Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - CITIZENS REPUBLIC BANCORP, INC. | d387041d8k.htm |
 Investor Presentation
Second Quarter 2012
Exhibit 99.1 |
 2
Safe Harbor Statement
Discussions and statements in this presentation that are not statements of
historical fact (including without limitation statements that include terms such as
“will,”
“may,”
“should,”
“believe,”
“expect,”
“anticipate,”
“estimate,”
“project”,
“intend,”
and
“plan”)
and
statements
regarding
Citizens’
future
financial
and
operating results, plans, objectives, expectations and intentions, are
forward- looking
statements
that
involve
risks
and
uncertainties,
many
of
which
are
beyond
Citizens’
control or are subject to change. No forward–looking statement is a
guarantee of future performance and actual results could differ
materially. Factors that could cause or contribute to such differences
include, without limitation,
risks
and
uncertainties
detailed
from
time
to
time
in
Citizens’
filings
with
the Securities and Exchange Commission.
Other factors not currently anticipated may also materially and adversely affect
Citizens’
results of operations, cash flows, financial position and prospects. There
can be no assurance that future results will meet expectations.
While Citizens
believes that the forward-looking statements in this presentation are
reasonable, you should not place undue reliance on any forward-looking
statement. In addition, these statements speak only as of the date
made. Citizens does not undertake, and expressly disclaims any
obligation to update or alter any statements, whether as a result of new
information, future events or otherwise, except as required by applicable
law. |
 Who
We Are |
 4
Who We Are
Established in 1871
57
th
largest bank holding
company in the U.S. ranked
by assets
–
$9.7 billion assets and
$7.3 billion deposits
–
Presence in 3 Upper
Midwest states with 219
branches and 248 ATMs
Increased market share in
49% of our counties since
2008
Growing number of new
clients 10% annually
80% of revenue is Michigan
based
Company Overview
219 Branches / 248 ATMs |
 5
How We Deliver Our Service
Core Banking
86% of revenue
Retail consumer
Commercial clients up to $5 million loan size
Treasury Management: 31% of commercial clients use TM
services
Public Funds: focus on generating lasting relationships rather
than temporary deposits
Preferred SBA Lender: dedicated specialists to fast track
process. Expertise in other state and local loan programs.
Mortgage: accommodate and sell
Indirect marine and RV lending
Investment Center: introduce single service CD clients to
financial consultants
Corporate Banking
10% of revenue
Asset Based Lending
Corporate
Specialty healthcare focus in assisted living & skilled nursing
Wealth Management
4% of revenue
Personal Trust
Employee Benefits
Institutional Trust |
 Local teams focus on delivery of :
Client service
Closing pipeline opportunities
Referring business
6
Wealth
Business
Development
Officer
Local
Advisory
Board
Commercial
Banker
Mortgage
Loan
Officer
Public
Funds
Officer
Branch
Manager
Treasury
Management
Officer
Investment
Consultant
Client
Local Delivery of Service |
 Where We’ve Been |
 8
Strategically Managed Through Cycle
Acquired Michigan-based bank with heavy real
estate concentrations in late 2006
Economic downturn and challenging Michigan
economy resulted in elevated credit costs
Employed strategies to reduce balance sheet risk
Enhanced capital
–
suspended dividend (1Q08)
–
$200 million common equity raise (3Q08)
–
$300 million TARP issuance (4Q08)
–
exchanged sub debt & trust preferred for $200
million of common equity (3Q09) |
 9
Successful Leaders in Key Roles
Name
Title
Held
Position
Since
Cathy Nash
Chief Executive Officer
Feb. 09
Lisa McNeely
Chief Financial Officer
Aug. 10
Mark Widawski
Chief Credit Officer
Feb. 09
Brian Boike
Treasurer
Oct. 09
Judi Klawinski
Director of Core Banking
Oct. 09
Ray Green
Director of Corporate Banking
May 10
Joe Czopek
Controller
Oct. 09
Ken Duetsch
Director of Wealth Management
Aug. 11 |
 Since
2009, focused on clients/revenue while working through credit issues
10
$26.6
$20.6
$29.6
$33.1
$34.7
$34.5
$36.2
$32.1
$30.7
$32.8
$37.8
$36.9
$31.7
$31.7
$0
$10
$20
$30
$40
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Pre-tax Pre-provision Profit*
Revenue Focus
Problem Asset Resolution Focus
Strengthened franchise
value
Eliminated uncertainty
around credit
0%
1%
2%
3%
4%
5%
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q112
2Q12
NPAs / Assets %
CRBC
Peer Median**
Regional Peer Median**
(in millions)
* Non-GAAP measure, as defined by management, represents net income (loss) excluding income tax
provision (benefit) provision for loan losses, securities (gains)/losses, and any impairment
charges (including goodwill, credit write downs and fair-value adjustments) caused by this economic cycle.
** Source: SNL Financial MRQ data
|
 Strategy from 2009 –
2010
1.
Preserved capital by managing assets
2.
Grew and maintained reserve levels in recognition of
portfolio risk
11
$0
$100
$200
$300
$400
$500
$600
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Allowance for Loan Losses
Non-Performing Loans
$12,982
$12,288
$12,072
$11,932
$11,652
$10,834
$10,639
$9,966
$9,724
$9,496
$9,600
$9,463
$9,577
$9,670
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Total Assets |
 Strategy from 2009 –
2010
3.
Aggressively and actively worked out of problem assets
4.
Carefully managed capital levels to allow execution of
problem asset reduction
12
June 30,
2011
Sept. 30,
2011
Dec. 31,
2011
March 31,
2012
June 30,
2012
Leverage ratio
7.83%
8.21%
8.45%
8.71%
9.77%
Tier 1 capital ratio
12.43
12.81
13.51
13.70
14.70
Total capital ratio
13.77
14.14
14.84
14.97
15.96
Tier 1 common
equity (non-GAAP)
6.36
6.77
7.24
7.49
8.50
$549
$601
$606
$591
$551
$468
$436
$280
$175
$139
$137
$102
$91
$94
4.4%
5.0%
5.2%
5.1%
4.9%
4.3%
4.1%
2.8%
1.8%
1.5%
1.4%
1.1%
1.0%
1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
$0
$100
$200
$300
$400
$500
$600
$700
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Non-Performing Assets
NPAs as a % of Total Assets |
 Where We’re Going |
 Continue to Provide Top Tier Client Service
14
* Surveys conducted by Prime Performance ™
76
78
80
82
84
86
88
90
Sep 07
Sep 08
Sep 09
Sep 10
Sep 11
June 12
Likelihood to Recommend *
Citizens' Score
PPI Industry Average |
 Rebuild Loan Portfolio
Focused on proven competencies
–
Business owner lending
–
Corporate lending –
structured finance, ABL, healthcare
expertise
–
Indirect marine and RV
15
$8,625
$8,302
$8,097
$7,788
$7,439
$7,138
$6,888
$6,217
$5,704
$5,628
$5,672
$5,530
$5,528
$5,522
$4,000
$6,000
$8,000
$10,000
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Loan Portfolio Balances
(in millions) |
 Mitigate Expected Margin Pressure
16
2.74%
2.75%
2.99%
3.13%
3.14%
3.35%
3.32%
3.42%
3.53%
3.56%
3.63%
3.62%
3.56%
3.60%
2.00%
2.50%
3.00%
3.50%
4.00%
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Net Interest Margin (FTE)
Reduce single service CD clients
Manage liquidity levels to reflect
improved credit trends
10,000
12,000
14,000
16,000
18,000
12/31/10
3/31/11
6/30/11
9/30/11
12/31/11
3/31/12
6/30/12
Single Service CD Clients
0
100
200
300
400
500
600
700
Fed Funds Sold (average)
(in millions)
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Continue focus on core deposits
Core Deposits
Retail CDs
Brokered CDs |
 Reserve Reductions Follow Improved Metrics
17
Reserve model is historical looking; future
modeling will continue to reflect significantly
improved credit metrics
Ensure reserves reflect reduced portfolio risk and
support growth initiatives
0%
1%
2%
3%
4%
5%
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Loan Loss Reserves / Loans %
CRBC
Peer Median*
Regional Peer Median*
* Source: SNL Financial MRQ data |
 Report Consistent Profits
18
* Excludes discontinued operations
Reprice and add new fee income
streams to replace lost revenue from
regulatory changes
$0
$10
$20
$30
$40
$50
$60
$70
$80
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Operating Non-Interest Expense*
Salaries and Employee Benefits
Other Expenses
* Non-GAAP measure. See Appendix for reconciliation.
Continue prudent expense
management while adding key
revenue generating positions
-
5,000
10,000
15,000
20,000
25,000
30,000
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Operating Non-Interest Income*
Service charges on deposit accounts
Card-based and other nondeposit fees
Other non-interest income*
(49)
(359)
(69)
(68)
(85)
(35)
(57)
(103)
(69)
14
20
21
25
26
-400
-350
-300
-250
-200
-150
-100
-50
0
50
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Income (Loss) before Tax* |
 19
2Q12 Highlights
Restored deferred tax asset
Reported consistent quarterly profit from banking
operations
–
Consistent net interest margin at 3.60%
–
Fee income from core banking services remained solid
–
Maintained control over operating expenses
Loan growth in focused areas of expertise
–
3% growth in C&I portfolio; 22% annualized YTD growth
–
6% growth in Indirect portfolio; 12% annualized YTD growth
–
Strong origination and pipeline activity in C&I and Indirect
Credit trends showed continued stability and
improvement |
 Solid
Core Earnings 20
2.74%
2.75%
2.99%
3.13%
3.14%
3.35%
3.32%
3.42%
3.53%
3.56%
3.63%
3.62%
3.56%
3.60%
2.00%
2.20%
2.40%
2.60%
2.80%
3.00%
3.20%
3.40%
3.60%
3.80%
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Net Interest Margin (FTE)
$109.9
$137.5
$138.2
$0
$20
$40
$60
$80
$100
$120
$140
$160
2009
2010
2011
Pre-tax Pre-provision Profit*
2.90%
3.31%
3.58%
2.00%
2.20%
2.40%
2.60%
2.80%
3.00%
3.20%
3.40%
3.60%
3.80%
2009
2010
2011
Net Interest Margin (FTE)
$26.6
$20.6
$29.6
$33.1
$34.7 $34.5
$36.2
$32.1
$30.7
$32.8
$37.8
$36.9
$31.7
$31.7
$0
$10
$20
$30
$40
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Pre-tax Pre-provision Profit* |
 Efficiency Ratio Trends
21
70.16%
76.84%
79.23%
70.89%
68.39%
70.40%
64.19%
68.22%
67.09%
63.85%
59.89%
61.39%
65.20%
65.99%
50%
55%
60%
65%
70%
75%
80%
85%
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Quarterly Efficiency Ratio
Peer Data Source: SNL Financial
74.21%
67.73%
63.05%
50%
55%
60%
65%
70%
75%
80%
2009
2010
2011
Annual Efficiency Ratio
Revenue per FTE of $207,000 is in line with peer median
of $210,000
Salary & benefits expense per FTE of $62,500 is better
than peer median of $72,200 |
    Organically Growing Strong Capital Position
0%
2%
4%
6%
8%
10%
12%
14%
16%
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Total Capital
Tier 1 Capital
Tier 1 Common (non-GAAP)
22
Accelerated
resolution
of over
$920
million of
problem
assets |
 23
Positioned for Growth
Successfully managed through credit cycle with a
strategic focus on revenue generation and problem
asset resolutions
Strategically focused into 2012 to
–
Continue providing top tier client service
–
Rebuild loan portfolio
–
Mitigate expected margin pressure
–
Evaluate reserve levels
–
Report consistent profitability |
 24
Appendix |
 25
Upper Midwest Franchise
MSA
Rank
Number
of
Branches
Total
Deposits
($000)
% of
Franchise
% Market
Share
Michigan:
Flint, MI
1
20
1,529,744
20.4
40.48
Detroit-Warren-Livonia, MI
11
31
1,154,717
15.4
1.28
Saginaw-Saginaw Township North,
1
15
589,977
7.9
29.97
Lansing-East Lansing, MI
3
14
521,070
6.9
10.42
Jackson, MI
2
8
373,118
5.0
24.57
Bay City, MI
3
5
212,226
2.8
20.34
Ann Arbor, MI
11
6
208,963
2.8
3.37
Cadillac, MI
1
7
188,460
2.5
35.99
Owosso, MI
3
6
135,722
1.8
20.54
Sturgis, MI
3
4
107,782
1.4
15.76
Alpena, MI
1
2
94,514
1.3
27.74
Houghton, MI
3
3
87,682
1.2
13.87
Total Michigan
8
155
6,024,966
80.3
3.82
Non-Michigan:
Cleveland-Elyria-Mentor, OH
17
12
321,077
4.3
0.64
Green Bay, WI
9
9
218,449
2.9
3.29
Appleton, WI
11
6
159,161
2.1
4.10
Stevens Point, WI
5
2
92,474
1.2
7.83
Platteville, WI
8
4
74,056
1.0
6.32
Total Non-Michigan
60
1,480,553
19.7
Source: SNL Financial as of 6/30/11 |
 26
Continued Stabilization and Diversification
in Michigan’s Economy
Source: U.S. Bureau of Labor Statistics
Michigan Nonfarm Employment
Michigan Employment by Industry
May 2012
May 2002
$000s
%
$000s
%
Trade, Transportation, and Utilities
654.9
16.3%
754.7
16.7%
Government
617.2
15.4%
694.6
15.3%
Professional Services
579.2
14.4%
603.4
13.3%
Health Care
550.7
13.7%
472.9
10.4%
Leisure and Hospitality
389.6
9.7%
411.0
9.1%
Other Manufacturing
385.6
9.6%
486.6
10.7%
Motor Vehicle
208.7
5.2%
362.2
8.0%
Financial Activities
199.7
5.0%
214.1
4.7%
Other Services
169.2
4.2%
180.5
4.0%
Construction
123.9
3.1%
207.1
4.6%
Education Services
80.8
2.0%
65.2
1.4%
Information
53.6
1.3%
71.3
1.6%
Mining and Logging
7.7
0.2%
8.9
0.2%
Total Nonfarm
4,020.8
4,532.5
Total Manufacturing
594.3
14.8%
848.8
18.7%
in thousands
Michigan NonFarm Employment (Seasonally Adjusted)
Trend
3,500
3,600
3,700
3,800
3,900
4,000
4,100
4,200
4,300 |
 27
Continued Stabilization and Diversification
in Michigan’s Economy
Unemployment Trends
Source: U.S. Bureau of Labor Statistics and Freddie Mac
4%
6%
8%
10%
12%
14%
16%
US Unemployment Rate
Michigan Unemployment Rate
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Freddie Mac House Price Index
Michigan
United States |
 28
Core Earnings Strength
Pre-Tax Pre-Provision Profit (non-GAAP)
(in millions)
3Q11
4Q11
1Q12
2Q12
Income(loss) from continuing operations
$32.9
$18.2
$24.9
$303.2
Income tax (benefit) provision
(12.6)
2.5
-
(276.8)
Provision for loan losses
17.5
15.0
8.4
5.3
Investment securities (gains) losses
-
-
-
-
Net losses (gains) on LHFS
(2.0)
0.2
(0.9)
(0.0)
(Gains) losses on ORE
1.2
1.1
(0.4)
(0.2)
Fair-value adjustment on BOLI
0.4
(0.1)
(0.2)
0.1
Fair-value adjustment on swaps
0.3
(0.0)
(0.1)
0.1
Pre-Tax Pre-Provision Profit
(1)
$37.8
$36.9
$31.7
$31.7
Last 12 Months
$138.1
(1)
Non-GAAP measure, as defined by management, represents total revenue (total net interest income
and non-interest income) excluding any securities gains/losses, fair value adjustments on
loans held for sale, interest rate swaps, and bank owned life insurance, less non-interest
expense excluding any goodwill impairment charges, credit write downs, fair value adjustments and
special assessments. |
 29
(in millions)
2009
2010
2011
Income (loss) from continuing operations
($505.7)
($289.1)
$6.7
Income tax (benefit) provision
(29.6)
12.9
(20.2)
Provision for loan losses
323.8
392.9
138.8
Goodwill impairment charge
256.3
-
-
Net loss on debt extinguishment
15.9
-
-
Investment securities (gains) losses
(0.0)
(13.9)
1.3
FDIC special assessment
5.4
-
-
Net losses (gains) on LHFS
20.1
20.6
(1.8)
Losses on ORE
23.3
13.4
12.8
Fair-value adjustment on BOLI
(0.1)
(0.1)
0.2
Fair-value adjustment on swaps
0.6
0.8
0.4
Pre-Tax Pre-Provision Profit
(1)
$109.9
$137.5
$138.2
Core Earnings Strength
Pre-Tax Pre-Provision Profit (non-GAAP)
(1)
Non-GAAP measure, as defined by management, represents total revenue (total net interest income
and non-interest income) excluding any securities gains/losses, fair value adjustments on
loans held for sale, interest rate swaps, and bank owned
life insurance, less non-interest expense excluding any goodwill impairment charges, credit write
downs, fair value adjustments and special
assessments. |
 30
Quarterly Non-Interest Income Trends
(in thousands)
2Q 11
3Q 11
4Q 11
1Q12
2Q12
Service charges on deposit accounts
$9,753
$10,362
$9,724
$8,985
$9,355
Trust fees
3,811
3,622
3,747
3,602
3,582
Mortgage and other loan income
1,883
2,089
2,705
1,858
1,952
Brokerage and investment fees
1,533
1,188
1,243
1,324
1,331
Card-based and other nondeposit fees
4,394
4,475
4,305
4,265
4,444
Net (losses) gains on loans held for sale
1,179
1,952
(217)
916
6
Investment securities gains (losses)
(993)
3
38
-
-
Other income
1,765
736
2,818
3,290
1,675
Total Non-Interest Income (GAAP)
$23,325
$24,427
$24,363
$24,240
$22,345
Investment securities gains (losses)
$993
(3)
$
(38)
$
-
$
-
$
Net (losses) gains on loans held for sale
(1,179)
(1,952)
217
(916)
(6)
Fair value adjustment on BOLI
48
385
(100)
(205)
118
Fair value adjustment on swaps
77
268
(46)
(61)
74
Operating Non-interest Income
(Non-GAAP)
$23,264
$23,125
$24,396
$23,058
$22,531 |
 31
Annual Non-Interest Income Trends
(in thousands)
2009
2010
2011
Service charges on deposit accounts
$42,116
$40,336
$39,268
Trust fees
14,784
15,603
15,103
Mortgage and other loan income
12,393
10,486
9,620
Brokerage and investment fees
5,194
4,579
5,072
ATM network user fees
6,283
7,057
7,511
Bankcard fees
7,714
8,859
9,656
Net (losses) gains on loans held for sale
(20,086)
(20,617)
1,808
Net loss on debt extinguishment
(15,929)
-
-
Investment securities gains (losses)
5
13,896
(1,336)
Other income
10,659
14,460
8,555
Total Non-Interest Income (GAAP)
$63,133
$94,659
$95,257
Net loss on debt extinguishment
$15,929
-
$
-
$
Investment securities gains (losses)
(5)
(13,896)
1,336
Net (losses) gains on loans held for sale
20,086
20,617
(1,808)
Fair value adjustment on BOLI
(144)
(67)
233
Fair value adjustment on swaps
606
782
413
Operating Non-interest Income
(Non-GAAP)
$99,605
$102,095
$95,431 |
 32
Quarterly Non-Interest Expense Trends
(in thousands)
2Q 11
3Q 11
4Q 11
1Q12
2Q12
Salaries and employee benefits
$31,265
$30,280
$30,952
$33,298
$32,801
Occupancy
6,047
6,125
6,326
6,696
6,140
Professional services
2,407
2,394
2,311
2,023
2,465
Equipment
2,841
2,918
3,326
3,303
2,904
Data processing services
4,247
3,823
3,709
4,048
3,721
Advertising and public relations
1,802
2,179
1,298
1,335
1,708
Postage and delivery
1,120
1,142
1,165
1,099
1,119
Other loan expenses
3,314
3,941
3,497
3,186
3,266
Losses on other real estate (ORE)
1,355
1,210
1,081
(385)
(173)
ORE expenses
1,029
529
995
450
266
Intangible asset amortization
778
732
688
578
545
Other expense
13,239
10,138
11,292
11,470
11,577
Total Non-Interest Expense (GAAP)
$69,444
$65,411
$66,640
$67,101
$66,339
Losses (gains) on ORE
1,355
1,210
1,081
(385)
(173)
Operating Non-Interest Expense
(Non-GAAP)
$68,089
$64,201
$65,559
$67,486
$66,512 |
 33
Annual Non-Interest Expense Trends
(in thousands)
2009
2010
2011
Salaries and employee benefits
$135,389
$126,384
$123,514
Occupancy
26,723
26,963
26,059
Professional services
11,877
10,550
9,331
Equipment
11,714
12,482
12,136
Data processing services
17,692
18,734
16,131
Advertising and public relations
7,113
6,530
5,848
Postage and delivery
5,525
4,571
4,543
Other loan expenses
24,553
20,311
16,007
Losses on other real estate (ORE)
23,312
13,438
12,768
ORE expenses
4,389
4,970
4,322
Intangible asset amortization
7,036
3,923
3,027
Goodwill impairment
256,272
-
-
Other expense
53,544
58,231
49,464
Total Non-Interest Expense (GAAP)
$585,139
$307,087
$283,150
Goodwill impairment
256,272
$
-
$
-
$
FDIC Special Assessment
5,351
-
-
Fair-value adjustment on ORE
23,312
13,438
12,768
Operating Non-Interest Expense
(Non-GAAP)
$300,204
$293,649
$270,382 |
 34
($ in millions)
Market
% of
Credit Rating
Value
Total
Gov't & Agency
2,538
$
89.7%
AAA
26
0.9%
AA
143
5.0%
A
43
1.5%
BAA1, BAA2 & BAA3
58
2.0%
BA1 & Lower
2
0.1%
Non-rated
19
0.7%
Total
2,829
$
100.0%
•
Over $2.1 billion in unpledged securities
•
No OTTI concerns
•
Over 70% of portfolio are GNMA securities
purchased over the last 2 –
3 years
($ in millions)
Book
Market
TEY*
Duration
Type
Value
Value
(%)
(years)
MBS Agency
989
$
1,028
$
2.87%
2.13
CMO - Agency
264
270
2.65%
1.50
CMO - Non-agency
69
68
3.53%
0.85
Municipals
108
114
6.31%
2.75
Total Available for Sale
1,430
$
1,480
$
3.12%
2.00
MBS Agency
873
$
911
$
3.04%
1.94
CMO - Agency
321
329
1.94%
2.00
Municipals
102
109
5.98%
3.06
Total Held to Maturity
1,296
$
1,349
$
3.00%
2.04
Total Investment Securities
2,726
$
2,829
$
3.06%
2.02
Investment Portfolio at June 30, 2012
* Taxable equivalent yield, except for Municipal yields which are before tax
effect Effective Management of Securities Portfolio Provides
Source of Liquidity |
 35
Maintaining Strong Capital Levels
($ in millions)
6/30/10
9/30/10
12/31/10
3/31/11
6/30/11
9/30/11
12/31/11
3/31/12
6/30/12
Tier 1 capital
$ 952
$ 886
$ 777
$ 706
$ 727
$ 758
$ 773
$ 795
$ 860
Qualifying LLR
96
92
83
76
74
75
73
74
74
Qualifying capital securities
7
7
7
3
3
3
3
-
-
Total risk-based capital
$ 1,055
$ 985
$ 867
$ 785
$ 805
$ 836
$ 850
$ 869
$ 934
Tier 1 capital
$ 952
$ 886
$ 777
$ 706
$ 727
$ 758
$ 773
$ 795
$ 860
Qualifying capital securities
(74)
(74)
(74)
(74)
(74)
(74)
(74)
(74)
(74)
Preferred stock
(275)
(277)
(278)
(280)
(282)
(283)
(285)
(287)
(289)
Tier 1 common equity
$ 603
$ 535
$ 425
$ 352
$ 371
$ 401
$ 415
$ 435
$ 497
Total Capital Ratio
14.17%
13.80%
13.51%
13.24%
13.77%
14.14%
14.84%
14.97%
15.96%
Tier 1 Capital Ratio
12.79%
12.41%
12.11%
11.90%
12.43%
12.81%
13.51%
13.70%
14.70%
Tier 1 Leverage Ratio
8.72%
8.50%
7.71%
7.39%
7.83%
8.21%
8.45%
8.71%
9.77%
Tier 1 Common Ratio *
8.10%
7.50%
6.62%
5.93%
6.36%
6.77%
7.24%
7.49%
8.50%
TCE to TA *
5.83%
5.34%
4.20%
3.59%
4.05%
4.31%
4.47%
4.68%
7.73%
TA -
tangible assets
* Non-GAAP
TCE -
tangible common equity |
 36
Non-GAAP Common Equity Ratios
(1)
Other assets deducted from Tier 1 capital and risk-weighted assets consist of
intangible assets (excluding goodwill) ($ in thousands)
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Total assets
$9,724
$9,496
$9,600
$9,463
$9,577
$9,670
Goodwill
(318)
(318)
(318)
(318)
(318)
(318)
Other intangible assets
(10)
(9)
(8)
(7)
(7)
(6)
Tangible assets
$9,396
$9,169
$9,274
$9,137
$9,252
$9,346
Total shareholders' equity
$945
$980
$1,009
$1,020
$1,045
$1,336
Goodwill
(318)
(318)
(318)
(318)
(318)
(318)
Other intangible assets
(10)
(9)
(8)
(7)
(7)
(6)
Tangible equity
$618
$653
$683
$694
$720
$1,011
Preferred stock
(280)
(282)
(283)
(285)
(287)
(289)
Tangible common equity
$338
$371
$400
$409
$433
$723
Total shareholders' equity
$945
$980
$1,009
$1,020
$1,045
$1,336
Qualifying capital securities
74
74
74
74
74
74
Goodwill
(318)
(318)
(318)
(318)
(318)
(318)
Disallowed tax assets
-
-
-
-
-
(236)
Accumulated other comprehensive income
14
1
1
6
2
10
Other assets
(1)
(10)
(9)
(8)
(7)
(7)
(6)
Total Tier 1 capital (regulatory)
$706
$728
$758
$773
$795
$860
Qualifying capital securities
(74)
(74)
(74)
(74)
(74)
(74)
Preferred stock
(280)
(282)
(283)
(285)
(287)
(289)
Total Tier 1 common equity (non-GAAP)
$352
$372
$401
$415
$435
$497
Net risk-weighted assets (regulatory)
(1)
$5,930
$5,850
$5,913
$5,723
$5,804
$5,852
Tangible common equity to tangilbe assets ratio
3.59%
4.05%
4.31%
4.47%
4.68%
7.73%
Tier 1 common equity ratio (non-GAAP)
5.93%
6.36%
6.77%
7.24%
7.49%
8.50% |
 $0
$20
$40
$60
$80
$100
$120
$140
$160
$180
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
37
Proactive Credit Management
$0
$50
$100
$150
$200
$250
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
30-89 Day Past Due
Portfolio Balances
Non-Performing Loans
($ in millions)
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
$550
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Net Charge-Offs
$0
$2,000
$4,000
$6,000
$8,000
$10,000
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Residential Mtg
Consumer
Income Producing
Land Hold, Land Dev. & Const.
Owner Occupied
C&I |
 $0
$5
$10
$15
$20
$25
$30
$35
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
$0
$20
$40
$60
$80
$100
$120
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
$0
$10
$20
$30
$40
$50
$60
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
38
Commercial & Industrial Portfolio
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
30-89 Day Past Due
Portfolio Balances
($ in millions)
C&I
Non-Performing Loans
Net Charge-Offs
Small Business |
 39
Commercial Portfolio Size Characteristics
< $5 million
$5 - $10 million
> $10 million
Total
Total Commercial Portfolio
Total (millions)
1,982
$
578
$
569
$
3,129
$
# of loans
7,005
83
37
7,125
Average loan size
$283,000
$6,961,000
$15,368,000
$439,000
Delinquencies
Total (millions)
4
$
-
$
-
$
4
$
# of loans
28
-
-
28
Average loan size
$144,000
-
$
-
$
$144,000
Nonperforming Loans
Total (millions)
53
$
6
$
-
$
60
$
# of loans
198
1
-
199
Average loan size
$269,000
$6,375,000
-
$
$299,000
Loan size category: |
 $0
$40
$80
$120
$160
$200
$240
$280
$320
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
$0
$20
$40
$60
$80
$100
$120
$140
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
40
Commercial Real Estate Portfolio
$0
$400
$800
$1,200
$1,600
$2,000
$2,400
$2,800
$3,200
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
30-89 Day Past Due
Portfolio Balances
($ in millions)
Owner Occupied
Income Producing Land
Hold, Land Development & Construction Non-Performing Loans
$0
$20
$40
$60
$80
$100
$120
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Net Charge-Offs |
 41
Commercial Real Estate Portfolio
By Collateral
By Region |
 $0
$20
$40
$60
$80
$100
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
42
Consumer Portfolio
$0
$20
$40
$60
$80
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
30-89 Day Past Due *
Portfolio Balances
Non-Performing Loans *
Net Charge-Offs *
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
1Q092Q093Q094Q091Q102Q103Q104Q101Q112Q113Q114Q111Q122Q12
($ in millions)
$0
$20
$40
$60
$80
$100
$120
$140
$160
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Indirect
Other Direct
Home Equity
Residential Mortgage
* Other direct included with Home Equity
|
 43
Consumer Portfolio Profiles
Home Equity
$36,200 avg
loan size
Indirect
(1)
$23,700 avg
loan size
(1) Indirect loans are RV and marine only (no auto)
Consumer Portfolio
Strong refreshed FICO scores
740 Home Equity
740 Indirect
726 Other Direct
45% of home equity is first lien position
Indirect NPLs have been less than
$2.6 million, or 0.33% of total,
throughout the cycle
Other
Direct
$19,500 avg
loan size
Residential Mortgage Portfolio
$165,000 average loan size
721 refreshed FICO score
66% average original LTV
Seasoned portfolio –
53% originated
2004 or earlier
Foreclosures are handled by PHH;
Michigan does not follow a judicial
foreclosure process
Michigan
84%
Ohio
6%
Wisconsin
4%
Other
6% |
 44
Non-Performing Loans
Commercial
Real Estate
$37.9
45.0%
Commercial
$21.7
25.7%
Residential
Mortgage
$13.5
16.0%
($ in millions)
Direct
Consumer
$9.3
11.0%
$84.3 million or 1.53% of portfolio
Indirect
Consumer
$1.9
2.2%
Loans 90+
Accruing
$0.01
Loan loss reserve = $136.1
million
Allowance for loan losses to
NPLs = 161.5% |
 45
(in millions)
3Q11
4Q11
1Q12
2Q12
Beginning NPAs
$139.4
$136.9
$102.2
$90.6
Commercial:
Additions
23.9
13.3
14.0
23.8
Payments
(11.0)
(8.0)
(11.7)
(12.0)
Returned to accruing status
(0.3)
-
-
(0.5)
Charge-Offs/ OREO writedown
(6.3)
(12.7)
(10.3)
(0.9)
Consumer - net change
(8.8)
(27.3)
(3.6)
(7.1)
Ending NPAs
$136.9
$102.2
$90.6
$94.0
Aggressive Non-Performing Asset Management
Quarterly Non-Performing Asset Activity
*
* 2Q12 inflows include a single $14 million relationship
|
 46
Peer Groups
Company Name
Ticker
Company Name
Ticker
Associated Banc-Corp
ASBC
Huntington Bancshares Incorporated
HBAN
Comerica Incorporated
CMA
KeyCorp
KEY
Commerce Bancshares, Inc.
CBSH
MB Financial, Inc.
MBFI
Fifth Third Bancorp
FITB
Old National Bancorp
ONB
First Midwest Bancorp, Inc.
FMBI
PNC Financial Services Group, Inc.
PNC
FirstMerit Corporation
FMER
TCF Financial Corporation
TCB
Flagstar Bancorp, Inc.
FBC
Wintrust Financial Corporation
WTFC
Company Name
Ticker
Company Name
Ticker
Associated Banc-Corp
ASBC
MB Financial, Inc.
MBFI
BancorpSouth, Inc.
BXS
National Penn Bancshares, Inc.
NPBC
Chemical Financial Corporation
CHFC
Old National Bancorp
ONB
Commerce Bancshares, Inc.
CBSH
Park National Corporation
PRK
Cullen/Frost Bankers, Inc.
CFR
Sterling Financial Corporation
STSA
F.N.B. Corporation
FNB
Susquehanna Bancshares, Inc.
SUSQ
First Citizens BancShares, Inc.
FCNCA
TFS Financial Corporation (MHC)
TFSL
First Midwest Bancorp, Inc.
FMBI
Trustmark Corporation
TRMK
FirstMerit Corporation
FMER
UMB Financial Corporation
UMBF
Flagstar Bancorp, Inc.
FBC
Valley National Bancorp
VLY
Fulton Financial Corporation
FULT
Wintrust Financial Corporation
WTFC
Regional Peers
Selected Peers |
 www.citizensbanking.com |