BANCORP OF NEW JERSEY INC Item 8.01 Other Events
As previously disclosed, onAugust 15, 2019 ,Bancorp of New Jersey, Inc. , aNew Jersey corporation (the "Company") and ConnectOne Bancorp, Inc., aNew Jersey corporation ("ConnectOne"), entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which the Company will merge with and into ConnectOne (the "Merger"). OnOctober 18, 2019 , an action captionedPaul Parshall v.Bancorp of New Jersey, Inc. et al., Docket No. C-276-19 (the "Action"), was filed in theSuperior Court of New Jersey ,Bergen County , Chancery Division, on behalf of a purported class of Company shareholders against the Company, its current directors and ConnectOne (collectively, the "Defendants"). The complaint in the Action alleges, among other things, that the registration statement on Form S-4 filed by ConnectOne onSeptember 27, 2019 in connection with the Merger (as amended, the "Registration Statement") omits material information with respect to the Merger, and therefore the plaintiff in the Action asserts causes of action alleging various breaches of fiduciary duties by the Defendants. The Defendants believe that the Action is entirely without merit, and deny that any further disclosure beyond that already contained in the Registration Statement is required under applicable law to supplement the Registration Statement, and the joint proxy statement included therein, which has subsequently been disseminated to Company and ConnectOne shareholders. Nevertheless, to avoid the risk that the Action may delay or otherwise adversely affect the consummation of the Merger and to minimize the expense of defending such Action, the Defendants are making the following supplemental disclosures (the "Litigation-Related Supplemental Disclosures"). Nothing in this Current Report on Form 8-K shall be deemed an admission of the legal necessity or materiality under applicable laws of any of the Litigation-Related Supplemental Disclosures set forth herein. The Litigation-Related Supplemental Disclosures supplement the proxy statement filed by the Company with theSecurities and Exchange Commission (the "SEC") onOctober 22, 2019 (the "Proxy Statement") and should be read in conjunction with the Proxy Statement, which Proxy Statement should be read in its entirety, along with periodic reports and other information the Company has filed with theSEC . To the extent that the information set forth herein differs from or updates information contained in the Proxy Statement, the information set forth herein shall supersede or supplement the information in the Proxy Statement. All page references below are to pages in the Proxy Statement, and terms used below, unless otherwise defined herein, have the meanings set forth in the Proxy Statement.
Litigation-Related Supplemental Disclosures
Opinion of
The disclosure under the heading "THE MERGER-Opinion of BONJ's Financial
Advisor- Comparable Company Analyses" is hereby amended by deleting the table of
company names at the bottom of page 76 (the
2
Financial Data as of or for the Period EndingJune 30, 2019 Balance Sheet / Asset Quality Capital Position LTM Profitability Valuation Market Data as ofAugust 14, 2019
Price /
NPAs ¹ / Total CRE/ Net Tang. Current
Total Loans / Total TCE/ Leverage RBC Total Interest Efficiency Book LTM Dividend Market
Assets Deposits Assets TA Ratio Ratio RBC ROAA ROAE Margin Ratio Value EPS Yield Cap
Company City, State Ticker ($mm) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (x) (%) ($mm)
Adirondack Trust Company ² Saratoga Springs, NY ADKT 1,168 74.5 0.18 9.10 10.11 15.03 247.9 1.08 10.54 3.38
69.17 126 10.4 3.0 131
Lyons Bancorp, Inc. Lyons, NY LYBC 1,139 79.0 4 0.44 4 7.50 7 8.33 4 12.36 4 124.6 4 1.02 4 13.16 4 3.64 4
65.80 4 146 12.1 3.1 125
Bank of Utica ² Utica, NY BKUT 1,110 8.5 0.20 20.87 21.10 21.28 15.5 1.37 6.52 1.81
50.96 58 9.2 2.8 113
Empire Bancorp, Inc. Islandia, NY EMPK 1,037 73.6 0.40 4 7.63 7 8.90 4 14.57 4 424.6 4 0.35 4.99 2.58
81.44 101 27.0 0.0 98
Pathfinder Bancorp, Inc. Oswego, NY PBHC 1,013 85.7 0.71 4 8.22 7.90 4 12.30 4 137.5 4 0.34 4.26 2.94
82.17 92 18.7 1.8 61
First Commerce Bank Lakewood, NJ CMRB 1,000 90.4 2.56 13.82 13.91 18.86 177.0 1.00 7.31 3.75
56.47 98 14.0 0.0 135
Solvay Bank Corporation ² Solvay, NY SOBS 937 75.2 0.33 9.06 9.46 16.04 101.0 5 0.95 10.79 2.88
62.86 102 10.1 3.5 87
Berkshire Bancorp Inc. ³ New York, NY BERK 764 63.3 0.52 6 20.99 20.50 35.10 250.2 6 0.76 3.60 3.58
62.74 118 33.7 0.0 190
Esquire Financial Holdings, Inc. Jericho, NY ESQ 732 82.6 0.00 13.97 12.85 4 17.78 4 179.0 4 1.64 11.91 4.85 55.70 166 15.7 0.0 170
Elmira Savings Bank Elmira, NY ESBK 610 97.0 0.81 7.69 8.11 12.51 114.9 0.62 6.17 3.19 76.43 112 14.2 6.3 51
The disclosure under the heading "THE MERGER-Opinion of BONJ's Financial
Advisor- Comparable Company Analyses" is hereby amended by deleting the table of
company names at the top of page 78 (
Financial Data as of or for the Period EndingJune 30, 2019 Balance Sheet / Asset Quality Capital Position LTM Profitability Valuation Market Data as ofAugust 14, 2019 Price / NPAs ¹ / Total CRE/ Net Tang. 2019 2020 Current Total Loans / Total TCE/ Leverage RBC Total Interest Efficiency Book LTM Est. Est. Dividend Market Assets Deposits Assets TA Ratio Ratio RBC ROAA ROAE Margin Ratio Value EPS EPS² EPS² Yield Cap Company City, State
Ticker ($mm) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (x) (x) (x) (%) ($mm) Provident Financial Services, Inc. Jersey City, NJ
PFS 9,938 106.1 0.86 10.04 10.14 13.05 413.6 1.30 9.30 3.42 53.01 161 11.8 13.1 13.0 4.0 1,534 NBT Bancorp Inc.Norwich, NY NBTB 9,636 91.7 0.30 8.41 9.88 13.21 157.1 1.24 11.61 3.61 59.38 197 13.2 13.3 13.5 2.9 1,547 OceanFirst Financial Corp.Toms River, NJ OCFC 8,029 96.3 0.47 9.76 10.06 14.36 241.7 1.17 8.49 3.70
54.01 145 11.5 10.2 9.8 3.2 1,066 Flushing Financial Corporation
Uniondale, NY FFIC 6,946 115.6 0.29 7.89 8.72 13.22 550.7 0.70 8.65 2.57
66.31 99 11.6 12.2 11.8 4.3 539 Tompkins Financial Corporation
Ithaca, NY TMP 6,654 97.3 0.39 8.50 9.25 13.34 242.3 1.19 12.94 3.34 62.50 210 14.8 14.8 14.4 2.6 1,166 Kearny Financial Corp.Fairfield, NJ KRNY 6,635 112.8 0.31 14.29 14.14 23.22 329.9 0.63 3.52 2.56
63.15 123 27.2 25.6 27.8 1.9 1,094 Dime Community Bancshares, Inc.
Brooklyn, NY DCOM 6,498 124.7 0.05 8.58 8.83 13.58 697.5 0.77 8.04 2.37 57.40 131 15.0 14.4 13.4 2.8 724 Lakeland Bancorp, Inc.Oak Ridge, NJ LBAI 6,407 96.8 0.31 8.61 9.30 13.60 397.6 1.10 10.14 3.36 56.06 140 11.3 10.7 10.5 3.3 754 TrustCo Bank Corp NYGlenville, NY TRST 5,228 87.5 0.69 9.85 9.97 20.03 20.1 1.21 12.34 3.27 55.18 144 12.3 12.6 12.4 3.6 743 Amalgamated BankNew York, NY AMAL 4,938 80.4 1.22 9.24 9.04 14.67 312.4 1.00 10.81 3.61
64.91 107 10.5 10.3 9.4 1.6 488
Peapack-Gladstone Financial Corporation
PGC 4,871 98.4 0.72 9.55 10.01 15.14 367.1 0.98 9.53 2.69
61.14 113 11.8 11.2 10.0 0.7 512 Northfield Bancorp, Inc.
Woodbridge, NJ NFBK 4,768 101.2 0.53 13.57 14.06 17.10 399.4 0.81 5.41 2.66
58.91 117 20.1 19.6 20.1 2.9 755 Bridge Bancorp, Inc.
Bridgehampton, NY BDGE 4,715 89.4 0.31 7.96 8.10 13.30 348.6 0.96 9.58 3.27
55.98 148 12.3 10.8 9.8 3.4 532 Financial Institutions, Inc.
Warsaw, NY FISI 4,314 90.8 0.25 7.77 8.55 12.57 185.5 0.96 10.22 3.21
60.72 140 11.6 10.4 10.2 3.5 456 First of Long Island Corporation
Glen Head, NY FLIC 4,202 97.2 0.09 9.31 9.30 16.00 285.3 0.99 10.82 2.60 50.98 134 12.9 12.5 12.0 3.2 523 The disclosure under the heading "THE MERGER-Opinion of BONJ's Financial Advisor -Analysis of Precedent Transactions" is hereby amended by deleting the table of Acquiror and Target names at the top of page 79 (the Regional Precedent Transactions group) of the Proxy Statement and replacing it with the following: 3 Transaction Information Seller Information Price/ Core 1-Day Deal LTM Deposit Market
Total TCE/ LTM Res./ NPAs ¹/
Annc. Value Earnings TBV Premium Premium Assets TA ROAA Loans Assets
Acquiror St Target St
Date ($mm) (x) (%) (%) (%) ($mm) (%) (%) (%) (%)
OceanFirst Financial
Country Bank Holding Co. NY 08/09/19 102.2 9.8 151 7.5 44.6
728.5 7.9 1.48 1.26 0.91
OceanFirst Financial
Two River Bncp NJ 08/09/19 182.8 15.4 174 9.5 53.7
1,153.8 9.1 1.05 1.22 0.80
Investors Bancorp Inc NJ
NY 07/24/19 63.6 27.3 138 5.2 21.8 562.6 8.0 0.43 0.96 0.00
Valley National NJ
Bancorp Oritani Financial Corp. NJ 06/26/19 744.0 13.7 138 10.2 0.5 4,074.7 13.0 1.28 0.81 0.27
Columbia Financial
Inc. (MHC) NJ Stewardship Financial Corp. NJ 06/07/19 137.2 17.3 167 8.2 77.0 961.1 8.6 0.83 1.07 0.77
Berkshire Hills MA
Bancorp Inc. SI Financial Group Inc. CT 12/11/18 182.5 27.3 118 2.6 13.2
1,607.1 9.7 0.41 1.10 1.17
MA 09/20/18 725.4 35.0 178 19.2 12.0
2,741.2 14.3 0.70 0.89 0.52
ConnectOne Bancorp,
Greater Hudson Bank NY 07/12/18 76.3 NM 145 6.8 15.2 519.6 10.1 (0.59 ) 2.08 1.09 People's United Financial Inc.
CT First Connecticut Bancorp, Inc CT 06/19/18 552.3 29.9 187 13.0 24.3 3,137.6 8.8 0.57 0.80 0.71
The disclosure under the heading "THE MERGER-Opinion of BONJ's Financial Advisor
-Analysis of Precedent Transactions" is hereby amended by deleting the table of
Acquiror and Target names in the middle of page 79 (the Nationwide Precedent
Transactions group) of the Proxy Statement and replacing it with the following:
Transaction Information Seller Information
Price/ Core 1-Day
Deal LTM Deposit Market Total TCE/ LTM Res./ NPAs ¹/
Annc. Value Earnings TBV Premium Premium Assets TA ROAA Loans Assets Acquiror
St Target St Date ($mm) (x) (%) (%) (%) ($mm) (%) (%) (%) (%) Heartland Financial USA Inc.
IA Rockford B&TC IL 08/13/19 59.2 NM 129 4.7 - 523.4 8.8 0.11 1.43 1.41 Three Rivers FCU IN West End Bank S.B.
IN 08/01/19 43.3 25.0 143 8.2 -
301.2 10.1 0.57 1.17 0.27
Investors Bancorp Inc NJ
NY 07/24/19 63.6 27.3 138 5.2 21.8 562.6 8.0 0.43 0.96 0.00
Carolina Financial
Corp. SC Carolina Trust BancShares Inc. NC 07/15/19 100.1 28.1 168 10.1 39.4 621.3 9.6 0.54 0.86 1.01
ACNB Corp. PA Frederick County Bancorp MD 07/02/19 61.3 21.8 163 8.0 41.5
442.4 8.2 0.65 1.00 0.46
First Financial Corp. IN
KY 01/07/19 133.3 31.8 152 8.5 40.8 904.9 9.7 0.43 0.68 0.98
Delmar Bancorp MD Virginia Partners Bank VA 12/13/18 55.5 NM 135 6.8 (2.2 ) 420.1 9.8 0.32 1.22 0.01
Berkshire Hills
Bancorp Inc. MA SI Financial Group Inc. CT 12/11/18 182.5 27.3 118 2.6 13.2 1,607.1 9.7 0.41 1.10 1.17 First Midwest Bancorp Inc.
IL Bridgeview Bancorp Inc. IL 12/06/18 144.6 NM 128 3.4 -
1,259.9 11.0 0.19 0.81 1.31
IN 10/29/18 135.5 NM 162 7.4 - 893.1 10.1 0.55 1.36 0.64 Orrstown Financial Services
PA Hamilton Bancorp Inc MD 10/23/18 58.4 NM 126 4.3 16.7
525.3 8.9 (1.07 ) 0.74 2.14
MA 09/20/18 725.4 35.0 178 19.2 12.0
2,741.2 14.3 0.70 0.89 0.52
Park National Corp. OH
SC 09/13/18 143.5 28.0 183 13.6 54.3 730.7 10.2 0.70 1.00 0.58
The disclosure under the heading "THE MERGER-Opinion of BONJ's Financial Advisor- Net Present Value Analyses" is hereby supplemented by adding the following to the first paragraph thereunder as a new third sentence following the number "165%", contained in the middle of page 80 of the Proxy Statement:
4
Sandler O'Neill selected these price to earnings and tangible book value
multiples based on Sandler O'Neill's review of, among other matters, the trading
multiples of selected companies that Sandler O'Neill deemed to be comparable to
BONJ.
The disclosure under the heading "THE MERGER-Opinion of BONJ's Financial Advisor- Net Present Value Analyses" is hereby supplemented by adding the following table after the Earnings Per Share Multiples chart (Annual Budget Variance) at the top of page 81 of the Proxy Statement:
The following table describes the discount rate calculation for BONJ common stock prepared bySandler O'Neill . In its normal course of business,Sandler O'Neill employs the Duff &Phelps Cost of Capital Navigator in determining an appropriate discount rate in which the
discount rate equals the sum of the risk free rate, the equity risk premium, the size premium and the industry premium.
Risk Free Rate 3.50% Per Duff & Phelps Normalized Rate
Equity Risk Premium 5.50% Per Duff & Phelps Cost of Capital Navigator
Size Premium 3.39% Per Duff & Phelps Cost of Capital Navigator
Industry Premium 0.77% Per Duff & Phelps Cost of Capital Navigator
Discount Rate 13.16%
The disclosure under the heading "THE MERGER-Opinion of BONJ's Financial Advisor- Net Present Value Analyses" is hereby supplemented by adding the following to the first full paragraph on page 81 of the Proxy Statement as a new third sentence following the number "160%":
Sandler O'Neill selected these price to earnings and tangible book value multiples based onSandler O'Neill's review of, among other matters, the trading multiples of selected companies thatSandler O'Neill deemed to be comparable to ConnectOne.
The disclosure under the heading "THE MERGER-Opinion of BONJ's Financial Advisor- Net Present Value Analyses" is hereby supplemented by adding the following table after the Earnings Per Share Multiples chart (Annual Budget Variance) at the top of page 82 of the Proxy Statement:
The following table describes the discount rate calculation for ConnectOne common stock prepared bySandler O'Neill . In its normal course of business,Sandler O'Neill employs the Duff &Phelps Cost of Capital Navigator and Bloomberg in determining an appropriate discount rate in which the discount rate equals the risk free rate plus the product of the 2-year beta for ConnectOne common stock and the equity risk premium, plus the size premium. 5 Risk Free Rate 3.50% Per Duff & Phelps Normalized Rate 2 Year Beta of Stock 100.3% Bloomberg Equity Risk Premium 5.50% Per Duff &Phelps Cost of Capital Navigator Size Premium 3.39% Per Duff &Phelps Cost of Capital Navigator Discount Rate 12.41% The first paragraph under the heading "THE MERGER-Opinion of BONJ's Financial Advisor-Pro Forma Transaction Analysis" on page 82 of the Proxy Statement is hereby amended and restated in its entirety as follows:Sandler O'Neill analyzed certain potential pro forma effects of the transaction on ConnectOne assuming the transaction closes onDecember 31, 2019 .Sandler O'Neill also utilized the following information and assumptions: (a) estimated net income for BONJ for the year endingDecember 31, 2019 with estimated annual net income growth rates for the years endingDecember 31, 2020 throughDecember 31, 2023 , as provided by the senior management of ConnectOne and its representatives, (b) the publicly available mean analyst earnings per share estimate for ConnectOne for the year endingDecember 31, 2019 , as well as estimated earnings per share for ConnectOne for the year endingDecember 31, 2020 , an estimated long-term annual earnings per share growth rate for the years endingDecember 31, 2021 throughDecember 31, 2023 , and estimated dividends per share for the years endingDecember 31, 2019 throughDecember 31, 2023 , as provided by senior management of ConnectOne and its representatives, and (c) certain assumptions relating to purchase accounting adjustments, transaction expenses, cost-savings and the ConnectOne Stock Buyback Transactions, as provided by the senior management of ConnectOne and its representatives. The analysis indicated that the transaction could be accretive to ConnectOne's estimated earnings per share (excluding one-time transaction costs and expenses) in the years endingDecember 31, 2020 throughDecember 31, 2023 by 4.0%, 4.8%, 4.2% and 3.8%, respectively, dilutive to ConnectOne's estimated tangible book value per share at closing,December 31, 2020 ,December 31, 2021 , andDecember 31, 2022 by 3.1%, 2.0%, 1.1% and 0.3%, respectively, and accretive to ConnectOne's estimated tangible book value per share by 0.2% atDecember 31, 2023 . Background of the Merger
The following disclosure supplements the discussion beginning on page 49 of the Proxy Statement under the heading "THE MERGER - Background of the Merger". The section is supplemented by adding the following to the end of the second paragraph on page 52 of the Proxy Statement, after the sentence stating "ConnectOne and BONJ executed a confidentiality agreement onJune 4, 2019 , while Party A and Party B executed confidentiality agreements onJune 4, 2019 and
June 6, 2019 , respectively.": 6 Each confidentiality agreement contained a standstill provision for a period of twelve months from the date of execution (a "Standstill") preventing each of ConnectOne, Party A and Party B from, among other things, acquiring, agreeing to acquire or offering or assisting in acquiring equity securities of BONJ or offering to enter into any merger or other business combination involving BONJ, unless there was advanced written authorization from an authorized representative of BONJ. Each confidentiality agreement also contained a provision stating that each of ConnectOne, Party A and Party B was not permitted to ask for a waiver of the Standstill.
Additional Information and Where to Find It
In connection with the proposed Merger, the Company has filed with theSEC and furnished to the Company's shareholders the Proxy Statement, which was filed with theSEC onOctober 22, 2019 . Shareholders are urged to read the Proxy Statement in its entirety because it contains important information about the proposed Merger. Investors and security holders may obtain a free copy of documents filed by the Company, including the Proxy Statement, with theSEC at theSEC's website at http://www.sec.gov. These documents may also be obtained, free of charge, from the Company at the "Investor Relations" section of the Company's website at www.bonj.net. Proxy Solicitation
The Company and certain of its directors and executive officers may be deemed to
be participants in the solicitation of proxies from the shareholders of the
Company in connection with the proposed Merger under the rules of the
Forward-Looking Statements All non-historical statements in this Current Report on Form 8-K (including, without limitation, statements regarding the pro forma effect of the proposed Merger, cost savings, anticipated expense, the accretive nature of the proposed transaction, revenue enhancement opportunities, anticipated capital ratios and capital, positioning, value creation, growth prospects and timing of the closing) constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words such as "believe," "expect," "anticipate," "intend," "target," "estimate," "continue," "positions," "prospects" or . . .
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