Cullen/frost Bankers, Inc. · NYSE:CFR
Cullen/frost Bankers — Merger or Acquisition (July 2006)
21 slides from Cullen/frost Bankers's merger presentation, Jul 3, 2006
Slide 1: Cullen/Frost Bankers, Inc. and Strategic Expansion in the Attractive Fort Worth Market
Cullen/Frost Bankers, Inc. and Strategic Expansion in the Attractive Fort Worth Market July 3, 2006
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements contained in this filing that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"), notwithstanding that such statements are not specifically id
Slide 3: Additional Information
Additional Information In connection with the proposed merger, Cullen/Frost will file with the SEC a Registration Statement on Form S-4 that will include a Proxy Statement of Summit and a Prospectus of Cullen/Frost, as well as other relevant documents concerning the proposed transaction. Shareholder
Slide 4: Transaction Rationale
Strong Cultural Affinity Solid Financial Results Low Risk Transaction Expands Presence in Attractive Market Transaction Rationale Tarrant County (Fort Worth) demographics more attractive than Dallas Metroplex and Texas as a whole Creates strong #4 market position in Tarrant County with 10.7% market
Slide 5: Transaction Summary
Transaction: Merger of Summit Bancshares, Inc. and its wholly owned subsidiaries (collectively "Summit") with Cullen/Frost Transaction Value (1): $363 million ($28.31 per share) Consideration (1): 3.84 million shares of Cullen/Frost common stock and $143.4 million in cash; approximately 60% stock /
Slide 6: Transaction Summary (cont.)
Management Retention: Phil Norwood to become president of Tarrant County region Seven senior employees have signed employment agreements Other employees have agreed to retention arrangements Walk Away (1): Double trigger walk away upon 20% Cullen/Frost price decrease and 20% Cullen/Frost price decre
Slide 7: Summit Overview
Summit Overview Ticker: "SBIT" (NASDAQ) Founded in 1975 in Fort Worth 12 full service banking locations located throughout Tarrant County Traditional commercially-oriented community bank - - Focus on C&I and commercial real estate lending - - Strong core deposit base Operates several ancillary busin
Slide 8: Summit Market
Summit Market ____________________________ Source: SNL Financial. Deposit data as of June 30, 2005. 1. Excludes non-traditional deposits. 2. Source: North Central Texas Council of Governments. Fort Worth is Texas' third largest deposit market DFW airport is the third busiest airport in the world and
Slide 9: Pro Forma Deposit Franchise
Pro Forma Deposit Franchise Pro Forma Dallas-Fort Worth Branch Map Top 10 Banks in Dallas-Fort Worth-Arlington MSA Top 6 Banks in Tarrant County Summit Cullen/Frost ____________________________ Source: SNL Financial. Data as of June 30, 2005, unless otherwise stated. 1. Branch overlap distance is 3.
Slide 10: Summit Growth Trends: Superior Growth
Superior Growth Diluted EPS Net Income 2001 0.68 8.802 2002 0.73 9.317 2003 0.77 9.768 2004 0.85 10.762 2005 1.04 13.176 Diluted EPS and Net Income Growth Trend Loans and Deposits Growth Trend Net Loans Deposits 2001 425 544 2002 462 582 2003 546 641 2004 692 792 2005 764 879 $mm $mm Summit Growth T
Slide 11: Continued Diversification of Texas Franchise: Deposits by Region
Continued Diversification of Texas Franchise $9.3 billion Deposits $10.2 billion Deposits Deposits By Region Cullen / Frost Pro Forma ____________________________ Source: Company data as of March 31, 2006.
Slide 12: Continued Diversification of Texas Franchise: Loans by Region
Continued Diversification of Texas Franchise Loans by Region $6.5 billion Loans $7.3 billion Loans Cullen / Frost Pro Forma ____________________________ Source: Company data as of March 31, 2006.
Slide 13: Similar Commercially Oriented Loan Portfolio
Similar Commercially Oriented Loan Portfolio Pro Forma Loans: $7.3 billion Deals Residential RE 0.02 Commercial & Industrial 0.45 Consumer & Other 0.13 Commercial Mortgage 0.24 RE-Const. & Land 0.16 Deals Residential RE 0.12 Commercial & Industrial 0.35 Consumer & Other 0.05 Commercial Mortgage 0.33
Slide 14: Strong Core Deposit Funding
Deals Non-interest bearing 0.29 Savings/NOW/MMDAs 0.48 CDs 0.23 Deals Non-interest bearing 0.36 Savings/NOW/MMDAs 0.52 CDs 0.12 Deals Non-interest bearing 0.36 Savings/NOW/MMDAs 0.51 CDs 0.13 Cullen/Frost Deposits: $9.3 billion Summit Deposits: $0.9 billion Pro Forma Deposits: $10.2 billion Strong C
Slide 15: Complementary Business and Operating Philosophies
Cultural Affinity Small/middle market commercial focus Relationship driven Strong financial performance with track record of growth Established trust business with $18 billion of trust assets (1) Statewide insurance agency with commission fees of $28 million (1) Cullen/Frost Summit Small/middle mark
Slide 16: Due Diligence and Integration
Due diligence and Integration Comprehensive due diligence performed - - Focus on credit, legal and accounting - - In-depth file review of a substantial portion of commercial loan portfolio Focus on minimizing customer disruption In order to facilitate integration, a transition team will be formed wi
Slide 17: Transaction Adjustments - Cost Savings
Transaction Adjustments - Cost Savings
Slide 18: Financial Impact
Financial Impact Cost savings of approximately 30% of Summit's non-interest expense, phased in 80% in 2007 and 100% thereafter Estimated one-time merger-related charges of $12.0 million pre-tax Revenue enhancements identified but not included in pro forma analysis Core deposit intangible of 2.5% of
Slide 19: Attractive Economics
Attractive Economics ____________________________ 1. Based on I/B/E/S consensus estimates of $3.75 in 2007 and $4.06 in 2008. 2. Based on I/B/E/S consensus estimate of $1.32 in 2007 and long term growth rate of 10.0% . 3. Cost savings of 30% of Summit's operating expense base phased in 80% in 2007 a
Slide 20: Transaction Pricing
Transaction Pricing Based on Cullen/Frost closing share price as of June 30, 2006 of $57.30 Multiples paid are in line with recent comparable transactions: ____________________________ Source: SNL Financial. Includes Texas bank deals announced since January 1, 2005 with deal value greater than $100
Slide 21: Conclusion
Conclusion Complementary corporate cultures - - Small/middle market and community focused Transaction adds substantial presence and accelerates growth in Tarrant County - - Creates strong #4 market position in Tarrant County with 10.7% market share Tarrant County is an affluent, rapidly growing mark
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