Contract
 Crescent
Financial Bancshares, Inc. Agreement to Acquire ECB Bancorp, Inc.
September 2012
Exhibit 99.2 |
 1
Cautionary Statement Regarding Forward-
Looking Statements
•
This presentation contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. You can identify forward-looking
statements by words such as “may,” “hope,”
“will,”
“should,”
“expect,”
“plan,”
“anticipate,”
“intend,”
“believe,”
“estimate,”
“predict,”
“potential,”
“continue,”
“could,”
“future”
or the negative of those terms or other words of similar
meaning. You should read statements that contain these words carefully because they discuss
our future
expectations
or
state
other
“forward-looking”
information.
These
forward-looking
statements
involve a number of risks and uncertainties.
•
Crescent Financial Bancshares, Inc. (“CRFN”) and ECB Bancorp, Inc.
(“ECBE”) caution readers that any forward-looking statement is not a
guarantee of future performance and that actual results could differ materially from
those contained in the forward-looking statement. Such forward-looking
statements
include,
but
are
not
limited
to,
statements
about
the
benefits
of
the
proposed
merger
involving CRFN and ECBE, CRFN’s and ECBE’s plans, objectives, expectations and
intentions, the expected timing of completion of the transaction and other statements
that are not historical facts. Important factors that could cause actual results to
differ materially from those indicated by such forward-looking statements are set
forth in CRFN’s and ECBE’s filings with the SEC. These include risks and
uncertainties relating to: the ability to obtain the requisite CRFN and ECBE shareholder
approvals; the risk that CRFN or ECBE may be unable to obtain governmental and regulatory
approvals required for the merger, or required governmental and regulatory approvals
may delay the merger; the risk that a condition to closing of the merger may not be
satisfied; the timing to consummate the proposed merger; the risk that the businesses
will not be integrated successfully; the risk that the cost savings and any other
synergies from the transaction may not be fully realized or may take longer than
expected; disruption from the transaction making it more difficult to maintain
relationships with customers and employees; the diversion of management time on merger-
related issues; general worldwide economic conditions and related uncertainties; the effect of
changes
in
governmental
regulations;
and
other
factors
discussed
or
referred
to
in
the
“Risk
Factors”
section of each of CRFN’s and ECBE’s most recent Annual Report on Form 10-K
filed with the SEC. Each forward-looking statement speaks only as of the date
of the particular statement and except as may be required by law, neither CRFN nor ECBE
undertakes any obligation to publicly update any forward-looking statement, whether
as a result of new information, future events or otherwise. |
 2
(1)
Based on CRFN stock price of $5.00 per share
(2)
Based on ECBE’s tangible book value per share of $22.63, inclusive of 55,000 restricted
shares issued on 9/12/2012 Overview of Transaction Terms
Acquiror:
Crescent Financial Bancshares, Inc. (NASDAQ: CRFN)
Target:
ECB Bancorp, Inc. (NYSE AMEX: ECBE)
Consideration:
100% Stock ($17.75 per ECBE share), tax-free exchange
Fixed Exchange Ratio:
3.55 shares of CRFN for each common share of ECBE
Transaction Value
(1)
:
$51.6 million
Price / Tangible Book Value
(2)
:
78.5%
TARP CPP Preferred:
$17.9 million assumed at par value
Capital Raise:
No anticipated need for additional capital
Management:
X. Xxxxxx Xxx will join CRFN as President and become Board
Chairman of Crescent State Bank
Board Representation:
3 ECBE Directors to join the CRFN Board and 3 ECBE Directors to
join the Crescent State Bank Board
Required Approvals:
Regulatory, ECBE & CRFN shareholders
Expected Closing:
1
st
quarter 2013 |
 3
Transaction Rationale
Strategic
Rationale
Financially
Compelling
Low Risk
Integration
Creates the largest community bank in eastern North Carolina
Leverages management’s extensive experience in the region
Doubles North Carolina deposit market share
92 year old franchise represents strong core funding base
Strategic and cultural alignment
Accretive to tangible book value per share
Immediately and meaningfully accretive to core EPS
Utilization of excess capital
Exceeds 20% IRR with no anticipated need for additional capital
Proven integrators with track record of successful acquisitions
Conservative credit mark and cost savings assumptions
Modeled approximately 25% cost savings phased in over 2 years |
    4
NC
SC
Source: SNL Financial and MapInfo
Note: Community banks not italicized
Deposit data as of 6/30/2011; Pro forma for recently completed and announced transactions
Strategic Market Expansion
SCALE
MANAGEMENT
GROWTH
PERFORMANCE
CAPITAL
Raleigh
Greensboro
Fayetteville
Charlotte
Wilmington
Xxxxxx
Xxxxxxxxx City
Xxxxxxx-Salem
Greenville
Virginia Beach
North Carolina Deposit Market Share
Rank
Institution
Number
of
Branches
Deposits in
Market
($mm)
1
Bank of America Corp.
193
134,648
2
Xxxxx Fargo & Co.
337
38,769
3
BB&T Corp.
366
35,064
4
First Citizens BancShares Inc.
264
12,252
5
PNC Financial Services Group
175
10,262
6
SunTrust Banks Inc.
188
7,309
7
Capital Bank Finl Corp
54
2,468
8
First Bancorp
82
2,446
9
BNC Bancorp
30
2,389
10
FNB United Corp.
61
2,365
11
Fifth Third Bancorp
61
2,103
Pro Forma
45
1,727
12
Yadkin Valley Financial
31
1,715
13
NewBridge Bancorp
31
1,431
14
HomeTrust Bancshares Inc.
20
1,272
15
Fidelity BancShares (N.C.) Inc
64
1,147
16
Southern BancShares (NC)
56
1,143
17
Park Sterling Corporation
19
1,004
18
United Community Banks Inc.
21
947
19
Crescent & VantageSouth
20
914
20
Peoples Bancorp of NC Inc.
24
847
21
25
813
22
Paragon Commercial Corp.
2
789
23
Macon Bancorp
12
781
24
Four Oaks Fincorp Inc.
16
767
25
First Community Bancshares Inc
24
738
Totals (1-25)
2,176
264,384
Totals (1-112)
2,721
282,894
Crescent & VantageSouth (20)
ECBE (25)
Jacksonville
-
Major Market |
 5
Source: SNL Financial
Comprehensive Due Diligence Process
Due Diligence Overview
Cumulative Loss Analysis
Thorough due diligence review conducted by 22
people
(internal
and
3
party)
100% of lending relationships $1.0 million or
greater
All watchlist loans with exposures over
$800,000
Top loans in each call code category
Bias towards reviewing loan categories with
historically higher loss rates, including land
(lots, A&D), residential construction,
multifamily, and non-owner occupied CRE
Additional
3
rd
party
loan
review
conducted
by
Credit Risk Management
High case losses of $31.4 million
Crescent’s $40 million credit mark 27% above
CRM’s high case
6/30/12
Balance
($mm)
Xxxxx Xxxx
(%)
Xxxxx Xxxx
($mm)
Total Loans
$506.3
(7.9%)
$40.0
OREO
$9.1
(20.9%)
1.9
Total Loans & OREO
$515.3
(8.1%)
$41.9
Net Charge-Offs Since 12/31/07
$29.2
Disclosed OREO Costs Since 12/31/07
$5.2
Cumulative Losses
$76.3
12/31/07 Loan Balance
$454.2
Cumulative Losses as % of 12/31/07 Loans
16.8%
rd |
 6
Source: SNL Financial
Note: Loan data per regulatory filings at 6/30/2012
(1)
Does not include purchase accounting adjustments
Pro Forma Loan Composition
Crescent & VantageSouth
ECB Bancorp, Inc.
Pro Forma
(1)
Loan Portfolio ($000)
Amount
% of Total
Construction
$85,026
12.0%
Residential R.E.
118,404
16.7%
Multifamily
24,307
3.4%
Non-Owner Occupied C.R.E.
190,177
26.8%
Owner Occupied C.R.E.
146,853
20.7%
Farm
499
0.1%
Commercial & Industrial
69,993
9.9%
Consumer & Other
74,385
10.5%
Gross Loans & Leases
$709,644
100.0%
Loan Portfolio ($000)
Amount
% of Total
Construction
$148,067
12.1%
Residential R.E.
176,233
14.5%
Multifamily
40,067
3.3%
Non-Owner Occupied C.R.E.
306,973
25.2%
Owner Occupied C.R.E.
228,278
18.7%
Farm
28,176
2.3%
Commercial & Industrial
124,982
10.3%
Consumer & Other
166,184
13.6%
Gross Loans & Leases
$1,218,960
100.0%
Loan Portfolio ($000)
Amount
% of Total
Construction
$63,041
12.4%
Residential R.E.
57,829
11.4%
Multifamily
15,760
3.1%
Non-Owner Occupied C.R.E.
116,796
22.9%
Owner Occupied C.R.E.
81,425
16.0%
Farm
27,677
5.4%
Commercial & Industrial
54,989
10.8%
Consumer & Other
91,799
18.0%
Gross Loans & Leases
$509,316
100.0% |
 Source: SNL
Financial Note: ECBE deposit data per GAAP filings
Note: Crescent & VantageSouth deposit composition consistent with GAAP reporting
(1)
Does not include purchase accounting adjustments
Pro Forma Deposit Composition
Total: $864 million
Total: $1,659 million
Total: $795 million
Crescent & VantageSouth
ECB Bancorp, Inc.
Pro Forma
(1)
Core Deposits
Time Deposits
ECB Bancorp, Inc. Historical Deposit Growth
$798
$786
$755
$629
$526
$795
7 |
 8
Sept. 2012:
Announced Acquisition
of ECB Bancorp, Inc.
Pro Forma Assets:
$2.0bn
Source: SNL Financial, ESRI and US Census data; Population growth from 2011-2016
Summary
Financially compelling transaction using conservative assumptions
–
Accretive to tangible book value
–
Significant EPS accretion
–
Strong IRR
–
Provides operating scale
Feb. 2010:
Piedmont acquired
62% Of
Vantage South Bank
Assets: $96mm
Apr. 2011:
Acquired Community
Bank of Rowan
Pro Forma Assets:
$224mm
Dec. 2011:
Acquired Crescent
Financial (CRFN)
Pro Forma Assets:
$1.1bn
Feb. 2012:
Merged
VSB & CBR
Pro Forma Assets:
$1.1bn
Aug. 2012:
Announced Merger
of VSB into
Crescent State Bank
Pro Forma Assets:
$1.1bn
Leverages capital resources and management expertise
Core deposit base will support organic asset growth across the footprint
The transaction furthers our goal of becoming a premier $5+ billion community banking
franchise across the Carolinas and Xxxxxxxx
Xxxxxxx–Xxxx MSA population is projected to grow 12.3% over the next 5 years
|
 9
Additional Information About the Merger and
Where to Find It
CRFN,
ECBE
and
their
respective
directors
and
executive
officers
may
be
deemed
“participants”
in
the
solicitation
of
proxies
from
shareholders
of
CRFN
and
ECBE
in
favor
of
the
merger.
Information
about
the
directors and executive officers of ECB Bancorp, Inc. and their ownership of ECBE
common stock is set forth in ECBE’s definitive proxy statement filed
with the SEC on April 27, 2012 and available at the SEC’s Internet site
(xxxx://xxx.xxx.xxx) and from ECB Bancorp, Inc. at the
address set forth in the preceding paragraph. Information about
the
directors
and
executive
officers
of
Crescent
Financial
Bancshares,
Inc.
and
their
ownership
of
CRFN
common
stock
is
set
forth
in
CRFN’s
definitive
proxy
statement
filed
with
the
SEC
on
April
5,
2012
and
available at
the SEC’s Internet site (xxxx://xxx.xxx.xxx) and
from CRFN at the address set forth in the preceding paragraph.
Additional
information
regarding
the
interests
of
these
participants
may
be
obtained
by
reading
the joint
proxy
statement/prospectus
regarding
the
proposed
merger
when
it
becomes
available.
In connection with the proposed merger, CRFN will file with the Securities and
Exchange Commission (“SEC”) a Registration Statement on Form
S-4 that will contain a joint proxy statement/prospectus of CRFN and ECBE. The
companies will file with the SEC other relevant materials in connection with the
proposed merger, and will mail the
joint
proxy
statement/prospectus
to
their
respective
shareholders.
SHAREHOLDERS
OF
BOTH
CRFN
AND
ECBE ARE STRONGLY URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY
STATEMENT/PROSPECTUS REGARDING THE PROPOSED MERGER WHEN THEY BECOME AVAILABLE
AND
OTHER
RELEVANT
DOCUMENTS
FILED
WITH
THE
SEC,
AS
WELL
AS
ANY
AMENDMENTS
OR
SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
REGARDING
CRFN,
ECBE
AND
THE
PROPOSED
MERGER.
You
will
be
able
to
obtain
a
free
copy
of
the
Registration Statement, as well as other filings containing information about
Crescent Financial Bancshares, Inc., at the SEC’s Internet site (xxxx://xxx.xxx.xxx). The documents can also be obtained, without charge, by directing a
written request to either Crescent Financial Bancshares, Inc., 0000 Xxxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000, Attention: Xxxxx Xxxxxx, Executive
Vice President and Chief Financial Officer, or ECB Bancorp, Inc., Post
Office Box 337, Engelhard, NC 27824, Attention: Xxx Xxxxxxx, Chief Financial
Officer. |
