Acquisition of Integrity Bancshares, Inc. October 30, 2014 Exhibit 99.1 |
Caution About Forward-Looking Statements This presentation contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. In general, forward-looking statements usually use words such as “may,” “believe,” “expect,” “anticipate,” “intend,” “will,” “should,” “plan,” “estimate,” “predict,” “continue” and “potential” or the negative of these terms or other comparable terminology, including statements related to the expected timing of the closing of the proposed merger, the expected returns and other benefits of the proposed merger to shareholders, estimated expense reductions resulting from the transaction and the timing of achievement of such reductions, the impact on tangible book value, and the effect of the merger on S&T Bancorp’s and S&T Bank’s capital ratios. Forward-looking statements represent management’s beliefs, based upon information available at the time the statements are made, with regard to the matters addressed; they are not guarantees of future performance. Forward-looking statements are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results or financial condition to differ materially from those expressed in or implied by such statements, and there can be no assurances that: the proposed merger will close when expected, the expected returns and other benefits of the proposed merger to shareholders will be achieved, the expected operating efficiencies will result, estimated expense reductions resulting from the transaction will occur as and when expected, or that the effect on S&T Bancorp’s and S&T Bank’s capital ratios will be as expected. Factors that could cause or contribute to such differences include, but are not limited to, the possibility that expected benefits may not materialize in the time frames expected or at all, or may be more costly to achieve; that the merger transaction may not be timely completed, if at all; that prior to completion of the merger transaction or thereafter, the parties’ respective businesses may not perform as expected due to transaction-related uncertainties or other factors; that the parties are unable to implement successful integration strategies; that the required regulatory, shareholder, or other closing conditions are not satisfied in a timely manner, or at all; reputational risks and the reaction of the parties’ customers to the merger transaction; diversion of management time to merger-related issues; and other factors and risk influences contained in the cautionary language included under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in S&T Bancorp’s Form 10-K for the fiscal year ended December 31, 2013 and other documents subsequently filed by S&T Bancorp with the SEC. Consequently, no forward-looking statement can be guaranteed. S&T Bancorp does not undertake any obligation to update or revise any forward- looking statements, whether as a result of new information, future events or otherwise. 2 |
Caution About Forward-Looking Statements This presentation is being made in respect of the proposed merger transaction involving S&T Bancorp and Integrity Bancshares, Inc. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed merger, S&T Bancorp will file with the SEC a registration statement on Form S-4 that will include a proxy statement/prospectus for the shareholders of Integrity Bancshares, Inc. S&T Bancorp also plans to file other documents with the SEC regarding the proposed merger transaction with Integrity Bancshares, Inc. Integrity Bancshares will mail the final proxy statement/prospectus to its shareholders. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION AND ANY OTHER RELEVANT DOCUMENTS CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The proxy statement/prospectus, as well as other filings containing information about S&T Bancorp will be available without charge, at the SEC’s Internet site (http://www.sec.gov). Copies of the proxy statement/prospectus can also be obtained, when available, without charge, from S&T Bancorp’s website (http://www.stbancorp.com/), under the heading “Financial Information” and on Integrity Bancshares, Inc.’s website, at (www.integritybankonline.com), under the heading “Investors.” 3 |
A Strategically Compelling Transaction An Opportunistic Partnership Attractive Financial Metrics • High performing bank – 45 consecutive quarters of loan growth – MRQ ROACE of 21.4%; PA’s top performing community bank (1) • Expansion into markets with favorable demographics • Strong commercial lending platform which aligns with S&T’s business model • Integrity’s customer base provides appealing cross-sell opportunities for S&T’s broader product suite • Immediately accretive to earnings per share; significant long-term accretion with conservative cost savings of 22% identified • Estimated pro forma ROATCE in excess of 14.5% • IRR of 20%; significantly in excess of cost of capital • 4.8 year tangible book value per share earnback period (2) Source: Integrity and S&T company documents. Includes institutions with >$500M in assets. Top performing by ROACE. ROACE excludes realized gains/(losses) on securities, non-recurring items and is tax-effected using a 35% assumed tax rate. Earnback period is defined as the number of years for pro forma tangible book value per share to exceed stand-alone projected tangible book value per share. 4 (1) (2) |
Overview of Integrity Bancshares, Inc. • 11 year old institution headquartered in Camp Hill, PA • 8 branch locations in south-central PA (Cumberland, Dauphin, Lancaster and York Counties); #10 deposit market share (1) • Strong track record of growth & profitability Total Loans ($M) Total Deposits ($M) Net Income to Common ($M) Source: SNL Financial and Integrity company documents. Note: YTD annualized represents the nine months ended 9/30/14, annualized over a 12-month period. (1) Reflects aggregate deposit market share in four operating counties. Deposit data as of 6/30/14. 5 $4.6 $7.3 $10.0 $0 $3 $6 $9 $12 12/31/12 12/31/13 YTD Annualized $602.0 $691.0 $764.0 $500 $550 $600 $650 $700 $750 $800 12/31/12 12/31/13 9/30/14 $543.2 $676.1 $765.9 $500 $550 $600 $650 $700 $750 $800 12/31/12 12/31/13 9/30/14 |
Excellent Historical Performance Source: Integrity company documents. NPAs defined as nonaccrual loans plus OREO plus loans 90+ days past due and still accruing. Note: Profitability ratios and NCOs/Avg. Loans for the quarters ended 3/31, 6/30 and 9/30 are annualized. ROAA excludes preferred dividends. NPAs / Loans + OREO Net Charge-offs / Average Loans Return on Average Common Equity Return on Average Assets 6 12.6% 17.0% 16.5% 19.2% 21.4% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 2012Y 2013Y 3/31/14 6/30/14 9/30/14 1.81% 0.58% 1.03% 0.82% 0.95% 0.0% 0.5% 1.0% 1.5% 2.0% 2012Y 2013Y 3/31/14 6/30/14 9/30/14 0.08% 0.10% 0.10% 0.10% 0.08% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 2012Y 2013Y 3/31/14 6/30/14 9/30/14 0.81% 1.15% 1.15% 1.34% 1.50% 0.00% 0.40% 0.80% 1.20% 1.60% 2012Y 2013Y 3/31/14 6/30/14 9/30/14 |
Excellent Historical Performance Source: Integrity company documents. NPAs defined as nonaccrual loans plus OREO plus loans 90+ days past due and still accruing. Note: Profitability ratios and NCOs/Avg. Loans for the quarters ended 3/31, 6/30 and 9/30 are annualized. ROAA excludes preferred dividends. 7 12.6 0.10 % 0.08 % 0.95 % (Dollars in Thousands) At or for the year ended, At or for the quarter ended, 12/31/12 12/31/13 3/31/14 6/30/14 9/30/14 Consolidated Balance Sheet Total Assets 674,133 $ 761,905 $ 782,111 $ 811,676 $ 860,434 $ Total Gross Loans 543,180 676,129 691,822 738,458 765,918 Deposits 602,001 691,008 709,567 735,201 764,007 Tangible Common Equity / Assets 5.78 % 6.27 % 6.38 % 6.59 % 6.97 % Profitability Net Income to Common 4,587 $ 7,339 $ 2,004 $ 2,504 $ 3,003 $ ROAA 0.81 % 1.15 % 1.15 % 1.34 % 1.50 % ROACE 17.0 16.5 19.2 21.4 Efficiency Ratio 67.8 50.6 48.1 47.3 43.5 Asset Quality NCOs / Avg. Loans 0.08 % 0.10 % 0.10 % NPAs + 90+PD / Loans + OREO 1.81 0.58 1.03 0.82 |
(1) Represents estimated data at close of transaction. Pro Forma income statement data is estimated for 2015 and assumes cost savings of 22% of Integrity’s noninterest expense, 75% phased-in, including estimated fair value adjustments and excluding restructuring charges. (2) Based on 7 trading day VWAP ending 10.28.14 ($25.4519) Strong Pro Forma Financial Metrics and Attractive Valuation 8 |
Expansion Into South-central PA • Provides branch presence in Lancaster, York, Dauphin, and Cumberland counties • Land for two future branch sites in York County already owned • Total population of markets served of approximately 1.5 million Source: SNL Financial 9 |
South-central PA Deposit Market Share Source: SNL Financial, credcpa.org and www.smartmarket.org. Note: Deposit data as of 6/30/14. Reflects aggregate deposit market share for Cumberland, Dauphin, Lancaster and York Counties. (1) Subsidiary of Royal Bank of Scotland Group. • #10 deposit market share in operating area; #3 for community banks • < 3% market share provides substantial room for continued growth • Local area economy bolstered by state and national government and strong healthcare presence Top Regional Employers Total Market Deposits $28.3 billion 10 Rank Institution Number of Branches Market Share (%) 1 Susquehanna Bancshares Inc. 70 14.7 2 M&T Bank Corp. 70 14.4 3 Fulton Financial Corp. 54 13.9 4 PNC Financial Services Group Inc. 64 12.4 5 Wells Fargo & Co. 33 8.6 6 Metro Bancorp Inc. 25 6.8 7 Banco Santander SA 43 4.6 8 Citizens Financial Group, Inc. (1) 22 3.5 9 Codorus Valley Bancorp Inc. 17 3.2 10 Integrity Bancshares Inc. 8 2.6 11 ENB Financial Corp 12 2.4 12 Orrstown Financial Services Inc. 10 2.1 13 Mid Penn Bancorp Inc. 12 2.0 14 Donegal Financial Services Corp. 17 1.5 15 National Penn Bancshares Inc. 6 1.1 16 Northwest Bancshares Inc. 16 1.1 17 Centric Financial Corp. 4 1.0 18 York Traditions Bank 4 0.8 19 Franklin Financial Services Corp. 8 0.7 20 ACNB Corp. 5 0.5 Total For Institutions In Market 524 |
Demographically Attractive Markets Source: SNL Financial. Note: Data is deposit weighted by county deposits. Deposit data as of 6/30/14. % of Households With Income > $100K Median Home Price August 2014 Unemployment Rate Median Household Income 11 |
Management Team Retention Integrity Management Current Position Career Experience Jim Gibson Chief Executive Officer Founder of Integrity Bancshares Will join S&T Bancorp Board of Directors Tom Sposito Chief Operating Officer Former President/CEO of Pennsylvania State Bank Chief Banking Officer of Sterling Financial EVP & Central PA Market Manager at PNC William Poole EVP - Business Development Founder & CEO of HomeTowne Heritage Bank EVP & CLO for Bank of Lancaster County Dennis Ginder Chief Credit Officer Former President of Bank of Lancaster County Senior credit roles at Sterling Financial and PNC Jordan Space Chief Lending Officer Formerly a relationship manager with M&T co-managing a $500 million portfolio • Integrity has built the top team of community bankers in south-central PA • To maintain existing momentum, Integrity’s customer facing team will be retained and several key executives have executed employment agreements: 12 |
Continuation of Effective Expansion Strategy • 2008 - IBT Bancorp $ 827 • 2012 - Mainline Bancorp 242 • 2012 - Gateway Bank of Pennsylvania 126 • 2014 - Integrity Bancshares, Inc. 860 Assets Acquired ($ in Millions) $2,055 • 2012 - Loan production office opened in northeast Ohio in August 2012 • 2014 - Loan production office opened in central Ohio in January 2014 • 2014 - Hired a team of bankers in State College, PA and branch opened in June 2014 Source: SNL Financial and S&T company documents. Data represents assets at completion for all deals other than Integrity. 13 |
Transaction Overview Aggregate Consideration (1)(2) Approximately $155 million Consideration Mix 80% common stock / 20% cash Per Share Consideration Structure $52.50 per share in cash or 2.0627 (2) shares of STBA common stock subject to the 80% stock / 20% cash consideration mix Corporate Governance Two board seats for existing directors of Integrity, including Jim Gibson Approval Requirements Integrity shareholders and customary regulatory approvals Integration Integrity Bank to merge with S&T Bank Will operate as Integrity Bank – A Division of S&T Bank Anticipated Closing Q1 2015 Termination Fee $6.25 million (1) Assumes 2,924,356 shares outstanding plus 63,053 options with a weighted strike price of $23.03. (2) Based on 7 trading day VWAP ending 10.28.14 ($25.4519) 14 |
Transaction Multiple Comparison S&T and Integrity Deal Value Per Share = $52.50 Comparable Transactions (1) Basis Multiple Median Value Price / LTM Earnings $3.29 16.0x 17.4x Price / Tangible Book $20.50 2.6x 2.2x Premium / Core TCE (2) $68.8M 2.4x 2.3x Target Comparison Integrity Target Median MRQ ROAA 1.50% 1.16% Tangible Common Equity / Assets 6.97% 8.75% (1) Includes all deals with announced values greater than $50 million and price to tangible book value greater than 2.0x announced since 1/1/2013. (2) Core TCE defined as 8.0% of tangible assets. Multiple calculated as aggregate transaction value less tangible common equity plus 8.0% times tangible assets divided by 8.0% times tangible assets. 15 |
Key Transaction Assumptions Cost Savings Identified 22% of Integrity’s operating expense Approximately $3.2 million pre-tax based on 2014 YTD annualized expenses 75% realized in 2015; 100% thereafter Credit Mark $9.5 million or 1.2% of 9/30 gross loans 2.3x nonperforming loans (1) ; 1.0x ALLL Additional Purchase Accounting Marks $1.5 million rate premium on loans $1.5 million rate premium on time deposits One Time Costs Approximately $9.7 million (6.3% of transaction value) on a pre-tax basis Debt Redemption Integrity’s $13.5 million of outstanding subordinated debt is redeemed in conjunction with close Integrity Preferred Stock Matured and was paid off per its terms on October 28 (1) Defined as nonaccrual loans plus loans 90+ days past due and still accruing. 16 |
Pro Forma Impact EPS Accretion (1) 6.1% in 2015 excluding one-time charges and 2.0% in 2015 including one-time charges. 8.8% in 2016 Tangible Book Value Dilution 8.7% Earnback Period (2) 4.8 years Internal Rate of Return 20% Pro Forma Capital (9/30/14) (3) Tangible Common Equity / Assets Tier 1 Common Risk Based Capital Total Capital Ratio 8.1% (-95 bps) 10.5% (-134 bps) 12.6% (-173 bps) (1) Based upon consensus earnings estimates. (2) Earnback period is defined as the number of years for pro forma tangible book value per share to exceed stand-alone projected tangible book value per share. (3) Includes the redemption of Integrity’s $13.5 million of outstanding subordinated debt in conjunction with the transaction. Calculation based upon current regulatory capital methodology. 17 |
Summary Strategically Compelling Financially Attractive • Expansion into attractive south-central PA market through region’s best performing community bank • Proven track record of growth & strong profitability • Allows for expansion through increased lending capacity and ability to offer additional product lines to Integrity’s customers • Retain growth focused lending team & in-market brand recognition through Integrity Bank name • Earnings accretion in the high single digits with fully phased in cost savings • IRR of 20%; significantly in excess of cost of capital • Potential for additional revenue enhancements 18 |
APPENDIX 19 |
Pro Forma Loan Composition S&T Integrity Pro Forma Source: S&T and Integrity company documents. Data as of 9/30/14. Data does not include purchase accounting adjustments. x x Loan Type Amount ($M) % of Total Commercial Real Estate 296.2 $ 38.7% Commercial & Industrial 169.0 22.1% Construction 101.1 13.2% Residential 163.6 21.4% Consumer & Other 35.9 4.7% Total Loans 765.9 $ 100.0% x x x x Loan Type Amount ($M) % of Total Commercial Real Estate 1,691.6 $ 44.5% Commercial & Industrial 946.4 24.9% Construction 186.5 4.9% Residential 910.1 23.9% Consumer & Other 69.7 1.8% Total Loans 3,804.3 $ 100.0% x x x x Loan Type Amount ($M) % of Total Commercial Real Estate 1,987.9 $ 43.5% Commercial & Industrial 1,115.3 24.4% Construction 287.6 6.3% Residential 1,073.7 23.5% Consumer & Other 105.7 2.3% Total Loans 4,570.2 $ 100.0% x x 20 Commercial Real Estate 44.5% Commercial & Industrial 24.9% Construction 4.9% Residential 23.9% Consumer & Other 1.8% Commercial Real Estate 43.5% Commercial & Industrial 24.4% Construction 6.3% Residential 23.5% Consumer & Other 2.3% Commercial Real Estate 38.7% Commercial & Industrial 22.1% Construction 13.2% Residential 21.4% Consumer & Other 4.7% |
Pro Forma Deposit Composition S&T Integrity Pro Forma Source: S&T and Integrity company documents. Data as of 9/30/14. Data does not include purchase accounting adjustments. x x Deposit Type Amount ($M) % of Total NIB Demand 1,077.5 $ 27.6% Interest Bearing Demand 336.7 8.6% MMDA and Savings 1,343.7 34.4% Time Deposits <$100,000 785.7 20.1% Time Deposits >$100,000 357.4 9.2% Total Deposits 3,901.0 $ 100.0% x x x x Deposit Type Amount ($M) % of Total NIB Demand 44.7 $ 5.9% Interest Bearing Demand 388.2 50.8% MMDA and Savings 98.7 12.9% Time Deposits <$100,000 117.2 15.3% Time Deposits >$100,000 115.2 15.1% Total Deposits 764.0 $ 100.0% x x x x Deposit Type Amount ($M) % of Total NIB Demand 1,122.2 $ 24.1% Interest Bearing Demand 724.9 15.5% MMDA and Savings 1,442.4 30.9% Time Deposits <$100,000 902.9 19.4% Time Deposits >$100,000 472.6 10.1% Total Deposits 4,665.0 $ 100.0% x x 21 NIB Demand 24.1% Interest Bearing Demand 15.5% MMDA and Savings 30.9% Time Deposits <$100,000 19.4% Time Deposits >$100,000 10.1% NIB Demand 27.6% Interest Bearing Demand 8.6% MMDA and Savings 34.4% Time Deposits <$100,000 20.1% Time Deposits >$100,000 9.2% NIB Demand 5.9% Interest Bearing Demand 50.8% MMDA and Savings Time Deposits <$100,000 15.3% Time Deposits >$100,000 15.1% 12.9% |