Brooklyn's Progress
December 2003

By Independence Community Bank

Independence Community Bank Corp.  (Nasdaq-ICBC) and Staten Island Bancorp, Inc. (NYSE-SIB) announced on Nov. 25 that they will merge in a stock and cash transaction valued at $1.5 billion.

Based on the closing price of $38.32 for ICBC’s common stock on Nov. 21, 2003, the transaction represents total consideration of $1.5 billion or $23.88 per SIB share, an exchange ratio of 0.6232 ICBC shares for each SIB share. Total consideration is fixed at $369 million in cash and approximately 29 million ICBC shares. The fixed exchange ratio at closing may rise or fall based on the average per share price of ICBC stock for a ten day period prior to closing. Each shareholder may choose cash or stock, subject to pro-ration if either cash or stock is oversubscribed. Common stock received by SIB shareholders is expected to qualify as a tax-free exchange.

Simultaneously, ICBC announced that Lehman Brothers would acquire a majority of the assets of SIB Mortgage Corporation in connection with the merger. 

The new combined company will be a $17 billion community bank with 116 full-service banking offices. Upon completion of the transaction, 60 percent of the combined bank’s loan portfolio of approximately $9 billion will be in commercial loans; 70 percent of its deposit base of approximately $9 billion will be lower-cost core deposits.

Among the strategic benefits of the transaction are: a significant expansion of the combined Bank’s presence in the New Jersey, Brooklyn and Staten Island markets; complementary franchises that provide opportunities for cost savings and revenue enhancements; increased funding for multi-family and commercial loan production; and the continuation of a strong tradition of community service that has been established by both institutions.

Alan H. Fishman, President and CEO of ICBC, the holding company for Independence Community Bank, said, “This strategic transaction joins two long-established organizations that have built well-rounded banking institutions. Both organizations are closely tied to their communities and have many complementary strengths that will be reflected in benefits for our shareholders, clients and employees. As the banking industry continues to consolidate, those organizations with outstanding value propositions for clients, exceptional people and strong balance sheets will emerge. Using our dynamic business model, Independence Community Bank has made the financial and human capital investments to create an outstanding business. Our strategic merger with Staten Island Bancorp, Inc.  significantly enhances that position. Our combined firms will serve more clients with additional products contributed by both of us. Our business model is strengthened by deeper penetrations in the New Jersey/New York markets. Moreover, the combination will broaden our pool of outstanding bankers. Independence Community Bank has made significant strides since becoming a public institution in 1998. These changes in people, prospects and franchises have accelerated in the last several years. This merger is a natural extension of this progress and we are very excited for all of our constituents.”

Harry P. Doherty, Chairman and CEO of Staten Island Bancorp, Inc., the holding company for SI Bank & Trust, said: “The combination of our two institutions makes great sense. We share a similar customer-focused culture and a deep commitment to the communities we serve. We look forward to joining with the management team at Independence to integrate our two organizations quickly and build a strong institution that will provide expanded financial products and services for our customers, benefits to our communities and enhanced value to our shareholders.”

Commenting on the financial merits of the transaction, Mr. Fishman said, “This transaction is expected to produce over three percent accretion to projected 2004 earnings per share, and eight percent accretion to our projected earnings per share in 2005. This accretion does not include benefits from revenue enhancements or purchase accounting adjustments.”

Upon completion of the transaction, the combined Bank will have a significant increase in its branch franchise in New Jersey, Staten Island and Brooklyn. There will be a total of 51 branches in New Jersey, giving the merged bank a presence in Bergen, Essex, Union, Hudson, Middlesex, Monmouth and Ocean Counties. The combined Bank will have 22 branches in Brooklyn and 21 branches in Staten Island. In addition, the branches of the combined Bank on Staten Island will operate under the SI Bank & Trust name as a division of Independence Community Bank.

Upon completion of the merger, Mr. Fishman will remain President and CEO of the combined Bank and Mr. Doherty will become Vice Chairman of ICBC. The Board of Directors of the combined bank will comprise 16 directors with 11 members from the current ICBC Board and five from the current SIB Board. Management of the merged company will be selected from both companies and there are expected to be minimal branch consolidations.

The agreement has been approved by the Board of Directors of both companies and will be submitted to shareholders of Staten Island Bancorp, Inc. and Independence Community Bank Corp. for approval. The transaction is expected to close in the second quarter of 2004.