Attached files
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| 8-K - FORM 8-K - BRYN MAWR BANK CORP | d437701d8k.htm |
 Third Quarter
2012
Update
September 30, 2012
Bryn Mawr Bank
Corporation
NASDAQ: BMTC
Strong -
Stable -
Secure
Exhibit 99.1 |
 Safe
Harbor •
This presentation contains statements which, to the extent that they are not recitations of
historical fact may constitute forward-looking statements for purposes of the
Securities Act of
1933,
as
amended,
and
the
Securities
Exchange
Act
of
1934,
as
amended.
•
Please see the section titled Safe Harbor at the end of the presentation for more information
regarding these types of statements.
•
The
information
contained
in
this
presentation
is
correct
only
as
of
November
9,
2012. Our
business, financial condition, results of operations and prospects may have changed since
that date, and we do not undertake to update such information.
1 |
 2
Bryn Mawr Bank Corporation
Profile
Founded in 1889 –
122 year history
A unique business model with a traditional commercial bank ($1.8
billion)
and a trust company ($6.5 billion) under one roof at September 30, 2012
Wholly owned subsidiary –
The Bryn Mawr Trust Company
Largest community bank in Philadelphia’s affluent western suburbs
3 wealth acquisitions and 1 bank acquisition completed since 2008
Experienced and committed management team |
 3
Southeast PA / DE Branch Footprint |
 4
Investment Considerations
Quarterly dividend of $0.16
per share
Profitability Ratios:
The Corporation’s shareholders’
equity grew $16.9 million or 9.2% from
December 31, 2011 to September 30, 2012
Emphasize increasing earnings per share going forward
Diversified revenue base: non-interest income 43% of total revenue for
the 3-months ended September 30, 2012
9/30/2012
12/31/2011
Return on Average Assets (ROA)
1.18%
1.13%
Return on Average Equity (ROE)
10.93%
10.63%
Return on Average Tangible Equity (ROTE)
14.87%
13.67% |
 5
Comments on BMTC from Bank Analysts
Due to its profitability and revenue mix, we believe Bryn Mawr
warrants a premium multiple
(Sterne Agee, July 2012)
In what remains a tough operating environment for banks, Bryn
Mawr’s results demonstrate the benefits of a diversified revenue
stream
(Keefe, Bruyette & Woods, July 2012)
Revenue diversity helps defray margin pressure, maintain buy rating
(Stifel Nicolaus, July 2012)
Going forward, despite fierce macroeconomic headwinds, we believe
management’s efforts are likely to produce significant core EPS
growth
(Merion Research, October 2012) |
 6
Year to Date 2012 BMTC Stock Performance
Closing price on December 30, 2011:
$19.49
Closing price on September 30, 2012:
$22.44
Dividends
declared
per
share
–
9
months
2012:
$0.48
Security or Index
Year to Date
2012 Return
3 Year Annualized
Return**
Trailing 12-Month
Dividend Yield
BMTC*
17.83%
2.20%
2.81%
NASDAQ Bank Index*
18.56%
-5.08%
2.01%
KBW Bank Index*
27.88%
-2.33%
1.89%
*Source: Bloomberg
** Annualized return -12/31/2008 to 12/31/2011 |
 7
Consistent BMTC Annual Dividend
Year
Annual
Dividend
Dividend Yield
Year-End
Dividend Payout
Ratio
2008
$0.54
2.69%
50.0%
2009
$0.56
3.71%
47.5%
2010
$0.56
3.21%
65.9%*
2011
$0.60
3.08%
39.0%
2012
$0.64**
2.85%**
39.8%**
*Excluding the $5.7 million of merger related and due diligence
expense, the dividend payout ratio was 46.0%.
** Expected annualized 2012 figures.
|
 Growth
Initiatives |
 9
2012 Strategic Initiatives
3-8-3 Strategic Plan
$3 billion in Banking assets -
$8 billion in Wealth assets –
3 years
(December 2014)
Approved by the Board of Directors on May 8, 2012
Organic growth –
opportunistic expansion
Inorganic
growth
criterion
-
Acquisitions
to
be
strategic
and
accretive to earnings per share in first 12 months (excluding merger
costs) |
 10
2012
Strategic
Initiatives
-
continued
Close the First Bank of Delaware acquisition
Focus on the net interest margin
Concentrate on growing fee based income
Continued emphasis on strong credit quality
Integrate, streamline and assimilate recent acquisitions into more
effective and efficient wealth operations
Enhance and upgrade IT infrastructure |
 Purchase of
Deposits and Loans from First Bank of Delaware
•
Announced May 2, 2012
•
Purchasing approximately $70 million of deposits and $90 million
of loans
•
Loan Composition: $12 million at a discount of 18%; balance at par
•
Deposits: effective deposit premium of 1%
•
Opportunity to enter an attractive market with an established loan portfolio
•
After-tax transaction costs estimated at $1.2 million
•
Expected to close in the fourth quarter of 2012, pending certain
conditions
11 |
 12
Purchase of Deposits and Loans from First
Bank of Delaware -
continued
Branch is located along heavily traveled Wilmington Pike (Route 202)
Compliments Lau Associates and Bryn Mawr Trust Company of Delaware
First Bank of Delaware branch presents a market penetrating opportunity to obtain
an established local presence
Branch will serve as a launching pad for additional branches in the market
Strategically
Compelling
Low Risk
Transaction
Detailed due diligence completed with detailed underwriting
Acquired loans are performing and loan marks conservative
Substantial protection via Purchase and Assumption Agreement
Financially
Attractive
Material EPS accretion
Nominal tangible book value dilution
Internal rate of return in excess of internal thresholds
|
 Financial
Review
The following financial highlights include revisions to
selected financial data resulting from the correction of an
immaterial accounting error. See slides 35-37 at the end
of this presentation for details. |
 14
Financial Highlights
3
rd
Qtr
2012
2
nd
Qtr
2012
1
st
Qtr
2012
4
th
Qtr
2011
3
rd
Qtr
2011
Total Assets
($ in billions)
$1.81
$1.85
$1.84
$1.77
$1.76
Portfolio Loans & Leases
($ in billions)
$1.31
$1.30
$1.30
$1.29
$1.28
Total Deposits
($ in billions)
$1.40
$1.43
$1.43
$1.38
$1.35
Total Wealth Assets
($ in billions)
$6.48
$6.28
$5.15
$4.83
$4.50
Market Capitalization
($ in millions)
$296.8
$280.1
$297.4
$253.2
$215.0
Net Income
($ in millions)
$5.43
$5.35
$5.07
$5.00
$5.23 |
 15
Financial Highlights -
continued
3
rd
Qtr
2012
2
nd
Qtr
2012
1
st
Qtr
2012
4
th
Qtr
2011
3
rd
Qtr
2011
Diluted Earnings Per
Common Share
$0.41
$0.40
$0.39
$0.38
$0.41
Dividends Declared
$0.16
$0.16
$0.16
$0.15
$0.15
Book Value Per Share
$15.02
$14.73
$14.40
$14.07
$14.29
Tangible Book Value Per
Share
$11.14
$10.77
$11.20
$10.78
$11.08
Tangible Common Equity
Ratio
8.58%
8.07%
8.22%
8.19%
8.41%
Efficiency Ratio
67.0%
66.4%
65.7%
65.4%
62.8%
Efficiency Ratio
(excluding merger/due diligence costs)
65.9%
63.1%
64.9%
65.7%
62.3% |
 16
Quarterly Net Interest Margin
On a tax-equivalent basis
3.90%
3.91%
3.93%
3.84%
3.78%
3.0%
3.2%
3.4%
3.6%
3.8%
4.0%
4.2% |
 17
Quarterly Non-Interest Income
(As a % of Total Revenue)
37%
37%
37%
42%
43%
15%
25%
35%
45%
55% |
 18
Capital Considerations
Maintain a “well capitalized”
capital position including a target tangible
common equity to tangible asset ratio of 8.00%
Selectively add capital to maintain capital levels and fund asset growth and
acquisitions
Strong emphasis on retained earnings going forward
Shareholders’
equity grew $16.9 million or 9.2% from December 31, 2011
to September 30, 2012
Shelf Registration (Form S-3) of $150 million provides the ability to raise
capital as needed including a Dividend Reinvestment and Direct Stock
Purchase Plan with Waiver |
 19
Capital Position -
Bryn Mawr Bank Corporation
9/30/2012*
6/30/2012
3/31/2012
Tier I
11.64%
11.30%
11.52%
Total (Tier II)
13.74%
13.90%
14.23%
Tier I Leverage
8.98%
8.80%
9.07%
Tangible Common
Equity
8.58%
8.07%
8.22%
*September 30, 2012 and June 30, 2012 figures reflect the acquisition of Davidson
Trust Company and intangible assets of $11.0 million. The September 30, 2012
figures reflect the Davidson Trust Company acquisition and the prepayment of
$7.5 million of subordinated debt at 6.22% on September 14, 2012. |
 Wealth
Division
Review |
 21
$2.28
$2.15
$2.87
$3.41
$4.83
$6.48
$1.5
$2.5
$3.5
$4.5
$5.5
$6.5
$7.5
2007
2008
2009
2010
2011
3rd Qtr 2012
Wealth Assets Under Management, Administration,
Supervision and Brokerage
($ in billions)
Excludes Community Bank’s assets in 2007 |
 22
Wealth Management Fees
($ in millions)
* Annualized run rate is approximately $32 million for Wealth Management Revenue
using
3
rd
quarter
of
2012
$13.5
$13.8
$14.2
$15.5
$21.7
$21.4
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
2007
2008
2009
2010
2011
3rd Qtr
2012* |
 23
Wealth Division Highlights
Wealth
Management
(Bryn Mawr, Hershey, Davidson Trust)
$4.66 billion in assets
Integrated solutions to protect and preserve wealth
Estate Planning
Retirement Planning
Investment Management
Custody Services
Philanthropic Services
Fiduciary Trust Services
Long standing client relationships |
 24
Wealth Division Highlights -
continued
Bryn Mawr Asset Management (Bryn Mawr, PA)
$305 million in assets
Brokerage services, asset allocation, objective advice
“Lift Out”
strategy with other opportunities being continuously evaluated
BMTC of Delaware (Greenville, DE)
$918 million in assets
Provides
corporate
fiduciary
and
administrative
trustee
services
under
Delaware law and the full spectrum of tax advantaged strategies
Lau Associates (Greenville, DE)
$604 million in assets
Fee-only, independent multi-family office providing highly personalized
service and sophisticated financial planning |
 Credit
Review |
 26
Portfolio Loan & Lease Growth
($ in millions)
* From 2010 forward, includes the addition of the First Keystone
loan portfolio.
** Proforma at September 30, 2012 including First Bank of Delaware: $1.41
billion in total loans and leases.
$803
$900
$886
$1,197
$1,295
$1,314
$500
$700
$900
$1,100
$1,300
$1,500
2007
2008
2009
2010*
2011
3rd Qtr 2012** |
 27
Loan Composition at September 30, 2012
($ in millions)
Total loans and leases of $1.314 billion
$472
$274
$214
$301
$22
$31
Commercial Mortgages
(36%)
Commercial & Industrial
(21%)
Home Equity & Consumer
Loans (16%)
Residential Mortgages
(23%)
Construction
(2%)
Leases
(2%) |
 28
Quarterly Asset Quality Data
3
rd
Qtr
2012
2
nd
Qtr
2012
1
st
Qtr
2012
4
th
Qtr
2011
3
rd
Qtr
2011
Non-Performing Loans as a % of
Portfolio Loans and Leases
1.05%
1.41%
1.73%
1.11%
1.11%
Allowance as a % of Portfolio
Loans and Leases
1.04%
1.01%
1.00%
0.98%
0.91%
Non-Performing Assets as a % of
Assets
0.78%
1.03%
1.25%
0.84%
0.88%
Annualized Net Charge-Offs as a %
of average quarterly loans and
leases
0.16%
0.28%
0.23%
-0.01%
0.49% |
 29
Loan and Lease Updates
4
th
quarter
2012
loan
pipeline
looks
promising
Recent hires of experienced lenders has been beneficial as they have
brought increased business to the Bank
The lease portfolio at September 30, 2012 is $31 million, has an
average
yield of 9.97% and a delinquency rate of 0.33%
Significant decline in non-performing assets from $23.0 million at March
31, 2012 to $14.2 million at September 30, 2012
|
 30
Summary
Outstanding franchise in a stable market
Focus on Wealth Services, Business Banking and Residential Mortgage
Diversified income base –
non interest income 43% at September 30,
2012
Outstanding loan quality in a difficult economic environment
Sound business strategy, strong asset quality, well capitalized and solid
risk management procedures serve as a foundation for potential strategic
expansion |
 31
Ted Peters, Chairman
610-581-4800
tpeters@bmtc.com
Frank Leto, EVP
610-581-4730
fleto@bmtc.com
Joseph Keefer, EVP
610-581-4869
jkeefer@bmtc.com
Duncan Smith, CFO
610-526 –2466
jdsmith@bmtc.com
Aaron Strenkoski, VP –
Investments & Shareholder Relations –
610-581-4822 –
astrenkoski@bmtc.com |
 32
This presentation contains statements which, to the extent that they are not
recitations of historical fact may constitute forward-looking
statements for purposes of the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended. Such forward-looking
statements may include financial and other projections as well as statements
regarding Bryn Mawr Bank Corporation’s (the “Corporation”)
that may include future plans, objectives, performance, revenues, growth,
profits, operating expenses or the Corporation’s underlying
assumptions. The words “may”, “would”, “should”,
“could”, “will”, “likely”, “possibly”, “expect,”
“anticipate,”
“intend”,
“estimate”,
“target”,
“potentially”,
“probably”,
“outlook”,
“predict”,
“contemplate”,
“continue”,
“plan”,
“forecast”,
“project”
and
“believe”
or
other
similar
words,
phrases
or concepts may identify forward-looking statements. Persons reading or
present at this presentation are cautioned that such statements are only
predictions, and that the Corporation’s actual future results or
performance may be materially different. Such forward-looking
statements involve known and unknown risks and uncertainties. A number of
factors, many of which are beyond the Corporation’s control, could cause our actual results,
events or developments, or industry results, to be materially different from any
future results, events
or
developments
expressed,
implied
or
anticipated
by
such
forward-looking
statements,
and so our business and financial condition and results of operations could be
materially and adversely affected.
Safe Harbor |
 33
Safe Harbor (continued)
Such factors include, among others, our need for capital, our ability to control
operating costs and expenses, and to manage loan and lease delinquency
rates; the credit risks of lending activities and overall quality of the
composition of our loan, lease and securities portfolio; the impact of
economic conditions, consumer and business spending habits, and real estate market
conditions on
our
business
and
in
our
market
area;
changes
in
the
levels
of
general
interest
rates,
deposit
interest rates, or net interest margin and funding sources; changes in banking
regulations and policies and the possibility that any banking agency
approvals we might require for certain activities will not be obtained in a
timely manner or at all or will be conditioned in a manner that would
impair our ability to implement our business plans; changes in accounting policies and
practices; the inability of key third-party providers to perform their
obligations to us; our ability to attract and retain key personnel;
competition in our marketplace; war or terrorist activities; material
differences in the actual financial results, cost savings and revenue enhancements
associated with our acquisitions including our contemplated acquisition of the
First Bank of Delaware; and other factors as described in our securities
filings. All forward-looking statements and information made herein are
based on Management’s current beliefs and assumptions as of
November
9,
2012
and
speak
only
as
of
that
date.
The
Corporation
does
not
undertake
to
update forward-looking statements. |
 34
Safe Harbor (continued)
For a complete discussion of the assumptions, risks and uncertainties related to
our business, you are encouraged to review our filings with the Securities
and Exchange Commission, including our most recent annual report on Form
10-K, as well as any changes in risk factors that we may identify in
our quarterly or other reports filed with the SEC. This
presentation
is
for
discussion
purposes
only,
and
shall
not
constitute
any
offer
to
sell
or
the
solicitation
of
an
offer
to
buy
any
security,
nor
is
it
intended
to
give
rise
to
any
legal
relationship
between
the
Corporation
and
you
or
any
other
person,
nor
is
it
a
recommendation
to
buy
any
securities or enter into any transaction with the Corporation.
The information contained herein is preliminary and material changes to such
information may be made at any time. If any offer of securities is made, it
shall be made pursuant to a definitive offering memorandum or prospectus
(“Offering Memorandum”) prepared by or on behalf of the
Corporation, which would contain material information not contained herein and
which shall supersede, amend and supplement this information in its
entirety. Any decision to invest in the Corporation’s securities
should be made after reviewing an Offering Memorandum, conducting such
investigations as the investor deems necessary or appropriate, and consulting the investor’s
own legal, accounting, tax, and other advisors in order to make an independent
determination of the suitability and consequences of an investment in such
securities. |
 35
Safe Harbor (continued)
No offer to purchase securities of the Corporation will be made or accepted prior
to receipt by an investor of an Offering Memorandum and relevant
subscription documentation, all of which must be reviewed together with the
Corporation’s then-current financial statements and, with respect to
the subscription documentation, completed and returned to the Corporation in its
entirety. Unless purchasing in an offering of securities registered
pursuant to the Securities Act of 1933, as amended,
all
investors
must
be
“accredited
investors”
as
defined
in
the
securities
laws
of
the
United States before they can invest in the Corporation.
Correction of an Immaterial Accounting Error
In September 2012, the Corporation identified an immaterial accounting error
related to two of its deferred compensation plans. The provisions of the
deferred compensation plans enabled certain executives and directors to
have bonus payments and director fees deferred, and allowed the
participants
to
direct
the
investment
of
these
deferred
amounts.
Because
one
of
the
investment
choices offered to the participants was the Corporation’s common stock, this
stock was placed in a trust owned by the Corporation whose fair market
value was periodically adjusted to reflect changes in the stock’s
price. The portion of this trust that contained the Corporation’s common
stock was incorrectly reported as an asset on the Corporation’s balance
sheet. |
 36
Safe Harbor (continued)
Changes in the fair market value of the asset were reflected as increases or
decreases in the value of the asset, as well as increases or decreases in
the value of the liability to the participants. The stock held in the trust
should have been classified as treasury stock and should
have
been
reported
in
the
stockholders’
equity
section
of
the
Corporation’s
balance
sheet, at cost. The resulting corrections involved adjustments to assets and
stockholders’ equity, as well as adjustments to other operating
expense, as changes in the fair market value of the Corporation’s
common stock held in the trust are charged to deferred compensation
expense, a component of other operating expense. All periods presented in the
tables accompanying
this
presentation
have
been
revised
to
reflect
this
correction.
In
addition,
a
reconciliation of net income, basic and diluted earnings per common share, total
assets, retained earnings, and number of shares and cost of treasury stock,
indicating their originally reported amounts and their corrected amounts,
is included after this slide. |
Effect of Immaterial Correction of Accounting Error
Income Statement Effect
(dollars in thousands except share data)
| For The Three Months Ended June 30, 2012 |
For The Three Months Ended March 31, 2012 |
For The Three Months Ended December 31, 2011 |
For The Three Months Ended September 30, 2011 |
|||||||||||||||||||||||||||||||||||||||||||||
| Originally Reported |
Corrected | Difference | Originally Reported |
Corrected | Difference | Originally Reported |
Corrected | Difference | Originally Reported |
Corrected | Difference | |||||||||||||||||||||||||||||||||||||
| Net Income |
$ | 5,261 | $ | 5,345 | $ | 84 | $ | 5,235 | $ | 5,074 | $ | (161 | ) | $ | 5,170 | $ | 5,004 | $ | (166 | ) | $ | 5,022 | $ | 5,230 | $ | 208 | ||||||||||||||||||||||
| Basic earnings per common share |
$ | 0.40 | $ | 0.41 | $ | 0.01 | $ | 0.40 | $ | 0.39 | $ | (0.01 | ) | $ | 0.40 | $ | 0.39 | $ | (0.01 | ) | $ | 0.39 | $ | 0.41 | $ | 0.02 | ||||||||||||||||||||||
| Diluted earnings per common share |
$ | 0.40 | $ | 0.40 | $ | — | $ | 0.40 | $ | 0.39 | $ | (0.01 | ) | $ | 0.39 | $ | 0.39 | $ | — | $ | 0.39 | $ | 0.41 | $ | 0.02 | |||||||||||||||||||||||
| For The Nine Months Ended September 30, 2011 |
||||||||||||||||||||||||||||||||||||||||||||||||
| Originally Reported |
Corrected | Difference | ||||||||||||||||||||||||||||||||||||||||||||||
| Net Income |
$ | 14,543 | $ | 14,598 | $ | 55 | ||||||||||||||||||||||||||||||||||||||||||
| Basic earnings per common share |
$ | 1.15 | $ | 1.16 | $ | 0.01 | ||||||||||||||||||||||||||||||||||||||||||
| Diluted earnings per common share |
$ | 1.15 | $ | 1.16 | $ | 0.01 | ||||||||||||||||||||||||||||||||||||||||||
|
Balance Sheet Effect |
||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands except share data) |
|
|||||||||||||||||||||||||||||||||||||||||||||||
| As of June 30, 2012 | As of March 31, 2012 | As of December 31, 2011 | As of September 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||
| Originally Reported |
Corrected | Difference | Originally Reported |
Corrected | Difference | Originally Reported |
Corrected | Difference | Originally Reported |
Corrected | Difference | |||||||||||||||||||||||||||||||||||||
| Total assets |
$ | 1,854,885 | $ | 1,853,355 | $ | (1,530 | ) | $ | 1,838,075 | $ | 1,836,411 | $ | (1,664 | ) | $ | 1,774,907 | $ | 1,773,373 | $ | (1,534 | ) | $ | 1,757,119 | $ | 1,755,770 | $ | (1,349 | ) | ||||||||||||||||||||
| Retained earnings |
$ | 132,837 | $ | 132,420 | $ | (417 | ) | $ | 129,702 | $ | 129,201 | $ | (501 | ) | $ | 126,582 | $ | 126,242 | $ | (340 | ) | $ | 123,377 | $ | 123,203 | $ | (174 | ) | ||||||||||||||||||||
| Cost of treasury stock |
$ | 29,789 | $ | 30,901 | $ | 1,112 | $ | 29,833 | $ | 30,995 | $ | 1,162 | $ | 29,833 | $ | 31,027 | $ | 1,194 | $ | 29,833 | $ | 31,008 | $ | 1,175 | ||||||||||||||||||||||||
| Shares of treasury stock |
2,905,293 | 2,988,561 | 83,268 | 2,909,542 | 2,995,681 | 86,139 | 2,909,542 | 2,997,628 | 88,086 | 2,909,542 | 2,996,600 | 87,058 | ||||||||||||||||||||||||||||||||||||