Attached files
| file | filename |
|---|---|
| 8-K - MIDSOUTH BANCORP, INC 8-K 9-26-2012 - MIDSOUTH BANCORP INC | form8k.htm |
| EX-3.1 - EXHIBIT 3.1 - MIDSOUTH BANCORP INC | ex3_1.htm |
| EX-2.1 - EXHIBIT 2.1 - MIDSOUTH BANCORP INC | ex2_1.htm |
| EX-99.2 - EXHIBIT 99.2 - MIDSOUTH BANCORP INC | ex99_2.htm |
Exhibit 99.1
Merger Agreement with PSB Financial Corporation
September 26, 2012
September 26, 2012
Forward Looking Statement
Certain statements contained herein are forward-looking statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934 and subject to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, which involve risks and uncertainties. These statements include, among others, statements
regarding future results, improvements in classified and criticized assets, changes in the local and national economy, the work-out
of nonaccrual loans, the competition for other potential acquisitions, the impacts from the integration of operations from
completed acquisitions and the impact of regulatory changes regarding electronic transactions.
1933 and Section 21E of the Securities Exchange Act of 1934 and subject to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, which involve risks and uncertainties. These statements include, among others, statements
regarding future results, improvements in classified and criticized assets, changes in the local and national economy, the work-out
of nonaccrual loans, the competition for other potential acquisitions, the impacts from the integration of operations from
completed acquisitions and the impact of regulatory changes regarding electronic transactions.
Actual results may differ materially from the results anticipated in these forward-looking statements. Factors that might cause
such a difference include, among other matters, the failure to obtain necessary regulatory approvals and the approval of PSB
shareholders; the ability of the parties to satisfy the other closing conditions; the effect of the announcement of the proposed
acquisition on relations with customers and employees; the effects of MidSouth’s expenditure of monies for legal and other
professional fees, which will be capitalized on its balance sheet and written off if the transaction is not completed; changes in
interest rates and market prices that could affect the net interest margin, asset valuation, and expense levels; changes in local
economic and business conditions, including, without limitation, changes related to the oil and gas industries, that could
adversely affect customers and their ability to repay borrowings under agreed upon terms, adversely affect the value of the
underlying collateral related to their borrowings, and reduce demand for loans; the timing and ability to reach any agreement to
restructure nonaccrual loans; increased competition for deposits and loans which could affect compositions, rates and terms; the
timing and impact of future acquisitions, the success or failure of integrating operations, and the ability to capitalize on growth
opportunities upon entering new markets; loss of critical personnel and the challenge of hiring qualified personnel at reasonable
compensation levels; legislative and regulatory changes, including changes in banking, securities and tax laws and regulations and
their application by our regulators, changes in the scope and cost of FDIC insurance and other coverage; and other factors
discussed under the heading “Risk Factors” in MidSouth’s Annual Report on Form 10-K for the year ended December 31, 2011
filed with the SEC on March 15, 2012 and in its other filings with the SEC.
such a difference include, among other matters, the failure to obtain necessary regulatory approvals and the approval of PSB
shareholders; the ability of the parties to satisfy the other closing conditions; the effect of the announcement of the proposed
acquisition on relations with customers and employees; the effects of MidSouth’s expenditure of monies for legal and other
professional fees, which will be capitalized on its balance sheet and written off if the transaction is not completed; changes in
interest rates and market prices that could affect the net interest margin, asset valuation, and expense levels; changes in local
economic and business conditions, including, without limitation, changes related to the oil and gas industries, that could
adversely affect customers and their ability to repay borrowings under agreed upon terms, adversely affect the value of the
underlying collateral related to their borrowings, and reduce demand for loans; the timing and ability to reach any agreement to
restructure nonaccrual loans; increased competition for deposits and loans which could affect compositions, rates and terms; the
timing and impact of future acquisitions, the success or failure of integrating operations, and the ability to capitalize on growth
opportunities upon entering new markets; loss of critical personnel and the challenge of hiring qualified personnel at reasonable
compensation levels; legislative and regulatory changes, including changes in banking, securities and tax laws and regulations and
their application by our regulators, changes in the scope and cost of FDIC insurance and other coverage; and other factors
discussed under the heading “Risk Factors” in MidSouth’s Annual Report on Form 10-K for the year ended December 31, 2011
filed with the SEC on March 15, 2012 and in its other filings with the SEC.
MidSouth does not undertake any obligation to publicly update or revise any of these forward-looking statements, whether to
reflect new information, future events or otherwise, except as required by law.
reflect new information, future events or otherwise, except as required by law.
Additional Information About This Transaction
In connection with the proposed transaction, PSB Financial Corporation (“PSB”) will distribute to its shareholders a proxy
statement that will also include information regarding MidSouth Bancorp, Inc. (“MidSouth”) and the MidSouth securities that are
expected to be privately issued in connection with the proposed transaction. SHAREHOLDERS OF PSB ARE URGED TO READ
THE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS DISTRIBUTED BY PSB WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Shareholders of PSB will be able to obtain a
free copy of the proxy statement (when available) by directing a request by telephone or mail to PSB Financial Corporation, 880
San Antonio Avenue, Many, LA 71449, Attention: Clay Abington, 318.238.4489
statement that will also include information regarding MidSouth Bancorp, Inc. (“MidSouth”) and the MidSouth securities that are
expected to be privately issued in connection with the proposed transaction. SHAREHOLDERS OF PSB ARE URGED TO READ
THE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS DISTRIBUTED BY PSB WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Shareholders of PSB will be able to obtain a
free copy of the proxy statement (when available) by directing a request by telephone or mail to PSB Financial Corporation, 880
San Antonio Avenue, Many, LA 71449, Attention: Clay Abington, 318.238.4489
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY,
ANY SECURITIES, NOR SHALL THERE BE ANY SALE OF SECURITIES IN ANY STATE OR JURISDICTION IN WHICH
SUCH AN OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE OR JURISIDICTION.
ANY SECURITIES, NOR SHALL THERE BE ANY SALE OF SECURITIES IN ANY STATE OR JURISDICTION IN WHICH
SUCH AN OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE OR JURISIDICTION.
Participants in the Solicitation
PSB and its directors, executive officers, certain members of management and employees may have interests in the proposed
transaction or be deemed to be participants in the solicitation of proxies of PSB’s shareholders to approve matters necessary to be
approved to facilitate the proposed transaction. Certain information regarding the participants and their interests in the solicitation
will be set forth in the PSB proxy statement distributed in connection with the proposed transaction. Shareholders may obtain
additional information regarding the interests of such participants by reading the proxy statement for the proposed transaction when
it becomes available.
transaction or be deemed to be participants in the solicitation of proxies of PSB’s shareholders to approve matters necessary to be
approved to facilitate the proposed transaction. Certain information regarding the participants and their interests in the solicitation
will be set forth in the PSB proxy statement distributed in connection with the proposed transaction. Shareholders may obtain
additional information regarding the interests of such participants by reading the proxy statement for the proposed transaction when
it becomes available.
Summary of Acquisition Terms
Transaction Value $39 million (1)
Form of Consideration $18 million cash, including $2 million contingent payment
$11 million common equity
$10 million liquidation value of 4% non-cumulative
convertible preferred equity, conversion price of
convertible preferred equity, conversion price of
$18.00 MSL
Board Seat Pete Abington, 7% MSL ownership
Required Approvals Customary regulatory and PSB shareholders
Termination Fee $2.5 million
Expected Closing Fourth Quarter 2012
(1) Based on MSL 20-day average stock price as of September 26 of $14.54 and a fixed exchange ratio of 10.3441
Transaction Rationale
Strategic Rationale
– Complimentary geographic markets - expands MSL into Central and North Louisiana along
I-49 Corridor
I-49 Corridor
– Continues to build scale as MSL closes in on $2.0 billion in assets with opportunities to
increase efficiencies
increase efficiencies
– Strong management talent with similar cultures and strong community relationships
Strong Financial Fundamentals
– Greater than 30% earnings accretion in 2013 based on 25% cost savings fully realized by the
end of 2013 and no revenue enhancements
end of 2013 and no revenue enhancements
– Greater than 15% IRR (well above MSL’s cost of capital)
– Manageable tangible book value payback of approximately 3.3 years
Low Risk
– Low execution risk given expansion into contiguous market
– Comprehensive due diligence process undertaken
– Conservative credit mark of 2.3%
|
Pro Forma - as of June 30, 2012
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|||
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($ in millions)
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|||
|
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MSL
|
PSB
|
Pro Forma
|
|
Loans
|
751
|
271
|
1,022
|
|
Deposits
|
1,154
|
417
|
1,571
|
|
Assets
|
1,395
|
501
|
1,896
|
|
|
|
|
|
|
Branches
|
40
|
16
|
56
|
|
FTEs
|
449
|
146
|
595
|
Peoples State Bank History
1913- Peoples State Bank founded, E.C. Dillon
President
President
1934 - John J. Blake named President following
death of E.C. Dillon
death of E.C. Dillon
1967 - John J. Blake Jr. named President
1984 - PSB Financial Corporation, a one bank
holding company controlled by Pete
Abington, purchased Peoples State Bank.
Total assets $28 million.
holding company controlled by Pete
Abington, purchased Peoples State Bank.
Total assets $28 million.
1985 - Acquired Bank of Pleasant Hill
1987 - FDIC assisted acquisitions of Pelican State
Bank in Mansfield and Liberty Bank &
Trust in Shreveport
Bank in Mansfield and Liberty Bank &
Trust in Shreveport
1996 - Acquired a branch in Alexandria of First
NBC, New Orleans
NBC, New Orleans
1986 - John J. Blake, III named President -
currently with the bank
currently with the bank
1997 - Acquired First Bank and Trust in
Natchitoches
Natchitoches
2005 - Purchased shell charter of First State Bank
and relocated branch to Texarkana, TX
and relocated branch to Texarkana, TX
Franchise Overview
Pro forma Deposit Market Share
Financial Impact of Transaction
• Comprehensive onsite credit due diligence process by MSL
– Reviewed 74% of loan portfolio
– Conservative aggregate credit mark of 2.3% or $6 million
• Review of operations and business lines
– Realistic cost savings of 25% of 2012 pretax noninterest expenses fully realized by
end of 2013
end of 2013
– No revenue synergies assumed
– One time merger related expenses of $0.5 million after tax
– EPS immediately accretive
• Resulting Pro Forma Capital Ratios
– Tier 1 Leverage 8.61%
– Tier 1 Capital to RWA 13.58%
– Total RBC Ratio 14.22%
– TE/TA 7.5%
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Loan Portfolio
|
Amount
|
% of Total
|
|
|
1-4 Family
|
112,343
|
14.95
|
%
|
|
C&D
|
55,111
|
7.33
|
|
|
Multifamily
|
7,566
|
1.01
|
|
|
CRE Loans & Farm
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263,575
|
35.07
|
|
|
C&I
|
226,993
|
30.20
|
|
|
Consumer
|
72,873
|
9.70
|
|
|
Agricultural
|
9,168
|
1.22
|
|
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Total Leases
|
3,974
|
0.53
|
|
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Total Loans
|
751,603
|
100.00
|
%
|
|
Loan Portfolio
|
Amount
|
% of Total
|
|
|
1-4 Family
|
36,652
|
13.51
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%
|
|
C&D
|
9,296
|
3.43
|
|
|
Multifamily
|
15,526
|
5.72
|
|
|
CRE Loans & Farm
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130,175
|
47.97
|
|
|
C&I
|
48,465
|
17.86
|
|
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Consumer
|
17,424
|
6.42
|
|
|
Agricultural
|
13,830
|
5.10
|
|
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Total Leases
|
-
|
-
|
|
|
Total Loans
|
271,368
|
100.00
|
%
|
|
Loan Portfolio
|
Amount
|
% of Total
|
|
|
1-4 Family
|
148,995
|
14.56
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%
|
|
C&D
|
64,407
|
6.30
|
|
|
Multifamily
|
23,092
|
2.26
|
|
|
CRE Loans & Farm
|
393,750
|
38.49
|
|
|
C&I
|
275,458
|
26.93
|
|
|
Consumer
|
90,297
|
8.83
|
|
|
Agricultural
|
22,998
|
2.25
|
|
|
Total Leases
|
3,974
|
0.39
|
|
|
Total Loans
|
1,022,971
|
100.00
|
%
|
PSB Yield on Total Loans: 5.45%
MidSouth Yield on Total Loans: 6.60%
Pro Forma Yield on Total Loans: 6.29%
Source: SNL Financial and Company Documents
(1) Excludes purchase accounting data
PRO FORMA LOAN COMPOSITION
MidSouth Bancorp
PSB Financial Corp
|
Deposit Composition
|
Amount
|
% of Total
|
|
|
Transaction Accounts
|
134,246
|
32.23
|
%
|
|
MMDA & Savings
|
186,063
|
44.67
|
|
|
Retail Time Deposits
|
79,330
|
19.04
|
|
|
Jumbo Time Deposits
|
16,907
|
4.06
|
|
|
Total Deposits
|
416,546
|
100.00
|
%
|
|
Deposit Composition
|
Amount
|
% of Total
|
|
|
Transaction Accounts
|
508,169
|
44.04
|
%
|
|
MMDA & Savings
|
369,524
|
32.03
|
|
|
Retail Time Deposits
|
119,098
|
10.32
|
|
|
Jumbo Time Deposits
|
156,970
|
13.61
|
|
|
Total Deposits
|
1,153,761
|
100.00
|
%
|
|
Deposit Composition
|
Amount
|
% of Total
|
|
|
Transaction Accounts
|
642,415
|
40.91
|
%
|
|
MMDA & Savings
|
555,587
|
35.38
|
|
|
Retail Time Deposits
|
198,428
|
12.64
|
|
|
Jumbo Time Deposits
|
173,877
|
11.07
|
|
|
Total Deposits
|
1,570,307
|
100.00
|
%
|
PSB Cost of Deposits: 0.67%
MidSouth Cost of Deposits: 0.48%
Pro Forma Cost of Deposits: 0.53%
Source: SNL Financial and Company Documents
(1) Excludes purchase accounting data
Pro Forma (1)
PRO FORMA DEPOSIT COMPOSITION