WHAT BANKERS NEED TO KNOW FOR CREATING A SUCCESSFUL GROWTH STRATEGY

Transcription

1 S E A R C H I N G F O R G R O W T H : WHAT BANKERS NEED TO KNOW FOR CREATING A SUCCESSFUL GROWTH STRATEGY HANS C. PETTIT,CPA, CGMA HORNE LLP

2 MERGERS & AQUISITIONS 2

3 NUMBER OF WHOLE-BANK M&A TRANSACTIONS By Year Since Source: SNL Financial. 3

4 HEAT MAP: 2014 TRANSACTIONS BY LOCATION OF SELLER Whole-bank Transactions Announced in 2014 Source: SNL Financial, Olsen Palmer analysis Key: No. of Deals (# of States) >10 (8) 6 10 (14) 2 5 (14) 1 Deal (7) 0 Deals (7) 4

5 LOCATION OF BUYER RELATIVE TO SELLER Whole-bank Transactions Announced in 2014 Out of State 28.7% In State 71.3% Source: SNL Financial, Olsen Palmer analysis 5

6 SIZE OF BUYER VS. SIZE OF SELLER Median Assets by Era ($mm) Seller Assets Buyer Assets $1,500 Seller as % of Buyer 25% $1,316 Median Assets ($million) $1,000 $ % 13.8% $1, % $846 20% 15% 10% Seller as % of Buyer 5% $80 $118 $132 $ % Note: Percentage reflects median of buyer and seller on each deal rather than aggregates illustrated in the chart. Source: SNL Financial, Olsen Palmer analysis 6

7 NUMBER OF TRANSACTIONS BY BUYER ASSET SIZE Whole-bank Transactions Announced in Median Buyer Size: $1.1 Billion < $50mm $50mm $100mm $100mm $250mm $250mm $500mm $500mm $1Bn $1Bn $5Bn $5Bn $10Bn > $10Bn Buyer Asset Size Source: SNL Financial, Olsen Palmer analysis ; excludes transactions in which buyer asset size was unavailable. 7

8 NUMBER OF TRANSACTIONS BY SELLER ASSET SIZE Whole-bank Transactions Announced in Median Seller Size: $160 million < $50mm $50mm $100mm $100mm $250mm $250mm $500mm $500mm $1Bn $1Bn $5Bn > $5Bn 3 Seller Asset Size Source: SNL Financial, Olsen Palmer analysis ; excludes transactions in which seller asset size was unavailable. 8

9 30.0x 25.0x 20.0x 15.0x 10.0x 1.37x 1.32x 1.41x 1.22x 1.17x 1.20x 1.10x 1.15x 1.67x 1.66x 1.69x 1.78x 2.09x 2.56x 2.12x 1.83x 1.74x 1.68x 2.04x 2.14x 2.18x 2.25x 2.10x 1.60x 1.35x 3.0x 2.5x 2.0x 1.5x 1.0x 0.5x 0.0x 5.0x 0.0x Transaction Price / Tangible Book Value (x) Transaction Price / Earnings (x) 9 MEDIAN M&A VALUATION MULTIPLES By Year Since 1990 Median Deal Value/ Tangible Book Value (%) left axis Median Price/Earnings (x) right axis

10 COST SAVINGS BY YEAR OF TRANSACTION Expected Savings as % of Seller Non-Interest Expense 35% 33.3% 30% 28.3% 30.4% 29.5% 25% 25.1% Cost Savings (as % of Seller Non Interest Expense) 20% Indicates average expected cost savings expected at time of deal announcement, based on company disclosures. Source: SNL Financial

11 YEAR 1 EPS ACCRETION BY YEAR OF TRANSACTION Expected Year 1 EPS Accretion (%) 15% 12.0% 12.1% 10% 9.1% 7.6% 5% 1.5% Expected 'Year 1' Buyer EPS Accretion (%) 0% Indicates average expected EPS accretion expected at time of deal announcement, based on company disclosures. Source: SNL Financial 11

12 9% 8% 7% Deposit Premium (%) 6% 5% 4% 3% 2% % 77 1% 0% BRANCH TRANSACTION ACTIVITY 2014 Branch Transaction Volume and Pricing Number of Deals Deposit Premium (%) Source: SNL Financial, Olsen Palmer analysis No. of Branch Transactions 12

13 EDUCATE & PREPARE 13

14 14 MARKET INTEREST

15 REASONS TO CONSIDER AN IPO Position for Growth Shareholder Liquidity M&A Currency Redeem Non-core Capital Elements 15

16 BANK IPOS RETURNING TO HISTORICAL LEVELS (1) Number of Bank IPOs YTD Annualized Source: SNL Financial 16

17 INCREASINGLY SMALLER COMPANIES ARE GOING PUBLIC (1) Median Asset Size and Offering Amount of Recent IPOs $12.0 $11.2 $1,000.0 Median Asset Size of IPOs ($bn) $9.0 $6.0 $3.0 $0.0 $900.5 $6.0 $1.9 $2.2 $173.4 $85.5 $85.5 $1.1 $ YTD $750.0 $500.0 $250.0 $0.0 Median Gross Offering Amount ($mm) Assets Offering Amount Total # of IPOs Source: SNL Financial Data illustrates median amount for all bank IPOs priced for each respective year 17

18 PROFILE OF RECENT IPOs What Investors Like Profile of Recent IPOs Headquarters: MSAs & Non-MSAs Quality management team Clear use of proceeds Higher growth opportunities Asset Size: Approximately $700 million and larger Profitability: Varies Growth: Acquisitive or organic growth Size of Offering: Usually $30 million or more 18

19 GEOGRAPHIC LOCATION Geographic Location of Recent IPOs Headquartered in a Top 25 MSA by Population SW 18% W 9% MW 23% NE 14% No 50% Yes 50% SE 36% Source: SNL Financial 19

20 ASSET SIZE Total Assets ($bn) $150.0 $24.0 $148.5 $130.3 $18.0 $12.0 $9.4 $6.0 $5.6 $4.5 $4.0 $3.6 $2.8 $2.3 $2.1 $1.8 $1.8 $1.6 $1.4 $1.4 $1.3 $1.1 Median: $1.8 million $1.0 $0.8 $0.7 $0.7 $0.7 $0.0 ALLY CFG GWB FCB TLMR OPB SFBS FNBC SQBK TSC GNBC IBTX CNOB BNK FSB TBK NCOM AVNU BWFG VBTX ICBK ISTR Source: SNL Financial Data as of most recent quarter available prior to IPO 20

21 PROFITABILITY ROAA (%) 3.20% 3.03% 2.40% 1.60% 1.39% 1.34% 1.31% 1.22% 1.20% 1.17%1.11% 1.08% 1.05% 0.98% 0.90% 0.87% Median: 0.94% 0.80% 0.79% 0.75% 0.68% 0.60% 0.58% 0.55% 0.54% 0.53% 0.00% TBK OPB SFBS IBTX FNBC GWB SQBK CNOB TLMR GNBC CFG ICBK FSB NCOM VBTX FCB ALLY BWFG TSC ISTR AVNU BNK 0.06% Source: SNL Financial Data as of most recent quarter available prior to IPO 21

22 3-YEAR ASSET CAGR 3-Year Asset CAGR (%) 90.0% 78.6% 78.1% 60.0% 45.3% 42.8% 39.1% 38.8% 34.7% 30.0% 26.1% 25.0% 24.8% 24.2% 24.0% 23.1% 21.7% Median: 24.1% 16.9% 13.7% 10.9% 7.1% 4.7% 2.8% 0.0% (0.4%) (5.1%) (30.0%) OPB TBK ISTR FSB TLMR NCOM FNBC VBTX BWFG IBTX SFBS BNK GNBC FCB AVNU SQBK CNOB TSC GWB ICBK CFG ALLY Source: SNL Financial Data as of most recent quarter available prior to IPO 22

23 NUMBER OF ACQUISITIONS PRIOR TO IPO Number of Acquisitions since 2008 (1) Median: 1 Acquisition FCB TLMR BNK IBTX BWFGGNBC OPB SFBS VBTX FNBC FSB NCOM TBK ALLY AVNU CFG CNOB GWB ICBK ISTR SQBK TSC Source: SNL Financial Data as of most recent quarter available prior to IPO Includes all whole bank and FDIC transactions announced since 12/31/07 and prior to IPO pricing 23

24 EARNINGS VALUATION Price / Forward EPS (x) 20.0x 18.9x 18.7x 17.7x 17.0x 15.8x 15.6x 15.5x 15.2x 14.0x 14.4x 14.4x 14.3x 14.2x 13.5x 13.3x 13.2x 13.1x 13.0x 13.0x Median: 13.9x 11.0x 11.0x 10.5x 10.5x 9.7x 9.7x 8.0x Source: SNL Financial, dealogics Data as of IPO first trade date and first available forward earnings 24

25 SUMMARY Investor demand for bank IPOs is strong Bank IPO activity has increased substantially Valuations are high Articulating the story well is critical 25

26 RENASANT BANK CASE STUDY 26

27 RENASANT S CURRENT FOOTPRINT More than 120 banking, lending, financial services and insurance offices 27

28 FOCUSED ON KEY STRATEGIC INITIATIVES Capitalize on Opportunities Enhance Profitability Aggressively Manage Problem Credits Build Capital Ratios 28

29 OPPORTUNISTIC MARKET EXPANSION FDIC-Assisted Transaction: Crescent Bank and Trust Jasper, GA Assets: $1.0 billion FDIC-Assisted Transaction: American Trust Bank Roswell, GA Assets: $145 million Trust Acquisition: RBC (USA) Trust Unit Birmingham, AL Assets: $680 million Whole Bank Transaction: First M&F Corporation Kosciusko, MS Assets: $1.6 billion Whole Bank Transaction Announcement: Heritage Financial Group, Inc. Albany, GA Assets: $1.8 billion De novo expansion: Columbus, MS De novo expansion: Montgomery, AL Starkville, MS Tuscaloosa, AL De novo expansion: Maryville, TN Jonesborough, TN De novo expansion: Bristol, TN Johnson City, TN 29

30 IN-MARKET MERGER WITH M&F BANK Nashville Johnson City Pro Forma Highlights Memphis TENNESSEE Huntsville Chattanooga Knoxville Branches (1) 117 Assets (2) $5.8 billion Gross Loans (2) $3.8 billion Deposits (2) $4.9 billion Kosciusko Jackson MISSISSIPPI Tupelo Birmingham ALABAMA Montgomery Atlanta GEORGIA Provides further expansion in current states of operation Mississippi Jackson MSA DeSoto County Oxford Starkville Alabama Birmingham MSA Tennessee Greater Memphis RNST FMFC 7 of 36 FMFC branches are located within 1 mile of a RNST branch Source: SNL Financial (1) Pro forma branches as of 1/31/2013 (2) Pro forma figures as of 12/31/2012, excluding purchase accounting adjustments 30

31 NEW MARKET PENDING MERGER WITH HERITAGE FINANCIAL GROUP Pro Forma Highlights Assets (2) Gross Loans (2) Deposits (2) $7.5 billion $5.2 billion $6.1 billion Highly Financially Accretive Immediately accretive to EPS, doubledigit EPS accretion projected in 2016 Estimated IRR of 20% Enhances existing footprint and provides initial entry RNST Branches (123) HBOS Branches (38) (1) HBOS Mortgage Offices (7) Source: SNL Financial (1) Pro forma for pending HBOS branch acquisition (2) Pro forma figures as of 9/30/2014, excluding purchase accounting adjustments points into several attractive markets: Alabama Auburn - Opelika Georgia Albany, Atlanta, Macon Savannah, Statesboro, Valdosta Florida Ocala, Gainesville 31

32 DIVERSIFIED NONINTEREST INCOME* 100,000 80,000 60,000 40,000 20,000 Noninterest Income* Diversified sources of noninterest income Less reliant on NSF Opportunities for growing Noninterest Income Expansion of Trust Division Wealth Management Services into larger, metropolitan markets Expansions within our de novo operations Expansion of the Mortgage Division within new markets Fees derived from higher penetration and usage of debit cards and deposit charges 2009 $55.9M 8% 39% 6% 14% Svc Chgs Insurance Mtg Gains Wealth Mgmt 2014 $80.6M 9% 32% 11% 12% Svc Chgs Insurance Mtg Gains Wealth Mgmt 27% 6% Fees & Comm Other 26% 11% Fees & Comm Other *Noninterest income excludes gains from securities transactions and gains from acquisitions 32

33 IMPROVED EFFICIENCY OF NONINTEREST EXPENSE 90.00% 85.00% 80.00% 75.00% 70.00% 65.00% 60.00% 55.00% Targeted 50.00% 45.00% 40.00% Efficiency Ratio* Efficiency Ratio ex. OREO Costs* *Excludes debt extinguishment penalties, amortization of intangibles and merger-related expenses from noninterest expense and profit (loss) on sales of securities and gains on acquisitions from noninterest income 33

34 TRANSITION TO CORE FUNDING DDA 9% Borrowed Funds 28% 2008 Other Int Bearing Accts 26% Time Deposits 37% DDA 18% Borrowed 2014 Funds Time 4% Deposits 27% Other Int Bearing Accts 50% $3.28B Cost of Funds 2.81% $5.03B Cost of Funds.45% 1,000, ,000 Noninterest Bearing Demand Deposits 856, , , , , , , , ,

35 MAINTAINING A STRONG CAPITAL POSITION 8.00% Tangible Common Equity Ratio 7.50% 7.00% 6.50% 6.00% 5.50% 5.00% 4.50% Renasant Capital Tangible Common Equity 6.34% 6.76% 7.35% 7.71% 6.64% 7.52% Leverage 8.68% 8.97% 9.44% 9.86% 8.68% 9.53% Tier 1 Risk Based 11.12% 13.58% 13.32% 12.74% 11.41% 12.45% Total Risk Based 12.37% 14.83% 14.58% 14.00% 12.58% 13.54% 35

36 POSITIONING TO WIN 36

37 BUILDING AN INTELLIGENT GROWTH STRATEGY Well-defined Vision and Strategic Plan Disciplined Focus on Identified Key Initiatives Buy-in Throughout the Organization Flexibility Ability to Adapt to a Changing Environment 37

38 JOIN THE CONVERSATION