Investor Presentation Third 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 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 249 ATMs Increased market share in 49% of our counties since 2008 Growing number of new clients 10% annually 80% of revenue is Michigan based Pending merger with FirstMerit, expect to close 2Q13 Company Overview 219 Branches / 249 ATMs th |
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 Delivery of Service Local teams focus on delivery of : Client service Closing pipeline opportunities Referring business 6 Client Local Advisory Board Commercial Banker Mortgage Loan Officer Public Funds Officer Branch Manager Treasury Management Officer Investment Consultant Wealth Business Development Officer |
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 $33.0 $0 $10 $20 $30 $40 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Pre-tax Pre-provision Profit* Revenue Focus Problem Asset Resolution Focus Strengthened franchise value Eliminated uncertainty around credit * 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 0% 1% 2% 3% 4% 5% 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q112 2Q12 3Q122 NPAs / Assets % CRBC Peer Median** Regional Peer Median** (in millions) |
Strategy from 2009 – 2010 1. Preserved capital by managing assets 2. Grew and maintained reserve levels in recognition of portfolio risk 11 $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 3Q12 Total Assets $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 $9,725 $0 $100 $200 $300 $400 $500 $600 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Allowance for Loan Losses Non-Performing Loans |
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 Sept. 30, 2011 Dec. 31, 2011 March 31, 2012 June 30, 2012 Sept 30, 2012 Leverage ratio 8.21% 8.45% 8.71% 9.77% 9.66% Tier 1 capital ratio 12.81 13.51 13.70 14.70 15.09 Total capital ratio 14.14 14.84 14.97 15.96 16.35 Tier 1 common equity (non-GAAP) 6.77 7.24 7.49 8.50 8.83 $549 $601 $606 $591 $551 $468 $436 $280 $175 $139 $137 $102 $91 $94 $86 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% 0.9% 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 3Q12 Non-Performing Assets NPAs as a % of Total Assets |
Focused on Growth |
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 $5,431 $4,000 $6,000 $8,000 $10,000 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 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% 3.57% 2.00% 2.50% 3.00% 3.50% 4.00% 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Net Interest Margin (FTE) Continue focus on core deposits 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 9/30/12 Single Service CD Clients 0 100 200 300 400 500 600 700 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Fed Funds Sold (average) (in millions) |
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 3Q12 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 * Non-GAAP measure. See Appendix for reconciliation. Continue prudent expense management while adding key revenue generating positions $0 $10 $20 $30 $40 $50 $60 $70 $80 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Operating Non-Interest Expense* Salaries and Employee Benefits Other Expenses - 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 3Q12 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 22 -400 -350 -300 -250 -200 -150 -100 -50 0 50 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Income (Loss) before Tax* |
19 3Q12 Highlights Announced merger with FirstMerit Corporation (NASDAQ: FMER); Expect to close 2Q13 Reported consistent quarterly profit from banking operations – Consistent net interest margin at 3.57% – Fee income from core banking services remained solid – Maintained control over operating expenses Loan growth in focused areas of expertise – 10% growth in C&I portfolio since last year – 9% growth in Indirect portfolio since last year – 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% 3.57% 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 3Q12 Net Interest Margin (FTE) 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 $33.0 $0 $10 $20 $30 $40 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Pre -tax Pre -provision Profit* $109.9 $137.5 $138.2 $0 $20 $40 $60 $80 $100 $120 $140 $160 2009 2010 2011 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% 65.20% 50% 55% 60% 65% 70% 75% 80% 85% 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 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 22 Accelerated resolution of over $920 million of problem assets 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Total Capital Tier 1 Capital Tier 1 Common (non-GAAP) |
23 Positioned for Growth Successfully managed through credit cycle with a strategic focus on revenue generation and problem asset resolutions Strategically focused in 2012 to – Continue providing top tier client service – Rebuild loan portfolio – Mitigate expected margin pressure – Evaluate reserve levels – Report consistent profitability Pending merger with FirstMerit Corporation (NASDAQ: FMER) expected to close 2Q13 |
24 Appendix |
25 Upper Midwest Franchise MSA Rank Number of Branches Total Deposits ($000) % of Franchise % Market Share Michigan: Flint, MI 1 21 1,413,395 19.2 37.84 Detroit-Warren-Livonia, MI 11 31 1,155,621 15.7 1.19 Saginaw-Saginaw Township North, 1 15 614,662 8.4 30.60 Lansing-East Lansing, MI 3 14 527,318 7.2 10.13 Jackson, MI 2 8 372,527 5.1 23.76 Bay City, MI 3 5 216,496 2.9 20.69 Ann Arbor, MI 12 6 211,446 2.9 3.17 Cadillac, MI 1 7 192,242 2.6 36.30 Owosso, MI 3 6 139,177 1.9 20.48 Sturgis, MI 3 4 101,110 1.4 15.27 Total Michigan 8 156 5,923,119 80.7 3.55 Non-Michigan: Green Bay, WI 5 10 286,993 3.9 4.85 Cleveland-Elyria-Mentor, OH 18 12 279,794 3.8 0.56 Appleton, WI 12 5 105,395 1.4 2.77 Stevens Point, WI 5 2 88,627 1.2 6.89 Platteville, WI 9 4 70,793 1.0 6.02 Total Non-Michigan 60 1,419,936 19.3 Source: SNL Financial as of 6/30/12 |
26 Continued Stabilization and Diversification in Michigan’s Economy Source: U.S. Bureau of Labor Statistics Michigan Nonfarm Employment Michigan Employment by Industry Sept. 2012 Sept. 2002 $000s % $000s % Trade, Transportation, and Utilities 647.4 16.1% 753.5 16.6% Government 612.4 15.2% 684.9 15.1% Professional Services 576.5 14.4% 610.3 13.5% Health Care 552.8 13.8% 475.3 10.5% Leisure and Hospitality 391.7 9.8% 414.3 9.2% Other Manufacturing 391.6 9.8% 484.8 10.7% Motor Vehicle 210.0 5.2% 360.5 8.0% Financial Activities 200.1 5.0% 213.7 4.7% Other Services 168.5 4.2% 180.4 4.0% Construction 130.8 3.3% 210.9 4.7% Education Services 73.4 1.8% 60.9 1.3% Information 52.9 1.3% 68.5 1.5% Mining and Logging 7.8 0.2% 8.9 0.2% Total Nonfarm 4,015.9 4,526.9 Total Manufacturing 601.6 15.0% 845.3 18.7% in thousands 3,500 3,600 3,700 3,800 3,900 4,000 4,100 4,200 4,300 Michigan NonFarm Employment (Seasonally Adjusted) Trend |
27 Continued Stabilization and Diversification in Michigan’s Economy Unemployment Trends Source: U.S. Bureau of Labor Statistics and Freddie Mac Freddie Mac House Price Index |
28 (in millions) 4Q11 1Q12 2Q12 3Q12 Income(loss) from continuing operations $18.2 $24.9 $303.2 $21.0 Income tax (benefit) provision 2.5 - (276.8) 1.3 Provision for loan losses 15.0 8.4 5.3 5.2 Investment securities (gains) losses - - - - Net losses (gains) on LHFS 0.2 (0.9) (0.0) 0.2 (Gains) losses on ORE 1.1 (0.4) (0.2) 0.9 Merger related expenses - - - 4.4 Fair-value adjustment on BOLI (0.1) (0.2) 0.1 (0.0) Fair-value adjustment on swaps (0.0) (0.1) 0.1 0.1 Pre-Tax Pre-Provision Profit (1) $36.9 $31.7 $31.7 $33.0 Last 12 Months $133.4 Core Earnings Strength (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. Pre-Tax Pre-Provision Profit (non-GAAP) |
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) 3Q 11 4Q 11 1Q12 2Q12 3Q12 Service charges on deposit accounts $10,362 $9,724 $8,985 $9,355 $9,554 Trust fees 3,622 3,747 3,602 3,582 3,635 Mortgage and other loan income 2,089 2,705 1,858 1,952 2,028 Brokerage and investment fees 1,188 1,243 1,324 1,331 1,831 Card-based and other nondeposit fees 4,475 4,305 4,265 4,444 4,431 Net (losses) gains on loans held for sale 1,952 (217) 916 6 (184) Investment securities gains (losses) 3 38 - - - Other income 736 2,818 3,290 1,675 2,415 Total Non-Interest Income (GAAP) $24,427 $24,363 $24,240 $22,345 $23,710 Investment securities gains (losses) (3) $ (38) $ - $ - $ - $ Net (losses) gains on loans held for sale (1,952) 217 (916) (6) 184 Fair value adjustment on BOLI 385 (100) (205) 118 (31) Fair value adjustment on swaps 268 (46) (61) 74 83 Operating Non-interest Income (Non-GAAP) $23,125 $24,396 $23,058 $22,531 $23,946 |
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) 3Q 11 4Q 11 1Q12 2Q12 3Q12 Salaries and employee benefits $30,280 $30,952 $33,298 $32,801 $33,589 Occupancy 6,125 6,326 6,696 6,140 6,129 Professional services * 2,394 2,311 2,023 2,465 6,806 Equipment 2,918 3,326 3,303 2,904 2,937 Data processing services 3,823 3,709 4,048 3,721 4,427 Advertising and public relations 2,179 1,298 1,335 1,708 1,847 Postage and delivery 1,142 1,165 1,099 1,119 1,157 Other loan expenses 3,941 3,497 3,186 3,266 3,121 Losses on other real estate (ORE) 1,210 1,081 (385) (173) 941 ORE expenses 529 995 450 266 323 Intangible asset amortization 732 688 578 545 513 Other expense 10,138 11,292 11,470 11,577 10,265 Total Non-Interest Expense (GAAP) $65,411 $66,640 $67,101 $66,339 $72,055 Merger related expenses - - - - 4,411 Losses (gains) on ORE 1,210 1,081 (385) (173) 941 Operating Non-Interest Expense (Non-GAAP) $64,201 $65,559 $67,486 $66,512 $66,703 * Includes merger related expenses |
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 2,634 $ 90.2% AAA 25 0.9% AA 139 4.8% A 41 1.4% BAA1, BAA2 & BAA3 59 2.0% BA1 & Lower 2 0.1% Non-rated 19 0.7% Total 2,919 $ 100.0% • Over $2.2 billion in unpledged securities • No OTTI concerns • Over 70% of portfolio are GNMA securities purchased over the last 2 – 3 years ($ in millions) Book Market TEY* Duration Type Value Value (%) (years) MBS Agency 971 $ 1,019 $ 2.73% 1.43 CMO - Agency 340 347 2.29% 1.70 CMO - Non-agency 65 65 3.45% 2.74 Municipals 104 110 6.26% 2.98 Total Available for Sale 1,480 $ 1,541 $ 2.91% 1.66 MBS Agency 907 $ 955 $ 3.00% 2.04 CMO - Agency 305 314 1.94% 1.08 Municipals 102 109 6.01% 3.26 Total Held to Maturity 1,314 $ 1,378 $ 2.99% 1.91 Total Investment Securities 2,794 $ 2,919 $ 2.95% 1.77 Investment Portfolio at September 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) 9/30/10 12/31/10 3/31/11 6/30/11 9/30/11 12/31/11 3/31/12 6/30/12 9/30/12 Tier 1 capital $ 886 $ 777 $ 706 $ 727 $ 758 $ 773 $ 795 $ 860 $ 878 Qualifying LLR 92 83 76 74 75 73 74 74 73 Qualifying capital securities 7 7 3 3 3 3 - - - Total risk-based capital $ 985 $ 867 $ 785 $ 805 $ 836 $ 850 $ 869 $ 934 $ 951 Tier 1 capital $ 886 $ 777 $ 706 $ 727 $ 758 $ 773 $ 795 $ 860 $ 878 Qualifying capital securities (74) (74) (74) (74) (74) (74) (74) (74) (74) Preferred stock (277) (278) (280) (282) (283) (285) (287) (289) (291) Tier 1 common equity $ 535 $ 425 $ 352 $ 371 $ 401 $ 415 $ 435 $ 497 $ 514 Total Capital Ratio 13.80% 13.51% 13.24% 13.77% 14.14% 14.84% 14.97% 15.96% 16.35% Tier 1 Capital Ratio 12.41% 12.11% 11.90% 12.43% 12.81% 13.51% 13.70% 14.70% 15.09% Tier 1 Leverage Ratio 8.50% 7.71% 7.39% 7.83% 8.21% 8.45% 8.71% 9.77% 9.66% Tier 1 Common Ratio * 7.50% 6.62% 5.93% 6.36% 6.77% 7.24% 7.49% 8.50% 8.83% TCE to TA * 5.34% 4.20% 3.59% 4.05% 4.31% 4.47% 4.68% 7.73% 7.91% 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) 3Q11 4Q11 1Q12 2Q12 3Q12 Total assets $9,600 $9,463 $9,577 $9,670 $9,725 Goodwill (318) (318) (318) (318) (318) Other intangible assets (8) (7) (7) (6) (6) Tangible assets $9,274 $9,137 $9,252 $9,346 $9,401 Total shareholders' equity $1,009 $1,020 $1,045 $1,336 $1,358 Goodwill (318) (318) (318) (318) (318) Other intangible assets (8) (7) (7) (6) (6) Tangible equity $683 $694 $720 $1,011 $1,034 Preferred stock (283) (285) (287) (289) (291) Tangible common equity $400 $409 $433 $723 $744 Total shareholders' equity $1,009 $1,020 $1,045 $1,336 $1,358 Qualifying capital securities 74 74 74 74 74 Goodwill (318) (318) (318) (318) (318) Disallowed tax assets - - - (236) (235) Accumulated other comprehensive income 1 6 2 10 6 Other assets (1) (8) (7) (7) (6) (6) Total Tier 1 capital (regulatory) $758 $773 $795 $860 $878 Qualifying capital securities (74) (74) (74) (74) (74) Preferred stock (283) (285) (287) (289) (291) Total Tier 1 common equity (non-GAAP) $401 $415 $435 $497 $514 Net risk-weighted assets (regulatory) (1) $5,913 $5,723 $5,804 $5,852 $5,822 Tangible common equity to tangilbe assets ratio 4.31% 4.47% 4.68% 7.73% 7.91% Tier 1 common equity ratio (non-GAAP) 6.77% 7.24% 7.49% 8.50% 8.83% |
$0 $20 $40 $60 $80 $100 $120 $140 $160 $180 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 37 Proactive Credit Management $0 $50 $100 $150 $200 $250 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 30-89 Day Past Due Portfolio Balances Non-Performing Loans ($ 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 3Q12 C&I Owner Occupied Income Producing Land Hold, Land Dev. & Const. Residential Mtg Consumer 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 3Q12 |
$0 $5 $10 $15 $20 $25 $30 $35 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 $0 $20 $40 $60 $80 $100 $120 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 38 Commercial & Industrial Portfolio $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 30-89 Day Past Due Portfolio Balances ($ in millions) C&I Small Business Non-Performing Loans Net Charge-Offs |
39 Commercial Portfolio Size Characteristics < $5 million $5 - $10 million > $10 million Total Total Commercial Portfolio Total (millions) 1,927 $ 529 $ 568 $ 3,025 $ # of loans 6,903 76 37 7,016 Average loan size $279,000 $6,961,000 $15,360,000 $431,000 Delinquencies Total (millions) 7 $ - $ - $ 7 $ # of loans 19 - - 19 Average loan size $346,000 - $ - $ $346,000 Nonperforming Loans Total (millions) 36 $ - $ - $ 36 $ # of loans 178 - - 178 Average loan size $200,000 - $ - $ $200,000 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 3Q12 $0 $20 $40 $60 $80 $100 $120 $140 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 40 Commercial Real Estate Portfolio $0 $400 $800 $1,200 $1,600 $2,000 $2,400 $2,800 $3,200 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 30-89 Day Past Due Portfolio Balances ($ 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 3Q12 Net Charge-Offs |
41 Commercial Real Estate Portfolio 32% 43% 16% 4% 5% Southeast Michigan Greater Michigan Ohio Wisconsin Other By Region By Collateral 22% 23% 15% 13% 7% 3% 2% 2% 1% 11% Retail Medical Warehouse/ Industrial Office Multi-Family Hotel Mixed Use Gas Station/ C.Store Residential Other (<1%) |
$0 $20 $40 $60 $80 $100 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 42 Consumer Portfolio $0 $20 $40 $60 $80 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 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 $3,500 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 ($ 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 3Q12 Indirect Other Direct Home Equity Residential Mortgage * Other direct included with Home Equity |
43 Consumer Portfolio Profiles Home Equity $36,000 avg loan size Indirect (1) $24,200 avg loan size (1) Indirect loans are RV and marine only (no auto) Consumer Portfolio Strong refreshed FICO scores 741 Home Equity 741 Indirect 727 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 $19,700 avg loan size Residential Mortgage Portfolio $164,000 average loan size 719 refreshed FICO score 66% average original LTV Seasoned portfolio – 52% 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 $26.4 41.3% Commercial $9.2 14.4% Residential Mortgage $15.3 23.9% ($ in millions) Direct Consumer $10.6 16.5% $63.8 million or 1.18% of portfolio Indirect Consumer $2.4 3.7% Loans 90+ Accruing $0.01 Loan loss reserve = $122.1 million Allowance for loan losses to NPLs = 191.3% |
45 Aggressive Non-Performing Asset Management Quarterly Non-Performing Asset Activity * * 2Q12 inflows and 3Q12 outflows include a single $14 million relationship * (in millions) 4Q11 1Q12 2Q12 3Q12 Beginning NPAs $136.9 $102.2 $90.6 $94.0 Commercial: Additions 13.3 14.0 23.8 4.6 Payments (10.3) (5.1) (12.0) (21.0) Returned to accruing status (0.0) (3.9) (0.5) (1.3) Charge-Offs/ OREO writedown (10.4) (13.1) (6.0) (6.2) Consumer - net change (5.3) (3.9) 3.4 3.6 Held For Sale - net change (17.8) 0.9 (2.4) 15.8 OREO - net change (4.2) (0.6) (3.0) (3.1) Ending NPAs $102.2 $90.6 $94.0 $86.2 |
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 |