EX-99.1 2 tv480720_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

 

I NVESTOR P RESENTATION E MCLAIRE F INANCIAL C ORP P ARENT COMPANY OF : T HE F ARMERS N ATIONAL B ANK OF E MLENTON Pittsburgh, Pennsylvania December 6, 2017 William C. Marsh Chairman, President and Chief Executive Officer

 

 

This presentation contains certain forward - looking statements and information relating to Emclaire Financial Corp (the “Company”) that are based on the beliefs of management as well as assumptions made by and information currently available to management. These forward - looking statements relate to, among other things, expectations of the business environment in which we operate, projections of future performance, potential future credit experience, perceived opportunities in the market and statements regarding our mission and vision. Such statements reflect the current views of the Company with respect to future looking events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. The Company does not intend to update these forward - looking statements. NOTE: This presentation will be available online at www.emclairefinancial.com . L EGAL 2

 

 

O VERVIEW 3 Key Information & Statistics Parent company (formed 1989) Emclaire Financial Corp Bank subsidiary (founded 1900) The Farmers National Bank of Emlenton Stock ticker EMCF (NASDAQ Capital Market – November 2009) Insider ownership 16.1% (11/30/2017) Most recent market close $30.76 per share (11/30/2017) Market capitalization $69.7 million (11/30/2017) Tangible book value $21.60 per share (9/30/2017) Price to tangible book 142.4% Price to LTM EPS 13.7x Total assets $774 million (9/30/2017) YTD ROAA (%) 0.69% (annualized for the 9 months ended 9/30/2017) YTD ROAE (%) 8.87% (annualized for the 9 months ended 9/30/2017) Number of branches 17 (PA & WV)

 

 

O UR F RANCHISE 4 Key Highlights • Solid earnings growth • Strong loan growth with high asset quality • Strong deposit growth; relatively low cost • Growth drivers: – Organic, acquisitions, & de novo offices • Strategic expansion: – Titusville branch office acquisition (August 2009) – St. Marys branch office opened (October 2013) – Cranberry Twp. branch office opened (May 2014) – United - American Savings Bank merger completed (April 2016) – Aspinwall branch office opened (August 2016) – Northern Hancock Bank & Trust Co. merger completed (September 2017)

 

 

Capitalized on opportunities to acquire small community banks & branches with stable earning asset bases that were available for sale in contiguous markets with attractive balance sheets . A CQUISITIONS 5 United American Savings Bank Northern Hancock Bank & Trust Co. ▪ Purchase price = $14.1 million (100% cash) ▪ $86 million in assets ▪ 1 branch – Pittsburgh, PA (South Side) ▪ Stable profitability; strong earnings accretion ▪ Immediate scale ▪ Purchase price = $1.7 million (~100% stock) ▪ $23 million in assets ▪ 2 branches – Newell & Chester, WV (Newell subsequently closed) ▪ Accretive to earnings & capital ▪ Incremental ROE of 17%+ ▪ Positive 2017 earnings impact ($1.3 million bargain purchase gain, less $832,000 in transaction costs net of tax shield). Titusville, PA Branch Acquisition ▪ Acquired from PNC Bank in National City divestiture ▪ $93 million in deposits; $32 million in loans (immediate scale) ▪ 3.4% premium ($3.1 million) on assumed deposits 2009 2016 2017

 

 

W HY I NVEST IN EMCF? 1. Consistent growth, including organic growth 2. Strong core deposit base 3. Superior asset quality 4. Experienced management team 5. Proven ability to execute acquisitions 6. Stable market area 7. Attractive dividend yield 6

 

 

Since December 31, 2013 : • 47% asset growth • 63% loan growth • 33% increase in equity □ $8.2 million in common equity raised in 2015 private placement ($4.6 million raised in 2011 not shown) C ONSOLIDATED F INANCIAL H IGHLIGHTS (D OLLAR AMOUNTS IN THOUSANDS , EXCEPT PER SHARE DATA ) 7 9/30/2017 2016 2015 2014 2013 Total assets 773,940$ 692,135$ 600,595$ 581,909$ 525,842$ Loans receivable, net 574,736 515,435 429,891 379,648 352,430 Deposits 662,552 584,940 489,887 501,819 432,006 Borrowed funds 41,250 44,000 49,250 21,500 44,150 Stockholders' equity 59,753 54,073 52,839 47,990 45,072 Stockholders' equity per common share $26.39 $25.12 $24.64 $24.14 $22.66 Tangible stockholders' equity per common share $21.60 $20.08 $22.67 $21.66 $20.04 Market value per common share $28.65 $29.25 $24.00 $25.00 $25.14 Common shares outstanding 2,264,389 2,152,358 2,144,808 1,780,658 1,768,658 Net loans to deposits 86.75% 88.12% 87.75% 75.65% 81.58% Nonperforming assets to total assets 0.54% 0.52% 0.54% 1.21% 1.01% Balance Sheet: As of December 31,

 

 

B ALANCE S HEET G ROWTH 8 47% Asset Growth – 12/31/2013 to 9/30/2017 $275 $325 $375 $425 $475 $525 $575 $625 $350 $400 $450 $500 $550 $600 $650 $700 $750 $800 12/31/2013 12/31/2014 12/31/2015 12/31/2016 9/30/2017 Loans, net (in millions) Total Assets & Deposits (in millions) Total Assets $526 $582 $601 $692 $774 Deposits 432 502 490 585 663 Loans, net 352 380 430 516 575 In millions

 

 

• Strong growth in net interest income despite margin pressure • ROAA and ROAE in 2016 were adversely impacted by merger costs and costs related to the opening of the Aspinwall office • Continued annual increase in common dividend C ONSOLIDATED F INANCIAL H IGHLIGHTS (D OLLAR AMOUNTS IN THOUSANDS , EXCEPT PER SHARE DATA ) 9 2016 2015 2014 2013 Net interest income 19,480$ 17,747$ 17,235$ 15,921$ Noninterest income 3,655 4,094 4,087 3,860 Net income 3,986 4,154 4,017 3,808 Diluted earnings per common share $1.85 $2.05 $2.20 $1.91 Cash dividends per common share $1.04 $0.96 $0.88 $0.80 Return on average assets 0.60% 0.70% 0.70% 0.73% Return on average equity 7.32% 7.89% 8.47% 7.73% Return on average common equity 7.32% 8.34% 9.24% 8.32% Net interest margin 3.23% 3.33% 3.35% 3.40% Efficiency ratio 72.78% 73.67% 72.13% 70.48% Income Statement: Key Ratios: For the years ended December 31,

 

 

E ARNINGS YTD - 2017 VS . YTD - 2016 10 Notes: • Net interest margin expansion driven by strong loan growth • Bargain purchase gain of $1.3 million was recognized in 2017 related to the acquisition of Northern Hancock Bank & Trust Co. • YTD net income in 2017 of $3.7 million is on pace to exceed $4.0 million reported for all of 2016 In $000's, except per share data (unaudited) 2017 2016 % Change Net interest income $16,059 $14,381 11.7% Strong loan growth Provision for loan losses 633 470 34.7% Related to loan growth Noninterest income 3,996 2,734 46.2% $1.3mm bargain purchase gain Noninterest expense, excluding merger costs 13,671 12,574 8.7% New offices & general increases Merger costs 1,069 401 166.6% Northern Hancock & UASB Net income before taxes 4,682 3,670 27.6% Provision for taxes 978 880 11.1% Net income $3,704 $2,790 32.8% Earnings per common share, fully diluted $1.69 $1.29 31.0% Return on average assets 0.69% 0.57% Return on average common equity 8.87% 6.87% Yield on earning assets 3.92% 3.86% Cost of funds 0.66% 0.66% Net interest margin, fully taxable equivalent 3.28% 3.22% Efficiency ratio 72.42% 73.26% For the 9 months ended September 30,

 

 

L OAN P ORTFOLIO 11 Notes: • Portfolio split 57% retail, 43% commercial • Average transaction sizes have increased in recent years Residential mortgages 39.1% Home equity loans and lines of credit 15.8% Commercial mortgages 33.1% Commercial business loans 10.4% Consumer loans 1.7% Loan Portfolio Current Balance ($000) % of Total Loans Average Yield (%) Average balance per loan ($000's) Residential mortgages $226,946 39.1% 3.87% $148 Home equity loans and lines of credit 91,602 15.8% 4.27% 38 Commercial mortgages 192,123 33.1% 4.74% 204 Commercial business loans 60,394 10.4% 4.30% 92 Consumer loans 9,611 1.7% 4.43% 8 Gross Loans $580,676 100.0% 4.27% $85 As of September 30, 2017

 

 

2.04% 2.02% 1.86% 1.52% 1.19% 1.00% 0.97% 1.19% 1.41% 1.01% 1.21% 0.54% 0.52% 0.54% 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% 2.00% 2.25% 12/31/2011 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 9/30/2017 Nonperforming Assets to Total Assets Peer Group Emclaire Financial Corp. A SSET Q UALITY N ONPERFORMING A SSETS 12 Peer Group includes the following local competitors : NexTier Bank, 1 st Summit Bank, Mid Penn Bank, Kish Bank, Dime Bank, Jonestown Bank & Trust, Riverview Bank, Standard Bank, Mars Bank, and Mercer County State Bank. Average assets of peer group = $791 million. Source: SNL Financial

 

 

D EPOSIT C OMPOSITION 13 Notes: • Strong core deposit levels; favorable concentration of noninterest bearing deposits • Favorable overall cost of deposits Deposits Current Balance ($000's) % of Total Deposits Average cost (%) Average per Account (Actual $) Noninterest bearing demand deposits $129,870 19.6% 0.00% $7,168 Interest bearing demand deposits 360,033 54.3% 0.40% 38,688 Time deposits 172,648 26.1% 1.56% 36,043 Gross Loans $662,551 100.0% 0.63% $20,567 Non-time deposits $489,903 Non-time deposit ratio 73.94% As of September 30, 2017 Noninterest bearing demand deposits 19.6% Interest bearing demand deposits 54.3% Time deposits 26.1%

 

 

M ARKET A SSESSMENT 14 Data adjusted for mergers and acquisitions as of 6/30/2017 Ticker Company Name City State Branches Balance ($000) % Branches Balance ($000) %Rank 1 PNC PNC Financial Services Group Pittsburgh PA 121 54,183,597$ 43.68% 123 55,033,504$ 50.20% 1 2 BK BNY Mellon New York NY 4 31,270,598 25.21% 4 19,499,294 17.79% 2 3 RBS Royal Bank of Scotland Group Edinburgh N/A 92 7,560,097 6.09% 95 7,467,578 6.81% 3 4 FNB F.N.B. Corp. Pittsburgh PA 78 5,291,860 4.27% 80 4,513,110 4.12% 4 5 Dollar Bank FSB Pittsburgh PA 34 3,905,048 3.15% 33 3,641,561 3.32% 5 6 TSC TriState Capital Bank Pittsburgh PA 2 3,537,682 2.85% 2 2,896,863 2.64% 6 7 KEY Key Corp Cleveland OH 41 2,966,729 2.39% 41 2,274,837 2.08% 7 8 HBAN Huntington Bancshares Inc. Columbus OH 29 2,503,634 2.02% 28 2,204,155 2.01% 8 9 FCF First Commonwealth Financial Indiana PA 48 1,954,694 1.58% 48 1,970,253 1.80% 9 10 NWBI Northwest Bancorp, Inc. Warren PA 41 1,923,503 1.55% 41 1,917,223 1.75% 10 11 STBA S&T Bancorp Inc. Indiana PA 24 1,788,254 1.44% 24 1,672,365 1.53% 11 12 WSBC WesBanco, Inc. Wheeling WV 23 907,770 0.73% 21 762,116 0.70% 13 13 CCNE CNB Financial Corp. Clearfield PA 15 806,173 0.65% 17 780,723 0.71% 12 14 EMCF Emclaire Financial Corp. Emlenton PA 17 651,787 0.53% 17 597,073 0.54% 15 15 Nextier Inc. Butler PA 16 637,130 0.51% 16 607,928 0.55% 14 16 Brentwood Bank (Mutual HC) Bethel Park PA 9 471,837 0.38% 9 426,251 0.39% 16 17 STND Standard AVB Financial Corp Monroeville PA 12 407,279 0.33% 11 386,333 0.35% 17 18 WFC Wells Fargo & Co San Francisco CA 1 352,601 0.28% 1 330,137 0.30% 18 19 MNBP Mars National Bank Mars PA 5 321,053 0.26% 5 302,295 0.28% 20 20 MCSB Mercer County State Bancorp Inc. Sandy Lake PA 11 314,806 0.25% 10 329,905 0.30% 19 All Others (19 banks) 55 2,287,092 1.84% 49 2,005,942 1.83% TOTAL 678 124,043,224$ 100.00% 675 109,619,446$ 100.00% Note: EMCF currently competes in 9 counties in Pennsylvania, including: Allegheny, Butler, Clarion, Clearfield, Crawford, Elk, Jefferson, Mercer, & Venango, and 1 county in West Virginina: Hancock Source: SNL Financial Deposit Market Share Deposit Market Share Headquarters June 30, 2017 June 30, 2016

 

 

County Allegheny 111,466,214$ 52,892$ 0.05% 22 2 426 1,222,356 59,990$ 9.2% Butler 4,281,487 138,344 3.23% 11 3 76 187,489 73,861 14.1% Clarion 790,681 126,035 15.94% 4 3 17 38,159 45,019 2.1% Clearfield 1,390,593 32,354 2.33% 7 1 28 80,202 47,161 11.6% Crawford 1,270,145 75,616 5.95% 6 1 29 85,671 49,846 9.2% Elk 704,144 33,921 4.82% 5 2 15 30,023 51,694 7.9% Jefferson 887,132 32,781 3.70% 7 1 18 43,713 47,864 7.3% Mercer 2,057,973 49,732 2.42% 7 1 42 111,695 50,792 14.3% Venango 747,759 87,783 11.74% 5 2 18 51,922 48,066 6.5% Hancock (WV) 447,096 29,271 6.55% 5 1 9 29,271 44,852 4.2% TOTAL 124,043,224$ 658,729$ 0.53% 14 17 678 1,880,501 Armstrong 1,131,109 65,755 47,981 6.0% Beaver 2,248,721 166,145 55,170 9.5% Erie 5,116,309 274,235 50,894 10.0% Indiana 2,490,691 85,563 50,673 12.7% Lawrence 1,568,041 86,351 47,624 6.7% McKean 779,247 41,357 48,871 8.8% Warren 752,180 39,563 46,490 1.8% Washington 4,804,733 207,802 65,080 11.9% Westmoreland 7,519,436 352,598 59,977 9.5% TOTAL 26,410,467$ 1,319,369 GRAND TOTAL 150,453,691$ 3,199,870 Pennsylvania 385,689,262$ 4,208 12,787,308 60,993$ 9.6% West Virginia 32,945,050$ 628 1,820,883 44,922$ 4.3% United States 10,609,255,076$ 89,175 326,533,070 61,045$ 8.9% Source: SNL Financial 2017 Population (actual) 2017 Median Household Income ($) 2017-2022 Projected HHI Growth (%) Total Deposits in Market ($000) EMCF as of June 30, 2017 Market Demographics Deposits in Market ($000) Market Share (%) Rank # of EMCF Branches # Total Branches M ARKET A SSESSMENT 15

 

 

E XECUTIVE T EAM 16 William C. Marsh – Chairman, President and Chief Executive Officer ▪ Has served in his current capacity since January 2009 ▪ Prior to this, served as President and CEO of The Farmers National Bank of Emlenton since June 2007 and Senior Vice President, Chief Financial Officer and Treasurer since 2006 ▪ Serves on the Board of Directors of the Federal Home Loan Bank of Pittsburgh ▪ Served on the Federal Reserve Bank of Cleveland’s Community Depository Institutions Advisory Council ▪ Past Chairman of the PA Bankers Association (PBA) and member on the Professional Development Policy Committee ▪ Public service has included positions on the board of directors of the Community Development Corporation of Butler County, the advisory board of Clarion University's College of Business Administration, and the Butler County Community College Foundation Capital Campaign Steering Committee ▪ Member of the PA Association of Community Bankers, the American Institute of Certified Public Accountants, the PA Institute of Certified Public Accountants, the American Bankers Association, and the Financial Managers Society ▪ B.S. degree in Business Administration from Clarion University of Pennsylvania; Certified Public Accountant with 6 years in public accounting at KPMG Peat Marwick’s financial services audit practice Matthew J. Lucco – Senior Vice President, Chief Strategy & Risk Officer ▪ Has served in his current capacity since July 2017 ▪ Prior to this, served as the Chief Financial Officer (August 2010 – July 2017) and the Chief Credit Officer (January 2016 – present) of The Farmers National Bank of Emlenton ▪ Responsibilities include: credit risk management, interest rate risk management, mergers & acquisitions, and business strategy in general ▪ B.S. degree in Finance from Grove City College; MBA from the University of Pittsburgh, Joseph M. Katz Graduate School of Business

 

 

E XECUTIVE T EAM 17 Jennifer A. Roxbury – Senior Vice President, Chief Operating Officer ▪ Has served in her current capacity since October 2011 ▪ Possesses over 30 years of community banking experience ▪ Has strong system enhancement, product development, and project management skills ▪ Responsibilities include managing the Bank’s branch network, facilities, compliance, and all consumer loan and deposit operations ▪ Brings a broad range of banking and financial services experiences having previously served as the Chief Operating Officer of Nextier Bank Robert A. Vernick – Senior Vice President, Chief Lending and Business Development Officer ▪ Has served in his current capacity since July 2012 ▪ Possesses nearly 30 years of community banking experience ▪ Has strong system leadership, commercial lending, treasury management and business development skills ▪ Responsible for commercial business development and strategically managing the Bank’s corporate banking group ▪ Possesses a wide range of community banking and corporate financial services experience ▪ Previously served as Vice President, Sales and Treasury Manager with Dollar Bank in Pittsburgh and Cleveland ▪ B.S. degree in Business Administration from Clarion University of Pennsylvania; MBA from Geneva College

 

 

E XECUTIVE T EAM 18 Amanda L. Engles – Senior Vice President, Chief Financial Officer ▪ Has served in her current capacity since July 2017 ▪ Prior to this, served as Controller of The Farmers National Bank of Emlenton since 2006 ▪ Possesses over 18 years of accounting experience; 14 years in community banking ▪ Has strong accounting, analytical, organizational, and problem solving skills ▪ Responsibilities include managing the Bank’s Finance department, financial reporting (internal, external, SEC and other regulatory reports), audit, investment portfolio management, budgeting, and tax planning & reporting ▪ MBA and BS degree in Business Administration from Clarion University of Pennsylvania Jerome F. Millin – Senior Vice President, Chief Technology Officer ▪ Has served in his current capacity since January 2016 ▪ Prior to this, served as Vice President of Information Technology of The Farmers National Bank of Emlenton since 2012. ▪ Possesses over 20 years of technology - based experience ▪ Previously server as Chief Information Officer with Salvage Direct, Inc. ▪ Has strong process improvement, project management, and vendor management skills ▪ Responsible for information technology management, information security, information technology risk management, and business continuity ▪ B.S. degree in Economics from Penn State University; (Microsoft Certified Systems Engineer MCSE, ITIL Foundation Certified, Certified Community Banking Security Professional)

 

 

S TRATEGY R ECAP • Corporate growth & expansion – Expand United American Savings Bank and Northern Hancock Bank & Trust Co. customer bases – Aspinwall branch growth – Next opportunity… • Continued focus on earnings growth • Continued focus on balance sheet growth & mix • Maintain strong asset quality • Improvement in systems, personnel and technology • Focus on key regulatory changes 19

 

 

W ELL P OSITIONED x Capital x Franchise x Systems & Technology x People 20

 

 

Questions and Answers Q&A S ESSION 21