Building a Leading Banking Franchise in the Southeast Region - - PowerPoint PPT Presentation

Building a Leading Banking Franchise in the Southeast Region

Investor Presentation December 20, 2018

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Cautionary Statement Regarding Forward-Looking Statements

This presentation contains forward-looking statements. These forward-looking statements include, but are not limited to, statements about the benefits

• f the proposed business combination of CCF Holding Company ("CCFH"), Heritage Bancorporation, Inc. ("HBCI") and Providence Bank ("Providence"),

collectively referred to herein as Heritage Southeast Bancorporation, Inc. ("HSBI"), including future financial and operating results (including the anticipated impact of each of the transactions on earnings and tangible book value), statements related to the expected timing of the completion of the business combination, the combined company's plans, objectives, expectations and intentions, and other statements that are not historical facts. Forward-looking statements may be identified by terminology such as "may," "will," "should," "scheduled," "plans," "intends," "anticipates," "expects," "believes," estimates," "potential," or "continue" or negatives of such terms or other comparable terminology. All forward-looking statements in this presentation, or in any other written or oral communication that relates to the proposed combination of CCFH, HBCI and Providence or to matters that may affect such proposed combination, are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of HSBI, or of CCFH, HBCI or Providence, to differ materially from any results expressed or implied by such forward-looking statements. Such factors include, among others: (1) the risk that the cost savings and any revenue synergies from the business combination may not be realized or take longer than anticipated to be realized, (2) disruption from the business combination with customers, suppliers, employees or other business partners, (3) the occurrence of any event, change or other circumstances that could give rise to the termination of the business combination agreement, (4) the risk of unsuccessful integration of HBCI’s or Providence’s business into the business of CCFH, (5) the failure to obtain the necessary approvals by the shareholders of CCFH, HBCI or Providence, (6) the amount of the costs, fees, expenses and charges related to the business combination or any subsequent mergers of the HSBI bank subsidiaries, (7) the ability by the parties to obtain required governmental approvals of the business combination agreement or of any subsequent mergers of the HSBI bank subsidiaries, (8) reputational risk and the reaction of each company's customers, suppliers, employees or other business partners to the business combination, (9) the failure of the closing conditions in the business combination agreement to be satisfied, or any unexpected delay in closing the business combination, (10) the risk that the integration of HBCI’s or Providence’s operations into the

• perations of CCFH will not occur, will be materially delayed or will be more costly or difficult than expected, (11) the possibility that the business

combination will be more expensive to complete than anticipated, including as a result of unexpected factors or events, (12) the dilution caused by CCFH’s issuance of additional shares of its common stock in the transaction, (13) general competitive, economic, political and market conditions. Each of CCFH, HBCI and Providence disclaim any obligation to update or revise any forward-looking statements contained in this presentation (which statements speak only as of the date hereof), or in any other written or oral communication that relates to the proposed combination of CCFH, HBCI and Providence or to matters that may affect such proposed combination, whether as a result of new information, future events or otherwise. CCFH intends to file with the Secretary of State of Georgia, as the Commissioner of Securities of the State of Georgia (the “GA Securities Commissioner”), an application under Section 10-5-11(9) of the Georgia Uniform Securities Act of 2008 requesting the issuance of an order on the fairness of the terms and conditions of the proposed transaction. In connection therewith, the shareholders of HBCI and Providence will receive notice of and be entitled to attend a hearing before the GA Securities Commissioner. Following the hearing and the issuance of an order by the GA Securities Commissioner, proxy statements containing the order and other important information about the proposed transaction, CCFH, HBCI and Providence will be mailed to the shareholders of CCFH, HBCI and Providence. The shareholders of CCFH, HBCI and Providence are urged to read their respective proxy statement, which will include the business combination agreement, and other related documents (including any amendments or supplements), carefully when they become available.

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1) Bank level financial information as of September 30, 2018; Excludes purchase accounting adjustments. As of September 30, 2018, holding company level loan and trust preferred obligations included: (i) a holding company loan with outstanding principal of approximately $3.2 million owed by CCFH, and (ii) HBCI trust preferred principal and accrued dividends totaling approximately $10.0 million Source: S&P Global Market Intelligence, Company Documents

Pro Forma Financial Highlights¹

• Assets:

~$1.1 billion

• Loans:

~$793 million

• Deposits:

~$980 million

• TCE:

~$104 million

• Heritage Southeast Bancorporation, Inc. will

be a publicly-traded bank holding company for 3 subsidiary banks

• Creates a dynamic and diverse banking

franchise to better serve the needs of clients, address the challenges of the banking industry and create value and optionality for shareholders

• Aligned corporate cultures and strategic goals

amongst the three bank management teams

• 24 total branch locations focused in attractive

GA and northeast FL markets Pro Forma Branch Map Pro Forma Franchise Overview

CCF Holding Company (6) Heritage Bancorporation, Inc. (17) Providence Bank (1)

Building a Leading Southeast Banking Institution

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Transaction Highlights and Rationale

1) Bank level financial information as of September 30, 2018; Excludes purchase accounting adjustments 2) Based on deposit information as of June 30, 2018; Includes banks and bank holding companies publicly-traded on major exchanges (NASDAQ, NYSE, NYSEAM) 3) Defined as total deposits less time deposit accounts greater than $100,000 4) Based on interest expense on deposits for the three (3) months ended September 30, 2018 and non-interest bearing deposits as of September 30, 2018 for each bank Source: S&P Global Market Intelligence, FDIC

Strategically Compelling Transaction

• Three bank combination that creates a growth-oriented Southeastern community bank holding

company with approximately $1.1 billion¹ in total assets and 24 branch locations throughout Georgia and northeast Florida – 8th largest publicly-traded bank holding company headquartered in Georgia by deposit market share² – 13th largest publicly-traded bank holding company by deposit market share² among institutions headquartered in Georgia or Florida

• Led by a combination of veteran management teams

– Each institution's CEO has over 30 years of banking experience and the collective management teams average over 100 years of banking experience

• Creates a sophisticated banking institution that will provide a significantly more comprehensive

banking experience for existing customers of the three participating banks – Combination of three separate franchises with diverse business lines, product offerings, market dynamics and complementary balance sheets with a shared “customer first” corporate culture

• The combined franchise will have a funding base of approximately $980¹ million in deposits, 46%
• f which are transaction accounts and 85% of which are core³, at an average cost of about 0.45%⁴

– Key value differentiator and driver of earnings upside in the current banking environment – Illustrates the benefits of long-term, relationship-driven community banking

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Transaction Highlights and Rationale (Cont.)

1) Bank level financial information as of September 30, 2018; Excludes purchase accounting adjustments Source: S&P Global Market Intelligence

• Creates a banking institution with the scale, breadth of product offerings and market presence to

expand into new markets and customer segments – Increased scale improves operating leverage and provides opportunities for increased lending and development of customers and products

• Shareholder and operating benefits of a larger company listed on a national public exchange

– Listed on the OTCQX at closing and expect to apply for listing on NASDAQ Global Markets in the second quarter of 2020 – Significantly increases liquidity optionality for new and existing shareholders – Provides capital flexibility and efficiency for each bank subsidiary

• A publicly-traded stock with meaningful liquidity provides a currency to execute an effective

M&A strategy – As a $1.1 billion asset¹ banking institution, there is a large pool of potential acquisition targets for HSBI

• Value creation for current shareholders

– HSBI publicly-traded peers trade at higher market valuation multiples than stand-alone peers – Potential for increased earnings accretion as cost savings are realized and potential revenue synergies are captured – Scarcity value of publicly-traded, growth-oriented Southeastern banking institutions – Increased ability to execute revenue and franchise building strategic initiatives such as M&A Strategically Compelling Transaction

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Transaction Overview

Structure

• Each bank will continue to operate as an independent subsidiary under the holding company

(HSBI) with the intent to identify the optimal operating structure as soon as practical Legal and Accounting Acquirer

• CCF Holding Company (will be re-branded as HSBI at closing)

HSBI Management Team

• Each bank's respective management team to remain in place at the subsidiary level
• Leonard Moreland, the current CEO of CCFH, to serve as CEO of HSBI
• Brian Smith, the current President and CEO of HBCI, will serve as President and COO of HSBI
• Brad Serff, the current President and CEO of Providence, will serve as Executive Vice

President of HSBI

• Phil Resch, the current CFO of HBCI, will serve as CFO of HSBI

Required Approvals

• Customary regulatory and shareholder approvals required by all parties

Targeted Closing

• Third quarter of 2019

Due Diligence

• Extensive third party due diligence performed by RP Financial
• Independent legal and financial due diligence completed by all banks
• Individual fairness opinion provided to each bank by independent investment banks

Pro Forma Capitalization

• Consolidated holding company and all subsidiary banks expected to be well-capitalized at

closing Consideration

• 100% CCFH common stock

Exchange Ratio

• A separate fixed exchange ratio for the shares of each of HBCI and Providence

HSBI Board of Directors

• Ken Lehman to serve as Chairman of the Board
• CCFH, HBCI and Providence each to have 2 board seats
• John Presley and one additional individual to be elected as independent directors

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Providence

Summary of Transaction Terms

Note: Transaction multiples based off of consolidated financial information as of or for the period ended September 30, 2018 for HBCI and bank regulatory data for Providence 1) Based on CCFH's closing share price of $25.51 on December 19, 2018 and HBCI's and Providence's fully diluted common shares outstanding 2) Year-to-date earnings for the nine (9) months ended September 30, 2018 annualized 3) Transaction value less tangible common equity divided by core deposits (total deposits less time deposit accounts greater than $100,000) 4) Assumes expected reversal of existing valuation allowance against the company's deferred tax asset equal to approximately $9 million as of September 30, 2018 5) Ken Lehman to serve as Chairman and 2 additional independent directors to be elected

Consideration Mix 100% CCFHH Stock 100% CCFH Stock HSBI Board Seats (9 Total Members⁵) 2 2 2 Parties HBCI CCFH Per Share Consideration¹ $3.12 $24.24

• Transaction Value

($mm)¹ $13.1 $92.0

• Pro Forma Ownership

7% 49% 44% Transaction Multiples Fixed Exchange Ratio 0.1225x 0.9504x

• 90%

274% / 216%⁴

• Price / TBV

Price / YTDA Earnings² NM 18.7x

• NM

13.6% / 11.5%⁴

• Core Deposit

Premium³

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Total All GA Deposits Rank Rank Institution State Branches ($mm) 1 1 SunTrust Banks Inc. GA 651 $104,849 2 2 Synovus Financial Corp. GA 217 28,688 3

• Raymond James Financial Inc.

FL 1 19,654 4

• BankUnited Inc.

FL 84 15,029 5

• CenterState Bank Corp.

FL 154 11,388 6 3 Ameris Bancorp GA 114 7,973 7 4 United Community Banks Inc. GA 65 6,138 8

• Seacoast Banking Corp. of Florida

FL 53 4,988 9 5 Fidelity Southern Corp. GA 70 4,085 10

• Ocean Bankshares Inc.

FL 21 3,243 11

• Capital City Bank Group Inc.

FL 64 2,462 12

• BAC Florida Bank

FL 1 1,796 13

• Villages Bancorp Inc.

FL 13 1,782 14 6 Atlantic Capital Bancshares Inc. GA 1 1,500 15

• Tampa Bay Banking Co.

FL 12 1,474 16

• Three Shores Bancorp. Inc.

FL 14 1,468 17

• First Federal Bancorp MHC

FL 21 1,363 18

• Crews Banking Corp.

FL 21 1,325 19

• FineMark Holdings Inc.

FL 10 1,245 20 7 United Bank Corp. GA 18 1,204 21

• TGR Financial Inc.

FL 7 1,122 22 8 Colony Bankcorp Inc. GA 27 1,050 23 9 Queensborough Co. GA 24 985 24 10 Heritage Southeast Bancorporation, Inc. GA 24 979 25

• U.S. Century Bank

FL 12 956

• The transaction will create a pro forma company with 24

branches that extend from Atlanta and Savannah, GA to Jacksonville, FL

• Stand-alone rank by deposits for all banks headquartered

in either GA or FL: – CCF Holding Company: 53rd – Heritage Bancorporation, Inc.: 44th – Providence Bank: 237th – Heritage Southeast Bancorporation, Inc.: 24th

• Relative to major exchange-traded² banking institutions

headquartered in GA and FL: – 8th ranked among institutions in GA only – 13th ranked among institutions in FL or GA

Note: Deposit and branch information as of June 30, 2018 1) Deposit market share highlights reflect combined data across GA and FL markets and excludes all banks headquartered outside of GA or FL 2) Includes institutions traded on either the NASDAQ, NYSE or NYSEAM Source: S&P Global Market Intelligence, FDIC

Deposit Market Share Highlights¹ Pro Forma GA and FL Deposit Market Share¹

Builds a Banking Leader with Increased Market Presence

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$1,029 $587 $565 $230 $128 $113 $210 $250 $365 $221 $533 $78 Florida Georgia North Carolina South Carolina Arkansas Mississippi Kentucky Louisiana Tennessee Alabama Virginia West Virginia 10.3% 10.9% 10.2% 11.3% 7.3% 7.0% 8.5% 2.6% 10.4% 8.5% 7.9% 4.4% Florida Georgia North Carolina South Carolina Arkansas Mississippi Kentucky Louisiana Tennessee Alabama Virginia West Virginia 21.5 10.6 10.4 5.1 3.0 3.0 4.5 4.7 6.8 4.9 8.6 1.8 Florida Georgia North Carolina South Carolina Arkansas Mississippi Kentucky Louisiana Tennessee Alabama Virginia West Virginia

Source: S&P Global Market Intelligence, U.S. Bureau Economic Analysis

2019 Population by State (mm) Southeast States 2Q 2018 GDP ($bn) ’19 – ’24 Proj. Population Change – Pro Forma MSAs ’19 – ’24 Proj. HHI Growth – Southeast States

Highly Attractive Southeastern Growth Markets

6.52% 2.14% 2.46% 4.62% 1.42% 6.15% 4.49% 6.03% 6.92% 3.56%

Atlanta, GA Hinesville, GA Waycross, GA Brunswick, GA Jesup, GA Savannah, GA

• St. Marys, GA

Statesboro, GA Jacksonville, FL US

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1) Deposit information as of June 30, 2018 Source: S&P Global Market Intelligence, FDIC

Median Household Income by MSA ($) $24,048 – $44,646 $44,646 – $49,515 $49,515 – $55,066 $55,066 – $61,751 $61,751 – $121,234

Premier Southeastern Market Demographics

• $490mm company

deposits¹ Atlanta-Sandy Springs- Roswell, GA

• $311mm company

deposits¹ in the three MSAs Savannah, Hinesville, & Brunswick, GA

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Attractive Core Deposit Franchise Niche Lending Business Improved Credit Quality Scale & Operating Leverage Enhanced Liquidity Diversified Loan Portfolio

Business Line Strengths and Expansion Opportunities

• CCF Holding Company

– Small Business Administration Lending – Cash Value Life Insurance Lending – Cash Management and Treasury Depository Services – Expansion Opportunities

• Insurance Sales
• Asset Based Lending Services
• Mortgage Lending
• Heritage Bancorporation, Inc.

– Low-Cost, Sticky Deposit Base – Strong Non-Interest Income Model – Recent Expansion into the Community Bank- Depleted Jacksonville, FL Market

• Providence Bank

– Small Business Lending – Home Equity Line of Credit – Expanding Alpharetta / North Atlanta Market

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Pro Forma Assumptions

Assumptions

• Income statement and balance sheet projections as provided by management and discussed with RP Financial
• Total pre-tax balance sheet purchase accounting mark of approximately negative $15 million¹

– Fair value balance sheet marks for each individual bank independently estimated by RP Financial

• One-time pre-tax merger related expenses of ~$5 million
• Fully phased in cost savings expected to be ~12% of combined non-interest expense base

– 50% realized in the first 12 months, and 100% realized within 24 months

• Significant revenue synergies identified, but excluded from pro forma modeling
• The consolidated holding company and all subsidiary banks are expected to be well-capitalized at closing
• 24% effective tax rate

1) Excludes reversal of each bank’s allowance for loan and lease losses

13 2018 Standalone YTD Financial Overview¹ Pro Forma¹ CCFH HBCI Providence Combined² Total Assets ($mm) $501 $532 $84 $1,117 Gross Loans ($mm) $391 $344 $59 $793 Total Deposits ($mm) $433 $485 $62 $980

• Tang. Common Equity

$46 $43 $15 $104 TCE / TA 9.1% 8.1% 17.5% 9.3% Pre-Tax Income ($mm) $4.3 $4.1 ($0.3) $8.1 Efficiency Ratio (FTE) 72% 77% 116% 77% ROAA 0.9% 1.0% (0.5%) 0.9% ROAE 10.2% 13.0% (3.2%) 9.6%

Strong Pro Forma Financial Metrics

1) Bank level financial information as of and for the nine (9) months ended September 30, 2018; ROAA and ROAE values shown are annualized 2) Excludes purchase accounting adjustments and any assumed cost savings or revenue synergies Source: S&P Global Market Intelligence

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Total Assets ($bn)

$2.88 $2.82 $2.70 $2.51 $2.27 $2.05 $1.86 $1.81 $1.72 $1.68 $1.67 $1.50 $1.42 $1.35 $1.26 $1.25 $1.18 $1.10 $1.09 $1.03

16.0x 16.5x 9.6x 19.7x 14.3x 13.5x 11.1x 11.4x 17.3x 19.9x 10.3x 8.9x 13.6x 12.4x 17.1x 14.4x 15.3x 10.5x 14.3x 25.2x ACBI CCBG SONA FBMS FCBC SMBK SFST AMNB MVBF RBNC ENFC CFFI CSTR ESXB NKSH SLCT FVCB PEBK FCCO OPOF 141% 183% 144% 173% 211% 121% 141% 156% 142% 176% 106% 125% 122% 127% 146% 131% 147% 116% 176% 123% ACBI CCBG SONA FBMS FCBC SMBK SFST AMNB MVBF RBNC ENFC CFFI CSTR ESXB NKSH SLCT FVCB PEBK FCCO OPOF

Pro Forma HSBI Southeast Comparable Group¹ Analysis

Note: Market data as of December 19, 2018 1) Includes banks and thrifts headquartered in the Southeast publicly-traded on a major exchange (NYSE, NASDAQ, NYSEAM) with total assets between $1 billion and $3 billion and NPAs / Assets less than 2%; Excludes announced merger targets Source: S&P Global Market Intelligence

Price / Tangible Book Value Price / 2018 Year-to-Date Annualized Earnings Per Share

Peer Median¹ 141% Peer Median¹ 14.3x

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Transaction Summary

 Benefits of scale  Capital flexibility and improved liquidity immediately enhances value for current and future shareholders  Combines veteran management teams from three separate banking institutions with unparalleled experience in their respective markets  Enhanced valuation with significant upside potential  New currency provides optionality to pursue potential M&A opportunities in the future

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Appendix

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Total Assets $501 million Gross Loans $391 million Total Deposits $433 million Loans / Deposits 90% MRQ Cost of Deposits¹ 0.50% ROAA (YTD)² 0.9% Efficiency Ratio (YTD)² 72% TCE / TA 9.1%

Overview of CCF Holding Company (CCFH)

Heritage Bank

1) Cost of deposits shown for the three (3) months ended September 30, 2018 2) Shown for the nine (9) months ended September 30, 2018; ROAA shown annualized Source: S&P Global Market Intelligence

Bank Financial Highlights as of September 30, 2018

• State-chartered commercial bank

headquartered in Jonesboro, GA serving metro Atlanta’s Southern Crescent since 1955

• The independent community bank has six

full service offices, features a well-rounded

• ffering of commercial and consumer

products, and is an active, involved member of the community it serves

• Seasoned management team with

experience in local markets

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Total Assets $532 million Gross Loans $344 million Total Deposits $485 million Loans / Deposits 71% MRQ Cost of Deposits¹ 0.36% ROAA (YTD)² 1.0% Efficiency Ratio (YTD)² 77% TCE / TA 8.1%

Overview of Heritage Bancorporation, Inc.

The Heritage Bank

1) Cost of deposits shown for the three (3) months ended September 30, 2018 2) Shown for the nine (9) months ended September 30, 2018; ROAA shown annualized Source: S&P Global Market Intelligence

• Headquartered in Hinesville, GA
• 107 year-old state-chartered commercial

bank headquartered in Hinesville, GA serving the 1-95 coastal and GA 84 corridor with a 17 branch network

• Commercial and consumer products
• Attractive low-cost, core deposit franchise
• Strong non-interest income model
• Strong historic core earnings
• Proud to be active in the communities it

serves

• Seasoned management team in its markets

Bank Financial Highlights as of September 30, 2018

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Total Assets $84 million Gross Loans $59 million Total Deposits $62 million Loans / Deposits 95% MRQ Cost of Deposits¹ 0.80% ROAA (YTD)²

• 0.5%

Efficiency Ratio (YTD)² 116% TCE / TA 17.5%

Overview of Providence Bank

1) Cost of deposits shown for the three (3) months ended September 30, 2018 2) Shown for the nine (9) months ended September 30, 2018; ROAA shown annualized Source: S&P Global Market Intelligence, Company website

• The only community bank locally-chartered

in the Alpharetta/Milton, GA community

• Established in 2006, Providence Bank
• ffers a wide array of banking solutions that

include consumer, commercial and real estate loans and lines of credit, as well as personal and business deposit products

• The bank employs the most recent banking

technology that gives customers the convenience of online banking with bill pay, mobile banking with mobile deposit capture and remote deposit capture for businesses

• Seasoned management team with

experience in local markets

Bank Financial Highlights as of September 30, 2018

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Pro Forma

Transaction 43.4% Savings & MMDA 27.7% Retail 10.2% Jumbo³ 18.7% 1-4 Family 18.6% Multifamily 2.1% CRE 45.9% C&D 13.9% C&I 14.8% Consumer 2.4% Other 2.2%

Pro Forma Loan & Deposit Composition¹

1) Bank level regulatory data as of September 30, 2018 2) CCFH's deposit composition includes approximately $154 million in transaction accounts that are classified as savings accounts for regulatory reporting purposes 3) Jumbo deposits defined as all time deposit accounts greater than $100,000 Source: S&P Global Market Intelligence

CCFH² HBCI Providence Gross Loans Deposits

1-4 Family 13.2% Multifamily 2.5% CRE 50.6% C&D 12.4% C&I 18.5% Consumer 2.3% Other 0.4% 1-4 Family 34.7% CRE 47.0% C&D 9.9% C&I 6.2% Consumer 1.5% Other 0.7% 1-4 Family 22.0% Multifamily 2.1% CRE 40.4% C&D 16.3% C&I 12.1% Consumer 2.7% Other 4.4% Transaction 30.8% Savings & MMDA 29.6% Retail 14.1% Jumbo³ 25.4% Transaction 50.7% Savings & MMDA 26.6% Retail 11.9% Jumbo³ 10.8% Transaction 46.2% Savings & MMDA 27.3% Retail 11.3% Jumbo³ 15.2%

$391mm $344mm $59mm $793mm $980mm $62mm $485mm $433mm