Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - CHARTER FINANCIAL CORP | ex99-1.htm |
| EX-2.1 - EXHIBIT 2.1 - CHARTER FINANCIAL CORP | ex2-1.htm |
| 8-K - FORM 8-K - CHARTER FINANCIAL CORP | chfn-8k06012017.htm |
ACQUISITION OF
(Resurgens Bank)
R: 1
G: 44
B: 86
R: 171
G: 4
B: 50
R: 1
G: 44
B: 86
R: 171
G: 4
B: 50
Forward Looking Statements
2
This presentation contains certain forward-looking information about Charter Financial Corporation and
subsidiaries (collectively, “CHFN”) that is intended to be covered by the safe harbor for “forward-looking
statements” provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements
of historical fact, are forward-looking statements. In some cases, you can identify forward-looking statements by
words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,”
“predict,” “potential,” “continue,” “could,” “future,” “drive,” “poise” or the negative of those terms or other words
of similar meaning. You should carefully read forward-looking statements, including statements that contain these
words, because they discuss the future expectations or state other “forward-looking” information about CHFN.
Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally
beyond the control of CHFN. Forward-looking statements speak only as of the date they are made and CHFN
assumes no duty to update such statements. In addition to factors previously disclosed in reports filed by CHFN
with the Securities and Exchange Commission (“SEC”), additional risks and uncertainties may include, but are not
limited to: the possibility that any of the anticipated benefits of the proposed mergers will not be realized or will
not be realized within the expected time period; the risk that integration of operations with those of CHFN will be
materially delayed or will be more costly or difficult than expected; the inability to complete the mergers due to the
failure of shareholder approval to adopt the respective merger agreements; the failure to satisfy other conditions
to completion of the mergers, including receipt of required regulatory and other approvals; the failure of the
proposed mergers to close for any other reason; the effect of the announcement of the mergers on customer
relationships and operating results; the possibility that the mergers may be more expensive to complete than
anticipated, including as a result of unexpected factors or events; and general competitive, economic, political and
market conditions and fluctuations. As stated previously, additional factors affecting CHFN are discussed in CHFN’s
Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K, filed with
the SEC. Please refer to the SEC’s website at www.sec.gov where you can review those documents.
SECTION DESCRIPTION
I. Transaction Summary
II. Overview of Resurgens Bancorp
III. Pro Forma Summary
Appendix
Table of Contents
3
I. Transaction Summary
4
• Two branches with more than $130 million of deposits and loans in highly desirable
in-town Atlanta sub-markets
• Energetic management team with capacity to expand market share
• Attractive core deposit mix
• History of consistent earnings
• Solid credit
• Strong IRR
• Compelling EPS accretion
5
Transaction Highlights
6
Transaction Rationale
Deploys CHFN’s capital, operating capacity and proven M&A expertise in
growing, attractive metro areas
Ambitious team with proven C&I and ability to grow Atlanta further
Infills desirable submarkets supporting prior Atlanta acquisition and
Buckhead de novo branch
Strategic
Rationale
Financially
Attractive
Conservative credit mark after comprehensive due diligence
De-conversion from same system in most recent prior acquisition
Simple operations
Significant management team retention
Low Risk
Integration
High-teens (%) EPS accretion
Adds to CHFN’s operating and capital leverage
Moderate TBV Dilution Payback Period
Clean credit profile
+20% IRR1
(1) Based on 14 P/E terminal value
7
Transaction Terms
Resurgens Bancorp
Transaction Value1 $26.3 million
Consideration 100% Cash
Price/TBV 168.6%
Price/LTM EPS2 18.9x
Required Approvals Customary regulatory and shareholder approval
Expected Closing Q3 2017
(1) Based on shares outstanding, options, and warrants
(2) Based on LTM tax-effected net income at 34% of $1.4 million
8
Transaction Assumptions
Resurgens Bancorp
Estimated Cost Savings: 25% of Resurgens LTM non-interest expense
Revenue Synergies: None assumed
Transaction Expenses: $2.7 million, pretax
Core Deposit Intangible: $1.0 million
Fair Value Marks: 1.5% aggregate mark on total loans
9
Resurgens Transaction Meets M&A Disciplines
Key Attributes Resurgens Rationale
Franchise Aspects:
• High-growth metro market?
Attractive “in-town” infill in the
attractive Atlanta MSA
• Complementary culture? Similar culture, efficient transition
• Attractive core deposit base?
Good core mix includes $38mm of
checking deposits with $27mm non-
interest bearing; 60 bps deposit cost
Fundamentals:
• Accretive to EPS day 1? Immediate EPS Accretion1
• TBV earn back period within 5 years? Less than 4 years
• Conservative credit marks? 1.5% of total loans
• Good IRR? +20% IRR2
(1) Excludes one-time merger costs
(2) Based on 14 P/E terminal value
II. Resurgens Bancorp Overview
10
11
Company Overview
Tucker, Georgia based financial
institution established in June,
2008
Led by President & CEO Charles M.
DeWitt III
2 Branches concentrated in DeKalb
County, GA; 1 in Decatur and 1 in
Tucker (Headquarters)
Strong core deposit base
Excellent credit quality – no NPAs
Note: Bank Level Data Shown, Company is an S-Corp: Profitability Measures are not tax adjusted
Source: SNL Financial
Resurgens Bank
In $000s except for per share data 12/31/14 12/31/15 12/31/16 03/31/17
Balance Sheet
Total Assets $125,061 $144,246 $160,761 $166,763
Total Loans $100,653 $115,929 $137,587 $135,171
Total Deposits $101,448 $116,565 $131,444 $137,588
Loans/Deposits 99.22% 99.45% 104.67% 98.24%
Capital
Common Equity $15,663 $17,163 $18,737 $18,283
Tangible Equity $15,663 $17,163 $18,737 $18,283
Total Equity/Assets 12.52% 11.90% 11.66% 10.96%
Tang. Common Equity/ Tang. Assets 12.52% 11.90% 11.66% 10.96%
Risked Based Capital 16.45% 15.64% 14.71% 14.46%
Tier 1 Capital 15.20% 14.38% 13.46% 13.21%
Leverage Ratio 12.78% 12.86% 11.69% 11.33%
Profitability Measures
Net Interest Margin 4.22% 4.33% 4.34% 4.58%
Non Interest Income/Avg. Assets 0.20% 0.54% 0.56% 0.20%
Non Interest Expense/Avg. Assets 3.10% 3.15% 3.13% 3.24%
Efficiency Ratio 72.32% 66.27% 65.75% 70.11%
ROAA 1.18% 1.60% 1.62% 1.38%
ROAE 9.13% 12.69% 13.94% 12.08%
Net Income $1,359 $2,063 $2,500 $559
Asset Quality
NPAs/Assets 0.61% 0.23% 0.19% 0.00%
NPAs (excl TDRs)/Assets 0.33% 0.00% 0.00% 0.00%
NCOs/Avg Loans 0.00% 0.00% 0.00% 0.00%
Reserves/Loans 1.74% 1.51% 1.28% 1.31%
Reserves/NPAs 228.07% 535.89% 573.70% NA
Quarters EndedFor the Twelve Months Ended
Franchise Footprint
12 Source: SNL Financial
Resurgens market area
home to major medical
and educational
institutions:
Emory University
CDC - Centers for Disease
Control
Emory University Health
Systems
Agnes Scott College
III. Pro Forma Summary
13
Atlanta
14
Continued Positioning in the Atlanta Metro Market
Will rank 8th in deposit market share among community banks in Atlanta MSA with less than $10.0 billion in assets1 and
20th overall
CHFN’s Atlanta MSA loans will increase to over $550 million
Atlanta MSA proportion of CHFN’s loans and deposits will increase to 54% each
(1) Assets as of March 31, 2017, deposit data as of June 30, 2016
Source: SNL Financial
Number of
Branches
Total Deposits In
Market ($000)
Total Market
Share (%)
Atlanta-Sandy Springs-Roswell, GA
Bank of the Ozarks Inc. (AR) 10 38 2,691,753 1.76
United Community Banks Inc. (GA) 11 36 2,322,572 1.52
Brand Group Holdings Inc. (GA) 12 7 1,910,125 1.25
Atlantic Capital Bcshs Inc. (GA) 13 1 1,427,057 0.93
Hamilton State Bancshares (GA) 14 24 1,317,796 0.86
State Bank Finl Corp. (GA) 15 7 1,232,279 0.81
Fifth Third Bancorp (OH) 16 29 938,637 0.61
United Bank Corp. (GA) 17 14 901,260 0.59
Renasant Corp. (MS) 18 18 892,067 0.58
IBERIABANK Corp. (LA) 19 8 850,881 0.56
Pro Forma Entity 11 710,282 0.46
First Citizens BancShares Inc. (NC) 20 14 690,052 0.45
East West Bancorp Inc. (CA) 21 3 668,143 0.44
Charter Financial Corp. (GA) 22 9 583,345 0.38
MetroCity Bankshares Inc. (GA) 23 6 575,655 0.38
Georgia Banking Co. (GA) 24 2 435,383 0.28
Piedmont Bancorp Inc. (GA) 25 4 432,413 0.28
Landmark Bancshares Inc. (GA) 26 3 404,959 0.26
CCF Holding Co. (GA) 27 6 362,172 0.24
Quantum Capital Corp. (GA) 28 3 352,311 0.23
Community Financial Holding Co (GA) 29 3 300,574 0.20
Community Banks of Georgia Inc (GA) 30 2 297,557 0.19
Resurgens Bancorp (GA) 50 2 126,937 0.08
Market Total 1,260 152,829,823
June 2016
Institution (ST) 2016 Rank
15
Continued Improvement of Deposit Portfolio Quality
Increase CHFN deposits by
$137.6 million
Boosts core funding base
with $83.2 million of core
deposits; approximately 20%
of total deposits are non-
interest bearing
Reasonable cost of deposits
of 0.60% for 1Q17
(1) Core Deposits include transaction, savings, and money market
Source: SNL Financial
($ Millions)
CHFN Deposit Growth Resurgens Acquisition
1
Pro Forma Franchise
16
17
Pro Forma Loans
CHFN Resurgens Combined
Note: Regulatory data shown, does not include purchase accounting adjustments
Source: SNL Financial
Composition Composition Composition
Loan Type ($000) % of Total Loan Type ($000) % of Total Loan Type ($000) % of Total
Constr & Dev 140,296 13.7% Constr & Dev 33,326 24.6% Constr & Dev 173,622 15.0%
1-4 Family Residential 228,562 22.4% 1-4 Family Residential 23,398 17.3% 1-4 Family Residential 251,960 21.8%
Home Equity 31,858 3.1% Home Equity 8,999 6.6% Home Equity 40,857 3.5%
Owner - Occ CRE 174,872 17.1% Owner - Occ CRE 26,624 19.7% Owner - Occ CRE 201,496 17.4%
Other CRE 293,884 28.8% Other CRE 22,942 16.9% Other CRE 316,826 27.4%
Multifamily 26,496 2.6% Multifamily 2,235 1.7% Multifamily 28,731 2.5%
Commercial & Industrial 70,650 6.9% Commercial & Industrial 17,652 13.0% Commercial & Industrial 88,302 7.6%
Consr & Other 54,644 5.4% Consr & Other 226 0.2% Consr & Other 54,870 4.7%
Total Loans $1,021,262 100.0% Total Loans $135,171 100.0% Total Loans $1,156,664 100.0%
MRQ Yield on Loans: 4.75% MRQ Yield on Loans: 5.75% MRQ Yield on Loans: 4.87%
C&D
13.7%
1-4 Fam
22.4%
HELOC
3.1%
OwnOcc CRE
17.1%
Other CRE
28.8%
Multifam
2.6%
C&I
6.9%
Consr & Other
5.4%
C&D
24.6%
1-4 Fam
17.3%
HELOC
6.6%
OwnOcc CRE
19.7%
Other CRE
16.9%
Multifam
1.7%
C&I
13.0%
Consr & Other
0.2%
C&D
15.0%
1-4 Fam
21.8%
HELOC
3.5%
OwnOcc CRE
17.4%
Other CRE
27.4%
Multifam
2.5%
C&I
7.6%
Consr & Other
4.7%
March 31, 2017
18
Pro Forma Deposits
CHFN Resurgens Combined
Note: Regulatory data shown, does not include purchase accounting adjustments
Source: SNL Financial
Composition Composition Composition
Deposit Type ($000) % of Total Deposit Type ($000) % of Total Deposit Type ($000) % of Total
Non Interest Bearing 203,993 16.8% Non Interest Bearing 26,790 19.5% Non Interest Bearing 230,783 17.1%
NOW & Other Trans 307,243 25.3% NOW & Other Trans 11,228 8.2% NOW & Other Trans 318,471 23.6%
MMDA & Sav 320,377 26.4% MMDA & Sav 45,222 32.9% MMDA & Sav 365,599 27.1%
Time Deposits < $100k 305,510 25.2% Time Deposits < $100k 17,113 12.4% Time Deposits < $100k 322,623 23.9%
Ti e Deposits > $100k 75,684 6.2% Ti e Deposits > $100k 37,234 27.1% Ti e Deposits > $100k 112,918 8.4%
Total Deposits $1,212,807 100.0% Total Deposits $137,587 100.0% Total Deposits $1,350,394 100.0%
MRQ Cost of Deposits: 0.39% MRQ Cost of Deposits: 0.60% MRQ Cost of Deposits: 0.41%
Loans / Deposits 84.2% Loans / Deposits 98.2% Loans / Deposits 85.7%
Non Int.
Bearing
16.8%
NOW Accts
25.3%
MMDA & Sav
26.4%
Time < $100k
25.2%
Time > $100k
6.2%
Non Int.
Bearing
19.5%
NOW Accts
8.2%
MMDA & Sav
32.9%
Time < $100k
12.4%
Time > $100k
27.1%
Non Int.
Bearing
17.1%
NOW Accts
23.6%
MMDA & Sav
27.1%
Time < $100k
23.9%
Time > $100k
8.4%
March 31, 2017
19
Transaction Summary
Drives high-teens % EPS and overall shareholder value
Infills two attractive “in-town” submarkets to CHFN’s growing Atlanta
presence
CHFN’s broader product line, higher lending limits and expected retention
of Resurgens’ leadership team create opportunities for growth and
synergies across CHFN’s Atlanta market system
Pro forma institution remains well capitalized and poised to deliver
continued balance sheet and earnings growth
Consistent with CHFN’s disciplined capital management and growth
strategy
Appendix
20
21
CHFN Acquisition History
Note: Regulatory data shown, does not include purchase accounting adjustments
Source: SNL Financial
Bank & Thrift Company Deals - Acquisitions
Target State Completion Date
Deal Value
($M)
Target Total
Assets
($000)
CBS Financial Corporation GA 4/15/2016 58.72 369,733
EBA Bancshares, Inc. AL 9/10/2002 8.40 76,326
Citizens Bancgroup, Inc. AL 8/18/1999 2.25 44,700
Government Assisted Deals - Acquisitions
Target State Completion Date
Target Assets
Sold
($000)
Deposits Transferred
($000)
First National Bank of Florida FL 9/9/2011 251,847 244,715
McIntosh Commercial Bank GA 3/26/2010 322,578 295,307
Neighborhood Community Bank GA 6/26/2009 202,792 181,326
22
Investor Contacts
Robert Lee Johnson
Chairman & Chief Executive Officer
Curtis R. Kollar
Senior Vice President & Chief Financial Officer
Lee W. Washam
President
Charter Financial Corporation
1233 O.G. Skinner Drive
West Point, GA 31833
(706) 645-1391
www.charterbk.com