Exhibit 99.2
Greater Bay Bancorp Slide Presentation
for July 28, 2004 Keefe Bruyette & Woods Community Bank Investor Conference
Keefe, Bruyette & Woods July 28, 2004
Greater Bay Bancorp
Certain matters discussed in this presentation constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements relate to the Company’s current expectations regarding future operating results, net interest margin, net loan charge-offs, asset quality, level of loan loss reserves, growth in loans and deposits and the strength of the local economy. These forward looking statements are subject to certain risks and uncertainties that could cause the actual results, performance or achievements to differ materially from those expressed, suggested or implied by the forward looking statements. These risks and uncertainties include, but are not limited to: (1) the impact of changes in interest rates, a decline in economic conditions at the international, national and local levels and increased competition among financial service providers on the Company’s results of operations and the quality of the Company’s earning assets; (2) any difficulties that may be encountered in consolidating the bank subsidiaries and in realizing operating efficiencies; (3) government regulation; and (4) the other risks set forth in the Company’s reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2003. Greater Bay does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.
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Table of Contents
I. Overview of Greater Bay Bancorp
II. Recent Developments
III. Financial Highlights
IV. Looking Forward: Our Strategy for 2004 and Beyond
V. Investment Rationale
VI. Appendix
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Overview of Greater Bay Bancorp
Company Snapshot – June 30, 2004
Company Name Greater Bay Bancorp
Nasdaq NM GBBK
Common Shares Outstanding 51.2 million
Market Value (1) $1.4 billion
Assets $7.6 billion
LTM Net Income $93.2 million
Q2 2004 Net Income $24.5 million
Common Equity $623.1 million
Preferred Equity:
Convertible Preferred $91.9 million
Perpetual Preferred $15.3 million
(1) Calculated using closing price of GBBK common stock on 7/21/04.
5
Experienced Senior Management Team
Position Name Years Experience
President & CEO Byron A. Scordelis 25+
Chief Financial Officer James Westfall 25+
Chief Information Officer Gregg Johnson 25+
Chief Risk Officer Kenneth Shannon 20+
Chief Administrative Officer Kimberly Burgess 30+
EVP, Human Resources Peggy Hiraoka 25+
Community Bank Presidents 20+ avg.
GBBK Board of Directors 20+ avg.
19 diversified and seasoned directors
Strategic Development Board of Directors 20+ avg.
90 diversified and seasoned directors
6
Franchise Overview
Regional Community Banking
Formed in late 1996 with the merger of Cupertino National Bancorp and Mid-Peninsula Bancorp.
Currently the largest independent community bank holding company headquartered in Northern California with assets of $7.6 billion, loans of $4.4 billion and deposits of $5.3 billion.
Diversified financial services company offering a full range of products and services.
7
Franchise Overview
Unique characteristics of GBBK as a Regional Community Bank:
Maintains strong community involvement in order to fully understand client’s business and personal needs.
Local people in local markets making local decisions based upon local knowledge.
Opportunistic and strategic acquirer of financial services companies.
In February 2004, subsidiary banks were consolidated into a single national charter, but continue to maintain local names and community identities.
Eleven community bank “dba’s” with 42 offices in 8 counties located throughout the San Francisco Bay Area.
8
Acquisition Strategy - “Ring the Bay”
Greater Bay now has a presence in all of the key sub-markets of the San Francisco Bay Area
1996 2004
9
Successful Acquisition Strategy
14 acquisitions completed since formation, adding $3.0 billion in assets and extending market reach throughout the San Francisco Bay Area
Assets At
Date Seller Acquisition
12/97 Peninsula Bank of Commerce $200
05/98 Golden Gate Bank $150
08/98 Pacific Business Funding $15
05/99 Bay Area Bank $200
10/99 Bay Bank of Commerce $200
01/00 Mt. Diablo National Bank $250
05/00 Coast Commercial Bank $400
07/00 Bank of Santa Clara $400
10/00 Bank of Petaluma $200
11/00 The Matsco Companies $285
03/01 CAPCO Financial Company, Inc. $15
12/01 San Jose National Bank $680
03/02 ABD Insurance and Financial Services N/A(1)
07/03 Sullivan & Curtis Insurance Brokers N/A(2)
(1) Gross annual revenues of $110 million
(2) Gross annual revenues of approximately $10 million
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Business Lines
Diversified Financial Services Provider Total Assets: $7.6 Billion
Regional Banking
Single Bank with 11 DBA’s 42 Offices Local Client Decision Making Local Management and Board Assets of $6.2 Billion
Insurance
Premiums > $1 billion Revenues of approx. $120 million Offering P&C, D&O, Employee Benefits, Risk Management Services No underwriting risk
Specialty Finance
International/Trade Finance Leasing Factoring Asset Based Lending SBA Lending Assets of $1.2 Billion
Wealth Management
Trust
Private Banking Assets under management of $0.6 Billion
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Recent Developments
Recent Developments
Completed $240 million offering of zero coupon senior convertible contingent debt securities (“CODES”) in Q1.
Share Repurchase Plan of up to $70 million in common stock – approximately $20.5 million available to repurchase under the plan as of June 30, 2004.
Legal charter consolidation effective February 1, 2004.
Operational consolidation underway – approximate 18 month process. Continued enhancement of enterprise-wide risk management processes with a focus on Sarbanes-Oxley compliance.
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Charter Consolidation
September / October 2003
Approved by GBBK and subsidiary banks
October 2003
Public announcement
Application Process (45-60 days)
January 2004
Final approval of application
February
Legal charter consolidation
Integration / Consolidation (Approx. 18 months)
Potential Benefits
Greater efficiency
Maintain community presence and relationships
Optimize resource allocation
Enhance product development
Improve relationship pricing
Enhance risk management
Reduce operational / regulatory complexity
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ABD Insurance and Financial Services
Acquired ABD Insurance and Financial Services (currently the 14th largest insurance brokerage agency in the country (1)) in March 2002.
Diversified and highly respected provider of property and casualty, employee benefits, and risk management services. Locations in key California markets and recent expansion into the Pacific Northwest.
Very successful partnership that has improved non-interest income from 12% to nearly 40%.
Contributed $117.5 million in insurance fee income for full year 2003 and $67.5 million for the first half of 2004.
(1) Source: 2002 Bank and Insurance magazine
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Significant Growth in Insurance Income
Ins. Fee Inc ($mm) $40.0 $35.0 $30.0 $25.0 $20.0 $15.0 $10.0 $5.0 $0.0
21.5%
18.4%
19.8%
25.3%
24.1%
26.8%
24.0%
28.2%
27.8% $27.6 $26.4 $23.7 $30.6 $27.9 $31.2 $27.7 $34.6 $32.9
Ins. Fee Inc / Total Rev.
30.0%
25.0% 20.0% 15.0% 10.0% 5.0% 0.0%
Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04
Insurance Fee Income
Insurance Fee Income / Total Revenues
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Financial Highlights
Q2 2004 Financial Highlights
Net Income—$24.5 million for Q2 and $49.4 million for the first six months of 2004 Fully Diluted EPS—$0.43 for Q2 and $0.86 for the first six months of 2004 Return on Average Assets of 1.29% for Q2 and 1.31% for the first six months of 2004
Return on Average Tangible Assets (1) of 1.33% for Q2 and 1.35% for the first six months of 2004
Return on Average Common Equity of 15.46% for Q2 and 15.13% for the first six months of 2004
Return on Average Tangible Equity(2) of 19.43% for Q2 and 18.92% for the first six months of 2004
(1) Average tangible assets includes total assets, less average goodwill and intangibles of $222.7 million for Q2 and $223.6 million YTD
(2) Average tangible equity includes average convertible preferred stock of $91.9 million and excludes average intangibles of $222.7 million QTD and $223.6 million YTD
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Q2 2004 Financial Highlights
Core Deposit Growth (excluding institutional time deposits) – quarter-to-quarter annualized growth rate of 22.7% and year-over-year growth rate of 10.3%. Loan Growth – $6.8 million from Q1 2004
Excluding Matsco loan sales and write-down of corporate finance loans, total loans grew $23.2 million, or at an annualized rate of 2.1%.
Year over year, loans declined 5.6% primarily due to the $256.5 million decrease in the construction loan portfolio consistent with diminished levels of construction activity.
Improved Credit Quality – NPAs declined to $42.2 million (down by 32% since 12/31/03) and net charge-offs were $4.0 million or 0.36% of average annualized loans (including $2.0 million loss in discontinued business and $1.0 million in total charge-offs at Matsco).
Non-Interest Income – $46.6 million or 39% of Total Revenue for Q2 and $94.1 million – 39% for the first half of 2004.
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Interest Rate Risk and Net Interest Margin
Balance sheet position is asset sensitive.
Designated approximately $500 million of securities as Held-to-Maturity during Q2 2004.
Buffering volatility in tangible equity as part of capital and interest rate risk management.
Investment strategy continues to be to invest in shorter duration securities.
Net interest margin declined 22 bps due to:
Accelerated premium amortization on securities – 9 bps
Change in loan mix – 7 bps
Increase in deposit costs – 6 bps
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Net Interest Margin
Management in a Volatile Environment
10% 8% 6% 4% 2%
12/98 12/99 12/00 12/01 12/02 12/03 06/04
GBBK’s Avg. Margin down 116 bps
Prime Rate
(1) Average NIM YTD
7.75%
8.50%
9.50%
5.00% 4.52%
4.20%
4.40%
(1)
5.50% 5.56% 5.29%
4.86%
4.25% 4.00% 4.00%
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Non-Interest Income (1)
Non- Interest Income as % of Total Income
2001 2002 2003 YTD 2004
12.7%
31.0% (1)
36.5%
39.0%
(1) As a result of the ABD acquisition in March 2002, the Company’s 2002 results included 10 months of insurance commissions and fees totaling $88.5 million with a full year in 2003. There were no such insurance commissions and fees in 2001.
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Credit Quality
Credit quality generally stable.
Current outstandings in the non-relationship SNC portfolio have been reduced to less than $15 million.
Continued attention to relationship-based business, portfolio concentrations, and discipline in underwriting remain at the core of our credit culture.
Non-performing assets have declined 32% since year end 2003.
Charge-offs YTD 2004 are low at 0.43% of annualized loans.
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Credit Quality
NON-PERFORMING ASSETS
( $ in millions) Q2 2004 Q1 2004 Variance
Commercial $10.7 $7.8 $2.9
Real Estate Term and Construction/Land 9.5 9.2 0.3
SBA 2.6 2.8 (0.2)
Shared National Credits 6.0 12.7 (6.7)
Venture Banking Group 3.3 3.4 (0.1)
Specialty Finance 9.9 11.6 (1.7)
Other 0.2 0.5 (0.3)
Total Non-Performing Loans 42.2 48.0 (5.8)
OREO 0.0 1.2 (1.2)
Total Non-Performing Assets $42.2 $49.2 $(7.0)
Non-performing Loans to Total Loans 0.95% 1.08%
Non-performing Assets to Total Assets 0.55% 0.64%
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Credit Quality – Q2 2004
Net Charge Offs (2)/ Average Loans
0.36%
0.24%
GBBK Peer (1)
Reserves/ EOP Loans
2.71%
1.53%
GBBK Peer (1)
NPAs/ Total Assets
0.55%
0.42%
GBBK Peer (1)
Reserves/ NPAs
286%
271%
GBBK Peer(1)
(1) Peer data as of March 31, 2004. Custom peer group defined by GBBK – see schedule A (2) Annualized
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Credit Quality
Trends in the Level of Allowance and Charge-offs
% of Loans
3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%
Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04
Quarter Ending
YTD Annualized Net Charge-offs GBBK Allowance as % of Loans UBPR Peer Allowance as % of Loans
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Credit Quality
Net Charge-Offs Peaked in 2002 $ in millions $60.0 $50.0 $40.0 $30.0 $20.0 $10.0 $0.0
-$ 10.0
Total Matsco SNC Other C&I CRE & Construction Consumer
2001 $25.2 $0.7 $15.2 $11.4 -$2.4 $0.4
2002 $54.8 $17.5 $13.8 $13.5 $9.5 $0.5
2003 $31.6 $9.5 $10.1 $5.8 $5.3 $0.9
YTD 2Q04 Annualized $19.2 $3.8 $9.8 $0.6 $5.0 $0.0
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Commercial Real Estate Loan Portfolio
Term Loans (6/30/04)
Multifamily 3%
Self Storage 2%
Office 36%
Retail 17%
Industrial 12%
Other RE 9%
Hotel/Motel 8%
R&D 5%
1-4 SFR 4%
Warehouse 4%
Construction Loans (6/30/04)
1-4 SFR 43%
Office 19%
Multifamily 18%
Self Storage 8%
Other RE 3%
Hotel/Motel 1%
Retail 4%
Industrial 4%
Total: $1,748.7 mm Total: $301.2 mm
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Real Estate Term Loan Portfolio
By Owner Occupied (6/30/04)
SFR 4%
Owner Occupied / Owner Operator 40%
Non-Owner Occupied 56%
By County (6/30/04)
Sacramento
2%
Solano
1%
Placer
1%
Santa Clara 36%
San Mateo 14%
Alameda 12%
San Francisco 7%
Contra Costa 6%
Santa Cruz 5%
Sonoma 5%
Marin 5%
Other 4%
Monterey 2%
Total: $1,748.7 mm
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Real Estate Construction Loan Portfolio
By Owner Occupied (6/30/04)
Owner Occupied / Owner Operator 23%
Non-Owner Occupied 34%
SFR 43%
By County (6/30/04)
Solano 1%
Riverside 1%
Other 1%
Santa Clara 33%
San Mateo 17%
San Francisco 12%
Alameda 12%
Santa Cruz 9%
Contra Costa 7%
Orange 3%
San Bernadino 2%
Marin 1%
Sonoma 1%
Total: $301.2 mm
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Capital Strength
Peer Top 75
GBBK (1) Group (2) Banks (3) Minimum to be
6/30/04 3/31/04 3/31/04 Well-Capitalized
Tangible Equity Ratio 6.67% 7.40% 7.04% N/A
Leverage Ratio 9.83% 8.25% 7.94% 5.00%
Tier I Risk Based Capital 12.72% 11.36% 10.79% 6.00%
Total Risk Based Capital 13.98% 13.66% 13.53% 10.00%
(1) Tangible Equity includes Common Shareholders’ Equity and Convertible Preferred Stock, less Goodwill and Other Intangibles. (2) Peer group data as of March 31, 2004. Custom peer group defined by GBBK – see schedule A
(3) Top 75 banks by asset size at March 31, 2004
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Capital Management and Strength
All capital ratios of the Company and the Bank continue to be comfortably above the regulatory well-capitalized minimum.
Total tangible equity ratio is 6.67% down from 6.90% at Q1 due mainly to temporary downward valuation of $41.0 million for the investment securities during Q2.
Share repurchase plan has $20.5 million remaining –continually evaluate opportunities to buy back shares as a part of our capital management process.
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Looking Forward: Our Strategy for 2004 and Beyond
“The economy of the Bay Area took a major blow from the post-2000 downturn, and the damage received maximum publicity from a fascinated world.”
McKinsey & Company/Bay Area Council “Downturn and Recovery in Restoring Prosperity” Economic Profile January 2004
34
The Collapse of the “Bubble”…
Average market capitalization of Bay Area companies
Bay Area IPOs
Average number of companies per year $ Billions
CAGR (1995-02): 18% CAGR (1985-95): 21%
652
1995-1998
2,214
1999-2000
1,277
2001-2002
21
1986-1990
32
1991-1995
41
1996-2000
7
2000-2002
Source: Economy.com; Compustat; Securities Data Corp.; McKinsey analysis
35
“The Bay Area has proven fairly resilient in the economic downturn. Several fundamental strengths remain in tact such as its highly skilled work force, global presence, and multi-faceted economy…(and) the Bay Area retains its core dynamism, and still has marked advantages over most other comparable regions in the country.”
McKinsey & Company/Bay Area Council “Downturn and Recovery in Restoring Prosperity” Economic Profile January 2004
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The Bay Area has Maintained its Impressive Productivity Lead During the Economic Downturn
Output per capita
$ Thousands
Bay Area
Boise
Austin
New York
Boston
Seattle
Houston
Los Angeles
U.S.
2000
62.8 47.9 47.7 46.8 45.7 42.3 41.6 33.1
32.6
93% advantage
2002
63.4 48.5 46.7 47.4 44 41.2 40.5 32.6
32.7
94% advantage
CAGR
Percent
0.5 0.5 -1.1 0.6 -1.9 -1.3 -1.4 -0.8 0.3
Note: All figures are real. Regions are consolidated metropolitan areas. See appendix for definitions Source: Bureau of Economic Analysis (BEA); Economy.com; McKinsey team analysis
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As a Result, the Bay Area has Significantly Increased its Share of Fortune 500 Companies Revenue…
By geography; percent
Share of Fortune 500 revenues of companies headquartered in these metros
100% = $673.7 billion 2,152.3
Bay Area 15% [24] 20% [26]
New York
47 [42]
45 [46]
Los Angeles
13 [18] 9 [21] Houston
11 [15] 10 [18] Boston 5 [13]
7 [16]
Seattle 7 [11]
Austin/Boise* 7 [4] 4 [5]
Revenue growth CAGR
12% 16 12 9 11 9 13 34
0.7 [2]
* Boise (1993: 0.0%, 2003:2.1%), Austin (1993: 0.0%, 2003: 1.9%) Source: Fortune; McKinsey analysis
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Sustainably Superior Virtues of the Bay Area Economy
Intellectual Capital Venture Capital Productivity Per Capita Income
Exports as Component of GRP
Entrepreneurial Spirit/Quest for Innovation
39
Strategic Goals
Reaching greater critical mass in the Company’s market areas.
Generating increased fee income through cross-selling broader services.
Continue to diversify revenue stream. Proactively mitigate and manage risk. Opportunistic market expansion.
40
Proactively Mitigate and Manage Risk
Continual enterprise-wide risk management Uncompromising focus on credit quality Monitor and manage loan concentration Focus on relationships – know our clients Proactive interest rate risk management
41
Market Concerns About GBBK
The Northern California economy, the state deficit and the technology industry in Silicon Valley.
Real estate valuations, lease rates and vacancy factors in the San Francisco Bay Area.
Market perception of GBBK’s credit quality and overall risk profile.
Ability to grow loans and sustain core EPS growth.
Deployment of capital – share repurchases, acquisitions, loan growth.
Direction and sensitivity of net interest margin.
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Guidance for the Remainder of 2004
Loan Growth – ranging from the low single to mid single digits.
Deposit Growth—core growth in the mid single digits. Credit Quality – net charge offs estimated to be in the 60-70 bps range for 2004.
Net Interest Margin – based on balance sheet trends and interest rate sensitivity of the balance sheet, expect margin to be in the 4.40% to 4.50% range.
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Investment Rationale
Well-Positioned for an Economic Upturn
Our franchise provides competitive opportunities. Asset sensitive balance sheet.
Internal capital generation will support future growth. Stable credit quality.
Increase in fee income from insurance agency and wealth management.
Increased business activity will bring higher commercial loan volume.
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Long Term Shareholder Returns (1)
11/27/96 – 6/30/04
800%
600%
400%
200%
0%
GBBK
S&P Bank Index S&P 500 Nasdaq Bank Index
561%
230%
157%
151%
‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 6/30/04
(1) Total shareholder return, including the reinvestment of dividends
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Appendix
Schedule A – Custom Peer Group
Allfirst Financial, Inc. Fulton Financial Corporation
Associated Banc-Corp Greater Bay Bancorp
BancorpSouth, Inc. Hibernia Corporation
Bank of Hawaii Corporation Hudson United Bancorp
BOK Financial Corporation International Bancshares Corporation
Bremer Financial Corporation Mercantile Bankshares Corporation
Central Bancompany Old National Bancorp
Citizens Banking Corporation Provident Financial Group, Inc.
City National Corporation RBC Centura Banks, Inc.
Colonial BancGroup, Inc. Riggs National Corporation
Commerce Bancorp, Inc. Sky Financial Group Inc.
Commerce Bancshares, Inc. South Financial Group, Inc. (The)
Community First Bankshares, Inc. Southwest Bancorporation of Texas, Inc.
Cullen/Frost Bankers, Inc. Susquehanna Bancshares, Inc.
F.N.B. Corporation Synovus Financial Corp.
FBOP Corporation TCF Financial Corporation
First Banks, Inc. Trustmark Corporation
First Citizens BancShares, Inc. UMB Financial Corporation
First Midwest Bancorp, Inc. United Bankshares, Inc.
First National of Nebraska, Incorporated Valley National Bancorp
Firstbank Holding Company of Colorado Whitney Holding Corporation
FirstMerit Corporation Wilmington Trust Corporation
48