UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of the Securities Exchange Act of 1934
December 10, 2014
Date of report (Date of earliest event reported)
RENASANT CORPORATION
(Exact name of registrant as specified in its charter)
| Mississippi | 001-13253 | 64-0676974 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
209 Troy Street, Tupelo, Mississippi 38804-4827
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (662) 680-1001
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| x | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 8.01. | Other Events. |
On December 10, 2014, Renasant Corporation, a Mississippi corporation (“Renasant”), and Heritage Financial Group, Inc., a Maryland corporation (“Heritage”), issued a joint press release announcing the execution of an Agreement and Plan of Merger, dated December 10, 2014, by and among Renasant and its wholly-owned subsidiary, Renasant Bank, a Mississippi banking association, on the one hand, and Heritage and its wholly-owned subsidiary, HeritageBank of the South, a Georgia savings bank, on the other hand (the “Merger Agreement”), providing for, among other things, the merger of Heritage with and into Renasant, with Renasant the surviving corporation in the merger, and the merger of HeritageBank of the South with and into Renasant Bank, with Renasant Bank the surviving banking association in the bank merger. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference.
In addition, on December 10, 2014, Renasant and Heritage provided supplemental information regarding the transactions contemplated by the Merger Agreement in connection with a presentation to analysts and investors. A copy of the presentation is furnished as Exhibit 99.2 hereto and is incorporated herein by reference.
Additional Information About the Renasant/Heritage Transaction
This communication is being made in respect of the proposed merger transaction involving Renasant and Heritage. In connection with the proposed merger, Renasant and Heritage will file a registration statement on Form S-4 that will include a joint proxy statement/prospectus, and other relevant documents concerning the proposed merger, with the Securities and Exchange Commission (the “SEC”). This report 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. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER OR INCORPORATED BY REFERENCE IN THE JOINT PROXY STATEMENT/PROSPECTUS BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT RENASANT, HERITAGE AND THE PROPOSED MERGER. When available, the joint proxy statement/prospectus will be mailed to shareholders of Renasant and stockholders of Heritage. Investors will also be able to obtain copies of the joint proxy statement/prospectus and other relevant documents (when they become available) free of charge at the SEC’s website (www.sec.gov). In addition, documents filed with the SEC by Renasant will be available free of charge from Kevin Chapman, Chief Financial Officer, Renasant Corporation, 209 Troy Street, Tupelo, Mississippi 38804-4827, telephone: (662) 680-1450. Documents filed with the SEC by Heritage will be available free of charge from Heritage by contacting T. Heath Fountain, Chief Financial Officer, Heritage Financial Group, Inc., 721 N. Westover Blvd, Albany, Georgia, telephone: (229) 878-2055.
Renasant, Heritage and certain of their directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the shareholders of Renasant and the stockholders of Heritage in connection with the proposed merger. Information about the directors and executive officers of Renasant is included in the proxy statement for its 2014 annual meeting of shareholders, which was filed with the SEC on March 11, 2014. Information about the directors and executive officers of Heritage is included in the proxy statement for its 2014 annual meeting of stockholders, which was filed with the SEC on April 25, 2014. Additional information regarding the interests of such participants and other persons who may be deemed participants in the transaction will be included in the joint proxy statement/prospectus and the other relevant documents filed with the SEC when they become available.
“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Congress passed the Private Securities Litigation Act of 1995 in an effort to encourage companies to provide information about their anticipated future financial performance. This act provides a safe harbor for such disclosure, which protects a company from unwarranted litigation if actual results are different from management expectations. This report reflects the current views and estimates of future economic circumstances, industry conditions, company performance, and financial results of the management of Renasant and Heritage. These forward-looking statements are subject to a number of factors and uncertainties which could cause Renasant’s, Heritage’s or the combined company’s actual results and experience to differ from the anticipated results and expectations expressed in such forward-looking statements, and such differences may be material. Forward-looking statements speak only as of the date they are made and neither Renasant nor Heritage assumes any
duty to update forward-looking statements. In addition to factors previously disclosed in Renasant’s and Heritage’s reports filed with the SEC and those identified elsewhere in this report, these forward-looking statements include, but are not limited to, statements about (i) the expected benefits of the transaction between Renasant and Heritage and between Renasant Bank and HeritageBank of the South, including future financial and operating results, cost savings, enhanced revenues and the expected market position of the combined company that may be realized from the transaction, and (ii) Renasant’s and Heritage’s plans, objectives, expectations and intentions and other statements contained in this report that are not historical facts. Other statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “targets,” “projects” or words of similar meaning generally are intended to identify forward-looking statements. These statements are based upon the current beliefs and expectations of Renasant’s and Heritage’s management and are inherently subject to significant business, economic and competitive risks and uncertainties, many of which are beyond their respective control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ from those indicated or implied in the forward-looking statements, and such differences may be material.
The following risks, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) the businesses of Renasant and Heritage may not be integrated successfully or the integration may be more difficult, time-consuming or costly than expected; (2) the expected growth opportunities or costs savings from the transaction may not be fully realized or may take longer to realize than expected; (3) revenues following the transaction may be lower than expected as a result of losses of customers or other reasons, including issues arising in connection with Heritage’s integration of Alarion Financial Services, Inc.; (4) deposit attrition, operating costs, customer loss and business disruption following the transaction, including difficulties in maintaining relationships with employees, may be greater than expected; (5) governmental approvals of the transaction may not be obtained on the proposed terms or expected timeframe; (6) Renasant’s shareholders or Heritage’s stockholders may fail to approve the transaction; (7) the terms of the proposed transaction may need to be modified to satisfy such approvals or conditions; (8) reputational risks and the reaction of the companies’ customers to the transaction; (9) diversion of management time on merger related issues; (10) changes in asset quality and credit risk; (11) inflation; (12) the cost and availability of capital; (13) customer acceptance of the combined company’s products and services; (14) customer borrowing, repayment, investment and deposit practices; (15) the introduction, withdrawal, success and timing of business initiatives; (16) the impact, extent, and timing of technological changes; (17) severe catastrophic events in the companies’ respective geographic area; (18) a weakening of the economies in which the combined company will conduct operations may adversely affect its operating results; (19) the U.S. legal and regulatory framework, including those associated with the Dodd Frank Wall Street Reform and Consumer Protection Act, could adversely affect the operating results of the combined company; (20) the interest rate environment may compress margins and adversely affect net interest income; and (21) competition from other financial services companies in the companies’ markets could adversely affect operations. Additional factors that could cause Renasant’s and Heritage’s results to differ materially from those described in the forward-looking statements can be found in Renasant’s and Heritage’s reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the SEC and available at the SEC’s website (www.sec.gov). All subsequent written and oral forward-looking statements concerning Renasant, Heritage or the proposed merger or other matters and attributable to Renasant, Heritage or any person acting on either of their behalf are expressly qualified in their entirety by the cautionary statements above. Renasant and Heritage do not undertake any obligation to update any forward-looking statement, whether written or oral, to reflect circumstances or events that occur after the date the forward-looking statements are made.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit |
Description of Exhibit | |
| 99.1 | Joint press release dated December 10, 2014 issued by Renasant Corporation and Heritage Financial Group, Inc. | |
| 99.2 | Presentation materials, dated December 10, 2014. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| RENASANT CORPORATION | ||||||
| Date: December 10, 2014 | By: | /s/ E. Robinson McGraw | ||||
| E. Robinson McGraw | ||||||
| Chairman, President and Chief | ||||||
| Executive Officer | ||||||
EXHIBIT INDEX
| Exhibit |
Description of Exhibit | |
| 99.1 | Joint press release dated December 10, 2014 issued by Renasant Corporation and Heritage Financial Group, Inc. | |
| 99.2 | Presentation materials, dated December 10, 2014. | |
Exhibit 99.1
|
|
Renasant Corporation and Heritage Financial Group, Inc.
Announce Definitive Merger Agreement
TUPELO, MS and ALBANY, GA (December 10, 2014) – Renasant Corporation (NASDAQ: RNST) and Heritage Financial Group, Inc. (NASDAQ: HBOS) jointly announced today the signing of a definitive merger agreement pursuant to which Renasant Corporation (“Renasant” or “the Company”) will acquire, in an all-stock merger, Heritage Financial Group, Inc. (“Heritage”), a bank holding company headquartered in Albany, Georgia, and the parent of HeritageBank of the South (“HeritageBank”), a Georgia savings bank.
Upon completion of the transaction, the combined company will have approximately $7.5 billion in total assets, $5.2 billion in gross loans and $6.1 billion in deposits with 171 banking, mortgage, insurance, wealth management and investment offices in Mississippi, Alabama, Tennessee, Georgia and Florida. The transaction will add to Renasant approximately $1.9 billion in assets, $1.2 billion in loans and $1.3 billion in deposits, and 48 banking, mortgage and investment offices in Alabama, Georgia and Florida as of September 30, 2014, inclusive of Heritage’s pending previously announced branch acquisition from The PrivateBank and Trust Company of a branch in Norcross, GA with $40 million in loans and $129 million in deposits.
The merger will solidify Renasant as one of the largest community banks operating in the Southeast with significant other business lines including insurance, mortgage and wealth management.
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The transaction also enhances the Company’s presence in the metro markets of Birmingham, AL and Atlanta, GA with minimal existing overlap while also providing entry into new markets, such as Albany, GA, Statesboro, GA, Savannah, GA, Auburn, AL, Ocala, FL and Gainesville, FL.
Additionally, the merger will provide a stable source of low-cost core deposits that are expected to support and enhance Renasant’s future growth activities.
O. Leonard Dorminey, President and Chief Executive Officer of Heritage, said “We are excited to partner with Renasant to provide enhanced value to our stockholders, clients, employees, and communities. This merger will provide greater resources and operational scale that will allow us to grow as part of a larger community bank. Renasant’s strong fundamentals and superior service are consistent with our own culture. Their proven track record of profitable growth, ability to successfully execute acquisitions, and similar community bank culture makes Renasant an excellent choice for Heritage. We are confident that this merger will be positive for all of our constituents: our stockholders, clients, employees and communities.”
Dorminey will join the Company as Executive Vice President of Renasant Corporation and will serve as the President of Renasant Bank’s Georgia region. He has been with HeritageBank since 2001 and has served as President and CEO of Heritage since 2003. Dorminey began his career in banking as a lender more than 32 years ago.
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According to the terms of the merger agreement, which has been approved by the Boards of Directors of both companies, Heritage stockholders will receive 0.9266 shares of Renasant common stock for each share of Heritage common stock, and the merger is expected to qualify as a tax-free reorganization for Heritage stockholders. Based on Renasant’s 20-day average closing price of $29.14 per share as of December 9, 2014, the aggregate deal value is approximately $258 million or $27.00 per share. Under the proposed terms, the transaction is expected to be immediately accretive to Renasant’s estimated earnings per share with the estimated tangible book value dilution being earned back in less than two years and an IRR which exceeds internal thresholds.
“This merger between Renasant and Heritage adds branch and mortgage locations to our legacy markets of Birmingham and Atlanta while providing for our entry into several attractive new markets in Alabama, Georgia and Florida,” said Renasant Chairman and Chief Executive Officer, E. Robinson McGraw. “This merger will expand our market share, earnings growth and profitability and is expected to greatly benefit our current and future clients with expanded locations, services and products. Heritage is a community bank with a proven track record of success in serving their clients and communities, and we look forward to completing this acquisition.”
The acquisition is expected to close during the third quarter of 2015 and is subject to Renasant and Heritage stockholder approval, regulatory approval and other conditions set forth in the merger agreement. Pursuant to the terms of the merger agreement, HeritageBank will merge with and into Renasant Bank immediately after the merger of Heritage with and into Renasant.
Renasant was advised by the investment banking firm of Raymond James & Associates, Inc., and the law firm of Phelps Dunbar LLP. Heritage was advised by the investment banking firm of Keefe, Bruyette & Woods and the law firm of Alston & Bird LLP.
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Conference Call Information:
Renasant and Heritage will host an investor conference call and webcast on December 11, 2014, at 9:00 AM Eastern through http://services.choruscall.com/links/rnst141211.html.
The conference may be accessed via telephone by dialing 1-877-513-1143 in the United States and requesting the Renasant Corporation call. International participants should dial 1-412-902-4145. A presentation outlining this announcement will be available through the Company’s IR site, www.renasant.com. The presentation will also be available through Heritage’s website at www.eheritagebank.com. A replay of the conference call will be available by dialing 1-877-344-7529 in the U.S. or 1-412-317-0088 internationally and entering access code 10057355. The webcast can be replayed until December 11, 2015, from either the Company’s or Heritage’s website.
Renasant and Heritage Contacts:
| RNST: | For Media: | For Financials: | ||
| John Oxford | Kevin Chapman | |||
| First Vice President | Executive Vice President | |||
| Director of Corp Communication | Chief Financial Officer | |||
| (662) 680-1219 | (662) 680-1450 | |||
| joxford@renasant.com | kchapman@renasant.com | |||
| HBOS: | For Financials: | |||
| T. Heath Fountain, CPA | ||||
| Executive Vice President | ||||
| Chief Financial Officer | ||||
| (229) 878-2055 | ||||
| hfountain@eheritagebank.com | ||||
ABOUT RENASANT CORPORATION:
Renasant Corporation is the parent of Renasant Bank, a 110-year-old financial services institution, and Renasant Insurance. Renasant has assets of approximately $5.8 billion and operates more than 120 banking, mortgage, financial services and insurance offices in Mississippi, Tennessee, Alabama and Georgia.
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ABOUT HERITAGE FINANCIAL GROUP, INC.:
Heritage Financial Group, Inc. is the holding company for HeritageBank of the South, a community-oriented bank serving primarily Georgia, Florida and Alabama through 36 banking locations, 20 mortgage offices, and 5 investment offices.
Additional Information about the Renasant/Heritage Transaction
This communication is being made in respect of the proposed merger transaction involving Renasant and Heritage. In connection with the proposed merger, Renasant and Heritage will file a registration statement on Form S-4 that will include a joint proxy statement/prospectus, and other relevant documents concerning the proposed merger, with the Securities and Exchange Commission (the “SEC”). This release 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. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER OR INCORPORATED BY REFERENCE IN THE JOINT PROXY STATEMENT/PROSPECTUS BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT RENASANT, HERITAGE AND THE PROPOSED MERGER. When available, the joint proxy statement/prospectus will be mailed to shareholders of both Renasant and Heritage. Investors will also be able to obtain copies of the joint proxy statement/prospectus and other relevant documents (when they become available) free of charge at the SEC’s website (www.sec.gov). In addition, documents filed with the SEC by Renasant will be available free of charge from Kevin Chapman, Chief Financial Officer, Renasant Corporation, 209 Troy Street, Tupelo, Mississippi 38804-4827, telephone: (662) 680-1450. Documents filed with the SEC by Heritage will be available free of charge from Heritage by contacting T. Heath Fountain, Chief Financial Officer, Heritage Financial Group, Inc., 721 N. Westover Blvd, Albany, Georgia, telephone: (229) 878-2055.
Renasant, Heritage and certain of their directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the shareholders of Renasant and Heritage in connection with the proposed merger. Information about the directors and executive officers of Renasant is included in the proxy statement for its 2014 annual meeting of shareholders, which was filed with the SEC on March 11, 2014. Information about the directors and executive officers of Heritage is included in the proxy statement for its 2014 annual meeting of shareholders, which was filed with the SEC on April 25, 2014. Additional information regarding the interests of such participants and other persons who may be deemed participants in the transaction will be included in the joint proxy statement/prospectus and the other relevant documents filed with the SEC when they become available.
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“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995:
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Congress passed the Private Securities Litigation Act of 1995 in an effort to encourage companies to provide information about their anticipated future financial performance. This act provides a safe harbor for such disclosure, which protects a company from unwarranted litigation if actual results are different from management expectations. This release reflects the current views and estimates of future economic circumstances, industry conditions, company performance, and financial results of the management of Renasant and Heritage. These forward-looking statements are subject to a number of factors and uncertainties which could cause Renasant’s, Heritage’s or the combined company’s actual results and experience to differ from the anticipated results and expectations expressed in such forward-looking statements, and such differences may be material. Forward-looking statements speak only as of the date they are made, and neither Renasant nor Heritage assumes any duty to update forward-looking statements. In addition to factors previously disclosed in Renasant’s and Heritage’s reports filed with the SEC and those identified elsewhere in this release, these forward-looking statements include, but are not limited to, statements about (i) the expected benefits of the transaction between Renasant and Heritage and between Renasant Bank and HeritageBank of the South, including future financial and operating results, cost savings, enhanced revenues and the expected market position of the combined company that may be realized from the transaction, and (ii) Renasant’s and Heritage’s plans, objectives, expectations and intentions and other statements contained in this release that are not historical facts. Other statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “targets,” “projects” or words of similar meaning generally are intended to identify forward-looking statements. These statements are based upon the current beliefs and expectations of Renasant’s and Heritage’s management and are inherently subject to significant business, economic and competitive risks and uncertainties, many of which are beyond their respective control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ from those indicated or implied in the forward-looking statements, and such differences may be material.
The following risks, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) the businesses of Renasant and Heritage may not be integrated successfully or the integration may be more difficult, time-consuming or costly than expected; (2) the expected growth opportunities or costs savings from the transaction may not be fully realized or may take longer to realize than expected; (3) revenues following the transaction may be lower than expected as a result of losses of customers or other reasons, including issues arising in connection with Heritage’s integration of Alarion Financial Services, Inc.; (4) deposit attrition, operating costs, customer loss and business disruption following the transaction, including difficulties in maintaining relationships with employees, may be greater than expected; (5) governmental approvals of the transaction may not be obtained on the proposed terms or expected timeframe; (6) Renasant’s or Heritage’s shareholders may fail to approve the transaction; (7) the terms of the proposed transaction may need to be modified to satisfy such approvals or conditions; (8) reputational risks and the reaction of the companies’ customers to the transaction; (9) diversion of management time on merger related issues; (10) changes in asset quality and credit risk; (11) inflation; (12) the cost and availability of capital; (13) customer acceptance of the combined company’s products and services; (14) customer borrowing, repayment, investment and deposit practices; (15) the introduction, withdrawal, success and timing of business initiatives; (16) the impact, extent, and timing of technological changes; (17) severe catastrophic events in the companies’ respective geographic area; (18) a weakening of the economies in which the combined company will conduct operations may adversely affect its operating results; (19) the U.S. legal and regulatory framework, including those associated with the Dodd-Frank Wall Street Reform and Consumer
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Protection Act, could adversely affect the operating results of the combined company; (20) the interest rate environment may compress margins and adversely affect net interest income; and (21) competition from other financial services companies in the companies’ markets could adversely affect operations. Additional factors that could cause Renasant’s and Heritage’s results to differ materially from those described in the forward-looking statements can be found in Renasant’s and Heritage’s reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the SEC and available at the SEC’s website (www.sec.gov). All subsequent written and oral forward-looking statements concerning Renasant, Heritage or the proposed merger or other matters and attributable to Renasant, Heritage or any person acting on either of their behalf are expressly qualified in their entirety by the cautionary statements above. Renasant and Heritage do not undertake any obligation to update any forward-looking statement, whether written or oral, to reflect circumstances or events that occur after the date the forward-looking statements are made.
###
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Exhibit 99.2
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Merger of Renasant Corporation (RNST)
and Heritage Financial Group, Inc. (HBOS)
December 10, 2014
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Forward Looking Statement
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Congress passed the Private Securities Litigation Act of 1995 in an effort to encourage companies to provide information about their anticipated future financial performance. This act provides a safe harbor for such disclosure, which protects a company from unwarranted litigation if actual results are different from management expectations. This presentation reflects current views and estimates of the respective management of Renasant Corporation (“Renasant” or “RNST”) and Heritage Financial Group, Inc. (“Heritage” or “HBOS”) regarding future economic circumstances, industry conditions, company performance, and financial results. These forward looking statements are subject to a number of factors and uncertainties which could cause Renasant, Heritage, or the combined company’s actual results and experience to differ from the anticipated results and expectations expressed in such forward looking statements. Forward looking statements speak only as of the date they are made and neither Renasant nor Heritage assumes any duty to update forward looking statements. In addition to factors previously disclosed in Renasant’s and Heritage’s reports filed with the SEC and those identified elsewhere in this presentation, these forward-looking statements include, but are not limited to, statements about (i) the expected benefits of the transaction between Renasant and Heritage and between Renasant Bank and HeritageBank of the South, including future financial and operating results, cost savings, enhanced revenues and the expected market position of the combined company that may be realized from the transaction, and (ii) Renasant and Heritage’s plans, objectives, expectations and intentions and other statements contained in this presentation that are not historical facts. Other statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “targets,” “projects” or words of similar meaning generally are intended to identify forward-looking statements. These statements are based upon the current beliefs and expectations of Renasant’s and Heritage’s management and are inherently subject to significant business, economic and competitive risks and uncertainties, many of which are beyond their respective control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from those indicated or implied in the forward-looking statements.
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Transaction Terms
Consideration 100% stock (tax-free exchange) Fixed exchange ratio of 0.9266x
Implied Price Per Share $27.00(1)
Aggregate Value $257.9 million(1)(2)
Board Seats One current member from HBOS to be added to RNST’s board of directors
Ownership HBOS pro forma ownership will be approximately 21%
Required Approvals
Customary regulatory approval
FDIC approval with respect to certain FDIC loss-share agreements with HBOS RNST and HBOS shareholder approval
Expected Closing Third quarter 2015
(1) Based on RNST’s 20 day average closing price as of December 9, 2014 of $29.14 (2) Aggregate value includes the value of options, which will be settled in cash
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Transaction Multiples
Implied Price Per Share $27.00(1)
Price / TBVPS 169% Price / LTM Core EPS 19.6x Price / 2016 EPS(2) 12.4x Core Deposit Premium 10.9%
Premium to Current Price(3) 24.5%
| (1) |
|
Based on RNST’s 20 day average closing price as of December 9, 2014 of $29.14 and an exchange ratio of 0.9266x |
| (2) |
|
Based on analyst estimates |
| (3) |
|
Based on HBOS closing price on December 9, 2014 of $21.69 |
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Transaction Rationale
Strategically Advantageous
Provides additional scale with $1.9 billion in quality assets and a strong core deposit base
Complementary cultures and strong ties to the community consistent with Renasant
Banking, mortgage and investment offices enhance existing footprint and provide initial entry point into several attractive markets
Ability to increase non-interest income through the enhancement of fee-based services
Financially Attractive
Immediately accretive to EPS, double-digit EPS accretion projected in 2016
Tangible book value dilution expected to be earned back in under two (2) years(1)
Estimated IRR of 20%
Anticipated realization of significant expense synergies (20% of noninterest expense)
Pro forma TCE ratio of approximately 6.8%
Pro forma regulatory ratios remain above “well capitalized” guidelines
Lower risk opportunity
Extensive due diligence process completed
Comprehensive review of loan and OREO portfolios
Conservative credit mark coupled with large portion of previously acquired assets at fair value
Unique acquisition of an acquisitive institution
(1) Tangible book value earn back utilizes the “crossover” or “standalone vs. pro forma” methodology (assumes all merger-related expenses are recognized at close)
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Strengthens Existing Southeast Footprint
RNST Branches (123) HBOS Branches (38) (1) HBOS Mortgage Offices (7)
Pro Forma Highlights
Assets (2) $7.5 billion Gross Loans (2) $5.2 billion Deposits (2) $6.1 billion
Source: SNL Financial
| (1) |
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Pro forma for pending HBOS branch acquisition |
| (2) |
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Pro forma figures as of 9/30/2014, excluding purchase accounting adjustments |
Provides further expansion in current states of operation and entry into Florida
Alabama
Auburn Opelika
Georgia
Albany
Atlanta
Macon
Savannah
Statesboro
Valdosta
Florida
Ocala
Gainesville
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Financial Impact of the Transaction
Assumptions
Attractive Returns
Loan Mark (Non-acquired)
Credit: 3.98%
OREO Mark (Non-acquired): 25%
Cost Savings: 20%, 75% realized in 2015 and 100% realized in 2016 and thereafter
No revenue enhancements assumed
Pre-Tax Merger Expenses: $30 million (includes termination of ESOP and other employee benefit plans)
Core Deposit Intangible: 1.0%, amortized sum-of-the-years digits over 10 years
Retain all FDIC loss share agreements
Closing: Q3 2015
Immediately accretive to EPS
Double-digit EPS accretion projected in 2016
Tangible book value dilution expected to be earned back in less than two years
Estimated IRR of 20%
Pro Forma Capital
Based on an anticipated Q3 2015 closing, pro forma capital ratios are expected to remain well in excess of “well capitalized” minimums at close
Pro forma TCE ratio of approximately 6.8% at close and expected to exceed 7% within one year
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Benefits to Our Stakeholders
Shareholders
Unlocks shareholder value for both institutions
Opportunity for improved shareholder return
Increased liquidity and dividend(1) for HBOS shareholders Customers
Both institutions operate under community banking models with strong service levels
Mortgage, insurance, wealth management (and other lines of business / retail & commercial)
Convenience of expanded network of 171 offices across 5 states Employees
Long-term dedicated teams
Compatible business cultures
Minimal branch overlap leads to superior retention
(1) Implied annual dividend of $0.63 per HBOS shares based on RNST’s most recent quarterly dividend per share of $0.17 multiplied by the fixed exchange ratio of 0.9266
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Appendix
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Heritage Financial Highlights
Financial Highlights
2011 2012 2013 YTD 9/30
Company Profile
Bank Subsidiary HeritageBank of the
South
Headquarters Albany, GA Bank Established: 1955
Offices: 48
Top 5 Markets by Deposit Market Share:
Albany, GA Ocala, FL Statesboro, GA
Atlanta-Sandy Springs- Roswell, GA Savannah, GA
Balance Sheet ($M)’ Total As s ets
1,090
1,098
1,381
1,756
Total Net Loans 561 677 900 1,207
Total Depos its 884 870 1,076 1,341
Tangible Common Equity 119 116 121 147
Profitability (% )’ Core ROAA
0.20
0.58
0.78
0.62
Core ROAE 1.59 4.96 8.39 6.83
Net Interes t Margin 3.57 5.35 5.24 4.78
Capital Ratios (% )
TCE / TA
10.99
10.65
8.79
8.44
Tier 1 Ratio 21.20 17.20 13.50 12.00
TRBC Ratio 22.40 18.40 14.50 12.80
As s et Quality (% )’ NPAs / As s ets
1.53
1.63
1.08
0.88
NCOs / Avg Loans 0.83 0.18 0.24 0.03
LLRs / Gros s Loans 1.32 1.32 0.98 0.81
Source: SNL Financial
10
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HBOS Deposit Market Share(1)
Albany, GA MSA Statesboro, GA MSA
2014
2013
Deposits
Market
2014
2013
Deposits
Market
Rank Rank Institution Names Branches ($000’s) Share (%)
| 1 |
|
1 Heritage Financial Group Inc. (GA) 5 408,108 19.38 |
| 2 |
|
2 SunTrust Banks Inc. (GA) 5 274,378 13.03 |
| 3 |
|
3 Synovus Financial Corp. (GA) 5 228,830 10.86 |
| 4 |
|
4 Regions Financial Corp. (AL) 5 203,212 9.65 |
| 5 |
|
6 Bank of America Corp. (NC) 3 144,920 6.88 |
| 6 |
|
5 Flint Community Bcshs Inc. (GA) 1 140,739 6.68 |
| 7 |
|
7 Colony Bankcorp Inc. (GA) 4 132,231 6.28 |
| 8 |
|
8 Georgia Community Bancorp Inc. (GA) 3 125,306 5.95 |
9 9 Community Capital Bancshares (GA) 3 107,065 5.08
10 10 Dawson Bancshares Inc. (GA) 1 97,095 4.61
Top Ten 35 1,861,884 88.40
Market Total 43 2,106,228 100.00
Rank Rank Institution Names Branches ($000’s) Share (%)
| 1 |
|
1 Synovus Financial Corp. (GA) 4 302,134 29.89 |
| 2 |
|
2 BB&T Corp. (NC) 2 238,497 23.59 |
| 3 |
|
4 Heritage Financial Group Inc. (GA) 2 152,699 15.11 |
| 4 |
|
3 FMB Equibanc Inc. (GA) 3 149,121 14.75 |
| 5 |
|
5 Wells Fargo & Co. (CA) 1 91,474 9.05 |
| 6 |
|
6 Citizens Bk of Washington Cnty (GA) 1 44,251 4.38 |
| 7 |
|
7 Queensborough Co. (GA) 1 22,768 2.25 |
| 8 |
|
8 Liberty Shares Inc. (GA) 1 9,928 0.98 |
Market Total 15 1,010,872 100.00
2014
2013
Ocala, FL MSA
Deposits
Market
2014
2013
Savannah, GA MSA
Deposits
Market
Rank Rank Institution Names Branches ($000’s) Share (%)
| 1 |
|
1 SunTrust Banks Inc. (GA) 13 1,070,982 19.27 |
| 2 |
|
2 Regions Financial Corp. (AL) 12 899,716 16.19 |
| 3 |
|
3 Wells Fargo & Co. (CA) 11 720,899 12.97 |
| 4 |
|
4 Bank of America Corp. (NC) 9 675,501 12.15 |
| 5 |
|
9 BBVA 3 487,692 8.77 |
| 6 |
|
5 Florida Community Bkshs Inc. (FL) 7 461,339 8.30 |
| 7 |
|
8 Heritage Financial Group Inc. (GA) 5 268,278 4.83 |
| 8 |
|
7 CenterState Banks (FL) 5 193,121 3.47 |
9 10 BB&T Corp. (NC) 4 133,138 2.40
10 11 Villages Bancorp. Inc. (FL) 1 105,361 1.90
Top Ten 70 5,016,027 90.25
Market Total 86 5,558,563 100.00
Rank Rank Institution Names Branches ($000’s) Share (%)
| 1 |
|
2 SunTrust Banks Inc. (GA) 12 1,300,931 22.79 |
| 2 |
|
1 Wells Fargo & Co. (CA) 16 1,225,597 21.47 |
| 3 |
|
3 Bank of America Corp. (NC) 11 713,818 12.50 |
| 4 |
|
4 South State Corporation (SC) 7 546,007 9.56 |
| 5 |
|
5 Ameris Bancorp (GA) 10 402,058 7.04 |
| 6 |
|
6 BB&T Corp. (NC) 8 377,759 6.62 |
| 7 |
|
7 FCB Financial Corp. (GA) 6 317,825 5.57 |
| 8 |
|
8 Synovus Financial Corp. (GA) 4 209,763 3.67 |
9 9 Heritage Financial Group Inc. (GA) 3 139,638 2.45
10 10 Putnam-Greene Financial Corp. (GA) 2 102,471 1.80
Top Ten 79 5,335,867 93.47
Market Total 102 5,708,387 100.00
| (1) |
|
Includes top four MSAs where Heritage was ranked within the top ten based on deposits |
Source: SNL Financial; Deposit market share data as of 6/30/2014
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|
|
HBOS Mortgage Production
Mortgage team started in 2012 and currently consists of more than 70 bankers
Headquartered in the attractive Buckhead market
Total Production ($mm) Refinance vs. Purchases (% of Total Production)
$800.0
$678.0
100.0%
$600.0
75.0%
46.8%
$400.0
$407.4
$546.5
50.0%
70.8%
80.6%
$200.0
$0.0
$99.3
$46.5
$52.8
$288.3
$119.2 $131.5
25.0%
0.0%
53.2%
29.2%
19.4%
H2 ‘12 2013 ‘14 YTD
Refinanced Purchased
H2 ‘12 2013 ‘14 YTD
Refinanced Purchased
12
|
|
History of HBOS Growth
Transaction History
Pending branch acquisition in Norcross, GA from The PrivateBank and Trust Company expected to be acquired in December 2014
$2,000
$1,600
($ in millions)
Total Assets
$1,381
$1,756
On September 30, 2014 Heritage closed on its acquisition of Alarion Financial Services, a $283 million bank headquartered in Ocala, FL.
On March 8, 2013, Heritage assumed $212 million of deposits and purchased $181 million of assets of Frontier Bank in LaGrange, GA, from the FDIC.
On August 19, 2011, Heritage assumed $170 million of deposits and purchased all ($175 million) of the assets of First Southern National Bank in Statesboro, GA, from the FDIC. Approximately $108 million in assets were covered under a
$1,200
$800
$400
$0
$1,090 $1,098
2011 2012 2013 YTD 9/30
Core Net Income & Core ROAA
loss share agreement with the FDIC.
On February 18, 2011, Heritage assumed $204 million of deposits and purchased nearly all ($214 million) assets of Citizens Bank of Effingham from the FDIC. Approximately
$153 million in assets were covered under a loss share agreement with the FDIC.
On December 4, 2009, Heritage assumed all ($56 million) of deposits and purchased all ($59 million) assets of Tattnall Bank in Reidsville, GA from the FDIC.
Since 2009 Heritage has completed three branch acquisitions totaling $157 million in deposits.
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$0
($ in thousands)
Core Net Income
Core ROAA
0.20%
$1,947
0.58%
$6,185
0.78%
$10,136
0.62%
$6, 02
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
2011 2012 2013 YTD 9/30
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|
|
Branch Detail of Overlapping Markets
Birmingham, AL Atlanta, GA
RNST Branches
HBOS Branches (1)
HBOS Mortgage Offices (2)
Source: SNL Financial
| (1) |
|
Pro forma for pending HBOS branch acquisition |
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Additional Information
Renasant and Heritage will be filing a joint proxy statement/prospectus, and other relevant documents concerning the merger with the Securities and Exchange Commission (the “SEC”). This presentation 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. INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE MERGER OR INCORPORATED BY REFERENCE IN THE JOINT PROXY STATEMENT/PROSPECTUS BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT RENASANT, HERITAGE AND THE PROPOSED MERGER. When available, the joint proxy statement/prospectus will be mailed to shareholders of both Renasant and Heritage. Investors will also be able to obtain copies of the joint proxy statement/prospectus and other relevant documents (when they become available) free of charge at the SEC’s Web site (www.sec.gov). In addition, documents filed with the SEC by Renasant will be available free of charge from Kevin Chapman, Chief Financial Officer, Renasant Corporation, 209 Troy Street, Tupelo, Mississippi 38804-4827, telephone: (662) 680-1450.
Renasant, Heritage and certain of their directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the shareholders of Renasant and Heritage in connection with the proposed merger. Information about the directors and executive officers of Renasant is included in the proxy statement for its 2014 annual meeting of shareholders, which was filed with the SEC on March 11, 2014. Information about the directors and executive officers of Heritage is included in the proxy statement for its 2014 annual meeting of shareholders, which was filed with the SEC on April 25, 2014. Additional information regarding the interests of such participants and other persons who may be deemed participants in the transaction will be included in the joint proxy statement/prospectus and the other relevant documents filed with the SEC when they become available.
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Investor Inquiries
209 TROY STREET TUPELO, MS 38804-4827
PHONE: 1-800-680-1601
FACSIMILE: 1-662-680-1234
WWW.RENASANT.COM
WWW.RENASANTBANK.COM
E. Robinson McGraw
Chairman
President and Chief Executive Officer
Kevin D. Chapman
Senior Executive Vice President and
Chief Financial Officer
16