Annual Meeting of Shareholders May 16, 2013 1 Palmetto Bancshares, Inc. Holding Company for NASDAQ: PLMT Exhibit 99.1 |
Informational Update to Shareholders: Samuel L. Erwin, Chief Executive Officer 2 NASDAQ: PLMT |
Forward Looking Statements Certain statements in this presentation contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future plans and expectations, and are thus prospective. Such forward-looking statements are identified by words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “targets,” and “projects,” as well as similar expressions. Forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Factors which could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements include, but are not limited to: (1) the strength of the United States economy in general and the strength of the local economies in which the Company conducts its operations which could result in, among other things, a deterioration in the credit quality or a reduced demand for credit, including the resultant effect on our loan portfolio and allowance for loan losses and the rate of delinquencies and amounts of charge-offs, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (2) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) and the impact of such conditions on the Company, and the timing and amount of future capital raising activities by the Company, if any; and (3) actions taken by banking regulatory agencies related to the banking industry in general and the Company or the Bank specifically. The assumptions underlying the forward-looking statements could prove to be inaccurate. Therefore, we can give no assurance that the results contemplated in the forward-looking statements will be realized. The inclusion of this forward-looking information should not be construed as a representation by our Company or any person that the future events, plans, or expectations contemplated by our Company will be achieved. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found in our 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 U.S. Securities and Exchange Commission (the “SEC”) and available at the SEC’s Internet site (http://www.sec.gov), including the “Risk Factors” included therein. All subsequent written and oral forward-looking statements concerning the Company or any person acting on its behalf is expressly qualified in its entirety by the cautionary statements above. We do not undertake any obligation to update any forward-looking statement to reflect changes in circumstances or events that occur after the date the forward-looking statements are made. 3 NASDAQ: PLMT |
Commitments to our Shareholders 1. Communicate regularly 2. Provide clear and transparent information 3. Be accessible and visible 4. Listen to concerns and suggestions 5. Continue the rich legacy of our 106-year old institution 6. Protect the reputation of The Palmetto Bank 7. Work hard with dedication and perseverance to recover and optimize shareholder value 4 NASDAQ: PLMT |
Economic, Industry and Market Challenges Continue… 1. Sluggish and slow growth economy 2. Improving but uneven loan production 3. Federal Reserve interest rate policy resulting in low interest rate environment and net interest margin compression 4. Revenue pressures and increasing regulatory costs 5. Highly competitive market in the Upstate of South Carolina 6. Ongoing industry consolidation (at 12/31/12, down 1,451 (17%) from 8,534 at 12/31/07 and down 8,075 (53%) from 15,158 at 12/31/90) 5 NASDAQ: PLMT |
How is the Industry Responding? 6 First Quarter 2013 Bank Earnings Releases – Focus on Expenses “Calling expense control a "major focus," BB&T Corp. Chairman, President and CEO Kelly King said the U.S. economy will probably remain in a slow-growth mode for the next two or three years, so the company needs to adjust its business strategies accordingly.” – SNL 4/18/13 “Our relentless focus on capital, liquidity, and expense reduction…” - Bank of America First Quarter 2013 Earnings Release 4/17/13 “…expenses continued to decline as we improved efficiency across the franchise…” - Wells Fargo First Quarter 2013 Earnings Release 4/12/13 “…we remain committed to disciplined expense management over the course of the year.” - PNC First Quarter 2013 Earnings Release 4/17/13 “ The Company remains focused on strategic efficiency and addressing the ongoing environmental impact to the banking industry of increased regulatory compliance costs, revenue pressures on fee income, and net interest margin challenges…” - Earnings Release 4/24/13 NASDAQ: PLMT |
The Palmetto Bank: Building Momentum… 7 NASDAQ: PLMT |
Sustained Profitability 1. Three consecutive quarters of profitability through March 31, 2013 2. Expected to continue for the remainder of 2013 3. Potential quarterly earnings “lumpiness” from strategic quarterly resolution of the few remaining problem assets 8 NASDAQ: PLMT |
Improving Asset Quality 9 NASDAQ: PLMT $92,532 $96,936 $113,181 $91,653 $90,773 $91,405 $85,099 $71,739 $75,007 $53,028 $45,544 $24,176 $19,879 $15,848 $17,106 $27,765 $28,014 $28,980 $26,627 $22,638 $20,087 $16,385 $15,334 $14,851 $27,824 $26,789 $14,746 $11,647 $10,991 $11,088 $120,297 $124,950 $142,161 $118,280 $113,411 $111,492 $101,484 $87,073 $89,858 $80,852 $72,333 $38,922 $31,526 $26,839 $28,194 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% $- $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 3Q 2009 4Q 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 Nonaccrual loans OREO and Repossessed Autos NPA to total assets |
Exited Consent Order 1. Consent Order terminated in January 2013 2. Continued favorable regulatory relations 3. Positive feedback and confirmation of progress from ongoing examinations 10 NASDAQ: PLMT |
New Technology to Enhance the Client Experience NASDAQ: PLMT 11 |
Winning in the Market, Including with Larger and More Sophisticated Companies NASDAQ: PLMT 12 |
Stock Price Trading at Premium to Book Value 13 1. 2012 common stock increase of 70% (from $5.05 to $8.58) 2. Stock price as of May 15, 2013 = $13.90 (increase of 62% from December 31, 2012) - 178% of Book Value as of March 31, 2013 NASDAQ: PLMT - 146% of Pro Forma* Book Value as of March 31, 2013 Including projected partial recapture of the valuation allowance on the deferred tax asset * |
The Palmetto Bank: Looking Forward… 14 NASDAQ: PLMT |
Summary of Evolution of Focus • 2009 – Quantify depth of credit loss hole – Implement Strategic Project Plan – Prepare for regulatory agreement • 2010 – Raise capital ($114 million in October 2010) – Process improvement – Change management – Consent Order • 2011 – Performance culture and talent management – Infrastructure – Operating earnings – Client focus • 2012 – Return to profitability – Substantial resolution of remaining problem assets – Expense reductions – Technology enhancements – Expanded niche lending • 2013 Exit Consent Order Sustained and predictable earnings “Final” resolution of problem assets Value creation, including the Client Experience and Teammate Experience NASDAQ: PLMT 15 |
Clear Focus on Value Creation Strategy 16 NASDAQ: PLMT What actions do we need to take to increase the Value of The Palmetto Bank Franchise 1. 2. Are all of our actions contributing to an enhanced Client Experience 3. Are we cultivating a Teammate Experience that inspires us to do our best and win? ? ? |
Big Picture Strategy – Line of Business Delineation with Tailored Go-To-Market Strategies 1. Retail Banking, including consumer banking services and lending, Mortgage, Credit Cards and Indirect Auto 2. Commercial Banking, including Small Business Administration loans, Business Banking, Corporate Banking, Treasury Management and Merchant Services 3. Wealth Management, including Trust, Brokerage, Insurance, and Financial Planning (and potential addition of Private Banking) 4. Support Groups: enable the above with disciplined expense management and sound risk management By line of business, tailored go-to-market strategies, products, services, bundled offerings, expertise, technology, infrastructure, marketing, etc. 17 NASDAQ: PLMT |
Summary Themes for Success in 2013 1. Growth, including loans, core deposits, households and revenues 2. Client Experience, including tailored strategies by line of business and specialized operational support 3. Continuous improvement, including process, systems and technology for seamless processing and operational excellence 4. Strategic efficiency, with refined processes and efficiency for competitive advantage 5. Capital planning, taking into consideration organic balance sheet growth, evolving Basel III capital rules, dividend and M&A preparation 6. Teammate Experience, including commitment to excellence and a winning mindset 18 NASDAQ: PLMT |
Closing Thoughts 19 NASDAQ: PLMT |
Value of The Palmetto Bank Franchise 1. 106 year legacy with excellent reputation and strong brand recognition 2. Historical high performing financial results, with history of innovation and balanced and fair pricing to our clients 3. Premier deposit-gathering franchise in an attractive and vibrant banking market with strong deposit gathering capability a. Greenville mentioned as a “booming city” in a recent American Banker article 4. Heritage of deep client relationships and loyalty, with high touch client service platform being leveraged for enhanced sales culture 5. Experienced, specialized and dedicated team committed to excellence Positive momentum and outlook! 20 NASDAQ: PLMT |
Building Shareholder Value Even with a 106 year history, legacy is more about what is in front of us than what is behind us… Someone’s sitting in the shade today because someone planted a tree a long time ago. --Warren Buffet 21 NASDAQ: PLMT |
Thank you for your support! 22 NASDAQ: PLMT |