set forth in the Proxy Statement.

SETTLEMENT OF LITIGATION

This supplemental disclosure is being filed in connection with the Company's entry into a memorandum of understanding with the plaintiffs (the "Memorandum of Understanding") regarding the settlement of certain litigation relating to the Merger Agreement. As previously disclosed on page 21 and page 131 of the Proxy Statement, eight putative class action lawsuits relating to the Merger Agreement were filed by purported stockholders were brought against the Company, the Company's directors and Provident. The first seven lawsuits were filed in the Supreme Court of the State of New York, New York County, and an eighth action was filed in the United States District Court for the Southern District of New York. Each of the actions alleged that Sterling's board of directors breached its fiduciary duties by agreeing to the proposed merger transaction and breached its fiduciary duties and/or the federal securities laws by failing to disclose all material information to shareholders. On June 21, 2013, the state court actions were consolidated and thereafter a consolidated amended complaint was filed. The actions seek, among other things, to enjoin the Merger as well as other equitable relief and/or money damages in the event that the transaction is consummated.

We entered into the Memorandum of Understanding with the plaintiffs regarding the settlement of the lawsuits on September 12, 2013.

The Company believes that the Proxy Statement is accurate and complete in all material respects and that no further disclosure is required under applicable laws. However, to avoid the risk that the lawsuits may delay or otherwise adversely affect the consummation of the Merger and to minimize the expense and burden of defending such actions, the Company has agreed, pursuant to the terms of the proposed settlement, to make certain supplemental disclosures related to the proposed Merger, all of which are set forth below. The proposed settlement is subject to, among other things, approval of the New York State Supreme Court. Under the terms of the proposed settlement, following final approval by the Court, each of the actions will be dismissed with prejudice.


SUPPLEMENTAL DISCLOSURES

In connection with the settlement of the actions as described in this supplemental disclosure, the Company has agreed to make these supplemental disclosures to the Proxy Statement. These supplemental disclosures should be read in conjunction with the Proxy Statement, which should be read in its entirety.

The following disclosure supplements and restates the first, second and third paragraphs on page 48 under the heading "Risk Factors" to include references to Sterling's unaudited prospective financial information.

Provident and Sterling's unaudited prospective financial information is based on various assumptions that may not prove to be correct.

The unaudited prospective financial information set forth in the forecast included under "The Merger-Certain Unaudited Prospective Financial Information" beginning on page 103 is based on assumptions of, and information available to, Provident and Sterling, at the time they were prepared and provided to Sterling's and Provident's financial advisors. Provident and Sterling do not know whether the assumptions they made will prove correct. Any or all of such information may turn out to be wrong. Such information can be adversely affected by inaccurate assumptions or by known or unknown risks and uncertainties, many of which are beyond Provident's and Sterling's control. Many factors mentioned in this joint proxy statement/prospectus, including the risks outlined in "Risk Factors" beginning on page 46 and the events and/or circumstances described under "Cautionary Statement Regarding Forward-Looking Statements" beginning on page 52 will be important in determining Provident's, Sterling's and/or the combined company's future results. As a result of these contingencies, actual future results may vary materially from Provident's and Sterling's estimates. In view of these uncertainties, the inclusion of certain Provident and Sterling unaudited prospective financial information in this joint proxy statement/prospectus is not and should not be viewed as a representation that the forecasted results will be achieved.

The unaudited prospective financial information presented herein was prepared solely for internal use and not prepared with a view toward public disclosure or toward compliance with published guidelines of any regulatory or professional body. Further, any forward-looking statement speaks only as of the date on which it is made. Provident and Sterling review and update their internal projections regularly and have revised their internal projections included in this joint proxy statement/prospectus since the time they were prepared based on, among other things, actual experience and business developments. However, neither Provident, Sterling nor any other party undertakes any obligation to update the unaudited prospective financial information herein to reflect events or circumstances after the date such unaudited prospective financial information was prepared or to reflect the occurrence of anticipated or unanticipated events or circumstances.

The unaudited prospective financial information was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information. This information is not fact and should not be relied upon as being necessarily indicative of future results. Neither Provident's nor Sterling's independent auditors nor any other independent accountants have compiled, examined, or performed any procedures with respect to the unaudited prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability.

The following is added to the sixth paragraph on page 79 under the heading "Background of the Merger."

Although they were known to each other as banking executives and directors in the same market area, there was no direct relationship between Mr. Kopnisky and Mr. Cappelli prior to these conversations.

The following disclosure supplements and restates the third, fourth and fifth paragraphs on page 80 under the heading "Background of the Merger."

As the discussions moved from informal conversations to more serious consideration, Sterling determined to apprise its board of the preliminary discussions. During meetings held in September and November of 2012,


Mr. Cappelli informed the Sterling board of directors about preliminary discussions with Provident regarding a potential strategic business combination.

Through the end of 2012 and into January of 2013, Provident's and Sterling's respective senior executives and financial advisors engaged in further discussions regarding a possible business combination and the businesses of the two companies. Provident's and Sterling's respective senior management teams, assisted by their respective financial advisors, began to discuss a potential business combination on terms which would provide for the merger of Provident and Sterling in a stock for stock transaction based on a fixed exchange ratio, with the board of directors of the combined company to be comprised of former Provident directors and former Sterling directors based on the relative ownership of the combined entity by Provident stockholders and Sterling shareholders, respectively. As Provident and Sterling envisioned a strategic combination, the discussions always centered around a stock for stock transaction and never included a cash component. These discussions were consistent with the broad outlines of a potential transaction previously discussed, but began for the first time to focus on economic and governance terms. Through these discussions it was agreed that Mr. Kopnisky would serve as chief executive officer of the combined company and Mr. Cappelli would serve as chairman of the board of directors. In addition to Mr. Cappelli, John Millman, President of Sterling National Bank, and William Helmer, Provident's current chairman, would also serve on the board of directors. At that time, the parties began preliminary discussions on the post-closing arrangements for Messrs. Kopnisky, Cappelli and Millman. These discussions continued over the course of the negotiations between the parties.

As discussions continued, Provident and Sterling each determined that the discussions to date merited more detailed due diligence investigations and, accordingly, executed a confidentiality agreement in January of 2013. Throughout early 2013, Provident and Sterling management collaborated on a thorough review of the each company's expense base and infrastructure to determine the optimal platform required to operate the combined entity. Through this detailed review, the companies identified several opportunities to realize significant operating expense savings which in aggregate were estimated at approximately $34 million, including expense savings in compensation and benefits, pension plan expenses, occupancy and equipment, marketing and other professional fees, information technology and other miscellaneous items. In addition, Provident retained Wachtell, Lipton, Rosen & Katz as legal advisors and Sterling retained Sullivan & Cromwell LLP as legal advisors.

The following disclosure supplements and restates the first sentence of the third full paragraph on page 88 under the heading "Opinion of J.P. Morgan."

The projections furnished to J.P. Morgan for Sterling and Provident were prepared by or at the direction of the management of Sterling, in the case of projections relating to the business of Sterling, and provided by the management of Provident (IBES consensus estimates for 2013 and three quarters of 2014 and based upon management approved extrapolation thereafter, relied upon with Sterling's consent), in the case of projections relating to the business of Provident, in connection with the merger.

The following table is inserted between the first and second full paragraphs on page 89 under the heading "Opinion of J.P. Morgan."

                                       Market Cap   Price / 2013
Company                                  ($mm)          EPS        Price / TBV
Valley National Bancorp                     1,961          14.3x          1.8x
Provident Financial Services, Inc.            896          13.2x          1.4x
Independent Bank Corporation                  723          13.3x          2.0x
Brookline Bancorp, Inc.                       633          14.1x          1.4x
TrustCo Bank Corp NY                          514          13.3x          1.4x
Flushing Financial Corporation                500          13.0x          1.2x
Provident New York Bancorp                    390          14.6x          1.2x
Lakeland Bancorp, Inc.                        287          12.0x          1.5x
Hudson Valley Holding Corp.                   281          19.4x          1.1x
The First of Long Island Corporation          260          11.9x          1.3x


The following is added to the list of bullets in the third full paragraph on page 89 under the heading "Opinion of J.P. Morgan."

exit based on 2023 net income at the stated range of terminal multiples, with such terminal multiple selected based on J.P. Morgan's professional judgment and experience and selected public company multiples;

The following disclosure supplements and restates the second paragraph on page 97 under the heading "Opinion of Keefe, Bruyette & Woods."


Selected Companies Analysis. Using publicly available information, KBW compared the financial performance and market performance of Sterling and Provident individually to the following publicly traded banks and bank holding companies and thrifts and thrift holding companies headquartered in the Mid-Atlantic, excluding mutual holding companies, pending merger targets, recently converted mutual holding companies and OTC Bulletin Board traded institutions, with assets between $2.0 billion and $5.0 billion. Companies included in this group, and their respective book value and earnings multiples, were:

                                  Price /
                        Price /    Tang.     LTM Estimate      2013 Estimate      2014 Estimate
                         Book      Book      EPS       P/E     EPS       P/E      EPS       P/E
Institution               (X)       (X)      ($)       (X)     ($)       (X)      ($)       (X)
Tompkins Financial
Corporation                1.35      1.80     2.43     17.0     3.50      11.8     3.53      11.7
S&T Bancorp, Inc.          1.01      1.53     1.18     15.5     1.43      12.8     1.44      12.7
Flushing Financial
Corporation                1.13      1.17     1.13     14.3     1.24      13.1     1.35      12.0
WSFS Financial
Corporation                1.13      1.25     3.25     14.6     3.44      13.8     3.76      12.7
TrustCo Bank Corp NY       1.43      1.43     0.40     13.7     0.41      13.3     0.43      12.6
Sandy Spring
Bancorp, Inc.              1.00      1.22     1.48     13.1     1.49      13.0     1.51      12.9
Dime Community
Bancshares, Inc.           1.27      1.49     1.17     11.9     1.27      11.0     1.25      11.2
The Bancorp, Inc.          1.50      1.53     0.50     27.2     0.78      17.4     1.13      12.0
Eagle Bancorp, Inc.        1.65      1.67     1.61     13.1     1.79      11.8     1.91      11.0
Sun Bancorp, Inc.          1.02      1.21    -0.59       NM     0.01        NM     0.09        NM
Lakeland
Bancorp, Inc.              1.02      1.47     0.76     12.6     0.80      12.0     0.85      11.4
Hudson Valley Holding
Corp.                      0.96      1.05     1.49      9.5     0.72      19.6     0.82      17.3
Oritani Financial
Corp.                      1.34      1.34     0.81     18.4     0.82      18.2     0.86      17.3
Financial
Institutions, Inc.         1.14      1.46     1.60     12.3     1.85      10.6     1.95      10.1
Metro Bancorp, Inc.        0.99      0.99     0.77     21.2     0.81      20.2     0.93      17.6
Univest Corporation
of Pennsylvania            1.01      1.27     1.24     13.8     1.30      13.2     1.40      12.2
OceanFirst Financial
Corp.                      1.15      1.15     1.12     12.6     1.14      12.4     1.13      12.5
First of Long Island
Corporation                1.25      1.26     2.27     12.6     2.43      11.8     2.57      11.1
Bryn Mawr Bank
Corporation                1.51      2.07     1.60     14.4     1.79      12.8     1.92      12.0
Arrow Financial
Corporation                1.69      1.97     1.85     13.2     1.80      13.6     1.83      13.4

The following disclosure supplements and restates the third paragraph on page 97 under the heading "Opinion of Keefe, Bruyette & Woods."


Using publicly available information, KBW compared the pro forma capital levels, pro forma earnings, and illustrative market statistics of a combined Sterling and Provident institution to the following banks and thrifts headquartered in the Mid-Atlantic, excluding mutual holding companies, pending merger targets, recently converted mutual holding companies and OTC Bulletin Board traded institutions, with assets between $4.0 billion and $20.0 billion. KBW expanded this group to include institutions up to $20.0 billion because the institutions in this larger group are sufficiently similar to the pro forma combined Sterling and Provident institution to provide a meaningful comparison. Companies included in this group, and their respective book value and earnings multiples, were:

                                                     Price /
                                           Price /    Tang.     2014 Estimate
                                            Book      Book      EPS       P/E
Institution                                  (X)       (X)      ($)       (X)
Susquehanna Bancshares, Inc.                  0.87      1.75     0.99      12.2
Signature Bank                                2.26      2.26     4.82      16.4
Fulton Financial Corporation                  1.10      1.48     0.89      12.9
Astoria Financial Corporation                 0.72      0.84     0.57      16.4
Valley National Bancorp                       1.30      1.84     0.65      15.2
F.N.B. Corporation                            1.18      2.39     0.92      12.8
National Penn Bancshares, Inc.                1.30      1.69     0.73      14.2
Northwest Bancshares, Inc.                    1.03      1.22     0.71      17.4
Community Bank System, Inc.                   1.27      2.23     2.10      13.8
Provident Financial Services, Inc.            0.91      1.42     1.18      12.5
NBT Bancorp Inc.                              1.25      1.76     1.73      12.4
First Commonwealth Financial Corporation      0.96      1.23     0.53      13.5
Tompkins Financial Corporation                1.35      1.80     3.53      11.7
S&T Bancorp, Inc.                             1.01      1.53     1.44      12.7
Flushing Financial Corporation                1.13      1.17     1.35      12.0
WSFS Financial Corporation                    1.13      1.25     3.76      12.7
TrustCo Bank Corp NY                          1.43      1.43     0.43      12.6

The following disclosure supplements and restates the second and third paragraphs on page 99 under the heading "Opinion of Keefe, Bruyette & Woods."

Selected Transactions Analysis. KBW reviewed publicly available information related to selected acquisitions of banks and bank holding companies as well as thrifts and thrift holding companies nationwide, excluding transactions with non-U.S. domiciled buyers, that were announced after January 1, 2011, with announced aggregate transaction values between $100 million and $500 million. Transaction multiples for the Provident-Sterling merger were derived by KBW based on an offer price of $11.08 per share for Sterling. For each transaction below, KBW compared, among other things, the following implied ratios:

consideration paid to selling shareholders in the form of the buyer's common stock as a percent of total consideration;

pro forma ownership;

total consideration conveyed to selling shareholders;

price per common share paid for the acquired company to tangible book value per share of the acquired company based on the latest publicly available financial statements of the acquired company available prior to the announcement of the acquisition;


tangible equity premium (excess of purchase price over tangible equity) to core deposits (total deposits less time deposits greater than $100,000) of the acquired company based on the latest publicly available financial statements of the acquired company prior to the announcement of the acquisition;

price per common share paid for the acquired company to last twelve months earnings per share of the acquired company;

price per common share paid for the acquired company to closing price of the acquired company one day prior to the announcement of the acquisition (expressed as a percentage and referred to as the one-day market premium).

The transactions included in the group, and their respective ratios and multiples, were:

                                                                                              Core     Price/   1 Day
                                                   Stock      Ownership      Deal    Price   Deposit    LTM     Market
                                                  Consid.   Buyer   Seller   Value   / TBV    Prem.     EPS     Prem.
Acquiror                       Aquiree              (%)      (%)     (%)     ($mm)    (x)      (%)      (x)      (%)
F.N.B. Corporation     PVF Capital Corp.              100      94        6     110    1.41      11.9     22.8     62.7
SCBT Financial         First Financial
Corporation            Holdings, Inc.                 100      71       29     299    1.32       3.4     12.0     10.2
Renasant Corporation   First M&F Corporation          100      80       20     116    1.22       1.7     23.3     51.8
United                 Virginia Commerce
Bankshares, Inc.       Bancorp, Inc.                  100      74       26     495    1.83      13.1     21.0     17.6
Prosperity             Coppermark
Bancshares, Inc.       Bancshares, Inc.                69      95        5     194    1.59       6.9     13.1       NA
                       First California
PacWest Bancorp        Financial Group, Inc.          100      78       22     235    1.70       7.3     21.1     17.5
                       Alliance Financial
NBT Bancorp Inc.       Corporation                    100      76       24     231    2.12      12.4     19.1     22.4
Investors              Marathon Banking
Bancorp, Inc. (MHC)    Corporation                      0      NM       NM     135    1.51       7.4     23.8       NA
Berkshire Hills        Beacon Federal
Bancorp, Inc.          Bancorp, Inc.                   50      88       12     130    1.11       3.2     22.6     48.9
Cadence Bancorp, LLC   Encore Bancshares, Inc.          0      NM       NM     257    2.40      18.2       NM     38.3
Carlile                Northstar Financial
Bancshares, Inc.       Corporation                      0      NM       NM     115    1.74       7.4     18.2       NA
Susquehanna
Bancshares, Inc.       Tower Bancorp, Inc.             75      84       16     342    1.49       6.0       NM     40.6
                       Parkvale Financial
F.N.B. Corporation     Corporation                    100      91        9     131    1.98       5.2       NM    109.0
Valley National
Bancorp                State Bancorp, Inc.            100      90       10     230    1.88       9.6     23.7     25.7
Brookline              Bancorp Rhode
Bancorp, Inc.          Island, Inc.                    50      85       15     234    1.93      11.8     22.9     57.1
IBERIABANK
Corporation            Cameron Bancshares, Inc.       100      92        8     135    1.74      11.9     14.6       NA
Susquehanna
Bancshares, Inc.       Abington Bancorp, Inc.         100      83       17     274    1.24       9.1     33.4     13.8
People's United
Financial, Inc.        Danvers Bancorp, Inc.           55      95        5     489    1.84      13.4     28.5     32.8

The following disclosure supplements and restates the third paragraph on page 101 under the heading "Opinion of Keefe, Bruyette & Woods".

Provident Discounted Cash Flow Analysis. KBW performed a discounted cash flow analysis to estimate a range of the present values of after-tax cash flows that Provident could provide to equity holders through 2018 on a stand-alone basis. In performing this analysis, KBW used earnings estimates for Provident for 2013 and 2014 and a growth rate of 5.0% thereafter provided by Provident management, and assumed discount rates ranging from 10.0% to 14.0%. The range of values was determined by adding (1) the present value of projected cash flows to Provident stockholders from 2014 to 2018 and (2) the present value of the terminal value of Provident's common stock. In determining cash flows available to stockholders, KBW assumed balance sheet growth provided by Provident management and assumed that Provident would maintain a tangible common equity/tangible asset ratio of 8.00% and would retain sufficient earnings to maintain these levels. Any earnings in excess of what would need to be retained represented dividendable cash flows for Provident. In calculating the terminal value of Provident, KBW applied multiples ranging from 12.0 times to 16.0 times 2019 forecasted earnings. KBW determined the projected free cash flows to Provident stockholders to be as follows: $32.8 million at assumed close of 12/31/2013, $11.5 million for the fiscal year ended 12/31/2014, $20.5 million for the fiscal year ended 12/31/2015, $21.3 million for


the fiscal year ended 12/31/2016, $22.2 million for the fiscal year ended 12/31/2017 and $23.2 million for the fiscal year ended 12/31/2018. For purposes of determining terminal value on 12/31/2018, KBW assumed 2019 earnings of $38.0 million. This resulted in a range of values of Provident from $7.56 to $10.90 per share. The discounted cash flow present value analysis is a widely used valuation methodology that relies on numerous assumptions, including asset and earnings growth rates, terminal values and discount rates. The analysis did not purport to be indicative of the actual values or expected values of Provident.

The following disclosure supplements and restates the fourth paragraph on page 101 under the heading "Opinion of Keefe, Bruyette & Woods".

Sterling Discounted Cash Flow Analysis. KBW performed a discounted cash flow analysis to estimate a range of the present values of after-tax cash flows that Sterling could provide to equity holders through 2018 on a stand-alone basis. In performing this analysis, KBW used earnings estimates for Sterling for 2013 and 2014 and a growth rate of 6.5% thereafter, provided by Sterling management, and assumed discount rates ranging from 10.0% to 14.0%. The range of values was determined by adding (1) the present value of projected cash flows to Sterling shareholders from 2014 to 2018 and (2) the present value of the terminal value of Sterling's common stock. In determining cash flows available to shareholders, KBW assumed balance sheet growth provided by Sterling management and assumed that Sterling would maintain a tangible common equity / tangible asset ratio of 8.00%, and would retain sufficient earnings to maintain these levels. Any earnings in excess of what would need to be retained represented dividendable cash flows for Sterling. In calculating the terminal value of Sterling, KBW applied multiples ranging from 12.0 times to 16.0 times 2019 forecasted earnings, which multiples were derived from the earnings of the Sterling peer group. KBW determined the projected free cash flows to Sterling stockholders to be as follows: ($13.6) million at assumed close of 12/31/2013, $13.0 million for the fiscal year ended 12/31/2014, $14.0 million for the fiscal year ended 12/31/2015, $14.8 million in 2016, $15.8 million for the fiscal year ended 12/31/2017 and $16.8 million for the fiscal year ended 12/31/2018. For purposes of determining terminal value on 12/31/2018, KBW assumed 2019 earnings of $32.8 million. This resulted in a range of values of Sterling from $7.78 to $11.88 per share. The discounted cash flow present value analysis is a widely used . . .

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