Attached files
| file | filename |
|---|---|
| 8-K - 8-K - PROVIDENT FINANCIAL SERVICES INC | d647943d8k.htm |
| EX-2.1 - EX-2.1 - PROVIDENT FINANCIAL SERVICES INC | d647943dex21.htm |
| EX-99.1 - EX-99.1 - PROVIDENT FINANCIAL SERVICES INC | d647943dex991.htm |
 Acquisition of
December 20, 2013
Investor Presentation
Franchise Expansion to Eastern Pennsylvania
Exhibit 99.2 |
 1
Forward-Looking Statements Disclosure
This presentation may contain forward-looking statements regarding Provident Financial Services,
Inc. These statements constitute forward-looking information within the definition of the
Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from any forward-looking statements expressed in this
presentation, since forward-looking information involves significant known and unknown
risks, uncertainties and other factors. Factors that may cause actual results to differ
materially from those contemplated by such forward-looking statements include, among others, the following: failure to satisfy
the conditions to closing for the proposed merger in a timely manner or at all; failure of the Team
Capital Bank stockholders to approve the proposed merger; failure to obtain the necessary
governmental approvals for the proposed merger or adverse regulatory conditions in connection
with such approvals; disruption to the parties’ businesses as a result of the announcement and
pendency of the transaction; difficulties related to the integration of the businesses following
the merger; competitive pressures among depository and other financial institutions; changes in
the interest rate environment; and changes in general economic conditions, either nationally or
regionally. For a discussion of additional factors that might cause such differences, please refer to
Provident Financial Services, Inc.’s public filings with the Securities and Exchange Commission.
These are available online at http://www.sec.gov. Provident Financial Services, Inc. does
not undertake to update any forward-looking statements made in this presentation to reflect
new information, future events or otherwise.
Provident Financial Services, Inc. will be filing a registration statement on Form S-4 containing
a proxy statement/prospectus and other documents regarding the proposed transaction with the
SEC. Team Capital Bank
stockholders and investors are urged to read the proxy statement/prospectus when it becomes available,
because it will contain important information about Provident Financial Services, Inc. and Team
Capital Bank and the proposed transaction. When available, copies of the
proxy statement/prospectus will be mailed to Team Capital Bank stockholders. Copies of the proxy
statement/prospectus also may be obtained free of charge at the SEC’s web site at
http://www.sec.gov, or by directing a request to Provident Financial Services, Inc., Attention:
Corporate Secretary, 100 South Wood Avenue, Iselin, New Jersey 08830, or on its website at
www.providentnj.com, or to Team Capital Bank, Attention: Corporate Secretary, 3001 Emrick Boulevard, Bethlehem,
Pennsylvania 18020, or on its website at www.teamcapitalbank.com. Copies of other documents
filed by Provident Financial Services, Inc. with the SEC may also be obtained free of charge at
the SEC’s website or by directing a request to Provident Financial Services, Inc. at the
address provided above. This presentation does not constitute an offer to
sell or the solicitation of an offer to sell or the solicitation of an offer to buy any
securities. |
 2
Transaction Rationale
1.
Financial data for Team Capital Bank as of or for the quarter ending 9/30/13, NPAs
exclude restructured loans. Enhances New Jersey Franchise with Expansion into
Eastern Pennsylvania Provident currently lends in Team Capital’s
Pennsylvania markets, and the acquisition will accelerate growth in those
areas Large, attractive lending markets offering favorable loan spreads
Talented lending team with strong commercial relationships in New Jersey, Lehigh
Valley, and Bucks County Loans have grown in excess of 10% annually since
2010 Provident’s larger balance sheet and capital base will provide
additional lending capacity Affluent demographics provide wealth management
opportunities High Performing Commercially-Oriented Bank with Solid Asset
Quality Strong profitability: ROAA 0.76%, ROACE 10.3%, NIM 3.65%
Diverse commercial loan portfolio: 51% CRE, 12% C&I, 5% multifamily, 5%
C&D; 4.97% yield on loans Solid asset quality: NPAs / Assets 0.5%,
NPAs / Loans + OREO 0.8% Low cost deposit franchise: 25%
noninterest-bearing deposits; 80% core deposits; 0.40% cost of deposits
Financially Attractive
5% EPS accretion in 2015 (first full year); slightly accretive to 2014 EPS
(excluding non-recurring deal related expenses)
TBV dilution of 3.5% with earnback in 4 years
IRR greater than 15%
Leverages Provident’s excess capital
1 |
 3
Deposit data as of 9/30/13.
Provident Financial (78)
Team Capital (12)
Branch
#
Dep.
($mm)
% of
Total
Branch
#
Dep.
($mm)
% of
Total
NJ
7
$383
51%
85
$5,639
94%
PA
5
$362
49%
5
$362
6%
Total
12
$745
90
$6,001
Pro Forma Branch Map
Pro Forma |
 4
Transaction Overview
Merger Consideration:
$122 million
Consideration Mix:
75% stock / 25% cash
Represents approximately 4.9 million PFS shares and $31 million in cash
Board Representation:
One Provident board seat to Team Capital
Required Approvals:
Customary regulatory approvals
Team Capital shareholder approval
Due Diligence:
Completed
Preferred Equity (SBLF):
Provident intends to repay Team Capital’s $22 million of SBLF preferred post
closing Termination Fee:
$5 million
Expected Closing:
Second quarter of 2014
1.
Based on PFS closing stock price of $18.61 on December 19.
1 |
 5
Overview of Team Capital
Company Description
Financial Summary ($ in millions)
1.
Financial data for Team Capital Bank as of or for the quarter ending 9/30/13.
2.
Excludes restructured loans.
Team Capital Bank is a Pennsylvania state-chartered
savings bank
Organized by regional segments / lending teams, which
include: Lehigh Valley, Bucks County and New Jersey
12 branches: Lehigh Valley (3), Bucks (2) and New
Jersey (7)
-
Experienced commercial lending teams with
approximately 15 loan officers
Focus on small business and middle market accounts
that are underserved by larger banks
Assets
$949
Net Loans
$581
Deposits
$745
Tangible Common Equity
$65
ROAA
0.76%
ROACE
10.3%
NPAs / Assets
0.47%
NPAs / Loans + OREO
0.76%
Lehigh Valley
New Jersey
Bucks
2
2
1 |
 6
Pro Forma Loans & Deposits
Source: SNL Financial and company reports. Based on regulatory data as of or for the
quarter ending 9/30/13. Loan Composition
Deposit Composition
Other
6%
C&D
4%
1-4
Family
29%
Multi-
Family
17%
C&I
8%
Com'l
RE
36%
Provident
Team Capital
Pro Forma
C&I
12%
Other
9%
Com'l
RE
51%
Multi-
Family
5%
1-4
Family
18%
C&D
5%
1-4
Family
28%
Multi-
Family
16%
Com'l
RE
37%
C&I
8%
C&D
4%
Other
7%
CDs
16%
Other
Trans,
MM &
Savings
67%
Non-
interest
17%
CDs
17%
Non-
interest
18%
Other
Trans,
MM &
Savings
65%
CDs
29%
Other
Trans,
MM &
Savings
46%
Non-
interest
25%
$5,083 million
$590 million
$5,673 million
Yield: 4.32 %
Yield: 4.97%
Yield: 4.39%
Loans / Deposits: 96%
$5,278 million
$745 million
$6,023 million
Cost: 0.33%
Cost: 0.40%
Cost: 0.34%
Provident
Team Capital
Pro Forma
Loans / Deposits: 79%
Loans / Deposits: 94% |
 7
Lehigh
Valley
1
Bucks County
Pennsylvania
PFS Current
Markets
2
Population (2012):
651,240
629,397
12,807,296
577,234
Projected 5-Year Population Growth:
2.4%
0.7%
1.5%
1.3%
# of Businesses:
23,592
27,664
496,809
22,873
Median Household Income:
$55,180
$73,557
$49,167
$69,276
Projected 5-Year HHI Growth:
20.6
14.4
16.3
14.8
Deposits (PFS & Team) ($mm):
$279
$84
$362
$5,639
Branches (PFS & Team):
3
2
5
85
Entry into Growing Markets
Source: Pennsylvania State Data Center, 2010 U.S. Census, SNL Financial, Deposit
data as of 9/30/13. 1.
Lehigh Valley Pennsylvania region consists of Lehigh and Northampton counties.
2.
Represents median of Provident’s current markets, branches and deposits include
contribution from Team Capital’s New Jersey branches. Team’s
Pennsylvania markets have an attractive business climate due to proximity to large markets such as Philadelphia and
New York, lower tax rates and affordable real estate
-
A large number of Fortune 500 companies have established warehouses and
distribution centers within the regions, including Amazon, Coca-Cola,
WalMart, Nestle and Kraft Provident’s entry positions the company to
take advantage of key demographic trends, including; -
Lehigh County had the fastest population growth from 2010-2012 across the state
of Pennsylvania -
Lehigh
Valley
is
the
third
most
populous
region
in
Pennsylvania,
while
Bucks
County
has
the
fourth
largest
county
population in the state |
 8
Financial Impact
1.
Earnback
represents
years
for
pro
forma
projected
TBV
to
equal
PFS’
standalone
projected
TBV
(“crossover”
method).
2.
Based on tangible common equity of approximately $66 million as of December
2013. 3.
Represents
median
of
Northeast
U.S.
acquisitions
since
2011
with
target
assets
between
$500mm
and
$3.0bn
and
NPAs
/
Assets
less
than
3.5%.
Financial Impact:
5% EPS accretion in 2015 (first full year); slightly accretive to EPS in 2014
(excluding non-recurring deal related expenses)
TBV per share dilution of 3.5% at closing with earnback of 4 years
IRR greater than 15%
Pro forma TCE/TA at close: 8.7%
Key Assumptions:
Cost savings: Approximately 25% or $6 million based on Team Capital’s core
noninterest expenses Gross credit mark of $9 million or 1.5% of loans
After-tax restructuring charge of $11 million
CDI of $9 million, representing 1.5% of core deposits amortized over 10 years
(SOYD) Revenue synergies identified but excluded from financial
analysis Pricing Metrics:
Adjusted for 25%
Precedent
Cost Savings
Transactions
Price / Tangible Common Equity :
1.8x
-
1.7x
Price / LTM Net Income:
18.8x
12.1x
19.6x
Price / 2014E Net Income:
16.9x
11.2x
22.1x
Core Deposit Premium:
9.3%
-
7.7%
1
2
3 |
 9
Summary
Enhances New Jersey franchise and accelerates growth in Eastern
Pennsylvania
Team Capital is a commercially-oriented bank with strong profitability,
loan growth and asset quality
Financially attractive transaction with 5% EPS accretion, 3.5% TBV
dilution with reasonable earnback, IRR greater than 15%
|
 Investor Presentation |