Attached files
| file | filename |
|---|---|
| 8-K - 8-K - STATE BANK FINANCIAL CORP | a8kcoverpage061517.htm |
| EX-2.1 - EXHIBIT 2.1 - STATE BANK FINANCIAL CORP | mergeragreement6152017.htm |
| EX-99.1 - EXHIBIT 99.1 - STATE BANK FINANCIAL CORP | alostarpressrelease.htm |
June 15, 2017
State Bank Financial Corporation
Announces Merger with AloStar
Bank of Commerce
2
Cautionary Note Regarding Forward-Looking
Statements
This presentation contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements, which are based on
certain assumptions and describe our future plans, strategies, and expectations, can generally be identified by the use of the words “will,” “estimate,” “expect,”
“should,” “anticipate,” “may,” and “project,” as well as similar expressions. These forward-looking statements include, but are not limited to, statements related to
State Bank Financial’s outlook or expectations with respect to the merger between State Bank Financial and AloStar, including the expected costs to be incurred and
costs savings to be realized in connection with the transaction, the expected impact of the transaction on State Bank Financial’s future financial performance
(including anticipated accretion to earnings per share and the tangible book value earn-back period), the assumed purchase accounting adjustments, other key
transaction assumptions, and the timing of the closing of the transaction. Proforma financial information is not a guarantee of future results and is presented for
informational purposes only. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions (“risk
factor”) that are difficult to predict with regard to timing, extent, likelihood, and degree. Therefore, actual results and outcomes may materially differ from what may
be expressed or forecasted in such forward-looking statements. We undertake no obligation to update, amend, or clarify forward-looking statements, whether as a
result of new information, future events or otherwise. Risk factors include, without limitation, the following:
• completion of the transaction is dependent on, among other things, receipt of regulatory approvals, the timing of which cannot be predicted at this point and which
may not be received at all;
• the transaction may be more expensive to complete and the anticipated benefits, including anticipated cost savings and strategic plans, may be significantly harder
or take longer to achieve than expected or may not be achieved in their entirety as a result of unexpected factors or events;
• the integration of Alostar’s business and operations into State Bank Financial, which will include the conversion of Alostar’s operating systems and procedures, may
take longer than anticipated or may be more costly than anticipated or have unanticipated adverse results;
• negative reactions to the transaction by each bank’s customers, employees, and counterparties or difficulties related to the transition of services;
• State Bank Financial’s ability to achieve anticipated results from the transaction is dependent on the state of the economic and financial markets going forward; and
• changes in Alostar’s tangible book value.
In addition, risk factors include, but are not limited to, the risk factors described in Item 1A, Risk Factors, in our Annual Report on Form 10-K for the most recently
ended fiscal year. These and other risk factors are representative of the risk factors that may emerge and could cause a difference between an ultimate actual
outcome and a forward-looking statement.
3
Strategic Rationale
Financially
Attractive
Highly
Experienced
Local Atlanta
Team
Exceeds all internal financial targets with conservative proforma assumptions
Significant EPS accretion in 2018 and 2019, with no revenue synergies assumed
Accretive to tangible book value in less than 1.5 years
All cash transaction further leverages capital
Atlanta-based ABL and Lender Finance team is comprised of veteran commercial
bankers with an experienced support staff
AloStar President & CEO Andy McGhee has 30 years of experience at large
national and regional banks and will join State Bank as EVP of ABL and Lender
Finance Division
Employment arrangements in place for key personnel
Line of
Business
Expansion
Strong reputation and veteran team with a significant position in middle-market
asset-based lending (“ABL”)
AloStar’s Lender Finance line of business is complementary and expands on State
Bank’s Specialty Finance Group
Two funding lines of business, Correspondent and Internet Banking, will bring
meaningful scale to State Bank’s existing efforts in these areas
Loan Portfolio
Diversification
National lending platform provides geographic, product, and industry
diversification, with attractive yields and high-quality credit metrics
Doubles State Bank’s C&I loan exposure to 26% of proforma loans, with AloStar ABL
and Lender Finance loans comprising 15% of proforma total loans
4
Transaction Analysis
Transaction
Assumptions
Immediately accretive to 2018 EPS; double digit EPS accretion projected in 2019
Marginally dilutive to tangible book value, with less than 1.5 year payback
Return on invested capital >12%
$10mm one-time merger expenses
25% cost savings
3.50% gross loan mark
~10.5% proforma TCE ratio; no additional capital needed for transaction
Transaction
Terms
Purchase price of 1.0x adjusted tangible book value as of the last day of the month
immediately before closing, currently estimated to be $196 million
100% cash consideration
17.1x LTM earnings
8.5x LTM earnings (adjusted for AloStar excess tangible common equity over 9%)
AloStar shareholders have approved transaction
Customary regulatory approvals required
Bank-level merger (no bank to holding company dividend required)
Expected closing in fourth quarter of 2017
Transaction
Approval
and Closing
5
Comprehensive Due Diligence
Credit
Standard comprehensive credit diligence with State Bank resources; in addition, engaged two independent third
party diligence resources with deep expertise in ABL and Lender Finance
Reviewed 99% of all outstanding loan balances
Strong track record with excellent historical credit metrics; less than $4mm of net charge-offs since inception
Credit mark of ~$27mm, or ~$16mm net of allowance for loan losses
Legacy Nexity loan portfolio stands at $13mm as of 1Q17, down from nearly $200mm in 2011
AloStar has completed the early termination of loss share, with no remaining clawback liability
Funding Lines of Business
State Bank team members with expertise in internet and correspondent banking reviewed AloStar’s existing
systems related to deposit funding
Expect to continue utilizing AloStar’s Internet Banking efficient delivery model as an additional avenue to add
funding
Will continue to offer Correspondent Banking services, including Fed Funds lines and money market accounts,
while evaluating additional products and services in this line of business
Additional Diligence Areas
State Bank due diligence teams completed thorough reviews of compliance, risk, legal, IT/operations, finance,
and HR functions
6
1 Excludes gain from FDIC loss share termination in 1Q17 Note: Key metrics and loan portfolio as of March 31, 2017
Source: SNL Financial and AloStar company documents
Founded in April 2011
Headquartered in Birmingham, AL, with a commercial
office in Atlanta that houses executive management,
ABL team, and credit team
President & CEO Andy McGhee co-founded the bank
and has 30 years of banking and asset-based lending
experience
Three distinct lines of business:
Business Credit (ABL)
Lender Finance (added in 2013)
Commercial Real Estate Finance (added in 2015)
Diversified funding strategy with no traditional branch
locations and no brokered deposits
Strong historical credit performance
Exited loss share in March 2017
Total Assets: $944 million
Total Loans: $763 million
Total Deposits: $715 million
Total Equity: $193 million
LTM ROAA1: 0.87%
NIM: 3.39%
NIB / Deposits: 15.3%
Key Metrics
Overview of AloStar Bank of Commerce
Loan Portfolio by Line of Business
Lender
Finance
43%
ABL
32%
CRE
24% Nexity
Loans
2%
7
AloStar Executive Management
Prior to joining AloStar, spent 11 years at SunTrust as Senior Credit Officer and
Portfolio Manager and 9 years at CIT Business Credit as Underwriting Manager
and Senior Portfolio Manager
33 years of experience at SunTrust, CIT Business Credit, Barclays, and GE Capital
Andy McGhee
President & Chief
Executive Officer
Co-founded AloStar in April 2011
President and Founding Partner of Archway Equity Partners from 2008 to 2011
Prior to Archway, spent 12 years with SunTrust in Capital Management, Specialty
Lending, and Private Equity Group
30 years of experience at SunTrust, Citicorp, and Bank of America Business Credit
Prior to joining AloStar, was in Asset-Based Lending Group at Textron Financial and
spent 11 years at SunTrust as Portfolio Manager in the Corporate and Investment
Banking Group
30 years of experience at SunTrust, Citicorp, and GE Capital
Mike Lapresi
Chief Credit
Officer
Susan Hall
Head of Portfolio
Management
8
Represents 43% of total loans
Additional sub-limits for 12 individual asset
classes within the Lender Finance portfolio
Transactions are sourced through AloStar’s
national lending platform
ABL and Lender Finance Overview
Lender Finance
Business Credit (ABL)
Represents 32% of total loans
AloStar Business Credit has a strong reputation
and is a significant player in the middle-market
ABL business
Business Credit provides financial solutions for
growth, leverage buyouts, turnarounds,
recapitalizations, and restructurings
National footprint and broad industry experience,
including manufacturing, distribution, service
industries, and retail
Typical Transaction Characteristics
• $5mm – $20mm transaction size
• 70% – 90% advance rate structures on
borrower’s advance
• 3 – 5 year commitments
• Minimum tangible net worth of $3.5mm+
• Asset classes include: Non-bank
factoring/ABL/SBA, merchant cash advance,
insurance premium finance, BDC’s, tax liens,
and other specialty segments
Typical Transaction Characteristics
• $5mm – $20mm committed facilities
• 3 – 5 year commitments (majority are 3 years)
• Revolving lines of credit secured by accounts
receivable and inventory
• Term loans secured by machinery and
equipment, real estate, and other assets
9
Enhances Loan Diversity
Source: SNL Financial and AloStar company documents as of March 31, 2017
Loan Portfolio ($000) Amount % Loan Portfolio ($000) Amount % Loan Portfolio ($000) Amount %
C&D $479,184 17% C&D $136 0% C&D $479,320 13%
CRE 1,134,971 40% CRE 163,219 21% CRE 1,298,190 36%
C&I 374,100 13% C&I 555,856 73% C&I 929,956 26%
Owner-occupied RE 393,673 14% Owner-occupied RE 34,123 4% Owner-occupied RE 427,796 12%
Residential RE 348,887 12% Residential RE 9,607 1% Residential RE 358,494 10%
Consumer / Other 123,965 4% Consumer / Other 4 0% Consumer / Other 123,969 3%
Total Loans (Gross) $2,854,780 100% Total Loans (Gross) $762,945 100% Total Loans (Gross) $3,617,725 100%
STBZ AloStar Proforma
CRE
21%
C&I
73%
Owner-
occupied
RE
4%
Residential
RE
1%
C&D
17%
CRE
40%
C&I
13%
Owner-
occupied
RE
14%
Residential
RE
12% Consumer /
Other
4%
C&D
13%
CRE
36%
C&I
26%
Owner-
occupied
RE
12%
Residential
RE
10%
Consumer
/ Other
3%
10
Expands Funding Channels
Source: SNL Financial and AloStar company documents as of March 31, 2017
Deposit Composition ($000) Amount % Deposit Composition ($000) Amount % Deposit Composition ($000) Amount %
Noninterest-bearing $944,838 28% Noninterest-bearing $109,375 15% Noninterest-bearing $1,054,213 26%
Interest-bearing Transaction 599,858 18% Interest-bearing Transaction 3,651 1% Interest-bearing Transaction 603,509 15%
Savings & Money Market 1,393,711 41% Savings & Money Market 264,536 37% Savings & Money Market 1,658,247 40%
CDs 471,368 14% CDs 337,564 47% CDs 808,932 20%
Total Deposits $3,409,775 100% Total Deposits $715,126 100% Total Deposits $4,124,901 100%
Deposits by LOB ($000) Amount %
ABL $42,505 6%
Correspondent 246,783 35%
Retail DDAs 86,269 12%
CDs 337,564 47%
Other 2,005 0%
Total Deposits $715,126 100%
STBZ AloStar Proforma
Noninterest-
bearing
26%
Interest-
bearing
Transaction
15%
Savings &
Money
Market
40%
CDs
20%
Noninterest-
bearing
15%
Interest-
bearing
Transaction
1%
Savings &
Money
Market
37%
CDs
47%
Noninterest-
bearing
28%
Interest-
bearing
Transaction
18%
Savings &
Money
Market
41%
CDs
14%
11
Summary
Strategically compelling position in ABL market, with executive management
and lending team based in Atlanta
Executing on strategy of adding scalable asset-generating lines of business
Diversifies loan portfolio
Accretive to EPS and net interest margin
Efficient deployment of capital
Proven track record of successful acquisitions/integrations at State Bank