EX-99.2 5 g73383ex99-2.txt REGULATION FD DISCLOSURE EXECUTING OUR STRATEGY IN THE MAINLAND -------------------------------------------------------------------------------- [R&G FINANCIAL CORPORATION LOGO] Acquisition of [LOGO CROWN BANK] December 20, 2001 FORWARD LOOKING STATEMENTS -------------------------------------------------------------------------------- This presentation contains certain forward looking statements with respect to the financial condition, results of operations and business of R&G Financial Corporation and, assuming the consummation of the merger, a combined R&G Financial Corporation/The Crown Group, Inc., including statements relating to: (a) the cost savings and accretion to reported earnings that will be realized from the merger; (b) the impact on revenues of the merger, including the potential for enhanced revenues; and, (c) the restructuring charges expected to be incurred in connection with the merger. These forward looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward looking statements include, among others, the following possibilities: (1) expected costs savings from the merger cannot be fully realized or realized within the expected time frame; (2) revenues following the merger are lower than expected; (3) competitive pressure among depository institutions increases significantly; (4) costs or difficulties related to the integration of the businesses of R&G Financial Corporation and The Crown Group, Inc. are greater than expected; (5) changes in the interest rate environment reduce interest margins; (6) general economic conditions, either nationally, in Puerto Rico or in the states in which the combined company will be doing business, are less favorable than expected; or, (7) legislation or regulatory requirements or changes adversely affect the businesses in which a combined R&G Financial Corporation/The Crown Group, Inc. would be engaged. R & G FINANCIAL CORPORATION 1 CROWN BANK TRANSACTION SUMMARY -------------------------------------------------------------------------------- - Consideration: $100.0 million in Cash $5.0 million in Debt(1) - Transaction Value: $104.4 million(2) - Structure: Purchase - Expected Closing: Early 2Q 2002 - Expected Restructuring Charge: $8.6 million - Required Approvals: Regulatory - Crown Bank Management: Key management to remain in place Notes: 1 Debt is due in 2007 and pays a coupon of 6 3/4% 2 Assumes present value of $4.4 million R & G FINANCIAL CORPORATION 2 CROWN BANK TRANSACTION RATIONALE -------------------------------------------------------------------------------- - Executing strategy to replicate our successful Puerto Rico business model in Florida -- complementary operations to existing mortgage banking operations -- position ourselves to gain significant market share in Hispanic markets - Orlando - Tampa Bay -- build a strong platform for further expansion in Florida - more cost effective than de novo branch expansion -- similar balance sheet composition to our existing operations - Financially attractive -- immediately accretive to EPS in 2002 - not dependent on cost savings - Lower risk profile -- acquisition represents only 15% of R&G Financial's assets -- predominately secured real estate lending - Favorably priced R& G FINANCIAL CORPORATION 3 CROWN BANK PRO FORMA COMPANY -------------------------------------------------------------------------------- POWERFUL COMBINATION R & G FINANCIAL CORPORATION United States Puerto Rico LOGO R&G PREMIER BANK LOGO CROWN BANK LOGO CONTINENTAL CAPITAL CORPORATION OF PUERTO RICO LOGO R&G MORTGAGE - 4th-largest - 2nd-largest - 6th-largest 2nd-largest depository in its originator of commercial bank mortgage bank in Florida footprint FHA/VA mortgages in Puerto Rico Puerto Rico in New York area
R & G FINANCIAL CORPORATION 4 CROWN BANK FINANCIALLY ATTRACTIVE -------------------------------------------------------------------------------- - Accretive to EPS in 2002 -- 2.6% accretive to New GAAP EPS -- 3.4% accretive to Cash EPS - Cost savings -- low level of assumed cost savings equal to 6.5% of Crown Bank's operating expenses - readily achievable, given Crown Bank's efficiency ratio of 65% - Expected restructuring charge of $8.6 million includes: -- additional loan loss reserves -- writedown of residual values - Lower cost of funding in Florida vs Puerto Rico -- 4.26% for Crown Bank vs 4.75% for R&G Financial R & G FINANCIAL CORPORATION 5 CROWN BANK LOWER RISK PROFILE -------------------------------------------------------------------------------- - Acquisition represents only 15% of R&G Financial's assets - Continues growth in our banking operations - Mortgage servicing platform complementary to existing operations - Key management to remain at Crown Bank -- to be strengthened over time by new hires in Florida marketplace - Solidifies R&G Financial's balance sheet position - Preserves our status as a secured real estate lender R & G FINANCIAL CORPORATION 6 CROWN BANK FAVORABLY PRICED --------------------------------------------------------------------------------
SOUTHEAST RECENT R&G COMPARABLE FLORIDA FINANCIAL/ TRANSACTION COMPARABLE CROWN GROUP MEDIAN TRANSACTION ----------- ------------ ----------- - Aggregate Value (mm): $ 104.4 -- -- - Price/Book Value: 1.34x 1.51x 1.41x - Price/Tangible Book Value: 1.34x 1.51x 1.41x - Price/2001E Earnings: 20.9x 26.8x 25.3x - Price/2002E Earnings: 16.8x 17.5x 21.8x - Premium to Core Deposits: 16.3% 14.1% 10.1%
R & G FINANCIAL CORPORATION 7 CROWN BANK WHY FLORIDA -------------------------------------------------------------------------------- - An ideal entry vehicle into Hispanic markets in the States - Strong links between Puerto Rico and Florida -- 450,000+ Puerto Ricans now living in Florida -- Orlando has second-largest Puerto Rican community outside of Puerto Rico and New York City - with many having moved from Puerto Rico within last 5 years - The "R&G" brand name is well known by Puerto Ricans in Orlando - Significant demographic growth in Florida -- population and income growth exceeding US over past decade - Large and fast-growing Hispanic population in Florida -- number of Hispanics living in Florida has grown by 64% since 1990 -- Hispanics account for 17.5% of Metro Orlando's population - over half of Orlando's Hispanics are Puerto Rican -- Puerto Ricans own 23% of Hispanic businesses in Orlando and 17% in Tampa Source: US Census R & G FINANCIAL CORPORATION 8 CROWN BANK FLORIDA'S COMPELLING GROWTH DYNAMICS -------------------------------------------------------------------------------- HISTORICAL GROWTH PROJECTED GROWTH 1990-2001 2001-2006 Population Population US 10.5% US 4.5% Florida 25.3% Florida 7.1% Households Households US 12.2% US 5.5% Florida 25.3% Florida 7.3% Median Income Median Income US 40.5% US 12.4% Florida 46.6% Florida 10.1% Source: SNL Securities R & G FINANCIAL CORPORATION 9 CROWN BANK CROWN BANK'S STRONG MARKET PRESENCE --------------------------------------------------------------------------------
MARKET SHARE IN ZIP CODES OF OPERATIONS DEPOSITS SHARE BRANCH LOCATIONS RANK INSTITUTION ($MM) (%) Branches [MAP] ---------------------------------------------------------------- 1 Bayonet Point 1 Bank of America 1,561 26.8 33 2 Holiday 2 SunTrust 753 12.9 18 3 Dunedin 3 Wachovia 560 9.6 11 4 Clearwater 4 CROWN GROUP 416 7.1 10 5 St. Petersburg 5 South Trust 404 6.9 12 6 Sarasota 6 Golden West 392 6.7 6 7 Englewood 7 F.N.B. 344 5.9 7 8 Cape Coral 8 Washington Mutual 255 4.4 6 9 Casselberry 9 AmSouth 219 3.8 6 10 Oviedo 10 Republic Bancshares 166 2.8 7 11 Altamonte Springs ============================================================== 12 Winter Park Source: SNL Securities, as of 6/30/00 13 Orlando 14 Lake Worth Pro Forma for pending acquisitions. Excluding four Crown Group branches opened since 6/30/00.
R & G FINANCIAL CORPORATION 10 CROWN BANK STRENGTHENED OPERATIONS -------------------------------------------------------------------------------- Pro Forma Results
R&G FINANCIAL CROWN GROUP PRO FORMA ------------------------------------------------------------------------------- Loans ($mm) 1,738 393 2,131 Deposits ($mm) 1,875 452 2,327 - Cost of Deposits (%) 4.75 4.26 4.66 Branches 63 14 77 Servicing Portfolio ($bn) 7.1 2.3 9.4 YTD Revenues ($mm) 138.5 15.8 154.3 - Mortgage Banking (%) 42.5 -- 38.1 - Retail Banking (%) 57.5 100.0 61.9 -------------------------------------------------------------------------------
R & G FINANCIAL CORPORATION 11 CROWN BANK POSITIVE EARNINGS IMPACT -------------------------------------------------------------------------------- 2002 EPS ACCRETION 2002 -------------------------------------------------------------------------------- 6.5% COST SAVINGS: I/B/E/S Estimated GAAP EPS ($) 1.90 Pro Forma GAAP EPS ($) 1.95 ACCRETION (%) 2.6 Pro Forma Cash EPS ($) 1.98 ACCRETION (%) 3.4 NO COST SAVINGS: I/B/E/S Estimated GAAP EPS ($) 1.90 Pro Forma GAAP EPS ($) 1.95 ACCRETION (%) 2.2 Pro Forma Cash EPS ($) 1.97 ACCRETION (%) 3.0 -------------------------------------------------------------------------------- Utilizing new FASB accounting pronouncements R & G FINANCIAL CORPORATION 12 CROWN BANK SECURED REAL ESTATE LENDER -------------------------------------------------------------------------------- LOAN COMPOSITION
(%) R & G Financial Crown Pro Forma -------------------------------------------------------------------------------- Yield 8.06 7.73 8.00 Composition: Residential RE 56.6 61.5 57.5 Commercial RE 19.1 26.6 20.4 Construction 10.4 7.4 9.9 Commercial & Industrial 4.3 -- 3.5 Consumer 9.6 4.5 8.7
R & G FINANCIAL CORPORATION 13 CROWN BANK INCREASED CORE DEPOSIT BASE -------------------------------------------------------------------------------- DEPOSIT COMPOSITION
(%) R & G Financial Crown Pro Forma -------------------------------------------------------------------------------- Cost 4.75 4.26 4.66 Composition: Non-Interest Bearing 10.1 10.3 10.1 Savings & MMDA 7.1 4.0 6.5 NOW & Other 11.0 5.9 10.1 Retail CDs 27.3 72.6 36.0 Jumbo CDs 44.5 7.2 37.3
R & G FINANCIAL CORPORATION 14 CROWN BANK TRANSACTION RATIONALE -------------------------------------------------------------------------------- - Executing strategy to replicate our successful Puerto Rico business model in Florida -- complementary operations to existing mortgage banking operations -- position ourselves to gain significant market share in Hispanic markets - Orlando - Tampa Bay -- build a strong platform for further expansion in Florida - more cost effective than de novo branch expansion -- similar balance sheet composition to our existing operations - Financially attractive -- immediately accretive to EPS in 2002 - not dependent on cost savings - Lower risk profile -- acquisition represents only 15% of R&G Financial's assets -- predominately secured real estate lending - Favorably priced R & G FINANCIAL CORPORATION 15 CROWN BANK APPENDIX -------------------------------------------------------------------------------- R&G FINANCIAL CORPORATION -------------------------------------------------------------------------------- - Headquartered in San Juan, Puerto Rico - Publicly-traded (Nasdaq: RGFC), bank holding company operates: -- R&G Mortgage Corp., the second-largest mortgage company in Puerto Rico -- R-G Premier Bank, a Puerto Rico commercial bank - Assets of $4.3 billion - Deposits of $1.9 billion - Stockholders' equity of $453 million - 63 branch offices, including: -- 34 mortgage offices in Puerto Rico -- 25 bank branches mainly located in northeastern Puerto Rico -- 4 mortgage offices in the United States - $7.1 billion loan servicing portfolio R & G FINANCIAL CORPORATION 17 CROWN BANK CROWN GROUP, INC. -------------------------------------------------------------------------------- - Headquartered in Casselberry, Florida, a suburb of Orlando - Privately-held, thrift holding company operates wholly-owned bank subsidiary, Crown Bank, FSB - Assets of $647 million - Deposits of $452 million - Stockholders' equity of $78 million - 14 branch offices and approximately 180 full-time employees - Serves individuals and small to mid-sized businesses in the Tampa/ St. Petersburg/Clearwater and Orlando MSAs - $2.3 billion loan servicing portfolio R & G FINANCIAL CORPORATION 18 CROWN BANK EXECUTING OUR STRATEGY IN THE MAINLAND -------------------------------------------------------------------------------- [R&G FINANCIAL CORPORATION LOGO] Acquisition of [LOGO CROWN BANK] December 20, 2001