Peoples Financial Services Corp. · NASDAQ:PFIS
Peoples Financial Services — Merger or Acquisition (September 2023)
31 slides from Peoples Financial Services's merger presentation, Sep 27, 2023
Slide 1: Transformational Strategic Merger
Transformational Strategic Merger September 27, 2023 Enhancing Value for our Shareholders, Customers and Communities
Slide 2: Disclaimer & Forward Looking
Disclaimer & Forward Looking FORWARD-LOOKING STATEMENTS This communication includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
Slide 3: Additional Information
Additional Information ADDITIONAL INFORMATION AND WHERE TO FIND IT In connection with the proposed transaction, PFIS will file a registration statement on Form S-4 with the SEC. The registration statement will include a joint proxy statement of PFIS and FNCB, which also constitutes a prospectus of P
Slide 4: Agenda
Agenda I. Transaction & Franchise Combination Overview II. Due Diligence & Key Financial Impacts III. Conclusion IV. Appendix
Slide 5: I. Transaction & Franchise Combination Overview
I. Transaction & Franchise Combination Overview
Slide 6: Transaction Summary
Transaction Summary ▪ Holding Company Merger: Peoples Financial Services Corp. ("PFIS"), FNCB Bancorp, Inc. ("FNCB") Merger ▪ Bank Merger: Peoples Security Bank and Trust Company and FNCB Bank Structure & ▪ 100% common stock; PFIS to issue shares to FNCB shareholders Consideration ▪ Fixed exchange r
Slide 7: Strategic Rationale: Key Elements
Strategic Rationale: Key Elements Material acceleration of each entity’s size, strength, profitability and shareholder value prospects Pro forma entity is expected to have increased liquidity and is expected to be well capitalized Excellent share of the Scranton MSA and opportunity to accelerate gro
Slide 8: Creating a Powerhouse Pennsylvania Community Banking Franchise
Creating a Powerhouse Pennsylvania Community Banking Franchise Attractive Pro Forma Footprint with a #1 Community Bank(2) in Our Footprint Pro Forma Key Highlights(1) Combination of Solid Legacy and #5 in Pennsylvania Overall(3) Franchise Market Share Coupled with Successful New Expansion Scranton M
Slide 9: Opportunity to Accelerate the PFIS Geographic Expansion Strategy
Opportunity to Accelerate the PFIS Geographic Expansion Strategy PFIS Balance Sheet Geographic Expansion Strategy (28) Legacy Expansion ✓ Following completion of the Penn Market Market (16) Security/Peoples merger in 2013, PFIS initiated a • Stable, Legacy Non-Metro organic growth plan focused on ne
Slide 10: Company Overviews
Company Overviews PFIS Company Description FNCB Company Description • Founded in 1905 and headquartered in Scranton, • Founded in 1910 and headquartered in Dunmore, Pennsylvania Pennsylvania • 28 branches • 16 branches • Recent growth focused on expansion strategy focused in • Highly granular deposi
Slide 11: Loan Composition
Loan Composition Pro Forma Combined(1) Consumer Consumer Lending Lending 3% Municipal/ 4% Municipal/ Other Owner- C&I Other 8% Occupied C&I 14% C&I 8% CRE Multi-family 18% 28% 15% 5% (2) Owner- Residential Occupied (2) Mortgage Residential CRE 18% $2.8 B 14% $1.2 B Mortgage $4.0 B Owner- Nonowner- 1
Slide 12: Deposit Composition
Deposit Composition Pro Forma Combined(1) Noninterest- Noninterest- Noninterest- bearing bearing bearing Deposits Deposits Deposits 22% 19% 21% Time Time Deposits Time Deposits 19% Deposits 21% 24% $3.2 B $1.5 B $4.7 B Total Total Total Deposits Deposits Deposits IB Demand, IB Demand, IB Demand, Sav
Slide 13: II. Due Diligence & Key Financial Impacts
II. Due Diligence & Key Financial Impacts
Slide 14: Key Merger Assumptions
Key Merger Assumptions ▪ Assumed closing date of early second quarter of 2024 ▪ All stock transaction; fixed exchange ratio of 0.146x ▪ Implied consideration per FNCB share of $6.44, or $129.0 million in aggregate deal value (1) Structural Elements ▪ PFIS is the legal and accounting acquiror ▪ PFIS
Slide 15: Pro Forma Financial Impact
Pro Forma Financial Impact GAAP Financial Results Proposed GAAP Excluding CECL Day 2 Double Count(1) GAAP 43% 59% 38% 54% Earnings Impact 2024E 2025E 2024E 2025E EPS Accretion EPS Accretion EPS Accretion EPS Accretion Earnings Impact 18% 32% 18% 32% Excluding Purchase 2024E 2025E 2024E 2025E Account
Slide 16: Pro Forma Financial Snapshot: Top-Tier Projected Profitability
Pro Forma Financial Snapshot: Top-Tier Projected Profitability Pro Forma Financial Performance Relative to $3 – 10BN Asset Banks(1) 3.0% Percentile Rank: Attractive Net Interest Margin 57% (Combined vs. Peers) 55% Percentile Rank: Low Efficiency Ratio 86% (Combined vs. Peers) 1.11% Percentile Rank:
Slide 17: Meaningful Increase in Cash Dividends
Meaningful Increase in Cash Dividends • PFIS is expected to PFIS 2025 Projected will raise its cash dividend following Cash Dividends per share Earnings per Share the merger to the level which is $6.29 $2.47 intended to create a neutral impact to FNCB’s current $1.64 $3.95 dividends (therefore FNCB’
Slide 18: Superior Projected Returns Relative to Comparable M&A
Superior Projected Returns Relative to Comparable M&A GAAP EPS Accretion TBV Dilution @ Closing Fully phased-in synergies 59.2% 27.5% (9.0%) (11.3%) Comparable M&A Comparable M&A Median(1) Median(1) TBV Earnback Relative Accretion EPS Accretion as a Multiple of TBV Dilution 3.0yrs 2.4yrs 5.1x 3.1x C
Slide 19: Anticipated Merger Synergies & Profitability Acceleration
Anticipated Merger Synergies & Profitability Acceleration Expected to Meaningfully Accelerate the PFIS' Profitability Achievable Cost Synergies Recovery to Above Peer Levels ▪ Identification of $11.5 million in anticipated annual pre-tax cost savings on the last twelve months non-interest expense ba
Slide 20: Projected Valuation Upside
Projected Valuation Upside $3-$10 B Asset Sized Public Banks Mid-Atlantic / Northeast Nationwide (1) Profitability 2025 Estimated Earnings Per Share $6.29 $7.46 $7.77 Core ROATCE ~16% 14% 15% Core ROAA ~1.11% 1.0% 1.2% Net Interest Margin ~2.97% 3.1% 3.5% Efficiency Ratio ~55% 60% 58% (2) (3) Balanc
Slide 21: Meaningful Acceleration of FNCB Net Income & EPS
Meaningful Acceleration of FNCB Net Income & EPS FNCB shareholders will own approximately 29% of the combined entity that has year-to-date annualized net income of $47 million(1), inclusive of projected synergies, merger adjustments and purchase accounting impacts Net Income(1) Diluted Earnings per
Slide 22: Comprehensive Due Diligence
Comprehensive Due Diligence • Full management review of all key functional areas for both Credit Due Diligence Details companies In depth review of FNCB loan portfolio • External and internal review of each loan portfolio ~70% ~20% of Commercial of the Leasing – Same third party utilized Loan Portfo
Slide 23: III. Conclusion
III. Conclusion
Slide 24: Impact on Our Constituencies & Key Stakeholders
Impact on Our Constituencies & Key Stakeholders Our Borrowers / Depositors Our Safety & Soundness ▲ Wider product suite and customer service capabilities ▲ Improved liquidity ratios to benefit existing relationships of each party ▲ Capital ratios remain significantly above well- capitalized levels ▲
Slide 25: Investment Thesis
Investment Thesis Key Drivers of Transaction ▲ Combined bank projected to have an improved balance sheet and revenue diversification ▲ Expected to improve liquidity through fair value of FNCB’s balance sheet ▲ Projected to meaningfully increase net income, profitability ratios and expected dividends
Slide 26: IV. Appendix
IV. Appendix
Slide 27: Pro Forma Net Income Reconciliation
Pro Forma Net Income Reconciliation Proposed GAAP (excluding Current GAAP ($ in millions, except per share data) CECL Double Count) Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma GAAP: 2024E 2025E 2024E 2025E Base Combined Net Income to Common $37.5 $44.4 $37.5 $44.4 After-tax Transaction Adjustm
Slide 28: FNCB Year-To-Date (YTD) Core Net Income Reconciliation
FNCB Year-To-Date (YTD) Core Net Income Reconciliation YTD EPS Accretion to FNCB Peoples Financial Services Corp. Core Earnings 2023 YTD Year-to-Date $ in 000s Annualized 2023Q1 2023Q2 Annualized FNCB Core Net Income to Common $13,076 GAAP Net Income $7,579 $9,425 $34,008 Adjustments: FNCB Av erage
Slide 29: Pro Forma Tangible Common Equity Reconciliation
Pro Forma Tangible Common Equity Reconciliation ($ in millions, except per share data) Estimated Common at Close Shares Estimated Current GAAP (3/31/2024) Outstanding TBV Calculation of Goodwill at Close PFI S Tangible Common Equity $279.3 7.13 $39.2 Stock Consideration to FNCB $129.7 FNCB Stand Alo
Slide 30: Uninsured Deposits Walk
Uninsured Deposits Walk Pro Forma Combined(1) $ in millions Uninsured Deposits (per FDI C definition) $821 $625 $1,446 Less: Transaction Acct: State & Political 63 258 321 Less: Nontransaction Acct: State & Political 401 37 438 Uninsured excluding Fully Collateralized Public Funds $357 $330 $687 Tot
Slide 31: Thank You
Thank You
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