In this session, originally presented on February 19, 2013, Jay D. Wilson, Jr., CFA, CBA, ASA of Mercer Capital, presents an overview of bank valuation. Topics include: An Overview of Community Banks, Financial Statement Basics, Key Financial Indicators, Valuation Approaches, the Levels of Value, and Special Issues in the Valuation of a Community Bank

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9. Total Securities Interest Income
Trading Account Loans
Fed Funds + CDs + Rev Repos Fed Funds Sold & CD's
Gross Loans & Leases Securities
Loan Loss Allowance Estimated Tax Benefit
Net Loans & Leases Interest Income (FTE)
Total Earning Assets
Interest Expense
Cash and Due From Banks Deposits
Bank Premises Fed Funds Purchased
Other Real Estate Owned Other Interest Expense
Intangible Assets Interest Expense
Cash Surrender Value of Life Insurance Net Interest Income (FTE)
Other Assets
TOTAL ASSETS Fee Income
Deposit Account Service Charges
Other Operating Income
Total Other Income
Non-Interest Operating Expense
Salaries & Benefits
Net Occupancy
Other Operating Expenses
Non-Interest Operating Expenses
Security Transactions
Loan Loss Provision
Pre-Tax Income
Taxes
NET INCOME

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17. Source: Mercer Capital Presentation at AOBA Conference “Capital
Management: Alternatives & Uncertainties”

18. 55%
60%
65%
70%
75%
80%
Assets > $10B Assets $3-10B Assets $1-3B Assets $500M - $1B
2005 2009 2012
Source: Mercer Capital Presentation at AOBA Conference “Capital
Management: Alternatives & Uncertainties”

19. 0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
50.00%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
2.00%
2004Y 2005Y 2006Y 2007Y 2008Y 2009Y 2010Y 2011Y YTD @
9/11
YTD @
9/12
LoanLossProvision+/-OREOLosses/Gains/PTPPPOIncome
Pre-Tax,Pre-Provision,Pre-OREOIncome/Avg.Assets
Loan Loss Provision + OREO / PTPPPO Income Pre-Tax, Pre-Provision, Pre-OREO Income / Avg. Assets
Source: Mercer Capital Presentation at AOBA Conference “Capital
Management: Alternatives & Uncertainties”

20. Source: FDIC
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Assets > $10B Assets $1-10B
Source: Mercer Capital Presentation at AOBA Conference “Capital
Management: Alternatives & Uncertainties”

21. Source: Mercer Capital Presentation at AOBA Conference “Capital
Management: Alternatives & Uncertainties”

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34. 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Price / Earnings 13.4 16.8 18.3 16.6 17.7 14.3 13.5 14.3 13.5 11.6 12.0
Price / Tang. Book Value 1.53 2.03 2.17 1.86 1.86 1.41 1.40 1.27 1.21 1.05 1.14
0.00
0.60
1.20
1.80
2.40
3.00
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
Price/TangibleBookValueMultiple
Price/EarningsMultiple
Price/Earnings and Price/Book Value Multiples
Banks with Assets of $500 Million - $5 Billion & Return on Tang. Equity Between 5% and 15%
2002-2012 Medians:
P/E: 14.28x
P/TBV: 1.41x

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38. 38
217
305
399
481
566
463458463
504
357
280
261
232
272
283
278
309 323
177 175
216 215
233
$0
$50
$100
$150
$200
$250
$300
0
50
100
150
200
250
300
350
400
450
500
550
600
DealValue($B)
Bank&ThriftTransactions
Bank & Thrift Transactions Deal Value

39. 39
50%
75%
100%
125%
150%
175%
200%
225%
250%
275%
300%
10x
14x
18x
22x
26x
30x
34x
38x
42x
46x
50x
Price/TBV
Price/Earnings
Price / Earnings Price / TBV
NM

40. -30%
-20%
-10%
0%
10%
20%
30%
0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x
ROAE
Price/Tangible Book Value
Bank and Thrift Transactions
2012 to 2/6/2013

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47. Weekly
Trading Assets
NPAs /
Loans+OREO ROTCE
< 0.5% 733,895 4.01 5.83
0.5 to 1.0% 1,700,931 3.10 9.81
1.0 to 2.0% 2,823,692 3.07 9.82
> 2.0% 14,913,012 2.08 11.65

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