Interchange Financial Services (NASDAQ:IFCJ)
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Interchange Financial Services Corporation (NASDAQ:IFCJ)
and Franklin Bank announced today that they have entered into a
definitive agreement in which Interchange Financial Services
Corporation ("Interchange") will acquire Franklin Bank ("Franklin") in
a transaction valued at $24.8 million based on Interchange's closing
stock price as of June 23, 2005. The acquisition of Franklin will be
accomplished through a merger of Franklin with and into Interchange
Bank, a wholly-owned subsidiary of Interchange. Interchange's
acquisition of Franklin represents Interchange's first expansion into
counties contiguous with Bergen County, Interchange's primary market
area, and is intended to further enhance Interchange's presence in
northern New Jersey.
"Franklin allows us to spring-board into Essex County and provides
us with a loyal customer and employee base," stated Anthony Abbate,
president and CEO of Interchange. "Just as important, four directors
have agreed to serve on the Essex County Advisory Board which we will
establish to assist in growing our franchise in the adjacent markets."
"This acquisition fits neatly into our strategic plan and we
believe it will allow us, with the assistance of the Essex County
Advisory Board, to replicate our Bergen County success," Abbate added,
"Franklin Bank began operations in 2000 and was profitable by 2003 due
to its sound banking fundamentals and dedication to providing
exceptional customer service."
"Interchange is an outstanding business partner for Franklin
Bank," explained Salvatore Cocco Jr., Chairman of the Board of
Franklin Bank. "It was important for us not only to provide
competitive value for our shareholders, but also to affiliate with a
community bank that believes in the same standards of service
excellence that we have delivered. This transaction will provide our
customers with greater flexibility and more banking locations to
service their business." President & CEO Tom Lupo added, "We believe
our combination with Interchange will only enhance future prospects
for our current and future customers and the communities we serve."
Under the terms of the agreement, the total consideration to be
received by Franklin shareholders in the merger is fixed at 1,323,575
shares of the common stock of Interchange. Based on the price of
$17.80 for Interchange common stock prior to today's announcement, the
transaction represents total consideration of approximately $24.8
million, including approximately $1.2 million for the cash payment for
option holders. The definitive agreement provides each Franklin
shareholder will receive 1.2264 Interchange shares for each Franklin
share, subject to adjustments, equating to approximately $21.83 for
each share of Franklin common stock held at closing, based upon the
closing price of June 23, 2005. The total consideration value at
closing may increase or decrease depending upon the average per share
price of Interchange common stock for a ten-day period prior to
closing.
Interchange expects to realize cost savings equal to approximately
35% of Franklin's annual non-interest expenses in the first full year
of combined operations. The transaction is expected to be accretive to
Interchange's earnings in the first year of combined operations. The
transaction has been approved by the Board of Directors of both
companies and is expected to be completed before the end of the year.
The consummation of the acquisition is conditioned upon, among other
things, the receipt of all necessary regulatory approvals and the
approval of Franklin's shareholders. Each of the directors of
Franklin, who hold in the aggregate approximately 37.6% of the
fully-diluted outstanding shares, has agreed to vote in favor of the
acquisition.
About Interchange Bank
Headquartered in Saddle Brook, NJ, Interchange Bank is one of
Bergen County's largest independent commercial banks and a wholly
owned subsidiary of Interchange Financial Services Corporation
(NASDAQ:IFCJ). A thought leader in the industry, the Bank was among
the first to implement a broad range of innovative services, including
24-hour, 7-day-a-week online banking and bill paying services, online
stock trading, and the ability to apply for a loan online with an
instant credit decision. Mutual funds and annuities are offered by
ICBA Financial Services, through the Bank's investment department.
With $1.5 billion in assets and 29 branches, the Bank focuses its
efforts on the local communities from which it derives deposits and
generates loans. Through Interchange Bank's subsidiary, Interchange
Capital Company, L.L.C., cost effective equipment leasing solutions
are available to small-and-middle market companies. For additional
information, please visit the company's Web site at
www.interchangebank.com.
About Franklin Bank
Franklin is a New Jersey state bank which conducts traditional
commercial banking business, accepting deposits from the general
public, including individuals, businesses, non-profit organizations
and governmental units. Franklin originates commercial loans, consumer
loans and both residential and commercial real estate loans. As of
March 31, 2005, Franklin Bank had total assets of approximately $81.0
million. Franklin is headquartered in Nutley, Essex County, New
Jersey.
Forward Looking Statements
This document contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements include, but are not limited to, (i) statements about the
benefits of the acquisition of Franklin by Interchange, including
future financial and operating results, cost savings, enhanced
revenues, and accretion to reported earnings that may be realized from
the merger; (ii) statements with respect to Interchange's and
Franklin's plans, objectives, expectations and intentions and other
statements that are not historical facts; and (iii) other statements
identified by words such as "believes," "expects," "anticipates,"
"estimates," "intends," "plans," "targets," "projects" and similar
expressions. These statements are based upon the current beliefs and
expectations of Interchange's and Franklin's management and are
subject to significant risks and uncertainties. Actual results may
differ from those set forth in the forward-looking statements.
The following factors, among others, could cause actual results to
differ materially from the anticipated results or other expectations
expressed in the forward-looking statements: (1) the risk that the
businesses of Interchange and Franklin will not be integrated
successfully or such integration may be more difficult, time-consuming
or costly than expected; (2) expected revenue synergies and cost
savings from the merger may not be fully realized or realized within
the expected time frame; (3) revenues following the merger may be
lower than expected; (4) deposit attrition, operating costs, customer
loss and business disruption following the merger, including, without
limitation, difficulties in maintaining relationships with employees,
may be greater than expected; (5) the ability to obtain governmental
approvals of the merger on the proposed terms and schedule; (6) the
failure of Franklin's stockholders to approve the transaction; (7)
competitive pressures among depository and other financial
institutions may increase significantly and have an effect on pricing,
spending, third-party relationships and revenues; (8) the strength of
the United States economy in general and the strength of the local
economies in which the combined company will conduct operations may be
different than expected resulting in, among other things, a
deterioration in credit quality or a reduced demand for credit,
including the resultant effect on the combined company's loan
portfolio and allowance for loan losses; (9) changes in the U.S. and
foreign legal and regulatory framework; and (10) adverse conditions in
the stock market, the public debt market and other capital markets
(including changes in interest rate conditions) and the impact of such
conditions on the combined company's capital markets and asset
management activities. Additional factors that could cause
Interchange's results to differ materially from those described in the
forward-looking statements can be found in Interchange's (such as
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K) filed with the Securities and Exchange
Commission and available at the SEC's Internet site
(http://www.sec.gov). All subsequent written and oral forward-looking
statements concerning the proposed transaction or other matters
attributable to Interchange or Franklin or any person acting on their
behalf are expressly qualified in their entirety by the cautionary
statements above. Interchange and Franklin do not undertake any
obligation to update any forward-looking statement to reflect
circumstances or events that occur after the date the forward-looking
statements are made.
The proposed transaction will be submitted to Franklin's
stockholders for their consideration, and Interchange will file with
the SEC a registration statement on form S-4, which will include a
proxy statement of Franklin and a prospectus of Interchange, as well
as other relevant documents concerning the proposed transaction.
Stockholders are urged to read the registration statement and the
proxy statement/prospectus regarding the proposed transaction when it
becomes available and any other relevant documents filed with the SEC,
as well as any amendments or supplements to those documents, because
they will contain important information. You will be able to obtain a
free copy of the proxy statement/prospectus, as well as other filings
containing information about Interchange and Franklin, at the SEC's
Internet site (http://www.sec.gov). Copies of the proxy
statement/prospectus and the SEC filings that will be incorporated by
reference in the proxy statement/prospectus can also be obtained,
without charge, by directing a request to Franklin Bank, Corporate
Secretary, 277 Franklin Avenue, Nutley, New Jersey 07110
(973-667-9595).
Interchange and Franklin, and their respective directors and
executive officers, may be deemed to be participants in the
solicitation of proxies from the stockholders of Franklin in
connection with the merger. Information about the directors and
executive officers of Interchange and their ownership of Interchange
common stock is set forth in the proxy statement, dated March 30,
2005, for Interchange's 2005 annual meeting of stockholders, as filed
with the SEC on a Schedule 14A. Additional information regarding the
interests of those participants may be obtained by reading the proxy
statement/prospectus regarding the proposed transaction when it
becomes available.