Attached files
| file | filename |
|---|---|
| 8-K - PPBI 8-K INDEPENDENCE BANK ACQUISITION - PACIFIC PREMIER BANCORP INC | ppbi_8k-idpkacq2014.htm |
| EX-2.1 - PPBI 8-K IDPK ACQUISITION EX 2.1 - PACIFIC PREMIER BANCORP INC | ppbi_8k-idpkacq2014ex21.htm |
| EX-99.1 - PPBI 8-K IDPK ACQUISITION EX 99.1 - PACIFIC PREMIER BANCORP INC | ppbi_8k-idpkacq2014ex991.htm |
Exhibit 99.2
Investor Presentation
October 22, 2014
Steven R. Gardner - President and CEO
Kent Smith - Executive Vice President and CFO
Enhancing PPBI’s Southern California Banking Franchise
Acquisition of Independence Bank
NASDAQ: PPBI
OTCQB: IDPK
2
Forward-Looking Statements and
Where to Find Additional Information
Where to Find Additional Information
Forward Looking Statements
This investor presentation may contain forward-looking statements regarding Pacific Premier Bancorp, Inc. ("PPBI"), including its wholly owned subsidiary Pacific
Premier Bank, Independence Bank ("Independence") and the proposed acquisition. These statements involve certain risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors: the
expected cost savings, synergies and other financial benefits from the acquisition might not be realized within the expected time frames or at all; governmental
approval of the acquisition may not be obtained or adverse regulatory conditions may be imposed in connection with governmental approvals of the acquisition;
conditions to the closing of the acquisition may not be satisfied; the shareholders of Independence may fail to approve the consummation of the acquisition; and
the shareholders of PPBI may not approve the issuance of shares of PPBI common stock for the acquisition. Annualized, pro forma, projected and estimated
numbers in this investor presentation are used for illustrative purposes only, are not forecasts and may not reflect actual results.
Premier Bank, Independence Bank ("Independence") and the proposed acquisition. These statements involve certain risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors: the
expected cost savings, synergies and other financial benefits from the acquisition might not be realized within the expected time frames or at all; governmental
approval of the acquisition may not be obtained or adverse regulatory conditions may be imposed in connection with governmental approvals of the acquisition;
conditions to the closing of the acquisition may not be satisfied; the shareholders of Independence may fail to approve the consummation of the acquisition; and
the shareholders of PPBI may not approve the issuance of shares of PPBI common stock for the acquisition. Annualized, pro forma, projected and estimated
numbers in this investor presentation are used for illustrative purposes only, are not forecasts and may not reflect actual results.
PPBI and Independence undertake no obligation to revise or publicly release any revision or update to these forward-looking statements to reflect events or
circumstances that occur after the date on which such statements were made.
circumstances that occur after the date on which such statements were made.
Notice to Shareholders
This investor presentation 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 acquisition transaction, a registration statement on Form S-4 will be filed with the Securities and Exchange Commission ("SEC") by
PPBI. The registration statement will contain a joint proxy statement/prospectus to be distributed to the shareholders of Independence and PPBI in connection with
their vote on the acquisition. SHAREHOLDERS OF INDEPENDENCE AND PPBI ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED ACQUISITION. The final joint proxy statement/prospectus will be mailed to
shareholders of Independence and PPBI. Investors and security holders will be able to obtain the documents free of charge at the SEC's website, www.sec.gov. In
addition, documents filed with the SEC by PPBI will be available free of charge by (1) accessing PPBI’s website at www.ppbi.com under the “Investor Relations” link
and then under the heading “SEC Filings,” (2) writing PPBI at 17901 Von Karman Avenue, Suite 1200, Irvine, CA 92614, Attention: Investor Relations or (3) writing
Independence at 4525 MacArthur Boulevard, Newport Beach, CA 92660, Attention: Corporate Secretary.
connection with the proposed acquisition transaction, a registration statement on Form S-4 will be filed with the Securities and Exchange Commission ("SEC") by
PPBI. The registration statement will contain a joint proxy statement/prospectus to be distributed to the shareholders of Independence and PPBI in connection with
their vote on the acquisition. SHAREHOLDERS OF INDEPENDENCE AND PPBI ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED ACQUISITION. The final joint proxy statement/prospectus will be mailed to
shareholders of Independence and PPBI. Investors and security holders will be able to obtain the documents free of charge at the SEC's website, www.sec.gov. In
addition, documents filed with the SEC by PPBI will be available free of charge by (1) accessing PPBI’s website at www.ppbi.com under the “Investor Relations” link
and then under the heading “SEC Filings,” (2) writing PPBI at 17901 Von Karman Avenue, Suite 1200, Irvine, CA 92614, Attention: Investor Relations or (3) writing
Independence at 4525 MacArthur Boulevard, Newport Beach, CA 92660, Attention: Corporate Secretary.
The directors, executive officers and certain other members of management and employees of PPBI may be deemed to be participants in the solicitation of proxies
in respect of the proposed acquisition. Information about the directors and executive officers of PPBI is included in the proxy statement for its 2014 annual meeting
of PPBI shareholders, which was filed with the SEC on April 16, 2014. The directors, executive officers and certain other members of management and employees of
Independence may also be deemed to be participants in the solicitation of proxies in favor of the acquisition from the shareholders of Independence. Information
about the directors and executive officers of Independence will be included in the joint statement/prospectus for the acquisition. Additional information regarding
the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the joint proxy
statement/prospectus regarding the proposed acquisition when it becomes available. Free copies of this document may be obtained as described in the preceding
paragraph.
in respect of the proposed acquisition. Information about the directors and executive officers of PPBI is included in the proxy statement for its 2014 annual meeting
of PPBI shareholders, which was filed with the SEC on April 16, 2014. The directors, executive officers and certain other members of management and employees of
Independence may also be deemed to be participants in the solicitation of proxies in favor of the acquisition from the shareholders of Independence. Information
about the directors and executive officers of Independence will be included in the joint statement/prospectus for the acquisition. Additional information regarding
the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the joint proxy
statement/prospectus regarding the proposed acquisition when it becomes available. Free copies of this document may be obtained as described in the preceding
paragraph.
3
Transaction Rationale
Strategic
Rationale
Rationale
§ Compelling in-market consolidation opportunity that strengthens PPBI’s competitive position as one of
the premier community banks headquartered in Southern California with $2.5 billion pro forma assets
the premier community banks headquartered in Southern California with $2.5 billion pro forma assets
§ Geographic fit - enhances and connects PPBI’s footprint in Southern California
§ Fills in existing franchise between Orange County and Coachella Valley
§ Deep understanding of respective business model, customer base and employees
§ Addition of attractive loan portfolio with no substantial asset quality issues
§ Valuable low-cost core deposit franchise
§ 25.9% non-interest bearing deposits and 81.5% non-CD deposits
§ Total cost of deposits of 0.40%
Financially
Attractive
Attractive
§ First full year EPS accretion of approximately 9.6% in 2016(1)
§ Internal rate of return in excess of 20%
§ Tangible book value per share(2) payback period of approximately 3.2 years(3)
§ Significant cost savings and operational synergies due to branch overlap
Source: SNL Financial, financial information as of the quarter ended 9/30/2014, based on regulatory data
(1) Based on PPBI mean EPS estimates for 2014 and 2015 per SNL FactSet research. Excludes non-recurring
merger related expenses in 2015
merger related expenses in 2015
(2) Non-GAAP, please see non-GAAP reconciliation in appendix
(3) Payback period based on the number of years its takes to eliminate the tangible book value per share
dilution with the estimated pro forma PPBI EPS accretion
dilution with the estimated pro forma PPBI EPS accretion
4
Pro Forma Footprint
Source: SNL Financial
Note: Map does not include PPBI office s outside of California
1.0 Mile Apart
175 Yards Apart
PPBI Branch
Independence Branch
§ Strong geographic fit, enhancing presence in Orange
County and connecting footprint in Orange,
Riverside and San Bernardino Counties
County and connecting footprint in Orange,
Riverside and San Bernardino Counties
§ Entering the Corona, Riverside, San Juan Capistrano
and Tustin markets
and Tustin markets
§ Consolidating Independence branches in Newport
Beach and Fountain Valley
Beach and Fountain Valley
§ On a pro forma basis PPBI will have 17 locations in
Southern California
Southern California
Headquarters are
1.25 miles apart
1.25 miles apart
5
Transaction Overview
Consideration Detail
(1) Based on PPBI price of $14.73, market data as of 10/21/2014
(2) Includes consideration for Independence common shareholders and stock options and assumes a fixed
exchange ratio of 0.9259x (for all stock election) without cap/collar adjustment. Transaction value will
change based on the fluctuation in PPBI’s common stock price
exchange ratio of 0.9259x (for all stock election) without cap/collar adjustment. Transaction value will
change based on the fluctuation in PPBI’s common stock price
(3) Option holders will be cashed out unless options are exercised prior to closing. Assumes warrant holders
elect to receive cash in lieu of equivalent warrants in PPBI
elect to receive cash in lieu of equivalent warrants in PPBI
Transaction Value
§ Aggregate transaction value of $71.5 million(1)(2)
§ Per share transaction value of $13.64 per share(1)(2)
§ 89.9% stock and 10.1% cash (including options and warrant holders)(1)(2)
§ Consideration for common shareholders of approximately $65.8 million(1)(2)
§ Common shareholders receive 4,365,843 shares of PPBI or $64.3 million stock consideration(1)(2)
§ Common shareholders receive $1.5 million in cash consideration
§ Consideration for option holders of $4.0 million and warrant holders of $1.7 million. Assumes 100% of
option and warrant holders receive cash consideration(3)
option and warrant holders receive cash consideration(3)
§ Pro forma ownership of 79.6% for PPBI and for 20.4% Independence shareholders in combined company
Exchange Ratio
§ Fixed exchange ratio of 0.9259x PPBI shares for Independence shareholders electing to receive all PPBI
common stock(2)
common stock(2)
§ Exchange ratio will continue to be fixed provided PPBI’s stock price remains between $16.335 and $13.365
as measured by the 10-day average closing price prior to closing (cap/collar +/- 10% of PPBI stock price of
$14.85)
as measured by the 10-day average closing price prior to closing (cap/collar +/- 10% of PPBI stock price of
$14.85)
Required Approvals
§ Customary regulatory approvals and shareholder approval for both Independence and PPBI
Anticipated Closing
§ First quarter of 2015
Capital Ratios
§ Strong pro forma capital ratios to support future growth
6
Financial Impact and Assumptions
Financially
Compelling
Compelling
§ EPS accretion of approximately 5.0% in 2015 and 9.6% in 2016(2)
§ Tangible book value per share(3) dilution of approximately 5.0% at closing
§ Tangible book value per share(3) payback period of approximately 3.2 years based on incremental EPS method(4)
§ Internal rate of return in excess of 20%
§ Strong pro forma capital position - leverage ratio above 9.0% and risk based capital ratio above 13.5%
Valuation
Multiples
Multiples
§ Deal value / tangible book value per share of 139.3%(1)
§ Deal value / earnings per share for last twelve months of 20.7x(1)
Source: SNL Financial, financial data as of 9/30/2014
(1) Based on PPBI price of $14.73, market data as of 10/21/2014
(2) Based on PPBI mean EPS estimates for 2014 and 2015 per SNL FactSet research. Excludes non-recurring merger
related expenses in 2015
related expenses in 2015
(3) Non-GAAP, please see non-GAAP reconciliation in appendix
(4) Payback period based on the number of years its takes to eliminate the tangible book value per share dilution
with the estimated pro forma PPBI EPS accretion
with the estimated pro forma PPBI EPS accretion
Cost Savings
§ Estimated cost savings in excess of 45.0%
§ Plan to consolidate 2 Independence branch locations
§ Assumption that cost savings are 75.0% phased-in during 2015 and 100.0% by 2016
Other
Assumptions
Assumptions
§ Fair value mark of -1.65% of gross loans, or $5.6 million, and -10.0% of fixed assets, or $200k
§ Fair value mark of 0.11% of total deposits, or $407k (increases deposit liability balance)
§ Pre-tax one-time transaction costs of approximately $6.3 million
§ Core deposit intangible asset of 1.42% or $4.2 million amortized over 8 years based on sum-of-years digits methodology
§ No revenue synergies assumed in modeling
7
Overview of Independence Bank
Source: SNL Financial, regulatory financial data as of 9/30/2014 and market data as of 10/21/2014
Note: All dollars in thousands
§ $426 million asset bank headquartered in Newport
Beach, California
Beach, California
§ Six branch footprint in Orange County and Riverside
County
County
§ ROAA of 0.77% and an ROATCE of 7.26% for Q3 2014
§ Loan growth of 27.6% and deposit growth of 20.7% in Q3
(annualized growth rate vs. prior period)
(annualized growth rate vs. prior period)
§ Completed acquisition of Riverside, CA-based Premier
Service Bank on January 31, 2014
Service Bank on January 31, 2014
8
Pro Forma Loans & Deposits
Pro Forma(1)
Independence
PPBI
PPBI
Independence
Pro Forma(1)
Diversified Loan Portfolio
Strong Core Deposit Base
$1.5B Deposits
0.35% Cost of Deposits
$358.3MM Deposits
0.40% Cost of Deposits
$1.9B Deposits
0.36% Cost of Deposits
$1.5B Loans
5.25% Yield on Loans
$341.1MM Loans
5.62% Yield on Loans
$1.9B Loans
5.35% Yield on Loans
Source: PPBI earnings release and Independence regulatory deposit data and
internal loan data, for the quarter ended 9/30/2014
internal loan data, for the quarter ended 9/30/2014
(1) Pro forma does not include purchase accounting or merger related adjustments
9
Pro Forma Capital Ratios
(1) Actual as of 9/30/2014
(2) Based on merger assumptions for Independence acquisition as identified on previous slides
(3) Non-GAAP, please see GAAP reconciliation
§ Financial assumptions for PPBI and Independence as of 9/30/2014
§ Includes pro forma scenario for PPBI with merger assumptions for Independence
§ Approximately $28 million in excess capital above target leverage ratio of 8.00%, which provides flexibility for
additional growth opportunities
additional growth opportunities
|
|
PPBI(1)
|
Pro Forma
With IDPK (2)
|
|
Tangible Common Equity Ratio(3)
|
8.43%
|
8.35%
|
|
Leverage Ratio
|
9.50%
|
9.22%
|
|
Tier-1 Ratio
|
10.53%
|
10.20%
|
|
Risk Based Capital Ratio
|
14.71%
|
13.65%
|
10
Concluding Thoughts
§ Pro forma organization with over $2.5 billion in assets and significant scarcity value
§ Acquiring a financially attractive institution with a strong geographic fit
§ Opportunity to realize significant cost savings and synergies
§ Meaningful addition of low-cost core deposit funding
§ Effective use of capital, enhancing both profitability and shareholder value
§ Strategically and financially compelling merger - in line with PPBI’s acquisition strategy
11
Appendix
12
Non-GAAP Financial Measures
Tangible common equity to tangible assets (the "tangible common equity ratio") and tangible book value per share are a non-GAAP financial measures derived from GAAP-based
amounts. We calculate the tangible common equity ratio by excluding the balance of intangible assets from common stockholders' equity and dividing by tangible assets. We calculate
tangible book value per share by dividing tangible common equity by common shares outstanding, as compared to book value per common share, which we calculate by dividing
common stockholders’ equity by common shares outstanding. We believe that this information is consistent with the treatment by bank regulatory agencies, which exclude intangible
assets from the calculation of risk-based capital ratios. Accordingly, we believe that these non-GAAP financial measures provide information that is important to investors and that is
useful in understanding our capital position and ratios. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP
measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled measures reported by other
companies. A reconciliation of the non-GAAP measure of tangible common equity ratio to the GAAP measure of common equity ratio and tangible book value per share to the GAAP
measure of book value per share are set forth below.
amounts. We calculate the tangible common equity ratio by excluding the balance of intangible assets from common stockholders' equity and dividing by tangible assets. We calculate
tangible book value per share by dividing tangible common equity by common shares outstanding, as compared to book value per common share, which we calculate by dividing
common stockholders’ equity by common shares outstanding. We believe that this information is consistent with the treatment by bank regulatory agencies, which exclude intangible
assets from the calculation of risk-based capital ratios. Accordingly, we believe that these non-GAAP financial measures provide information that is important to investors and that is
useful in understanding our capital position and ratios. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP
measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled measures reported by other
companies. A reconciliation of the non-GAAP measure of tangible common equity ratio to the GAAP measure of common equity ratio and tangible book value per share to the GAAP
measure of book value per share are set forth below.
Note: All dollars in thousands
(1) As of 9/30/2014
(2) Based on merger assumptions for Independence acquisition as identified on previous slides