425 1 g74959e425.htm THE SOUTH FINANCIAL GROUP, INC. THE SOUTH FINANCIAL GROUP, INC.
 

     
    Filed by The South Financial Group, Inc.
    Pursuant to Rule 425 under the Securities Act of 1933
    Subject Company:
    The South Financial Group, Inc.
    Commission File No. 0-15083

The following is the text of (1) a joint press release issued by The South Financial Group, Inc. and Gulf West Banks, Inc. following the close of the markets on March 21, 2001 and (2) the contents of slides available on the investor relations portion of The South Financial Group’s Web site.

 

 

(THE SOUTH FINANCIAL GROUP LOGO)

102 South Main Street
Greenville, SC 29601
864.255.4919

NEWS RELEASE

     
Date:   March 21, 2002
 
Release Time:   Immediate

THE SOUTH FINANCIAL GROUP TO ACQUIRE GULF WEST BANKS
EXPAND INTO GREATER TAMPA BAY AREA

GREENVILLE, SC — The South Financial Group, Inc. (Nasdaq: TSFG) today announced a definitive agreement to acquire Gulf West Banks, Inc. (Nasdaq: GWBK) in a stock and cash transaction currently valued at approximately $115 million. Gulf West operates 15 branches in greater Tampa and St. Petersburg, Florida through its subsidiary, Mercantile Bank.

The South Financial Group will merge Mercantile Bank into its Florida banking subsidiary and add approximately $516 million in assets and banking offices in Apollo Beach, Brandon, Clearwater, Largo, New Port Richey, Port Richey, St. Petersburg, Tampa, Temple Terrace and Tierra Verde, Florida. Following the merger, The South Financial Group’s Florida banking subsidiary (when combined with Mercantile) will have approximately $1.3 billion in assets and 31 branches, principally in Jacksonville, Orlando, and the greater Tampa Bay area.

“The merger with Gulf West is consistent with our goal of increasing shareholder value by operating in superior markets, where the population and per capita income growth projections well exceed the national averages,” said Mack I. Whittle, Jr., President and Chief Executive Officer of The South Financial Group. “The purchase of Gulf West adds the high growth markets of Tampa and St. Petersburg to our Florida franchise. We remain committed to profitably expanding our market presence in high-growth

 

Southeastern markets and welcome Gulf West and Gordon W. Campbell to The South Financial Group family.”

Mr. Campbell, who will remain as Vice Chairman of The South Financial Group’s Florida banking subsidiary and will join The South Financial Group’s board of directors, said, “We are enthusiastic about our merger with The South Financial Group because it makes sense for our shareholders, customers and communities. We are combining our strong position in what we define as a powerhouse market with The South Financial Group’s growing presence in Orlando and Jacksonville. The pieces fit together extremely well. All of our offices will remain open, and Gulf West’s personnel will bring additional management talent to our combined Florida banking subsidiary. In addition, we are teaming with a partner who shares our focus on earnings growth as a higher priority than market share growth.”

In the merger, The South Financial Group will issue approximately 4.5 million shares of common stock and approximately $32.4 million in cash in a transaction in which Gulf West shareholders will have an opportunity to choose between stock and cash consideration. Based on the current price of The South Financial Group stock, each Gulf West shareholder would receive approximately 0.695 shares of The South Financial Group common stock or $13.60 in cash for each share of Gulf West common stock, and the allocation of the purchase price would be approximately 70% stock and 30% cash. The transaction, which is expected to close in the third quarter of 2002, is subject to regulatory approvals as well as the approval of Gulf West shareholders.

The South Financial Group plans to repurchase approximately 1 million shares, or 2.5% of its outstanding common stock, following the completion of the transaction. In addition, The South Financial Group also expects to continue to repurchase common stock under its existing share repurchase program, which currently has approximately 1.5 million authorized shares remaining.

Based on the current price of The South Financial Group stock, the transaction is valued at approximately 265% of Gulf West’s book value per share as of December 31, 2001 and 21.6x 2001 earnings. The South Financial Group estimates synergy

2

 

opportunities of approximately $2.7 million after-tax in 2003. The transaction is expected to be immediately accretive to The South Financial Group’s earnings. One-time, merger-related charges of approximately $15 to $17 million pre-tax are anticipated.

The South Financial Group, headquartered in Greenville, South Carolina, is a financial holding company with $6.0 billion in total assets and 90 branch offices in South Carolina, Florida, and North Carolina as of December 31, 2001. It operates two subsidiary banks: Carolina First Bank and Citrus Bank. Carolina First Bank, the largest South Carolina-based commercial bank, operates in South Carolina, North Carolina, and on the Internet under the brand name, Bank CaroLine. Citrus Bank operates in Florida, principally in the Jacksonville and Orlando markets. The South Financial Group’s common stock trades on the Nasdaq National Market under the symbol TSFG. Press releases along with additional information may also be found at The South Financial Group’s web site: www.thesouthgroup.com.

     
Transaction Summary        
   
 
Indicated price per share (3/20/02)   $13.60
 
Initial exchange ratio   0.695 shares of The South Financial Group for each Gulf West share
 
Aggregate transaction value   Approximately $115 million (consisting of approximately 4.5 million shares of TSFG common stock and $32.4 million in cash)
 
Form of consideration   TSFG common stock and cash (current allocation is approximately 70% stock and 30% cash)
 
Expected closing   Third quarter 2002
 
Anticipated merger-related charges   $15 to $17 million
 
Anticipated synergies   Approximately $2.7 million after-tax in 2003
 
Due diligence   Completed
 
Required approvals   Regulatory, Gulf West shareholders
 
Pricing Overview    
   
 
Price to 2001 EPS ($0.63)   21.6x
 
Price to 12/31/01 book value ($5.14)   2.65x

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Gulf West Profile

  •   $516 million bank holding company headquartered in St. Petersburg, FL
  •   15 branches in greater Tampa Bay area
  •   5-year CAGR for assets of 26% and net income of 42%
  •   Q4 2001 annualized ROA of 1.29%
  •   Q4 2001 annualized ROE of 16.21%
  •   Q4 2001 net interest margin of 4.68%

Conference Call/Webcast Information

     The South Financial Group will conduct a conference call on Friday, March 22, 2002 at 10:00 a.m. (ET) to discuss the acquisition of Gulf West and answer analyst questions. It will also provide a live webcast of the call, which may be accessed through The South Financial Group’s Internet site at www.thesouthgroup.com under the Investor Relations tab. To listen to the live call, please go to the web site at least fifteen minutes early to register, download and install any necessary audio software. To participate in the conference call, please call 1-888-405-5393 or 1-212-547-0201 using the access code “The South.” A 7-day rebroadcast of the call will be available via 1-888-282-0031 or 1-402-998-0515.

Certain matters set forth in this news release may contain forward-looking statements that are provided to assist in the understanding of anticipated future financial performance. These statements, as well as other statements that may be made by management in the conference call, include, but are not limited to, the estimates of synergies, projected earnings, merger-related charges, and share repurchases. However, these forward-looking statements are not guarantees of future performance, and actual results may differ materially from those expressed or implied by the forward-looking statements as a result of risks related to: our ability to achieve, manage or maintain growth and execute our business strategy successfully; our ability to close the proposed transaction and integrate Gulf West into our business; and various other factors discussed in detail in our filings with the SEC. For a discussion of certain other factors that may cause such forward-looking statements to differ materially from our actual results, see The South Financial Group’s Annual Report on Form 10-K for the year ended December 31, 2001.

CONTACTS:

     William S. Hummers III, Executive Vice President, (864) 255-7913

     Mary M. Gentry, Treasurer, (864) 255-4919

***END***

4

 

(The South Financial Group Front Cover)

acquisition of
GULF WEST BANKS, INC.

March 22, 2002

 

(Forward-Looking Statements)

 The forward-looking statements being made today are subject to risks and uncertainties. The South Financial Group's actual results may differ materially from those set forth in such forward-looking statements. Reference is made to The South Financial Group's reports filed with the Securities and Exchange Commission for a discussion of factors that may cause such differences to occur.

-1-

 

(Transaction Summary)

Transaction Summary

-2-

 

(Transaction Summary)

(a) Based on TSFG's average closing stock price of $19.57 per share for the 20 trading days ended March 20, 2002.

Transaction Summary

-3-

 

(Transaction Summary)

Transaction Summary

-4-

 

(Gulf West OVerview)

Gulf West Overview

-5-

 

(Gulf West OVerview)

Gulf West Overview

$516 million total assets
Headquartered in St. Petersburg, Florida
Operations date back to 1986
Seven offices in Pinellas County
Six offices in Hillsborough County
Two offices in Pasco County
Superior financial performance
Q4 2001 annualized
1.29% Return on Assets; 16.21% Return on Equity
4.68% Net Interest Margin
Five year CAGR
26% Assets
42% Net Income

Financial Highlights

-6-

 

(Gulf West OVerview)

Financial Highlights(a)

Gulf West Overview

(a) Dollars in millions. Source: Gulf West 2001 10-K and SNL Financial.

-7-

 

(Gulf West Overview)

Gulf West Overview

-8-

Financial Highlights(a)

(a) Dollars in millions. Source: Gulf West 2001 10-K and SNL Financial.

 

(Gulf West Overview)

Balance Sheet Composition(a)

DEPOSIT PORTFOLIO

(a) As of December 31, 2001.

Gulf West Overview

-9-

 

(Transaction Pricing and Financial Impact)

Transaction Pricing and
Financial Impact

-10-

 

(Transaction Pricing)

Implied Merger Multiples(a)

(a) Financial data as of December 31, 2001. Market data as of March 20, 2002.
(b) Represents merger multiples associated with selected Florida bank merger and acquisition transactions since January 1, 2000.

Transaction Pricing

-11-

 

(Transaction Pricing)

Contribution Analysis
Balance Sheet(a)

(a) Financial data as of December 31, 2001. Dollar amounts in millions.
(b) Based on proposed transaction terms.

Transaction Pricing

-12-

 

(Transaction Pricing)

Contribution Analysis
Income Statement(a)

Transaction Pricing

(a) Financial data as of December 31, 2001. Dollar amounts in millions. Assumes transaction completed January 1, 2001.
(b) Based on proposed transaction terms.

-13-

 

(Financial Impact)

Assumptions

Transaction closes by September 30, 2002
Approximately $2.7 million after-tax in synergies realized in 2003
Core deposit premium of 3.0%; Core deposit intangibles amortized over 10 year period (sum-of-the-years digits)
Repurchase approximately 1 million shares, or 2.5%, of pro forma TSFG stock in addition to its existing share repurchase program

Financial Impact

-14-

 

(Financial Impact)

Pro Forma Results(a)

(a) Based on the assumptions on page 14.
(b) Represents consensus First Call estimates.

Financial Impact

-15-

 

(Transaction Rationale)

Transaction Rationale

-16-

 

(Transaction Rationale)

Enhances and accelerates existing three-year plan to improve overall profitability...

Transaction Rationale

-17-

 

(Transaction Rationale)

Achieves our objective of operating in the right markets...

Source: Division of Research, Moore School of Business, University of South Carolina.

Transaction Rationale

19.1%

18.7%

18.4%

17.7%

17.2%

15.1%

14.9%

21.1%

Myrtle Beach

Wilmington

Columbia

Tampa/St. Pete

Greenville

Charleston

Jacksonville

Orlando

14.8%

Per capita income growth
2002 - 2007

U.S. median

-18-

 

(Transaction Rationale)

Presents exciting growth opportunities...

Transaction Rationale

15.4%

14.5%

11.5%

10.9%

10.1%

8.1%

7.4%

7.3%

Orlando

Myrtle Beach

Wilmington

Jacksonville

Charleston

Tampa/St. Pete

Columbia

Greenville

U.S. median

5.1%

Population growth
2002 - 2007

Source: Division of Research, Moore School of Business, University of South Carolina.

-19-

 

(Transaction Rationale)

Transaction Rationale

Significantly expands the Florida franchise...

TSFG
GWBK

-20-

 

(Transaction Rationale)

Creates an impressive Florida institution...

Transaction Rationale

Ninth largest Florida-based institution(a)

(a) Dollars in millions. Based on bank assets as of December 31, 2001. Source: SNL Financial.

-21-

 

(Transaction Rationale)

Expands into new markets...

Transaction Rationale

(a) Dollars in millions. As of June 30, 2001. Source: SNL Financial.

-22-

 

(Transaction Rationale)

Low risk, contiguous market acquisition...

Transaction Rationale

Gulf West senior executives to join TSFG Florida team
Average banking experience of over 30 years
Integral part of Tampa community
Company operations date back to 1986
Instant market recognition and familiarity
Similar banking cultures
Internal focus on profitability
Seamless transition
No branch closures
No interruption of service, customer disruption

-23-

 

(Transaction Rationale)

$5.3 billion in assets
74 offices in SC and NC

$755 million in assets
16 offices in FL

$55 million in deposits
Internet only

$6.0 billion in assets
90 offices in SC, FL and NC

Transaction Rationale

Premier community banking franchise...

As of December 31, 2001, excluding proposed merger

-24-

 

(Summary)

Summary

-25-

 

(Summary)

Consistent with TSFG's strategy to further enhance shareholder value
Enhances TSFG's presence in one of the most attractive banking markets in Florida
Accretive pro forma financial impact...
Financial results are not contingent upon aggressive assumptions
Low risk, contiguous market acquisition
Familiar markets, customer base and lines of business

Summary

-26-

 

(The South Financial Group Back Cover)

Nasdaq/NM: TSFG

www.thesouthgroup.com

Contact: Mary Gentry, Treasurer
 864.255.4919
 mary.gentry@thesouthgroup.com

 

THE SOUTH FINANCIAL GROUP PLANS TO FILE A REGISTRATION STATEMENT ON FORM S-4 WITH THE SEC IN THE SECOND QUARTER OF 2002. ADDITIONALLY, GULF WEST BANKS EXPECTS TO MAIL A PROXY STATEMENT/PROSPECTUS TO ITS SHAREHOLDERS CONTAINING INFORMATION ABOUT THE TRANSACTION. THE REGISTRATION STATEMENT ON FORM S-4 AND THE PROXY STATEMENT/PROSPECTUS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE SOUTH FINANCIAL GROUP, GULF WEST BANKS, THE TRANSACTION, AND RELATED MATTERS. INVESTORS ARE URGED TO READ THESE MATERIALS CAREFULLY WHEN THEY ARE AVAILABLE.

INVESTORS CAN OBTAIN FREE COPIES OF THESE DOCUMENTS THROUGH THE WEB SITE MAINTAINED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION AT HTTP://WWW.SEC.GOV. FREE COPIES OF THE REGISTRATION STATEMENT ON FORM S-4 MAY ALSO BE OBTAINED FROM THE SOUTH FINANCIAL GROUP BY DIRECTING A REQUEST BY MAIL TO MARY M. GENTRY, TREASURER, THE SOUTH FINANCIAL GROUP, P.O. BOX 1029, GREENVILLE, SOUTH CAROLINA 29602, TELEPHONE: 1-800-951-2699 ext. 54919, THROUGH THE INVESTOR RELATIONS PORTION OF THE SOUTH FINANCIAL GROUP’S WEB SITE AT http://www.thesouthgroup.com, OR BY E-MAIL TO MARY M. GENTRY AT mary.gentry@thesouthgroup.com.