Pab Bankshares — IPO Roadshow (June 2010)
68 slides from Pab Bankshares's IPO roadshow presentation, Jun 8, 2010
Slide 1: June 2010 Offering of Common Stock $80 Million
June 2010 Offering of Common Stock $80 Million
Slide 2: Cautionary Notice Regarding Forward-Looking Statements
general economic conditions (both generally and in our markets) may be less favorable than expected, resulting in, among other things, a continued deterioration in credit quality, a further reduction in demand for credit and/or a further decline in real estate values; the general decline in the real
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation also contains non-GAAP financial measures determined by methods other than in accordance with generally accepted accounting principles ("GAAP"). These non-GAAP financial measures include the following: tangible book value per common share, tangible commo
Slide 4: Table of Contents
Table of Contents Offering Summary ................................................................ Page 6 Investment Summary ............................................................ Pages 8-19 Appendix A: Our Management Team .............................................. Page 21 Appendix B: Ana
Slide 5: Offering Summary
Offering Summary
Slide 6: Offering Summary
Offering Summary Issuer: PAB Bankshares, Inc. (NASDAQ: PABK) Transaction Size: $80 million Expected Pricing Date: June 2010 Over-Allotment Option: 15% Use of Proceeds: General corporate purposes Book Running Manager: Sandler O'Neill + Partners, L.P. Co-Manager: BB&T Capital Markets
Slide 7: Investment Summary
Investment Summary
Slide 8: Company Overview
Company Overview $1.2 billion bank holding company headquartered in Valdosta, GA Operating in South Georgia for over 50 years with well- established market presence Foothold in attractive long-term demographic markets of North Georgia and North Florida Credit quality deterioration centered in constr
Slide 9: Strategic Plan - Near Term Focus
Strategic Plan - Near Term Focus Fortify Our Capital Position Provide flexibility to accelerate disposition of NPAs Strengthen our regulatory standing Emerge from economic downturn well-positioned to take advantage of opportunities Eliminate Our Problem Assets Restructure and rehabilitate (where fea
Slide 10: Recent Initiatives - Protection Initiatives
Recent Initiatives - Protection Initiatives (1) For the period ended March 31, 2010 (2) See non-GAAP reconciliation on page 68 We undertook the following tactical initiatives to stabilize our balance sheet and protect our franchise: Protection Initiatives Closed a private capital offering of $13.4 m
Slide 11: Recent Initiatives - Change Initiatives
Recent Initiatives - Change Initiatives In response to deterioration in our asset quality, we undertook the following tactical initiatives to strategically reposition the company: Change Initiatives Restructured and realigned the senior management team Transformed our credit culture to manage future
Slide 12: The Virtual "Good Bank / Bad Bank"
The Virtual "Good Bank / Bad Bank" In January 2010, we completed the creation of a granular tracking function for our troubled assets that isolates our "good bank" from our "bad bank" This internal accounting system: Separates our troubled loans, OREO and non-core funding sources from our performing
Slide 13: Changes to Management Structure
Changes to Management Structure Former President and CEO retired in April 2009 Jay Torbert named President and Chief Executive Officer in June 2009 Nicole Stokes named Chief Financial Officer Announced restructuring of executive management team in October 2009 George Henderson named Chief Banking Of
Slide 14: Review Process and Our Analytics
Review Process and Our Analytics External Loan Review: Quarterly outside loan reviews Third party loan review firm reviewed approximately 45% of total loans in 2009 (1) Completed final 2009 review in December First quarter 2010 review completed in March covered approximately 11% of total loans Inter
Slide 15: Summary of Management Loss Analysis
Summary of Management Loss Analysis Management loss assumptions include $62 million of loan losses and $33 million of losses on OREO disposition, for total potential losses in a 1-2 year accelerated liquidation scenario of $95 million The "More Adverse SCAP Scenario" shows remaining potential losses
Slide 16: Summary of Financial Projections - Drivers
Summary of Financial Projections - Drivers Using our accelerated liquidation analysis for our "bad bank", we projected our balance sheet and income statement through 2014 based on the following assumptions (1): Liquidation of bad bank and reduction of balance sheet size of $230 million through Q4 20
Slide 17: Summary of Financial Projections - Results
Summary of Financial Projections - Results Through the accelerated disposition of our bad bank and the rejuvenation of steady core growth, we intend to provide a conservative base case earnings stream bolstered by a beneficial tax position that we expect to deliver the following results to our share
Slide 18: Strategic Plan - Long-Term Objectives
Strategic Plan - Long-Term Objectives Capitalize on Our Competitive Position Only 8 publicly traded commercial banks with assets between $1 billion and $5 billion headquartered in Georgia and North Florida (1) Combination of core community banking model with sophisticated banking platform Manage Dis
Slide 19: Investment Opportunity
Investment Opportunity An investment in PAB provides an opportunity to recapitalize a viable franchise with tangible strengths and a credible business plan Unique & Compelling Investment Attributes Completed an extensive discounted asset analysis to determine our true capital need Created an interna
Slide 20: Appendix A: Our Management Team
Appendix A: Our Management Team
Slide 21: Current Leadership Team
Current Leadership Team Donald J. "Jay" Torbert, Jr. President and CEO Named President April 2009 Named CEO June 2009 Joined PAB in 2000, CFO 2001 to 2009 Prior to 2000 audit manager for banking practice of regional accounting firm W. Keith Morris SVP Special Assets Group Named head of Special Asset
Slide 22: Appendix B: Analysis of the "Good Bank / Bad Bank"
Appendix B: Analysis of the "Good Bank / Bad Bank"
Slide 23: Summary of the Virtual "Good Bank / Bad Bank"
Summary of the Virtual "Good Bank / Bad Bank" (1) Note: Dollars in Thousands (1) Derived from internal "good bank" financial measures for Q1 2010 (2) Nonperforming loans, out-of-market loans and potential problem loans (3) Accrued interest on loans, deposits and other borrowings allocated to bad ban
Slide 24: "Good Bank / Bad Bank" Loan Summary
"Good Bank / Bad Bank" Loan Summary (1) Note: Dollars in Thousands (1) Derived from internal "good bank" financial measures for Q1 2010 As of March 31, 2010
Slide 25: Appendix C: Analysis of Troubled Assets
Appendix C: Analysis of Troubled Assets
Slide 26: Management Loss Analysis - Loan Portfolio
Management Loss Analysis - Loan Portfolio Note: Dollars in Thousands (1) Not representative of a standard ALL analysis; this Management Loss Analysis was performed specifically for purposes of calculating potential loan losses in an accelerated disposition scenario; this analysis was not calculated
Slide 27: Management Loss Analysis - OREO
Management Loss Analysis - OREO Performed Management Loss Analysis (1) to determine the liquidation value of our OREO properties as of December 31, 2009 Refer to Appendix D on pages 31 - 32 for additional details Note: Dollars in Thousands (1) Not representative of an OREO carrying value analysis pr
Slide 28: Supervisory Capital Assessment Program Test ("SCAP")
Supervisory Capital Assessment Program Test ("SCAP") In May 2009, the Federal Reserve announced the results of the Supervisory Capital Assessment Program, or "SCAP Test" This stress test was performed to measure the near-term capital needs of the 19 largest U.S. bank holding companies We performed o
Slide 29: Supervisory Capital Assessment Program Test ("SCAP")
Supervisory Capital Assessment Program Test ("SCAP") Note: Dollars in Thousands (1) Percentage loss rates based on weighted average of midpoint "More Adverse" SCAP loss rate for the given loan category
Slide 30: Appendix D: Detail of OREO Analysis
Appendix D: Detail of OREO Analysis
Slide 31: Detail of OREO Analysis
Detail of OREO Analysis Note: For period ended December 31, 2009; Dollars in Thousands
Slide 32: Detail of OREO Analysis
Detail of OREO Analysis Note: For period ended December 31, 2009; Dollars in Thousands (1) Not representative of an OREO carrying value analysis prepared in accordance with GAAP; this Management Loss Analysis was performed specifically for purposes of calculating potential OREO losses assuming accel
Slide 33: Appendix E: Summary of Financial Projections
Appendix E: Summary of Financial Projections
Slide 34: Note to Financial Projections
Note to Financial Projections THESE FINANCIAL PROJECTIONS CONTAIN FORWARD-LOOKING STATEMENTS The following projections are based on management's current assessment of the financial impact of the current economic environment, projections for the future economic environment and projections for our bal
Slide 35: Key Drivers to Financial Projections
Key Drivers to Financial Projections Reflects closing of branch sale transaction in May 2010 Includes gross proceeds from capital offering of $80 million in Q2 2010 (1) Assumes reduction of NPLs from $93 million at YE 2009 to $3 million at YE 2011 and reduction of OREO from $92 million at YE 2009 to
Slide 36: Key Drivers to Financial Projections (cont.)
Key Drivers to Financial Projections (cont.) Assumes NIM increases to 4.1% by 2014 based on "good bank" analysis and elevated capital levels Assumes non-interest income / average assets of 0.8% by 2014 Assumes non-interest expense / average assets of 2.7% by 2014 and efficiency ratio of 57% by 2014
Slide 37: Summary of Branch Sale Transaction
Summary of Branch Sale Transaction Pro Forma Branch Map Branches Sold (1) Note: Dollars in Thousands (1) Data as of May 24, 2010 On May 24, 2010, sold five branches to HeritageBank of the South Transaction resulted in the transfer of: $52 million of loans $75 million of non-certificate deposits Cert
Slide 38: Description of Tax Position
Description of Tax Position In 2009, we took advantage of the five-year NOL carry-back provision in the Worker, Homeownership and Business Assistance Act of 2009 and realized a $15.3 million refund of taxes paid in prior periods At December 31, 2009, we recorded an $11.1 million valuation allowance
Slide 39: Summary of Financial Projections - Equity and TCE
Summary of Financial Projections - Equity and TCE Total Stockholders' Equity (1) Tangible Common Equity / Tangible Assets (1) (2) Note: Dollars in Thousands (1) Red bars represent the impact of the $74.4 million net proceeds of the capital raise (2) See non-GAAP reconciliation on page 66 $40,395 3.4
Slide 40: Summary of Financial Projections - Capital & Credit
Summary of Financial Projections - Capital & Credit Regulatory Capital Ratios (1) Credit Ratios Note: Dollars in Thousands (1) Textured bars in 2010Q2 represent the impact of the $74.4 million of net proceeds of the capital raise 4.1% 6.2% 7.4% Actual
Slide 41: Summary of Financial Projections - Forward Earnings
Summary of Financial Projections - Forward Earnings Net (Loss) Income (1) Pre-tax, Pre-provision and OREO (Loss) Income (2) ROAA (1) (3) ROAE (1) (4) $ 24.8 2.5 % 31.3 % Note: Dollars in Millions (1) Red bars represent the result of an assumed $11.1 million tax benefit in 2012 through the reversal o
Slide 42: Summary of Financial Projections
Summary of Financial Projections Note: Dollars in Thousands; assumes offering of $74.4 million net proceeds in Q2 2010 (1) See non-GAAP reconciliation on page 68
Slide 43: Summary of Financial Projections
Summary of Financial Projections Note: Dollars in Thousands; assumes offering of $74.4 million net proceeds in Q2 2010 (1) Efficiency ratio excluding securities gains (losses), OREO gains (losses) and goodwill impairment
Slide 44: Appendix F: Current and Historical Financial Position
Appendix F: Current and Historical Financial Position
Slide 45: Historical Financial Results
Historical Financial Results Note: Dollars in Thousands (1) See non-GAAP reconciliation on page 66 (2) Efficiency ratio excluding securities gains (losses), OREO gains (losses) and goodwill impairment
Slide 46: Historical Financial Performance
Gross Loans Historical Financial Performance Total Deposits Tangible Equity / Tangible Assets (1) Pre-tax, Pre-provision and OREO Income (Loss) (1) Note: Dollars in Millions (1) See non-GAAP reconciliation on pages 66-67
Slide 47: Historical Financial Performance
ROAA (1) Historical Financial Performance ROAE (1) Net Interest Margin (1) Efficiency Ratio (1) (2) (3.92)% 131.9% (57.4)% (1) Annualized (2) Efficiency ratio excluding securities gains (losses), OREO gains (losses) and goodwill impairment (1.74)% (43.5)%
Slide 48: Current Loan Portfolio
Current Loan Portfolio Loans by Type (1) Loans by Geography (1) Current Loan Portfolio (1) Commercial and financial Agricultural Real Estate-C&D Real Estate-Comm. Real Estate-Residential Installment loans South Georgia North Georgia Florida Treasury Note: Dollars in Millions (1) For period ended Mar
Slide 49: Current Loan Portfolio
Current Loan Portfolio Real Estate - Construction and Development (1) Real Estate - Commercial (1) Note: Dollars in Millions (1) For period ended March 31, 2010 (2) Percentage based on total loan portfolio
Slide 50: Historical Loan Portfolio
Historical Loan Portfolio Note: Dollars in Thousands Historical Loans by Type Historical Loans by Geography
Slide 51: Nonperforming Assets
Nonperforming Assets Historical Nonperforming Assets Nonperforming Assets by Geography Note: Dollars in Thousands
Slide 52: Problem Asset Migration
Problem Asset Migration Note: Dollars in Thousands
Slide 53: Problem Asset Migration
Problem Asset Migration Note: Dollars in Thousands
Slide 54: Nonperforming Assets
Nonperforming Assets Nonperforming Loans: $124.3 million (1) OREO: $94.6 million (1) (1) For period ended March 31, 2010 (2) The term "net carrying value" represents the book value of the loan less any allocated allowance for loan losses.
Slide 55: Allowance for Loan Losses
Allowance for Loan Losses Note: Dollars in Thousands (1) Loan loss reserve allocated to loan category / gross loan category balance
Slide 56: Loan Charge-offs
Loan Charge-offs Note: Dollars in Thousands (1) Annualized
Slide 57: Deposit Mix
Deposit Mix (1) Note: Dollars in Thousands; data not adjusted for May 2010 branch transaction (1) For period ended March 31, 2010 Deposit Mix By Type Deposit Mix By Market
Slide 58: Historical Deposit Mix
Historical Deposit Mix Note: Dollars in Thousands Historical Deposits by Type Historical Deposits by Geography
Slide 59: Components of NIM Compression
Components of NIM Compression Note: Dollars in Thousands; net interest margins annualized (1) Interest income from non-accrual loans represents both interest lost due to loans on non-accrual status and reversing interest income for loans placed on non-accrual status during the fiscal period (2) Norm
Slide 60: Current Footprint
Current Footprint Note: Dollars in Thousands; data not adjusted for May 2010 branch transaction (1) Dollar amounts are presented in thousands for period ended March 31, 2010; amounts exclude $40.4 million in loans and $216.7 million in deposits assigned to the "Treasury" that are not allocated to an
Slide 61: South Georgia Market
South Georgia Market Loan Composition (1) Deposit Mix (1) Historical Loan & Deposit Composition Commercial and financial Agricultural Real Estate-C&D Real Estate-Comm. Real Estate-Residential Installment loans Nonint.-bearing demand Int.-bearing demand and savings Time < $100,000 Time >= $100,000 Re
Slide 62: North Georgia Market
North Georgia Market Historical Loan & Deposit Composition Commercial and financial Agricultural Real Estate-C&D Real Estate-Comm. Real Estate-Residential Installment loans Nonint.-bearing demand Int.-bearing demand and savings Time < $100,000 Time >= $100,000 Retail time / CDARS program Loan Compos
Slide 63: Florida Market
Florida Market Historical Loan & Deposit Composition Commercial and financial Agricultural Real Estate-C&D Real Estate-Comm. Real Estate-Residential Installment loans Non int. bearing demand Int. bearing demand and savings Time < $100,000 Time >= $100,000 Retail time / CDARS program Loan Composition
Slide 64: Appendix G: Glossary and Non-GAAP Reconciliation
Appendix G: Glossary and Non-GAAP Reconciliation
Slide 65: Glossary of Financial Terms
Glossary of Financial Terms A&D: Acquisition & Development loans ALL: Allowance for Loan Losses CDs: Certificates of Deposit CDARS: Certificate of Deposit Account Registry Service CRE: Commercial Real Estate FTE: Fully-Taxable Equivalent HELOC: Home Equity Line of Credit NCOs: Net Charge-Offs NIM: N
Slide 66: Non-GAAP Reconciliation (Tangible book value)
Non-GAAP Reconciliation (Tangible book value) (1) 2007 and prior periods adjusted for 2% stock dividend paid on July 15, 2008 (2) As of March 31, 2010 and for all prior periods, we have never had preferred stock outstanding; as a result, tangible equity and tangible common equity are the same (3) Pr
Slide 67: Non-GAAP Reconciliation (Pre-tax, pre-provision and OREO income (loss))
Non-GAAP Reconciliation (Pre-tax, pre-provision and OREO income (loss)) Note: Dollars in Thousands (1) Projected forward earnings according to management's assumptions, see pages 35-36
Slide 68: Non-GAAP Reconciliation (Deposits and Controllable Operational Expenses)
Non-GAAP Reconciliation (Deposits and Controllable Operational Expenses) Note: Dollars in Thousands (1) Projected values based on management's assumptions, see pages 35-36 (2) Brokered deposits, CDARS and Internet CDs