Attached files
| file | filename |
|---|---|
| EX-99.3 - EXHIBIT 99.3 KBW CONFERENCE PRESENTATION - Bank of Marin Bancorp | exhibit99-3kbwconference.htm |
| EX-99.1 - EXHIBIT 99.1 - Bank of Marin Bancorp | exhibit991pressrelease.htm |
| 8-K - 8-K - Bank of Marin Bancorp | form8kbankofnapa.htm |
Bank of Marin Bancorp
Acquisition of Bank of Napa
Investor Presentation | July 31, 2017
Forward Looking Statements
This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, but are not limited to, statements about the Company’s plans, objectives, expectations and intentions that
are not historical facts, and other statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “should,”
“projects,” “seeks,” “estimates”, or the negative version of those words or other comparable words or phrases of a future or forward-looking
nature. These forward-looking statements are based on current beliefs and expectations of management and are inherently subject to
significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control. In addition,
these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to
change. The following factors, among others, could cause actual results to differ materially from the anticipated results (express or implied) or
other expectations in the forward-looking statements, including those set forth in this presentation: 1) the risks associated with lending and
potential adverse changes of the credit quality of loans in the Company’s portfolio; 2) changes in trade, monetary and fiscal policies and laws,
including interest rate policies of the Board of Governors of the Federal Reserve System or the Federal Reserve Board, which could adversely
affect the Company’s net interest income and profitability; 3) legislative or regulatory changes, including increased banking and consumer
protection regulation that adversely affect the Company’s business; 4) ability to complete pending or prospective future acquisitions, limit certain
sources of revenue, or increase cost of operations; 5) costs or difficulties related to the completion and integration of acquisitions; 6) the
goodwill the Company has recorded in connection with acquisitions could become impaired, which may have an adverse impact on earnings
and capital; 7) reduced demand for banking products and services; 8) the reputation of banks and the financial services industry could
deteriorate, which could adversely affect the Company's ability to obtain (and maintain) customers; 9) competition among financial institutions in
the Company's markets may increase significantly; 10) the risks presented by continued public stock market volatility, which could adversely
affect the market price of the Company’s common stock and the ability to raise additional capital or grow the Company through acquisitions; 11)
the projected business and profitability of an expansion or the opening of a new branch could be lower than expected; 12) consolidation in the
financial services industry in the Company’s markets resulting in the creation of larger financial institutions who may have greater resources
could change the competitive landscape; 13) dependence on the CEO, the senior management team and the Presidents of Bank divisions; 14)
potential interruption or breach in security of the Company’s systems and technological changes which could expose us to new risks (e.g.,
cybersecurity), fraud or system failures; 15) natural disasters, including fires, floods, earthquakes, and other unexpected events; 16) the
Company’s success in managing risks involved in the foregoing; and 17) the effects of any reputational damage to the Company resulting from
any of the foregoing. Please take into account that forward-looking statements speak only as of the date of this presentation. Given the
described uncertainties and risks, the Company cannot guarantee its future performance or results of operations and you should not place
undue reliance on these forward-looking statements. The Company does not undertake any obligation to publicly correct, revise, or update any
forward-looking statement if it later becomes aware that actual results are likely to differ materially from those expressed in such forward-looking
statement, except as required under federal securities laws.
2
3
Transaction Highlights
• Significantly enhances Bank of Marin’s position in the attractive Napa market
• Pro forma #1 deposit market share among community banks
• Bank of Napa is a high quality business bank
• The only Napa based community bank
• Total assets of $246 million, gross loans of $139 million and total deposits of $218 million
• 64.0% loan / deposit ratio and 26.9% noninterest-bearing deposits
• Strong credit culture
• Complementary community-focused business banking models built around
strong core deposit bases
• Customer-facing employees committed to continue serving the Napa market
• Customers will benefit from broader product offerings and higher lending limits
Financially
Attractive
• Immediately accretive to earnings per share
• Internal rate of return of greater than 15%
• Tangible book value dilution earnback of 4 years
• Regulatory capital ratios remain strong
Strategic
Rationale
Balance Sheet: ($000s) Balance Sheet / Capital Ratios:
Total Assets 246,056$ TCE / TA 11.05%
Gross Loans 139,297 CET1 Ratio 16.40%
Total Deposits 217,746 Leverage Ratio 10.99%
Total Equity 27,175 Tier 1 Ratio 16.40%
Core Deposits(2) 95.3% Total Risk-based Capital Ratio 17.56%
MRQ Profitability: Asset Quality:
Net Income ($000) 523$ NPLs/ Loans (%) 0.10%
ROAA 0.84% NPAs (Excluding TDRs) / Assets 0.06%
ROATCE 7.78% NPAs / (Loans + OREO) 0.10%
Net Interest Margin 3.62% Net Chargeoffs / Avg Loans 0.00%
Efficiency Ratio 65.7% Loan Loss Reserves / Gross Loans 1.38%
4
• Founded in 2006; headquartered in Napa Valley
with two branches in Napa County
• Community-focused business bank with strong
core deposits
• Exceptional asset quality
• Strong earnings potential
Bank of Napa Overview
Source: SNL Financial.
(1) As of or for the quarter ended 6/30/2017.
(2) Core deposits equal to total deposits less time deposits greater than $250,000.
Company Overview
Financial Highlights(1)
• Bank of Marin
• Bank of Napa
5
• Strengthens presence in the attractive Napa County
market
• Napa county has a population of ~145,000
• 2017 – 2022 population growth is projected at 4.3% compared to 3.8%
nationally
• Napa County’s economy is strong and rapidly growing
• May 2017 unemployment rate of 3.1% is significantly less than
California’s 4.7% unemployment rate
• 2017 median household income of $77,751 is ~18% greater than
California’s median household income
• 2017 – 2022 projected household income growth of 12.3%
substantially outpaces California’s projected growth of 7.7%
• ~25% of Napa County’s workforce is involved in
leisure and hospitality or agriculture
• Opportunity to better serve Bank of Napa’s customers
through expanded service offerings and higher lending
limits
Napa County Market Highlights
Source: SNL Financial & Bureau of Labor Statistics.
6
Top Market Share for Community Banks in Napa
Source: SNL Financial.
Note: Deposits per FDIC Summary of Deposits as of 6/30/2016.
Note: Bold indicates community banks with assets less that $25 billion.
Rank Institution (ST)
Number
of
Branches
Total
Deposits
($mm)
Market
Share
(%)
1 Wells Fargo & Co. (CA) 6 708 19.1
2 Bank of America Corp. (NC) 4 545 14.7
3 First Republic Bank (CA) 2 453 12.2
4 Umpqua Holdings Corp. (OR) 5 325 8.8
5 BNP Paribas USA Inc. (NY) 4 269 7.3
Pro Forma Company 3 258 7.0
6 Westamerica Bancorp. (CA) 6 250 6.7
7 JPMorgan Chase & Co. (NY) 2 213 5.7
8 Bank of Napa (CA) 2 204 5.5
9 Rabobank 1 154 4.2
10 Mechanics Bank (CA) 3 148 4.0
11 SVB Financial Group (CA) 1 134 3.6
12 Citigroup Inc. (NY) 1 119 3.2
13 U.S. Bancorp (MN) 4 93 2.5
14 Bank of Marin Bancorp (CA) 1 54 1.5
15 1867 Western Financial Corp. (CA) 1 26 0.7
16 BayCom Corp. (CA) 1 15 0.4
Total For Institutions In Market 44 3,709 100.0
Napa County Deposit Market Share
7
Transaction Overview and Assumptions
Transaction Value(1)(2) $51.0 million
Pro Forma Ownership
Due Diligence
Expected Closing
Required Approvals
89.4% BMRC / 10.6% BNNP
Completed, including extensive loan and compliance review
BNNP shareholders and other customary regulatory approvals
Q4 2017
Consideration Mix 100% Stock
Fixed Exchange Ratio 0.3070 BMRC shares issued for each BNNP share outstanding
(1) Based on BMRC’s stock price of $65.95 as of 7/28/2017.
(2) Includes consideration paid for BNNP shares and the value of BNNP options assumed by BMRC.
Transaction Overview
Transaction Assumptions
Revenue Synergies None assumed
Fair Market Value Adjustments
Core Deposit Intangible
Credit mark of 1.38% (equal to ALLL); securities mark of 1.39% ($1.3 million)
Estimated at 2.50% of BNNP’s non-time deposits
Transaction Expenses Approximately $5.9 million pre-tax
Cost Savings 42.5% or approximately $2.7 million
8
Pricing Multiples and Pro Forma Financial Impact
Transaction Multiples(1)
Price / Tangible Book Value 1.76x
Price / LTM Earnings 25.3x
Core Deposit Premium(3) 11.5%
Transaction Metrics
2018e EPS Accretion | Incremental EPS Accretion(4) ~1% | ~9%
2019e EPS Accretion | Incremental EPS Accretion(4) ~4% | ~35%
TBV Earnback Period 4 years
Internal Rate of Return
Estimated Pro Forma Capital Ratios At Closing
> 15%
TCE / TA 11.0%
Leverage Ratio 11.5%
Total Capital Ratio 16.0%
(1) Based on BMRC’s stock price of $65.95 as of 7/28/2017.
(2) Median values for all CA transactions since 1/1/2017.
(3) Core deposits equal to total deposits less time deposits greater than $250,000.
(4) Assumes cost savings phase-in of 75% in 2018 and 100% thereafter. Incremental EPS is calculated as incremental income divided by dilutive shares issued in the transaction.
Bank of Marin /
Bank of Napa
YTD CA
Transactions(2)
1.97x
25.3x
10.5%
Price / LTM Earnings + Cost Savings 14.4x
Appendix
10
Pro Forma Loan and Deposit Composition
Source: SNL Financial.
Note: Data per regulatory filings as of 6/30/2017; Pro Forma excludes purchase accounting adjustments.
Lo
an
s
D
ep
os
its
Bank of Marin
Yield on Loans: 4.42%
C&D
4% C&I
9%
Res. RE
8%
OO CRE
17%
NOO CRE
43%
Multifamily
6%
Consumer &
Other
13%
Bank of Napa
Yield on Loans: 4.85%
C&D
3% C&I
9%
Res. RE
4%
OO CRE
22%
NOO CRE
36%
Multifamily
9%
Consumer &
Other
17%
Cost of Deposits: 0.16%
DDA
27%
NOW &
Other
22%
MMDA &
Sav.
40%
Retail Time
3%
Jumbo Time
8%
Pro Forma
C&D
4% C&I
9%
Res. RE
7%
OO CRE
17%
NOO CRE
42%
Multifamily
7%
Consumer &
Other
14%
Cost of Deposits: 0.06%
DDA
49%
NOW &
Other
0%
MMDA &
Sav.
43%
Retail Time
2%
Jumbo Time
6%
DDA
46%NOW & Other
3%
MMDA &
Sav.
43%
Retail Time
2%
Jumbo Time
6%
11
An Overview of the Local Economy
Market Demographics by County Workforce Sector Breakdown (% of employees)
Unemployment Rate(1)
Other
Services
Educational &
Health Services
Trade,
Transportation,
& Utilities
Government
Manufacturing
County
Total Pop. (2017)
(000s)
Pop. Change
(%) 2010-2017
Median HH
Income ($) 2017
Unemployment
Rate (%)
Napa 143.9 5.4% $71,379 3.10%
Alameda 1,669.3 10.5% $82,231 3.30%
Contra Costa 1,145.6 9.2% $85,674 3.50%
Marin 263.9 4.6% $101,402 2.60%
San Francisco 881.9 9.5% $88,829 2.70%
Sonoma 507.2 4.8% $71,883 3.00%
Solano 441.0 6.7% $72,010 4.30%
California 39,691 6.5% $66,091 4.20%
United States 325,139 5.3% $57,462 4.50%
3.10%
4.20%
4.30%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17
Napa CA Nationwide
Leisure /
Hosp, 17%
Government,
14%
Mfg. &
Trade, 29%
Education,
13%
Farm, 8%
Other, 19%
Source: SNL Financial, Bureau of Labor Statistics.
(1) Not seasonally adjusted.