Stellar Bancorp, Inc. · NYSE:STEL
Stellar Bancorp — CBTX — Merger or Acquisition (November 2021)
28 slides from Stellar Bancorp's merger presentation, Nov 8, 2021
Slide 1: Transformational Merger of Equals Creating a Premier Texas Franchise
Transformational Merger of Equals Creating a Premier Texas Franchise INVESTOR PRESENTATION November 8, 2021
Slide 2: Disclaimer: Forward-Looking Statements
Disclaimer FORWARD-LOOKING STATEMENTS Certain statements in this presentation which are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, and Secti
Slide 3: Table of Contents and Presenters
CONTENTS PRESENTERS I. Executive Summary II. Merger Rationale III. Diligence & Financial Impact IV. Conclusions 3 Table of Contents Steven F. Retzloff Robert R. Franklin, Jr. Paul P. Egge
Slide 4: Executive Summary
Executive Summary E\\\ CBTX, INC. Wh ” AllegianceBancshares, Inc.
Slide 5: A Premier Texas Franchise
A Premier Texas Franchise Creates a premier Texas financial institution by combining two of the largest Houston-focused banks Generates significant shareholder value through materially enhanced metrics True merger-of-equals – combined management team and equal board contribution Complementary branch
Slide 6: Key Merger Terms
(1) Based on CBTX total shares outstanding of 24,579,599 (including 159,961 shares of restricted stock to be vested upon CIC) & ABTX total shares outstanding of 20,247,480 (2) Cash to be exchanged in lieu of fractional shares Note: Market data as of November 5, 2021 6 Key Merger Terms CONSIDERATION
Slide 7: Seasoned and Deep Combined Leadership Team
7 Seasoned and Deep Combined Leadership Team Steven F. Retzloff Executive Chairman Ramon “Ray” Vitulli, III Bank CEO Paul P. Egge CFO SELECTED EXECUTIVE LEADERSHIP TEAM BOARD OF DIRECTORS EXPERIENCED LEADERSHIP WITH A PROVEN TRACK RECORD Robert “Bob” Franklin Jr. HC CEO Joe West Bank Chief Credit Of
Slide 8: Merger Rationale
Merger Rationale E\\\ CBTX, INC. Wh ” AllegianceBancshares, Inc.
Slide 9: Merger Rationale
9 Merger Rationale TRANSFORMATIVE MERGER Combined company projected to have approximately $11 billion in assets and stronger financial performance The ability to grow, generate top tier profitability, and create value for shareholders is materially enhanced Better positioned to grow non- interest in
Slide 10: 10 Largest Deposit Market Share of any Texas-Based Bank in the Houston Region
$2.2 $3.3 $3.5 $3.6 $5.5 $6.3 $6.3 $6.5 $6.8 $8.0 $8.7 $13.8 $16.1 Truist CHARLIE Texas Capital Comerica ALPHA Woodforest BancorpSouth Prosperity Capital One Frost PRO FORMA Zions PNC BofA Wells Fargo JPMorgan Note: Deposit market share based on FDIC data as of June 30, 2021; Pro forma represents de
Slide 11: Unparalleled Market Focus: Deposits in the Houston Region
11 Unparalleled Market Focus: Deposits in the Houston Region (1) Name Total Assets ($B) Houston Region (1) Deposits ($B) Percent of Company Deposits (%) JPMorgan 3,757.6 156.5 6.5% Wells Fargo 1,954.9 33.2 2.3% BofA 3,085.4 26.9 1.4% PNC 553.5 16.1 3.6% Zions 88.3 13.8 17.8% PRO FORMA 11.0 8.7 95.0%
Slide 12: Largest Community Bank Headquartered in 4th Largest City in the US
Largest Community Bank Headquartered in 4th Largest City in the US 5-YEAR HISTORICAL POPULATION GROWTH MEDIAN HOME PRICE ($000s) -4.5% -0.2% -1.5% 11.3% 11.8% 9.4% 3.6% New York MSA Los Angeles MSA Chicago MSA Dallas MSA Houston MSA Texas USA 496.7 712.8 268.7 263.6 224.5 203.0 254.8 New York MSA Lo
Slide 13: Meaningful Texas Franchise
13 Meaningful Texas Franchise OBSERVATIONS The combined company will have the 17th largest deposit market share in the state of Texas Together the companies will have the 9th largest deposit market share of any Texas headquartered bank TX HQ 2021 Rank Institution Branches # Deposits $ Billions Marke
Slide 14: Diligence & Financial Impact
Diligence & Financial Impact
Slide 15: Robust and Comprehensive Two-Way Due Diligence
KEY DILIGENCE ITEMS Robust and Comprehensive Two-Way Due Diligence of loans outstanding individual loans of loans 58% >1,200 $2.5B of COVID- sensitive loans commercial borrowers of hotel loans 76% >800 95% Culture & Philosophy Credit Regulatory & Compliance Financial Technology Operational Risk Huma
Slide 16: Key Merger Assumptions
Note: Key merger assumptions, adjustments, and estimates based on internal management forecasts 16 Key Merger Assumptions EARNINGS (1) ABTX: Estimated earnings per share of $3.12 in 2022 and $3.21 in 2023 CBTX: Estimated earnings per share of $1.47 in 2022 and $1.89 in 2023 COST SAVINGS Estimated $3
Slide 17: Attractive Pro Forma Financial Metrics
17 ~$11B Total Assets ~$1.5B Market Cap ~$142M Net Income SCALED FOR SUCCESS COMPELLING FINANCIAL IMPLICATIONS 2023E ROAA ~1.3% 2023E ROATCE ~12% EPS Accretion to CBTX (1) 40% EPS Accretion to ABTX (1) 17% TBV per Share Dilution (3.9%) TBVPS Earnback 0.9 YEARS ABTX Dividend Accretion (2) 32% (1) 202
Slide 18: Enhanced Pro Forma Performance Based on 2023 Estimates
Note: Pro Forma calculated using 2023 estimates with fully phased in cost savings; Peer estimates as of November 5, 2021; Source: S&P Capital IQ Pro, FactSet; See glossary for abbreviation definitions Based on merger assumptions on page 16; See glossary for abbreviation definitions 18 Enhanced Pro F
Slide 19: Estimated Market Value Creation
OBSERVATIONS The combination is anticipated to create significant value through cost savings The capitalized value of cost savings is equal to ~20% of the combined company market capitalization 19 Estimated Market Value Creation $28M AFTER-TAX COST SAVINGS STANDALONE MKT CAP ILLUSTRATIVE COMBINED VA
Slide 20: Conclusions
Conclusions E\\\ CBTX, INC. Wh ” AllegianceBancshares, Inc.
Slide 21: Expected Benefits to All Constituencies
Expected Benefits to All Constituencies CLIENTS Ability to serve more clients As a larger company, clients will benefit from expanded service offerings TEAM MEMBERS Similar culture focused on community, clients and team members Expanded roles and enhanced career paths for team members COMMUNITY Stro
Slide 22: A Premier Texas Franchise
A Premier Texas Franchise Creates a premier Texas financial institution by combining two of the largest Houston-focused banks Generates significant shareholder value through materially enhanced metrics True merger-of-equals – combined management team and equal board contribution Complementary branch
Slide 23: Appendix
Appendix E\\\ CBTX, INC. Wh ” AllegianceBancshares, Inc.
Slide 24: Similar Loan Mix
39% 13% 21% 13% 6% 5% 4% Consistent mix of commercial, CRE and C&D loans Disciplined, low-risk balance sheets Emphasis on credit administration and risk management (1) Excludes Paycheck Protection Program Source: S&P Capital IQ Pro | Note: Loan composition data reflects Holding company level data as
Slide 25: Attractive Low Cost Deposit Base
47% 46% 2% 5% 42% 40% 9% 9% 39% 37% 13% 11% Note: Deposit composition data reflects holding company level data as of September 30, 2021 Source: S&P Capital IQ Pro 25 Attractive Low Cost Deposit Base Meaningful level of non-interest bearing balances Limited reliance on time deposits Low pro forma cos
Slide 26: TBVPS Reconciliation
(1) Includes vesting of 159,961 thousand shares of CBTX restricted stock Based on merger assumptions on page 16; See glossary for abbreviation definitions 26 TBVPS Reconciliation CBTX 21Q3 TBVPS CBTX TBVPS AT CLOSE ESTIMATED GROWTH THROUGH CLOSE DAY 2 PROVISION PRO FORMA TBVPS AT CLOSE NET MERGER CO
Slide 27: EPS Reconciliation
27 EPS Reconciliation $1.89 EPS $2.65 EPS $46.4 $66.3 $142.3 ABTX STANDALONE NET INCOME AFTER TAX MERGER ADJUSTMENTS PRO FORMA NET INCOME CBTX STANDALONE NET INCOME PRO FORMA EARNINGS 2023E $s in millions, except per share ABTX ESTIMATED NET INCOME $66.3 ABTX ESTIMATED EPS $3.21 CBTX ESTIMATED NET I
Slide 28: Glossary
28 Glossary TERM DEFINITION CALCULATION ROAA Return on average assets Net income divided by average assets ROATCE Return on average tangible common equity Net income divided by average tangible common equity TBVPS Tangible book value per share Tangible common equity divided common shares outstanding