Citizens South Banking Corporation
KBW Community Bank
Investor Conference
New York, New York
July 29, 2009
Forward Looking Statements
Statements contained in this presentation, which are
not historical facts, are forward looking statements. The
Company’s senior management or directors may from
time to time make public forward looking statements
concerning matters herein. Such forward looking
statements are estimates reflecting the best judgment of
senior management or the directors based on current
information. A number of factors that could affect the
accuracy of such forward looking statements are
identified in the public filings made by the Company with
the Securities and Exchange Commission on Forms 10-Q
and 10-K. The Company undertakes no obligation to
publicly revise any forward looking statements to reflect
events and circumstances that may arise after the date
hereof. There can be no assurance the such factors will
not affect the accuracy of such forward looki
ng statements.
2
Overview of Presentation
Corporate Profile
Charlotte Market Data
Stock / Financial Information
CSBC Business Strategy
Historical Financial Performance
Why own CSBC stock?
3
Corporate Profile
Founded in 1904
Converted from a Mutual in 1998
Two acquisitions since 2001
Fifteen full-service offices and
one LPO in the Charlotte Region
Assets exceeding $800 million
4
Executive Management Team
Experience Prior Employer
Kim S. Price 27 First Nat’l Bank / FHLB
President & CEO
Gary F. Hoskins 22 FHLB Atlanta / OTS
Chief Financial Officer
Michael R. Maguire 28 First Union Nat’l Bank
Chief Credit Officer
Daniel M. Boyd, IV 24 Wachovia / First Gaston
Chief Operating Officer
Paul L. Teem, Jr. 25 Citizens South Bank
Chief Administrative Officer
5
Market Area
Charlotte Region
6
Fortune 500 Companies in Charlotte
7
Housing Prices by Metro Area
8
Historical Housing Prices
9
Deposit Market Share
Counties Where Citizens South has a Branch Office
Gaston, Rowan, Iredell, & Union Counties
As of June 30, 2008
* = Recently merged
100.00%
$9,510,867
243
Total Deposits - All CSB Counties
25.06%
$2,383,354
86
All other institutions
2.51%
$239,120
6
Yadkin Valley B&T Co.
10
2.53%
$240,365
6
American Community (Yadkin) *
9
3.79%
$360,569
11
Community One Bank
8
3.81%
$362,501
8
Fifth Third Bank (First Charter) *
7
3.96%
$376,291
9
Farmers and Merchants Bank
6
5.64%
$536,151
16
SunTrust Bank
5
6.18%
$587,437
15
Citizens South Bank
4
9.74%
$926,374
23
Bank of America
3
15.75%
$1,497,913
29
Branch Banking and Trust Co.
2
21.04%
$2,000,792
34
Wachovia Bank (Wells Fargo) *
1
Market %
Deposits
Branches
Financial Institution
Rank
Source: FDIC
10
Deposit Market Share
Charlotte Metropolitan Area
As of June 30, 2008
Source: FDIC
100.00%
$108,994,464
432
Total Deposits - Charlotte MSA
2.07%
$2,256,992
79
All other institutions
0.16%
$173,483
4
Bank of Granite
15
0.16%
$179,029
5
Community One Bank
14
0.21%
$230,503
6
South Carolina B&T (Scottish) *
13
0.22%
$242,796
1
Park Sterling Bank
12
0.27%
$296,063
2
First Trust Bank
11
0.33%
$362,960
10
American Comm Bank (Yadkin) *
10
0.34%
$373,534
11
Citizens South Bank
9
0.36%
$389,800
4
New Dominion Bank
8
0.71%
$776,149
18
RBC Bank USA
7
0.80%
$875,475
31
First Citizens B&T Co.
6
1.09%
$1,188,163
35
SunTrust Bank
5
1.69%
$1,846,996
34
Fifth Third Bank (First Charter) *
4
3.15%
$3,438,361
55
Branch Banking and Trust
3
19.13%
$20,848,398
57
Bank of America
2
69.28%
$75,515,762
80
Wachovia Bank (Wells Fargo) *
1
Market %
Deposits
Branches
Financial Institution
Rank
* = Recently merged
11
Peer Group Data
12
Texas Ratio
On 06-30-09 CSBC had a Texas
ratio of 20.1% and traded at 72.8%
of tangible book
13
Balance Sheet Data
06-30-09
Total Assets $ 836,283
Gross Loans $ 629,963
Total Deposits $ 616,233
Common Equity $ 83,609
Preferred Stock 20,548
Total Capital $ 104,157
14
Stock Information
Stock Price (06-30-09) $ 5.15
Price to BV ($11.11) 46.4 %
Price to TBV ($7.07) 72.8 %
2008 EPS Actual $ 0.42
2009 EPS Consensus $ (0.06)
2010 EPS Consensus $ 0.26
Dividend Yield ($0.16) 3.1 %
NASDAQ Global Market – CSBC
15
Selected Financial Ratios
06-30-09
Net Interest Margin 2.87 %
NPA’s / Total Assets 1.49 %
Efficiency Ratio (1) 70.55 %
TCE / Tang. Assets 6.61 %
Total RB-Capital Ratio 14.31 %
(1) Efficiency Ratio excludes gains (losses) on sales of assets, impairment on
securities, and FDIC special assessment.
16
2009 Key Points
Well Capitalized
- 14.3 % Total Risk-based Capital
- 13.3 % Tier 1 Risk-based Capital
- 10.4 % Tangible Capital
Strong Credit Quality Ratios
- 1.97 % NPAs to Loans + OREO
- 1.49 % NPAs to Total Assets
- 1.64 % NPLs to Total Loans
- 1.38% ALLL to Total Loans
Note: Ratios are as of June 30, 2009
17
Positive Publicity to TARP Utilization
Creation of CPP Mortgage Program
- Low Interest Rate
- No Closing Costs
- CSB Builders / Developers
National Recognition
- The Washington Post
- NBC Nightly News with Brian Williams
Local Recognition
- The Gaston Gazette
- The Charlotte Observer
18
Citizens South Outlook for 2009
Rough Waters Throughout 2009
- High Unemployment
- Continued Real Estate Weakness
Capital is KING!
Asset Quality is Very Important
Smart Growth - Leaner is Better
Citizens South is Well Positioned
- FDIC Assisted Transactions
- Branch Acquisitions
19
Citizens South Long Term Objectives
Create the Dominant Community
Banking Franchise in the Charlotte
Region
Focus on Gathering Core Deposits
Asset Quality – Job One
Personal Attention to our Customers
Pricing and Growth Discipline
20
Expense Control Actions
Reduced Budgeted 2009 Operating
Expenses by $1.5 Million, or 7% of 2008
Total Noninterest Expenses
Froze All Executive Salaries
Eliminated Executive Cash Bonuses
Suspended the Bank’s 401-K Match
21
Expense Control Actions
Reduced Retainer of Holding Company
Directors by 25%
Reduced and Restructured the Capacity
of the Commercial Lending Team
Deferred Current Expansion Plans
Reduced Dividend to Preserve Capital
22
Loan Portfolio Mix
June 30, 2009
23
0.9 %
$ 1,002
$ 116,562
Consumer Loans
0.2 %
$ 94
$ 44,536
Commercial Business Loans
2.1 %
$ 4,473
$ 210,706
Other Commercial RE Loans
0.5 %
$ 432
$ 82,346
Residential Permanent Loans
1.6 %
$10,360
$ 629,962
Total Loans
2.2 %
$ 683
$ 31,770
Residential 1-4 Family Rental Property
-
-
$ 20,416
Multifamily Property Loans
0.9 %
$ 379
$ 43,231
Residential A & D Loans
4.6 %
$ 1,962
$ 42,934
Land and Lot Loans
-
-
$ 12,416
Commercial Construction Loans
5.3 %
$ 1,335
$ 25,045
Residential Construction Loans
% Portfolio
NPL’s
Balance (000's)
Loan Portfolio (June 30, 2009)
Nonperforming Loans
24
Nonperforming Assets
(as a percentage of total assets)
25
Deposit Mix
June 30, 2009
Note: Brokered CDs totaled $99,000
26
Total Core Non-Time Deposits
27
Net Interest Margin
28
Why Own CSBC Stock?
Capital Strength
Solid Asset Quality
Strong Core Deposit Franchise
Market Share Strength
Experienced Management Team
Opportunistic Position
Attractive Valuation
29
We appreciate your interest
in Citizens South Banking
Corporation.
Thank You
30
