Covest Bancshares — Merger or Acquisition (November 2002)
27 slides from Covest Bancshares's merger presentation, Nov 4, 2002
Slide 1: Midwest Banc Holdings, Inc. to acquire CoVest Bancshares, Inc.
Midwest Banc Holdings, Inc. to acquire CoVest Bancshares, Inc. Investor Presentation November 4, 2002
Slide 2: Forward Looking Statements
Forward Looking Statements This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the
Slide 3: Additional Information
Additional Information A registration statement will be filed with the Securities and Exchange Commission in connection with the proposed transaction. The registration statement will include a proxy statement/prospectus which will be sent to the shareholders of CoVest Bancshares and Midwest Banc Hol
Slide 4: Transaction Summary
Transaction Summary Transaction: Midwest Banc Holdings, Inc. to acquire CoVest Bancshares, Inc. Aggregate Value: $105.2 million (including options) Deal Structure: 0.925 shares of MBHI stock plus $10.25 in cash for each share of CoVest stock Stock/Cash Mix: 62.9% stock and 37.1% cash Price per COVB
Slide 5: Transaction Summary
Transaction Summary Due Diligence: Credit file review completed Price Protection: COVB may terminate if MBHI stock underperforms defined peer group by more than 17.5%, subject to certain provisions Conditions to Closing: MBHI and COVB shareholder approvals and state and federal regulatory approvals
Slide 6: Transaction Rationale
Transaction Rationale The COVB acquisition is one part of a three-part strategy to expand market presence within the greater Chicago metropolitan area Fills in "market gaps" within existing franchise Creates market-effective and cost-efficient network of 20 banking centers in the greater Chicago met
Slide 7: Highly Attractive Regional Banking Franchise
Highly Attractive Regional Banking Franchise $2.8 billion in assets, $1.8 billion in loans and $2.0 billion in deposits at 9/30/02 Solid core customer base with strong Cook County franchise Attractive higher growth markets in DuPage and McHenry Counties Middle class, white collar and professional de
Slide 8: Transaction Rationale
Transaction Rationale Accretive to MBHI pro forma EPS in 2003: 5.6% on a cash basis and 1.8% on a GAAP basis (based on consensus estimates for MBHI and COVB and with no revenue enhancements) Provides market expansion and incremental earnings without impairing superior ROE position to peer groups Cos
Slide 9: Transaction Rationale
Transaction Rationale Diversifies commercial real estate portfolio with a multi-family niche and increases core deposit base Provides staffing depth for key skilled positions in lending, retail banking, and operations The COVB and BFFC transactions will increase MBHI stockholders by 3.5 times (from
Slide 10: Overview of Midwest Banc Holdings, Inc. (MBHI)
Overview of Midwest Banc Holdings, Inc. (MBHI) Bank holding company headquartered in Melrose Park, IL with $1.9 billion in assets ($2.1 billion after completion of the pending BFFC transaction) with insurance and retail securities brokerage service subsidiaries 9/30/02 YTD earnings of $19.1 million
Slide 11: Overview of CoVest Bancshares, Inc. (COVB)
Overview of CoVest Bancshares, Inc. (COVB) Bank holding company with $600 million in assets, headquartered in Des Plaines, IL. Additional banking centers in Schaumburg and Arlington Heights Established in 1992 and converted from a thrift in 1997 Publicly traded on Nasdaq (symbol: COVB) September 200
Slide 12: MBHI's Three Step Approach to Strategic Growth
MBHI's Three Step Approach to Strategic Growth Internal Growth: Internal growth from deposit and loan penetration in existing markets. Further acceleration in revenue growth from fee- generating business lines De Novo Branching: Glenview and Addison banking centers announced. Openings are anticipate
Slide 13: Big Foot Financial Corp.
Big Foot Financial Corp. Three banking centers with $131.7 million in deposits and $169.4 million in loans at 9/30/02 Long Grove - affluent, high revenue growth potential Wicker Park/Bucktown - established MBHI customer base and rehab lending Norridge - strong core deposit generation in contiguous m
Slide 14: Glenview and Addison De Novo Branches
Glenview and Addison De Novo Branches Established MBHI customer base in local markets Attractive retail customer demographics Low to moderate fixed overhead in facilities 8 to 10 months to break even and 15 to 18 months on a cumulative basis
Slide 15: CoVest and the Northwest Corridor
CoVest and the Northwest Corridor Three banking centers with $462.9 million in deposits and $517.6 million in loans at 9/30/02 Largest banking center and top market share in Des Plaines Schaumburg is contiguous to existing MBHI branch in Roselle Arlington Heights - attractive mix of retail and comme
Slide 16: Compelling Chicago MSA Deposit Market Share
Compelling Chicago MSA Deposit Market Share Of the 15 markets in Chicago MSA - Top 5 in 11 Ranked # 1 in 5 markets. Ranked # 2 in 1 market. Ranked # 3 in 2 markets. Ranked # 4 in 2 markets. Ranked # 5 in 1 market. Ranked # 1 in 5 markets Ranked # 2 in 1 market Ranked # 3 in 2 markets Ranked # 4 in 2
Slide 17: Deposit Market Share
now ee Midwest Banc a) Holdings, Inc. Deposit Market Share covest banc
Slide 18: Increase In Core Deposits and Improved Mix
Increase In Core Deposits and Improved Mix
Slide 19: Comparable Loan Portfolio
rs C8), Midwest B a) Holdings, Ine. covest banc Comparable Loan Portfolio Pro Forma MBHI'BFFC COVB Pro Forma rey nev 119% 20% 105% 29% 94% ae 104% 16506 i 206 anal 259% a0 22% 208 45096 am Comes W Comanescial RE Ocorstuctin VE — OMalt-Fanily RE gvialtne LConsuner Mertzaze Comsuner Total Loans $1.3 b
Slide 20: Solid Credit Quality
Solid Credit Quality At September 30, 2002* MBHI COVB Pro Forma Non-Performing Assets / Assets 0.41% 0.85% 0.50% Non-Performing Assets / Loans + OREO 0.66 0.98 0.75 Non-Performing Loans / Loans 0.74 0.85 0.70 Net Charge-Offs / Average Loans 0.13 0.11 0.12 Allowance / Gross Loans 0.88 1.32 1.01 Allow
Slide 21: Pro Forma Earnings Impact
now ee Midwest Banc a) Holdings, Inc. Pro Forma Earnings Impact BHI cov (@ in tousands, except per-share dala) —_Projected 2003 Projected 2003 covest banc Merger Adjustments _Pro Forma ( Cash Bamings $30,872 $7,205 : 933077 After-Tax Anticipated Cost Savings (2) : : 2197 $2,197 Other After-Tax Adjus
Slide 22: Transaction Costs
Transaction Costs ($ in millions) One-Time Transactional Costs Pre-Tax Amount Severance Expenses $4.0 Professional Fees 1.7 Data Processing & Systems Conversion 1.4 Branch Facility & Equipment Improvements 0.4 Other Expenses 3.3 Total Transaction Costs (pre-tax) $10.8 Total Transaction Costs (after-
Slide 23: Estimated Cost Savings
Estimated Cost Savings ($ in millions) Source of Cost Savings Pre-Tax Amount Compensation and Benefits $1.6 Data Processing & Systems 0.7 Advertising & Marketing 0.7 Professional Fees 0.5 General & Administrative 0.1 Total Cost Savings (pre-tax) $3.7 Total Cost Savings (after-tax) $2.2 Revenue enhan
Slide 24: Comparative Performance to Peers
Comparative Performance to Peers At September 30, 2002 ($ in millions) Performance Measures MBHI* COVB Pro Forma IL Peers** ROAA (%) 1.28 1.12 1.24 1.10 ROAE (%) 21.72 14.45 20.10 13.82 Net Interest Margin (%) 3.53 3.68 3.56 3.75 Efficiency Ratio (%) 48.64 52.90 49.59 56.10 * Includes acquisition of
Slide 25: Manageable Integration
Manageable Integration Similar banking cultures and community bank philosophies Comparable human resource benefits and programs Common focus on high-quality credits Similar deposit products and services - smooth customer conversion Experienced transition teams to manage business lines integration No
Slide 26: BFFC and COVB Timetable
BFFC and COVB Timetable BFFC Acquisition-SEC Approval BFFC Proxy & Shareholders Approval BFFC Systems Integration COVB Acquisition Definitive Agreement COVB Acquisition SEC Approval COVB /MBHI Proxies & Shareholder Approval COVB Systems Integration Projected Date Sept. 02 Oct. 02 Nov. 02 Dec. 02 Jan
Slide 27: Transaction Summary
Transaction Summary Creates an efficient 20 banking center network with an above average revenue growth potential Dominant market share in markets served Transaction diversifies commercial real estate portfolio Financially compelling: accretive to GAAP & Cash EPS in first full year of operations Ide
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