Attached files
| file | filename |
|---|---|
| EX-99.2 - EX-99.2 - PROSPERITY BANCSHARES INC | d593977dex992.htm |
| 8-K - FORM 8-K - PROSPERITY BANCSHARES INC | d593977d8k.htm |
 Merger with F&M Bancorporation Inc.
August 29, 2013
Exhibit 99.1 |
 2
“Safe Harbor”
Statement
“Safe Harbor”
Statement
under the Private Securities Litigation Reform Act of 1995
Statements contained in this presentation which are not
historical facts and which pertain to future operating results
of Prosperity Bancshares
®
and its subsidiaries constitute
“forward-looking statements”
within the meaning of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements involve significant risks and
uncertainties. Actual results may differ materially from the
results discussed in these forward-looking statements. Factors
that might cause such a difference include, but are not limited
to, those discussed in the company’s periodic filings with the
SEC. Copies of the SEC filings for Prosperity Bancshares
®
may be downloaded from the Internet at no charge from
www.prosperitybankusa.com. |
 3
Strategic Rationale
Strategic Rationale
•
Expands Prosperity’s presence to the economically attractive Tulsa
market: •
Bolsters commercial lending efforts:
•
Adds the well-established F&M Private Bank
•
Accretive to earnings per share:
•
Prosperity will remain well-capitalized
•
Combined
company
will
surpass
$20
billion
in
total
assets
(1)
(1)
Based on 6/30/13 financial data; pro forma for pending acquisition of
FVNB Corp. –
F&M is currently the 2nd largest bank in Tulsa (by deposits)
–
Combined
franchise
would
be
the
7th
largest
bank
in
Oklahoma
(by
deposits)
–
Adds significant C&I lending focus, including expertise in energy
lending –
Commercial clients in both Oklahoma and Texas
–
Complementary
to
existing
Prosperity
trust
and
wealth
management
businesses
–
Consistent with recently announced acquisition of FVNB Corp.
–
F&M’s 2013 year-to-date efficiency ratio was
76.4% –
Estimated
cost
savings
of
25%
-
30% |
 4
Continued Oklahoma Expansion
Continued Oklahoma Expansion
Source: SNL Financial
* Branch count excludes duplicative drive-thru locations
PB* (219)
FVNB* (34)
FMBC (13) |
 5
Enhances Oklahoma Market Share
Enhances Oklahoma Market Share
(1)
(2)
Source: SNL Financial
Note: Deposit data as of 6/30/12
Rank
Institution (ST)
Number
of
Branches
Deposits in
Market
($mm)
Market
Share
(%)
1
BOK Financial Corp. (OK)
82
10,313
13.9
2
BancFirst Corp. (OK)
100
5,120
6.9
3
Midland Financial Co. (OK)
55
5,007
6.7
4
Arvest Bank Group Inc. (AR)
101
4,096
5.5
5
JPMorgan Chase & Co. (NY)
33
3,638
4.9
6
Bank of America Corp. (NC)
33
3,202
4.3
Pro Forma
19
2,889
3.9
7
F & M Bancorp. Inc. (OK)
10
1,811
2.4
8
RCB Holding Co. (OK)
30
1,615
2.2
9
Durant Bancorp Inc. (OK)
24
1,546
2.1
10
Southwest Bancorp Inc. (OK)
13
1,381
1.9
11
International Bancshares Corp. (TX)
52
1,313
1.8
12
Prosperity Bancshares Inc. (TX)
9
1,078
1.5
13
Olney Bancshares of Texas Inc. (TX)
19
972
1.3
14
Spirit BankCorp Inc. (OK)
14
879
1.2
15
Ironhorse Financial Group Inc. (OK)
22
877
1.2
Top 15
597
42,848
57.7
Total
1,391
74,258
100.0
Oklahoma Deposit Market Share |
 6
Growing Markets of Operation
Growing Markets of Operation
(1)
(2)
Tulsa
Dallas
•
With
a
population
of
over
one
million
in
the
Tulsa
MSA,
it
ranks
as
the
2nd
largest
city,
and
most
densely
populated county
in Oklahoma
•
Diversified economy inclusive of Energy, Finance, Aviation,
Telecommunications and Technology •
Tulsa Port of Catoosa and Tulsa International Airport are home to
extensive industrial parks •
Consistently rated among the best cities in the country to do business
with by Forbes magazine •
Tulsa manufacturing accounts for 60% of Oklahoma’s exports and GDP
growth ranks in the top third nationally •
The Dallas/Ft. Worth MSA is the largest MSA in the state of Texas and
the 4th largest in the United States •
The metropolitan area is a major economic hub for the North Texas
region, is the home to 19 Fortune 500 companies and has the
third busiest airport in the world •
2011 GDP of nearly $400 billion, with a population of 6.5 million and
growing •
Home to AT&T, American Airlines, Texas Instruments and Lockheed
Martin, Dallas/Ft. Worth represents one of the most attractive
economies in the United States |
 7
Source: F&M internal documents
•
Founded in 1946, F&M Bank
is the 4th largest bank
headquartered in Oklahoma
•
Operates 13 total locations in
the Tulsa (10) and Dallas (3)
areas
•
Consistent balance sheet
growth through the cycle
•
Markets of operation are both
economically and
demographically attractive
Financial Highlights:
F&M Bancorporation Inc.
Financial Highlights:
F&M Bancorporation Inc.
Year ended,
Year to Date
Dollars in Thousands
12/31/2010
12/31/2011
12/31/2012
6/30/2013
Balance
Sheet
Total Assets
1,560,876
2,021,290
2,309,714
2,436,656
Net Loans (Including HFS)
1,122,138
1,473,187
1,859,216
1,876,423
Securities
45,488
31,882
69,034
112,364
Deposits
1,409,602
1,798,170
2,073,762
2,208,371
Borrowings
57,390
49,497
57,386
45,340
Total Equity (Including Minority Interest)
93,884
156,919
161,535
169,766
Tangible Common Equity
91,470
118,697
123,313
131,544
Balance
Sheet
Ratios
Loans / Deposits (%)
80.5
83.0
90.9
86.0
TCE / TA (%)
5.9
5.9
5.3
5.4
Leverage Ratio (%)
8.4
10.1
9.3
9.1
Tier 1 Capital Ratio (%)
9.9
12.0
10.0
10.2
Total Capital Ratio (%)
11.5
13.2
11.3
11.3
Income
Statement
Net Interest Income
49,892
59,219
78,946
42,284
Provision Expense
7,781
29,954
10,939
350
Noninterest Income (Including Securities Gains)
16,358
10,695
15,280
6,791
Noninterest Expense
49,576
55,747
62,769
37,514
Gain / Loss on Securities
358
(63)
376
0
Pre-tax Income
8,893
(15,787)
20,518
11,211
Net Income Available to Common Shareholders
5,704
(8,131)
12,179
6,869
Profitability
Ratios
ROAA (%)
0.46
(0.41)
0.61
0.60
ROAE (%)
7.20
(6.34)
8.39
8.45
Net Interest Margin (%)
3.58
3.54
3.96
3.78
Efficiency Ratio (%)
75.2
79.7
66.9
76.4
Fee Income / Operating Revenue (%)
24.3
15.4
15.9
13.8
Per
Share
Information
Weighted Average Common Shares Outstanding
2,094
2,455
3,337
3,348
Tangible Book Value per Share ($)
43.68
34.94
33.90
34.69
Dividends ($)
1.00
1.20
2.50
0.26
Earnings Per Share ($)
2.72
(3.31)
3.65
1.84 |
 8
Pro Forma Loan Composition
Pro Forma Loan Composition
Source: SNL Financial; data as of or for the quarter ended
6/30/13 Note: Pro forma loan composition excludes purchase
accounting adjustments Loan composition per GAAP and regulatory
filings Prosperity Bancshares, Inc.
Pro Forma
Yield on Loans: 5.89%
Loans / Deposits: 49.4%
Yield on Loans: 5.25%
Loans / Deposits: 76.7%
Yield on Loans: 5.61%
Loans / Deposits: 57.6%
FVNB Corp.
F&M Bancorporation Inc.
Yield on Loans: 5.01%
Loans / Deposits: 86.0%
Residential
R.E.
23.5%
Commercial
R.E.
42.5%
Construction
11.3%
Commercial
& Industrial
17.6%
Consumer &
Other
5.2%
Residential
R.E.
22.2%
Commercial
R.E.
37.0%
Construction
11.8%
Commercial
& Industrial
24.7%
Consumer &
Other
4.3%
Residential
R.E., 10.9%
Commercial
R.E., 21.9%
Construction
6.1%
Commercial
& Industrial,
57.5%
Consumer &
Other, 3.5%
Residential
R.E., 20.8%
Commercial
R.E., 37.5%
Construction,
10.3%
Commercial
& Industrial,
26.6%
Consumer &
Other, 4.7%
Loan Portfolio ($000)
Amount
%
Residential R.E.
1,452,268
23.5%
Commercial R.E.
2,621,209
42.5%
Construction
694,585
11.3%
Commercial & Industrial
1,084,233
17.6%
Consumer & Other
320,188
5.2%
Total Loans & Leases
$6,172,483
100%
Loan Portfolio ($000)
Amount
%
Residential R.E.
366,066
22.2%
Commercial R.E.
609,124
37.0%
Construction
194,510
11.8%
Commercial & Industrial
407,073
24.7%
Consumer & Other
71,499
4.3%
Total Loans & Leases
$1,648,272
100.0%
Loan Portfolio ($000)
Amount
%
Residential R.E.
207,400
10.9%
Commercial R.E.
417,060
21.9%
Construction
116,309
6.1%
Commercial & Industrial
1,092,694
57.5%
Consumer & Other
66,672
3.5%
Total Loans & Leases
$1,900,135
100.0%
Loan Portfolio ($000)
Amount
%
Residential R.E.
$2,025,734
20.8%
Commercial R.E.
$3,647,393
37.5%
Construction
$1,005,404
10.3%
Commercial & Industrial
$2,584,000
26.6%
Consumer & Other
$458,359
4.7%
Total Loans & Leases
$9,720,890
100.0% |
 9
Pro Forma Deposit Composition
Pro Forma Deposit Composition
Cost of Deposits: 0.30%
Cost of Deposits: 0.32%
Cost of Deposits: 0.32%
Cost of Deposits: 0.42%
Deposit Portfolio ($000)
Amount
%
Demand Deposits
3,016,205
24.1%
NOW & Other
2,750,305
22.0%
MMDA & Savings
4,240,094
33.9%
Retail Time Deposits
1,133,753
9.1%
Jumbo Time Deposits
1,368,293
10.9%
Total Deposits
$12,508,650
100%
Deposit Portfolio ($000)
Amount
%
Demand Deposits
543,526
25.3%
NOW & Other
557,891
25.9%
MMDA & Savings
617,807
28.7%
Retail Time Deposits
214,234
10.0%
Jumbo Time Deposits
216,421
10.1%
Total Deposits
$2,149,879
100.0%
Deposit Portfolio ($000)
Amount
%
Demand Deposits
623,374
28.2%
NOW & Other
162,491
7.4%
MMDA & Savings
623,468
28.2%
Retail Time Deposits
148,587
6.7%
Jumbo Time Deposits
650,451
29.5%
Total Deposits
$2,208,371
100.0%
Deposit Portfolio ($000)
Amount
%
Demand Deposits
$4,183,105
24.8%
NOW & Other
$3,470,687
20.6%
MMDA & Savings
$5,481,369
32.5%
Retail Time Deposits
$1,496,574
8.9%
Jumbo Time Deposits
$2,235,165
13.3%
Total Deposits
$16,866,900
100.0%
Prosperity
Bancshares,
Inc.
Pro Forma
FVNB Corp.
F&M Bancorporation Inc.
Demand
Deposits,
24.1%
NOW &
Other,
22.0%
MMDA &
Savings,
33.9%
Retail Time
Deposits,
9.1%
Jumbo Time
Deposits,
10.9%
Demand
Deposits,
25.3%
NOW &
Other,
25.9%
MMDA &
Savings,
28.7%
Retail Time
Deposits,
10.0%
Jumbo Time
Deposits,
10.1%
Demand
Deposits,
28.2%
NOW &
Other, 7.4%
MMDA &
Savings,
28.2%
Retail Time
Deposits,
6.7%
Jumbo Time
Deposits,
29.5%
Demand
Deposits,
24.8%
NOW &
Other,
20.6%
MMDA &
Savings,
32.5%
Retail Time
Deposits,
8.9%
Jumbo Time
Deposits,
13.3%
Source: SNL Financial; data as of or for the quarter ended 6/30/13 Note: Pro forma deposit composition excludes
purchase accounting adjustments Deposit
composition per GAAP and regulatory filings |
 10
Transaction Terms
Transaction Terms
Merger Partner:
F&M Bancorporation Inc. (OTC: FMBC)
Aggregate Deal Value:
$243.9 million
(1)
Consideration Structure:
3,298,246 shares of Prosperity and $47.0 million of cash
Consideration Mix:
81% stock / 19% cash
(1)
Termination Fee:
$10.0 million plus expenses incurred by Prosperity up to
$750,000 Required Approvals:
Customary regulatory approval; F&M shareholder approval
Due Diligence:
Completed
Anticipated Closing:
First quarter of 2014
(1)
Based on a per share price of Prosperity Bancshares, Inc. common stock
of $59.69, which represents the closing price as of 8/28/13 |
 11
Transaction Summary
Transaction Summary
Aggregate Deal Value ($mm)
(1)
$243.9
Transaction
Multiples
LTM Earnings ($15.3mm)
16.0x
Book Value ($131.5mm)
1.85x
Tangible Book Value ($131.5mm)
1.85x
Most Recent Quarter Annualized Earnings ($13.7mm)
17.8x
Core Deposit Premium ($1,558mm)
(2)
7.2%
Source: SNL Financial
F&M’s financials are as of and for the period ended 6/30/13
(1)
Based on a per share price of Prosperity Bancshares, Inc. common stock
of $59.69, which represents the closing price as of 8/28/13 (2) Equal to aggregate deal value
less F&M’s tangible common equity as a percentage of core deposits; core deposits defined as total deposits less jumbo time deposits (greater than $100,000) |
 12
Management Retention
Management Retention
Prosperity has placed a very high value on the existing F&M
leadership team and has extended numerous individual employment
agreements to members of the production staff, including existing loan officers and
several managers and supervisory personnel.
In addition, the executive leaders listed below will join Prosperity in
the following capacity: F&M
Member
Current Role
Prosperity Bank Position
Anthony Davis
Chairman and CEO
Chairman –
Tulsa Area / Turtle Creek Banking Center
Eric Davis
President
Vice Chairman –
Tulsa Area / Turtle Creek Banking Center
Jeff Pickryl
President of F&M Bank
President –
Tulsa Area / Turtle Creek Banking Center
|
 13
Financial Impact
Financial Impact
Source: SNL Financial
Note: Includes impact of the redemption of FVNB’s $18.0 million
SBLF preferred and F&M’s $38.2 million SBLF preferred
(1)
Pro Forma includes both the pending merger with FVNB Corp. and the
proposed merger with F&M Bancorporation Inc.; estimated closing for the FVNB Corp. merger is the 4th quarter of 2013;
estimated closing for the F&M merger is the 1st quarter of
2014 Includes estimated purchase accounting adjustments
Assumes no asset growth from 6/30/13 through 3/31/14
PB
Prosperity Bancshares, Inc.
FVNB Corp.
F&M Bancorporation Inc.
Pro Forma
(1)
Financial Impact
6/30/13
6/30/13
6/30/13
3/31/14
Balance Sheet ($mm)
Total Assets
$16,270.7
$2,417.1
$2,436.7
$21,272.4
Gross Loans
6,172.5
1,648.3
1,900.1
9,671.0
Total Deposits
12,508.7
2,149.9
2,208.4
16,866.9
Tangible Common Equity
967.8
151.6
131.5
1,214.7
Capital (%)
TCE / TA (%)
6.50%
6.40%
5.40%
6.23%
Leverage Ratio (%)
7.07%
8.72%
9.13%
7.09%
Tier 1 Capital Ratio (%)
14.15%
12.58%
10.15%
12.34%
Total Capital Ratio (%)
14.91%
13.83%
11.28%
12.85% |
 |