Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - VALLEY NATIONAL BANCORP | exhibit992mergerfinancing.htm |
| 8-K - 8-K - VALLEY NATIONAL BANCORP | vly-form8xkxmergeragreemen.htm |
© 2017 Valley National Bank®. Member FDIC. Equal Opportunity Lender. All Rights Reserved.
Valley National Bancorp to Acquire
USAmeriBancorp, Inc.
Enhancing Florida Franchise
EXHIBIT 99.1
Forward Looking Statements
The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical
facts and include expressions about management’s confidence and strategies and management’s expectations about new and existing programs and products,
acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations. These statements may be identified by such forward-
looking terminology as “should,” “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “typically,” “usually,” “anticipate,” or similar statements
or variations of such terms. Such forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from such forward-looking
statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to:
failure to obtain shareholder or regulatory approval for the merger of USAmeriBancorp, Inc. ("USAB") with Valley or to satisfy other conditions to the merger on the
proposed terms and within the proposed timeframe; delays in closing the merger; the inability to realize expected cost savings and synergies from the merger of
USAB with Valley in the amounts or in the timeframe anticipated; changes in the estimate of non-recurring charges; the diversion of management’s time on issues
relating to the merger; costs or difficulties relating to integration matters might be greater than expected; material adverse changes in Valley’s or USAB’s operations
or earnings; an increase or decrease in the stock price of Valley during the 30 day pricing period prior to the closing of the merger which could cause an adjustment
to the exchange ratio or give either Valley or USAB the right to terminate the merger agreement under certain circumstances; the inability to retain USAB’s
customers and employees; weakness or a decline in the economy, mainly in New Jersey, New York, Florida and Alabama, as well as an unexpected decline in
commercial real estate values within our market areas; less than expected cost reductions and revenue enhancement from Valley's cost reduction plans including its
earnings enhancement program called "LIFT"; damage verdicts or settlements or restrictions related to existing or potential litigations arising from claims of breach
of fiduciary responsibility, negligence, fraud, contractual claims, environmental laws, patent or trade mark infringement, employment related claims, and other
matters; the loss of or decrease in lower-cost funding sources within our deposit base may adversely impact our net interest income and net income; cyber attacks,
computer viruses or other malware that may breach the security of our websites or other systems to obtain unauthorized access to confidential information, destroy
data, disable or degrade service, or sabotage our systems; results of examinations by the OCC, the FRB, the CFPB and other regulatory authorities, including the
possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, require us to
reimburse customers, change the way we do business, or limit or eliminate certain other banking activities; changes in accounting policies or accounting standards,
including the new authoritative accounting guidance (known as the current expected credit loss (CECL) model) which may increase the required level of our
allowance for credit losses after adoption on January 1, 2020; higher or lower than expected income tax expense or tax rates, including increases or decreases
resulting from changes in tax laws, regulations and case law; our inability to pay dividends at current levels, or at all, because of inadequate future earnings,
regulatory restrictions or limitations, and changes in our capital requirements; higher than expected loan losses within one or more segments of our loan portfolio;
unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather or
other external events; unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments,
changes in regulatory lending guidance or other factors; and the failure of other financial institutions with whom we have trading, clearing, counterparty and other
financial relationship. A detailed discussion of factors that could affect our results is included in our SEC filings, including the “Risk Factors” section of our Annual
Report on Form 10-K for the year ended December 31, 2016. We undertake no duty to update any forward-looking statement to conform the statement to actual
results or changes in our expectations. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements.
2
3
Additional Information and Where to Find It
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In
connection with the proposed merger, Valley intends to file a joint proxy statement/prospectus with the Securities and Exchange Commission. INVESTORS
AND SECURITY HOLDERS ARE ADVISED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of the registration statement (when available) and other documents
filed by Valley with the Commission at the Commission’s web site at www.sec.gov. These documents may be accessed and downloaded for free at Valley’s
web site at http://www.valleynationalbank.com/filings.html or by directing a request to Dianne M. Grenz, Executive Vice President, Valley National Bancorp,
at 1455 Valley Road, Wayne, New Jersey 07470, telephone (973) 305-3380.
Participants in the Solicitation
This communication is not a solicitation of a proxy from any security holder of Valley or USAB. However, Valley, USAB, their respective directors and
executive officers and other persons may be deemed to be participants in the solicitation of proxies from USAB’s shareholders in respect of the proposed
transaction. Information regarding the directors and executive officers of Valley may be found in its definitive proxy statement relating to its 2017 Annual
Meeting of Shareholders, which was filed with the Commission on March 17, 2017 and can be obtained free of charge from Valley’s website. Other
information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will
be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.
Preferred Stock Offering
This presentation shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the preferred stock in any state or
jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or
jurisdiction. Any offering of the preferred stock is being made only by means of a written prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
Strategic Focus to Achieve 2020 Vision
4
66.2%
61.2% 59.6%
<55.0%
2015 2016 2017 YTD Long-Term Goal
Efficiency Ratio1
12%
14%
13%
15% - 20%
2015 2016 2017 YTD Long-Term Goal
Non-Int Income / Total Revenue
13%
7%
6%
8% - 10%
2015 2016 2017
Annualized
Long-Term Goal
Loan Growth Exclusive of Whole Bank
Acquisitions
1Refer to the disclosure in the appendix regarding the calculation for the efficiency ratio
Enhance Non-Interest Revenue Grow Customer Base
Improve Operating Efficiency
Improve
Earnings
Performance
Improve Operating Efficiency
Overview of USAmeriBancorp, Inc.
5
Company Overview Financial Highlights ($ in Millions)
Management Team
USAB Deposit Franchise (3)
• Founded in 2007
• Headquartered in
Clearwater, FL
• Acquired Alexander
City, AL-based
Aliant Financial
Corporation in 2011
Market Market No. of Deposits
MSA Rank Share (%) Branches ($mm)
Tampa-St. Petersburg-Clearwater, FL 8 3.4% 14 $2,114
Montgomery, AL 7 5.7 6 441
Birmingham-Hoover, AL 14 0.9 5 321
Alexander City, AL 1 52.7 3 289
Auburn-Opelika, AL 13 1.9 1 47
Total: 29 $3,211
Name Title
Joseph V. Chillura President & CEO
Alfred T. Rogers, Jr. Executive VP and Chief Lending Officer
Amanda J. Stevens Executive VP & CFO
Loans (2) Deposits (2)
Non-Interest
Demand
25%
Savings, MMA
& O her
Checking
46%
Retail Time
6%
Jumbo Time
23%
Construction
12%
Residential
R.E.
14%
Commercial
R.E.
54%
Commercial &
Industrial
18%
Consumer &
Other
2%
(1) See Non-GAAP disclosures on slide 18
(2) As of June 30, 2017
(3) Per SNL Financial, as of June 30, 2016
2016Y 2017Q2
Net Interest Income $126.0 $35.5
Non Interest Income 14.3 5.2
Provision 6.0 (0.0)
Non Interest Expenses 75.9 21.2
Net Income 43.4 12.7
ROAA (%) 1.12% 1.19%
ROACE (%) 14.37 15.19
Net Interest Margin (%) 3.53 3.60
Efficiency Ratio (%) 54.1 52.2
Total Assets $4,153.3 $4,382.9
Gross Loans 3,373.6 3,585.7
Total Deposits 3,478.0 3,530.0
Total Equity 319.7 345.2
TCE / TA (%) (1) 7.2% 7.4%
Loans/ Deposits (%) 97 102
Leverage Ratio (%) 8.0 8.1
Tier 1 Ratio (%) 9.0 9.1
Total Capital Ratio (%) 11.7 12.1
Pr
of
ita
bi
lit
y
Ba
la
nc
e
Sh
ee
t
Ca
pi
ta
l
Ra
tio
s
In
co
m
e
St
at
em
en
t
$3,076
$3,632
$4,153
$4,383
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
2014 2015 2016 Q2 2017
USAmeriBancorp, Inc. Financial Performance
$25
$33
$42
$48
$20
$25
$30
$35
$40
$45
$50
2014 2015 2016 Q2 2017 Ann.
6
Net Income to Common ($ Million) Total Assets ($ Million)
Return on Average Assets (%) Efficiency Ratio (%)
0.92%
1.03%
1.12%
1.19%
0.50%
0.75%
1.00%
1.25%
2014 2015 2016 Q2 2017
58.2%
54.1% 54.1%
52.2%
48%
50%
52%
54%
56%
58%
60%
2014 2015 2016 Q2 2017
Orlando
Branches 5
Loans $0.5B
Deposits $0.5B
Market Share 1.2%
Bolstering Valley’s Florida Franchise
7
Tampa (1)
Branches 18
Loans $3.1B
Deposits $2.5B
Market Share 3.6%
Southeast
Branches 13
Loans $0.9B
Deposits $1.3B
Market Share 0.6%
Penetrating Florida’s Most Dynamic Markets
(1) Pro Forma for USAB acquisition.
Pro Forma market share as of 6/30/2016, Source SNL Financial
Florida Total (1)
Branches 46
Loans $4.8B
Deposits $4.9B
CNLBank (2015)
1st United Bank (2014)
USAmeriBank (2018)
Florida Acquisitions
Southeast
Orlando Tampa
Other Florida Markets: Branches -10, Loans - $0.3B, Deposits - $0.6B
Professional &
Business
Services
18%
Education &
Health Services
15%
Leisure &
Hospitality
12%
Total
Government
12%
Retail Trade
12%
Finance &
Insurance
6%
Construction
6%
Other
19%
Tampa Market Highlights
8
Pro Forma VLY Florida Deposit Franchise (1) Tampa Highlights
Source: SNL Financial, Tampa Hillsborough Economic Development Corporation
(1) Deposit data as of June 30, 2016
MSA Pro Forma VLY / USAB
Deposits in % of FL Market
Market Deposits Market Share Deposits
MSA ($ bn) (%) Rank (%) Branches ($ mm)
Tampa-St. Petersburg-Clearwater 61 11.7 8 3.6 18 2,230
Miami-Fort Lauderdale-West Palm Beach 226 43.0 25 0.6 13 1,382
Orlando-Kissimmee-Sanford 45 8.5 13 1.2 5 523
Cape Coral-Fort Myers 15 2.9 19 1.2 3 186
Jacksonville 59 11.1 20 0.3 3 161
Naples-Immokalee-Marco Island 15 2.9 30 0.4 1 57
Sebastian-Vero Beach 4 0.8 16 0.6 1 26
Palm Bay-Melbourne-Titusville 8 1.6 16 0.3 1 21
North Port-Sarasota-Bradenton 19 3.7 37 0.1 1 16
• Tampa Bay is the second largest MSA in Florida and 18th
largest in the U.S. by population
‒ $61 billion of deposits
‒ Expected population growth of 6.5% by 2022
• 3.8% unemployment rate compares favorably to Florida
(4.0%) and national (4.1%) levels
• Home to over 112,000 businesses
• Key Industries include: Financial Services, Life Sciences,
Defense and Security, Manufacturing, Medical Devices, and
Technology
Tampa Employment by Sector Key Employers in Tampa
Alabama Franchise
9
Pro Forma VLY Alabama Deposit Franchise Alabama Highlights
Source: US Census, SNL Financial, Montgomery Chamber of Commerce, Birmingham Business Alliance, CNN Money
Deposit data as of June 30, 2016 and June 30, 2015, where applicable
• Franchise obtained through acquisition of Aliant Financial
Corporation
̶ Serves as low cost deposit generator within a growing
market
• 13% of non-farm employment in manufacturing sector
Montgomery and Birmingham
• Key Industries: Banking, Education, Technology, and Healthcare
• Key Employers: AT&T, Honda, Regions Financial, Hyundai Motors,
Baptist Health Systems, ALFA Insurance
Key Statistics – Montgomery and Birmingham
MSA Pro Forma VLY / USAB
Deposits in % of AL Market
Market Deposits Market Share Deposits
MSA ($ bn) (%) Rank (%) Branches ($ bn)
Montgomery, AL 8 8.0 7 5.7 6 441
Birmingham-Hoover, AL 37 38.6 14 0.9 5 321
Alexander City, AL 1 0.6 1 52.7 3 289
Auburn-Opelika, AL 2 2.5 13 1.9 1 47
Total Alabama 15 1,098
1,151
373
0
200
400
600
800
1,000
1,200
1,400
Birmingham Montgomery
Population
In thousands
46,569
15,237
0
10,000
20,000
30,000
40,000
50,000
60,000
Birmingham Mo tgo ery
$101
$34
Small Businesses
Sales in
billions
255
332 321
441
0
100
200
300
400
500
600
Birmingham Montgomery
USAB 2015 Deposits USAB 2016 Deposits
14
7
USAB 2016 DMS
Rank
$ in millions
USAB Deposit Growth
Transaction Rationale
Strong
Strategic Fit
• As the 5th largest community bank headquartered in Florida, USAmeriBank provides
significant scale to Valley’s Florida franchise, specifically in the Tampa Bay Market
• Increases Valley’s loan and deposit exposure in Florida by ~130% and 100%, respectively
• USAmeriBank has a history of consistent growth, strong profitability, and stable asset
quality
• Low-cost core funding base includes 25% non-interest bearing deposits
• Strong and experienced leadership team to drive future growth
Financially
Compelling
• Expected to be immediately accretive to EPS, excluding restructure charges
• Modest dilution to tangible book value per share with 4.7 year earnback
Conservative
Acquisition
• Comprehensive credit, business, financial, and legal due diligence
• Credit mark in excess of existing reserves
• Retention of key personnel
• Extensive integration experience
• Pricing protection to preserve financial outcomes
10 Note: Pricing metrics using VLY closing price of $12.40 as of 7/25/2017
Key Transaction Terms
Consideration
& Structure
Transaction Value: • $815.7 million
Structure: • 100% stock / 0% cash (1)
Exchange Ratio: • Fixed exchange ratio of 6.100x (2)
Pricing
Multiples
Price / Tangible Book Value: • 238% of USAB’s 6/30/2017 tangible book value
Price / LTM EPS: • 16.4x of USABs’s LTM net income
Price / 2018 EPS + Cost Savings (3): • 11.4x
Core Deposit Premium • 18.2%
Closing &
Other
Due Diligence:
• Comprehensive due diligence performed over 8 weeks
including thorough review of USAB’s loan portfolio
Approvals:
• Customary regulatory approvals & approval of both VLY
& USAB shareholders
Management Representation:
• VLY inherits USAB’s strong & seasoned Florida &
Alabama teams
Expected Closing: • Q1 2018
11
Note: Pricing metrics using VLY closing price of $12.40 as of 7/25/2017
(1) In certain circumstances outlined in Definitive Merger Agreement, Valley may choose to substitute some component of cash for stock
(2) Subject to cuffs and collars as outlined in Definitive Merger Agreement
(3) Using Valley’s projections of USAB earnings inclusive of fully phased-in cost savings
Key Transaction Assumptions
12
Expense Savings
• Estimated pre-tax expense savings of approximately $26 million (~28% of
USAB G&A expenses) phased in 75% in 2018, and excluding CDI amortization
Transaction
Expenses
• Expected to be approximately $32 million pre-tax
Capital Raise
• Preferred equity raise of approximately $75 million, launched concurrently
with announcement of USAB acquisition
Purchase
Accounting &
Other Adjustments
• Gross credit mark: $63 million, equal to 1.75% of USAB loans
• Core deposit intangible: 1.15% ($30 million)
• Additional purchase accounting adjustments: $6 million write-down to assets
• Estimated Durbin Amendment impact on USAB earnings: $400k
Note: Pricing metrics using VLY closing price of $12.40 as of 7/25/2017
Pro-Forma Impact Financial Summary
13
Note: Pro forma impacts presented inclusive of anticipated preferred stock capital raise
Note: Assumes pricing based on VLY closing price of $12.40 as of 7/25/2017
(1)Estimated financial impact is presented solely for illustrative purposes using mean analyst estimates. Includes purchase accounting marks and
cost savings, as well as approximately $75 million preferred stock capital raise
(2)See Non-GAAP disclosures on slide 19
Key Transaction Impacts to VLY (1)
2018E EPS Accretion ~3%
2019E EPS Accretion ~6%
Initial Tangible Book Value Dilution 5.5%
Tangible Book Value Earnback Period 4.7 years
As of June 30, 2017 Proforma (1)
VLY USAB
As of and for the year ended
December 31, 2017
Balance Sheet (S in Millions)
Total Assets $23,449 $4,383 $29,046
Gross Loans HFI 17,711 3,586 21,766
Deposits 17,250 3,530 21,286
Tangible Common Equity (2) 1,578 323 1,910
Capital Ratios
TCE/TA (2) 6.9% 7.4% 6.9%
Leverage Ratio 7.7% 8.1% 7.9%
Common Equity Tier I Ratio 9.2% 8.4% 9.0%
Tier I Ratio 9.8% 9.1% 10.0%
Total Risk-based Capital Ratio 12.0% 12.1% 12.2%
Loan Concentration Ratios
C&D / Tier 1 + ALLL 47% 108% 58%
CRE / Total Risk-based Capital 433% 367% 417%
Year Recent Bank Acquisitions
State
Asset Size
2017 USAmeriBank FL $4.4 billion
2015 CNLBank FL $1.4 billion
2014 1st United Bank FL $1.7 billion
2012 State Bank of Long Island
NY $1.6 billion
2010 The Park Avenue Bank (FDIC)
NY $0.5 billion
2010 LibertyPointe Bank (FDIC)
NY $0.2 billion
2008 Greater Community Bank
NJ $1.0 billion
2005 NorCrown Bank NJ $0.6 billion
2005 Shrewsbury State Bank NJ $0.4 billion
Keys to Execution Success
Proven Acquirer & Retention of Key Personnel
14
USAmeriBank
CNLBank
1st United Bank
• VLY has retention agreements with USAB President & CEO
Joseph V. Chillura, Chief Lending Officer Alfred T. Rogers, Jr.
and other key management
• USAB Chairman Jennifer W. Steans is expected to join VLY’s
board of directors
USAmeriBancorp Acquisition
Appendix
15
Due Diligence Process
Due Diligence Departments
Accounting Human Resources
AML/BSA Compliance Information Security
Appraisal Review Legal
Audit Loan Review
Commercial Lending Property Management
Consumer Lending Regulatory Compliance
Corporate Treasury Residential Mortgage
CRA Retail Banking
Credit Risk Management Risk Management
Deposit Operations Tax
Executive Technology
16
Due Diligence Scope
• Comprehensive on-site and off-site due diligence
conducted over an 8 week period
- Detailed evaluation of over 950 electronic documents
provided in virtual data room
- 22 departments participated in thorough review of
complementary functions:
Credit Due Diligence
• Targeted review over the course of three weeks covering:
- 75% of commercial balances including all criticized loans
with balances above $300,000
- 84% of construction portfolio
- 77% of residential real estate portfolio
- 72% of home equity balances
- 75% of consumer balances
Observations of Loan Portfolio
• Strong existing asset quality metrics:
- 0.76% NPAs / total assets as of June 30, 2017
• $63 million pre-tax credit mark equaling 1.75% of total
loans
• Existing allowance for loan losses of $41 million
Pro Forma Loan & Deposit Composition
17
Valley USAmeriBank Pro Forma
Loa
n
s
D
e
po
si
ts
Construction
5%
Residential
R.E.
15%
Commercial
R.E.
52%
Commercial
& Industrial
15%
Consumer &
Other
13%
Construction
12%
Residential
R.E.
14%
Commercial
R.E.
54%
Commercial
& Industrial
18%
Consumer &
Other
2%
Construction
6% Residential
R.E.
15%
Commercial
R.E.
53%
Commercial
& Industrial
15%
Consumer &
Other
11%
Non-Interest
Demand
30%
Savings,
NOW and
Money
Market
50%
Retail Time
9%
Jumbo Time
11%
Non-Interest
Demand
25%
Savings,
NOW and
Money
Market
46%
Retail Time
6%
Jumbo Time
23%
Non-Interest
Demand
29%
Savings,
NOW and
Money
Market
50%
Retail Time
8%
Jumbo Time
13%
Source: SNL Financial
Note: Loan and deposit data as of June 30, 2017
Total Loans: $17.7 billion Total Loans: $3.6 billion Total Loans: $21.3 billion
Total Deposits: $17.3 billion Total Deposits: $3.5 billion Total Deposits: $20.8 billion
Cost of Deposits: 0.53% Cost of Deposits: 0.59% Cost of Deposits: 0.54%
Non-GAAP Disclosure Reconciliations
USAB
18
(1) Pro Forma includes estimated purchase accounting adjustments
USAB USAB USAB
$ in millions 2015Y 2016Y 6/30/2017
Total Assets 3,632 4,153 4,383
Less: Goodwill & Other Intangibles (13) (13) (12)
Total Tangible Assets (TA) 3,619 4,141 4,371
Total Common Equity 270 310 335
Less: Goodwill & Other Intangibles (13) (13) (12)
Total Tangible Common Equity (TCE) 257 297 323
TCE / TA (%) 7.1% 7.2% 7.4%
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender.
Non-GAAP Disclosure Reconciliations
6/30/2017
19
(1) Pro Forma includes estimated purchase accounting adjustments
$ in millions
VLY
6/30/2017
USAB
6/30/2017
Pro-Forma (1)
12/31/2017
Total Assets 23,449 4,383 29,046
Less: Goodwill & Other Intangibles (734) (12) (1,235)
Total Tangible Assets (TA) 22,715 4,371 27,811
Total Common Equity 2,312 335 3,145
Less: Goodwill & Other Intangibles (734) (12) (1,235)
Total Tangible Common Equity (TCE) 1,578 323 1,910
TCE / TA (%) 6.9% 7.4% 6.9%
Operating Efficiency
Calculation for efficiency ratio
Six Months Ended Years Ended
($, thousands) June 30, December 31, December 31,
2017 2016 2015
Total non-interest expense 240,191 476,125 499,075
Less: Amortization of tax credit investment 13,056 34,744 28,032
Less: Loss on extinquishment of debt 51,129
Total non-interest expense, adjusted 227,135 441,381 419,914
Net interest income 331,489 618,149 550,269
Total non-interest income 49,749 103,225 83,802
Total net interest income and non-interest income 381,238 721,374 634,071
Less: Change in FDIC loss-share receivable -312 -1
Total net interest income and non-interest income, adjusted 381,238 721,686 634,072
Efficiency ratio 63.00% 66.00% 78.71%
Efficiency ratio, adjusted 59.58% 61.16% 66.22%
20