First Keystone Corp. · OTC:FKYS
First Keystone — Debt Investor Presentation (December 2020)
43 slides from First Keystone's debt investor presentation, Dec 11, 2020
Slide 1: First Keystone Corporation Subordinated Notes Offering Presentation
December 2020 First Keystone Corporation Subordinated Notes Offering Presentation CONFIDENTIAL
Slide 2: Notice to Recipients
Notice to Recipients 2 This confidential presentation (this “Presentation”) has been prepared solely for general informational purposes by First Key sto ne Corporation (the “Company,” the “holding company,” “we” or “our”), and is being furnished solely for use by prospective participants in consider
Slide 3: Offering Disclaimer
Offering Disclaimer This Presentation has been prepared based on information regarding our operations, as well as information from public sources . T he information in this Presentation is confidential and may not be reproduced or redistributed, passed on or divulged, directly or indirectly, to any
Slide 4: Table of Contents
Table of Contents Executive Summary 5 I Management Team, Board & Ownership Information 15 II Assets Highlights 19 III Liabilities Highlights 28 IV Capital Highlights 32 V Income Statement Highlights 35 VI Appendix 40 VII 4
Slide 5: I. Executive Summary
I. Executive Summary 5
Slide 6: Terms of the Offered Securities
Terms of the Offered Securities Issuer: First Keystone Corporation , holding company of First Keystone Community Bank (the "Bank") Security: Subordinated Debt Principal Amount : $20 million Term: 10 - year term, 5 - year no - call period Coupon: [TBD] fixed for 5 years; floating thereafter at [TBD]
Slide 7: Company Overview
(dollars shown in thousands) 2017 2018 2019 2020YTD Total Assets 990,121$ 1,012,000$ 1,007,226$ 1,134,735$ Total Loans 559,397$ 606,392$ 647,732$ 704,040$ Total Deposits 778,146$ 671,553$ 761,628$ 919,219$ Tangible Equity 97,586$ 97,623$ 109,619$ 121,336$ Loans / Deposits 71.78% 90.24% 84.74% 75.26%
Slide 8: Markets Overview
Source: U.S. Census Bureau, Austin Business Journal, Austin Chamber of Commerce, U.S. News & World Report, S&P Global Market Int elligence Note: The company, product and service names used herein are for identification purposes only All trademarks and registered trademarks are the property of their
Slide 9: Investment Highlights
Investment Highlights Source: S&P Global Market Intelligence; Company provided documents (1) Net noninterest expense / AA calculation detailed on page 39 (2) Statistic represents 79% of loans classified as CRE loans for internal collateral purposes (3) Statistic represents 89% of loans classified as
Slide 10: Pro Forma Regulatory Capital
$110,221 $20,000 $7,717 Common Equity Tier 1 Capital New Sub Debt ALLL $110,221 $7,717 Actual Pro Forma Bank Level Pro Forma Regulatory Capital 09/30/20 Adj. 09/30/20 Common Equity Before Adjustments 127,771$ 18,000$ 145,771$ Less: Goodwill & Intangible Assets Net of DTLs 19,133 – 19,133 Less: Other
Slide 11: Debt Service Coverage Ratio
Source: Company documents, S&P Global Market Intelligence (1) 2020E consolidated based on 09/30/20 YTD annualized pre - tax net income (2) 2020E bank net income based on 9/30/20 YTD annualized net income (3) Pro forma September 30, 2020 bank level equity assumes First Keystone down - streams 90% of
Slide 12: Relative Risk Analysis – PT Score
First Keystone Community Bank Relative Risk Analysis – PT Score TM Source: Performance Trust PT Score Note: PT Score Overview using September 30, 2020 financial data Note : PT Score™ is a propriety risk assessment system created using numerous call report based ratios selected by Performance Trust .
Slide 13: Relative Risk Analysis – PT Score Pro Forma
Relative Risk Analysis – PT Score TM Pro Forma Source: Performance Trust PT Score Note: PT Score Overview using September 30, 2020 financial data 13 This analysis assumes an $20 million sub debt issuance at the holding company with $18 million of proceeds down - streamed to the bank as capital immed
Slide 14: 2020 Q2 & Q3 Financial Highlights
($000s) Q2 2020 Q3 2020 Total Assets $1,068,719 $1,134,735 Total Loans (HFI & HFS) $676,914 $704,040 Total Deposits $844,726 $919,219 Tangible Equity $118,399 $121,336 Loans / Deposits 80.13% 76.59% Loans / Assets 63.34% 62.04% NPAs / Assets (1)(2) 0.66% 0.61% NCOs / Avg. Loans (2) 0.02% 0.03% Reser
Slide 15: II. Management Team, Board & Ownership Information
II. Management Team, Board & Ownership Information 15
Slide 16: Experienced Management Team
Elaine A. Woodland – President and CEO Experienced Management Team Source: Company provided biographies 16 Elaine joined First Keystone Community Bank on November 1, 2007 when the Bank acquired Pocono Community Bank where she served as a Commercial Loan Officer. In 2008 she was promoted to Sr. VP /
Slide 17: Experienced Management Team (Con't)
Experienced Management Team (Con’t) Source: Company provided biographies 17 Jonathan R. Littlewood – VP and Chief Lending Officer Jonathan joined First Keystone Community Bank on January 7, 2008 as Business Deposit Specialist. He was promoted to Commercia l Services Officer in September 2008 and Chi
Slide 18: Ownership Information
Ownership Information Source: S&P Global market intelligence, recent 13F filings, proxy statements, and Form 4’s Holder Common Stock Equivalent Held (actual) Percent of Common Shares Outstanding (%) Position with First Keystone William E. Rinehart 138,693 2.36 Independent Director Robert A. Bull 134
Slide 19: III. Assets Highlights
III. Assets Highlights 19
Slide 20: Measured Balance Sheet Growth
$726 $778 $672 $762 $919 $500 $600 $700 $800 $900 $1,000 2016Y 2017Y 2018Y 2019Y 2020YTD $91 $98 $98 $110 $121 $50 $70 $90 $110 $130 $150 2016Y 2017Y 2018Y 2019Y 2020YTD $984 $990 $1,012 $1,007 $1,135 $800 $900 $1,000 $1,100 $1,200 2016Y 2017Y 2018Y 2019Y 2020YTD $522 $559 $606 $648 $704 $400 $500 $
Slide 21: Investment Portfolio Composition & Performance
Investment Portfolio Composition & Performance Source: S&P Global Market Intelligence, Performance Trust Capital Partners Note: Bank level asset class breakdown shown (1) Total return calculations based on Performance Trust Total Return calculations as of September 30, 2020. Past performance is not
Slide 22: Loan Portfolio Diversification & Growth
$522 $559 $606 $648 $704 $400 $500 $600 $700 $800 2016Y 2017Y 2018Y 2019Y 2020YTD Loan Portfolio Diversification & Growth Source: S&P Global Market Intelligence, Company provided documents Note: 2020YTD as of September 30, 2020 9/30/20 Bank Loan Composition – Regulatory Classification Loan Trends ($
Slide 23: Historical Bank Loan Composition & Yields
Historical Bank Loan Composition & Yields Source: S&P Global Market Intelligence Note: 2020YTD financials shown for the year - to - date ended September 30, 2020. Bank level financials shown. Total Loans include loans held for sale; Other loans are net of unearned fees $31.7MM of PPP loans included
Slide 24: CRE and C&I Portfolio by Product Type
CRE and C&I Portfolio by Product Type Source: Company provided documents as of 9/30/20; based on internal code classifications, may not match call report classific ati ons (1) Statistic represents 79% of loans classified as CRE loans for internal collateral purposes 24 9/30/2020 % of # of Balance CR
Slide 25: Loan Deferral Tracking Due to COVID-19
Loan Deferral Tracking Due to COVID - 19 Source: Company provided deferrals spreadsheet reported in the 10 - Q filing, data as of 11/20/2020 25 Loan Deferral Commentary: • As of 9/30/20, there were $74.9MM in active deferrals • Top 10 borrowers on deferment represented $26MM, all concentrated in com
Slide 26: Non-performing Assets Details
Non - performing Assets Details Source: S&P Global Market Intelligence Bank Non - Accrual Loans by Type Bank Commentary Asset Quality Detail as of September 30, 2020 : • Total non - accrual loans of $6.84MM • Loans 90+ days past due of $542K • OREO to total assets of 0.01% Non - Accrual Loan Detail
Slide 27: Asset Quality & Reserve Coverage Ratios
Asset Quality & Reserve Coverage Ratios Source: S&P Global Market Intelligence Note: Bank level financials shown for the year - to - date ended or as of September 30, 2020. (1) NPA’s excluding loans past - due 90 days or more and still accruing interest; calculated as the sum of nonaccrual loans and
Slide 28: IV. Liabilities Highlights
IV. Liabilities Highlights 28
Slide 29: Deposit Growth & Composition
Deposit Growth & Composition Source: S&P Global Market Intelligence; Company provided documents. Deposit composition as of September 30, 2020 Note: 2020YTD for the year - to - date ended September 30, 2020. Non Interest Bearing Deposits /Total Deposits (%) Deposit Composition 15.2% 15.6% 18.8% 17.7%
Slide 30: Regional Deposit Information by County
Regional Deposit Information by County Source: S&P Global Market Intelligence; Deposit information as of June 30, 2020 Note: Deposit market share data does not include credit unions Columbia County, PA 2020 2020 2020 2020 Deposits Market Rank Institution (ST) Branches ($000s) Share (%) 1 CCFNB Banco
Slide 31: CD Repricing Opportunities
CD Repricing Opportunities Source: Company provided financial information; CD balances as of September 30, 2020 31 $26,788 $84,763 $39,230 $25,302 $15,268 $8,224 $91 – $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 2020 2021 2022 2023 2024 2025 2026 Balance Avg. Rate Maturit
Slide 32: V. Capital Highlights
V. Capital Highlights 32
Slide 33: Total Risk-based & Tier 1 Leverage Bank Capital Ratios
Total Risk - based & Tier 1 Leverage Bank Capital Ratios Source: S&P Global Market Intelligence (1) “Expanded Community Bank Guide to the New Capital Rule for FDIC - Supervised Banks” 9.71% 9.42% 9.48% 8.43% 8.62% 9.03% 9.19% 9.00% 8.42% 8.21% 8.02% 8.59% 9.25% 8.56% 8.63% 8.46% 8.67% 8.84% 9.01% 9.
Slide 34: Historical Regulatory Bank Capital Ratios
Historical Regulatory Bank Capital Ratios Source: S&P Global Market Intelligence Note: 2020YTD as of September 30, 2020 (1) “Expanded Community Bank Guide to the New Capital Rule for FDIC - Supervised Banks” Tier 1 Risk Based Ratio CET1 Ratio Total Risk Based Ratio Tier 1 Leverage Ratio 34 8.84% 9.0
Slide 35: VI. Income Statement Highlights
VI. Income Statement Highlights 35
Slide 36: Core Net Revenue Detail
Core Net Revenue Detail Source: S&P Global Market Intelligence, 2020YTD shown for the 9 months ended September 30, 2020. *2020YTD values shown on an annualized basis for comparative purposes. 36 $28,620 $29,574 $30,105 $33,784 $21,502 $22,807 $23,686 $23,796 $5,214 $5,789 $6,282 $5,936 $- $5,000 $10
Slide 37: Net Interest Income & Net Interest Margin
Net Interest Income & Net Interest Margin Source: S&P Global Market Intelligence, 2020YTD shown for the 9 months ended September 30, 2020. *2020YTD Net Interest Income shown on an annualized basis for comparative purposes. (1) Bank level ratios shown, since selected GAAP yields/costs not available $
Slide 38: Profitability & Expense Controls
Profitability & Expense Controls Source: S&P Global Market Intelligence, 2020YTD shown for the 9 months ended September 30, 2020. 63.2% 63.6% 63.6% 59.7% 2.15% 2.27% 2.35% 2.25% 0.00% 1.50% 3.00% 4.50% 6.00% 0.0% 20.0% 40.0% 60.0% 80.0% 2017Y 2018Y 2019Y 2020YTD Noninterest Expense / Avg. Assets Eff
Slide 39: Net Interest Margin vs. Net Non-interest Expense
Net Interest Margin vs. Net Non - interest Expense Source: S&P Global Market Intelligence 3.19% 3.26% 3.33% 3.28% 3.48% 3.59% 1.66% 1.69% 1.79% 1.76% 1.60% 1.72% 2.05% 1.98% 2.02% 2.03% 1.90% 1.78% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 Net Interest Margin Net
Slide 40: VII. Appendix
VII. Appendix 40
Slide 41: Regulatory Financial Highlights – First Keystone Community Bank
Regulatory Financial Highlights – First Keystone Community Bank Source: S&P Global Market Intelligence Note: Financial data shown at Bank level (1) NPA’s excluding restructured loans 12/31/2016 For the Years Ended: For the Quarters Ended: 9/30/2020 12/31/2016 12/31/2017 12/31/2018 12/31/2019 9/30/20
Slide 42: Historical Consolidated Balance Sheet
Historical Consolidated Balance Sheet Source: Audited financial statements for 2016 to 2019 Year-Ended December 31, September 30, (dollars shown in thousands) 2016 2017 2018 2019 2020 Assets Cash & Bal. Due from Dep. Inst. 10,610$ 10,221$ 12,432$ 10,971$ 46,223$ Securities 385,118$ 354,276$ 326,295$
Slide 43: Historical Consolidated Income Statement
Historical Consolidated Income Statement YTD Year-Ended December 31, September 30, (dollars shown in thousands) 2016 2017 2018 2019 2020 Total Interest Income 31,643$ 32,268$ 35,573$ 38,527$ 29,251$ Total Interest Expense 5,282 6,548 8,620 10,243 5,136 Net Interest Income 26,361 25,720 26,953 28,284
First Keystone — Debt Investor Presentation (December 2020) on 6ix