Exhibit 99.2
Greater Bay Bancorp Investor Presentation October 2005 1
2 Greater Bay Bancorp Greater Bay Bancorp Certain matters discussed in this press release 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) government regulation, including ABD’ s receipt of requests for information from state insurance commissioners and a subpoena from the New York Attorney General related to the ongoing insurance industry-wide investigations into contingent commissions and override payments; and (3) 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, 2004. 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. |
3 Company Profile Company Profile As of September 30, 2005 As of September 30, 2005 1.42% / 15.13% Q3 ROA / ROE $1.22 billion Market Capitalization (2) $667 million Common Equity 50.4 million Common Shares Outstanding $0.44 Q3 Diluted EPS $25.6 million Q3 Net Income $4.6 billion Core Deposits (1) $7.1 billion Total Assets (1) Excludes brokered and wholesale institutional deposits (2) As of October 24, 2005 |
4 Investment Rationale Investment Rationale Largest independent banking franchise in Northern California operating in lucrative San Francisco Bay Area regional market. – Established track record as acquirer of choice. – Proven record of organic growth and in-market expansion. Diversified provider of financial services in four distinct business areas. – Mitigates geographic concentration of banking business and sector-specific earnings volatility. – Reduces spread income dependence. |
5 Investment Rationale Investment Rationale Strong financial fundamentals and sound credit metrics. Experienced and proven executive management team. Leading to long-term record of superior shareholder return. |
6 An Exceptional Regional Market An Exceptional Regional Market |
7 Greater San Francisco Bay Area Greater San Francisco Bay Area |
8 Greater San Francisco Bay Area Profile Greater San Francisco Bay Area Profile Recognized global leadership in technological innovation, advancement, and growth. – Unmatched concentration of venture capital funding and investment. – Entrepreneurial spirit and results-oriented ethic. Highest levels of worker productivity and per capita income in the nation. Highest level of workforce education in the nation. Exceptionally strong international trade position. |
9 “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 other comparable regions in the country.” McKinsey & Company/Bay Area Council “Downturn and Recovery in Restoring Prosperity” Economic Profile January 2004 A Regional Strategic Perspective A Regional Strategic Perspective |
10 Diversified Financial Services Diversified Financial Services Provider Provider |
11 Diversified Financial Services Provider Diversified Financial Services Provider Loans of $3.1 billion Core deposit of $4.6 billion 12 distinct community bank branches 40 offices Relationship based Centralized operations, international and cash management support Regional in scope Regional Community Banking Assets of $1.4 billion Commercial finance to health care businesses Small ticket leasing Factoring and asset based lending SBA lending National in scope Specialty Finance Annual premiums approaching $2 billion 2004 annual revenues of $130 million* Offering P&C, D&O, employee benefits, risk management services No underwriting risk Western U.S. in scope Insurance Brokerage Trust and private banking AUM in excess of $600 million Regional in scope Wealth Management Greater Bay Bancorp * Excludes Lucini/Parish which was acquired May, 2005. |
12 Regional Community Banking Regional Community Banking |
13 Regional Community Banking Business Regional Community Banking Business Operating 12 separate business dbas under single consolidated charter – 40 office locations throughout the Greater Bay Area. Common data processing platform, credit policies and operating procedures – served and supported by single administrative staff. Relationship focused: – Loans: Commercial ($500m-5mm), CRE ($1-10mm), and construction ($1-10mm) credit opportunities. – Deposits: Full suite of business and personal products. – Local people in local markets making local decisions based upon local knowledge. |
14 Greater Bay Community Banking – Greater Bay Community Banking – 1996 1996 |
15 Greater Bay Community Banking - Greater Bay Community Banking - Today Today |
16 Community Banking Group Profile Community Banking Group Profile Mid-Peninsula Bank Peninsula Bank of Commerce Bay Area Bank Peninsula/ San Mateo County Cupertino National Bank San Jose National Bank Bank of Santa Clara Santa Clara County Golden Gate Bank Greater Bay Bank- Marin San Francisco/ Marin Counties Bay Bank of Commerce Greater Bay Bank- Fremont Alameda County Mt. Diablo National Bank Greater Bay Bank- Walnut Creek Contra Costa County Coast Commercial Bank Greater Bay Bank- Carmel Santa Cruz/ Monterey Counties Bank of Petaluma Sonoma County Community Banking Group Note: Figures shown as of 09/30/05. Total Loans: $3.1 billion Core Deposits: $4.6 billion |
17 Client-Centric Banking Model Client-Centric Banking Model Install Sell Service Craft Locate and Diagnose 1 5 4 2 3 Client Link and Build 6 Relationship Management Business Development |
18 Core Deposit Balance Core Deposit Balance (1) (1) $4.43 $4.56 $4.81 $4.75 $4.55 $4.58 $0 $2 $4 $6 2002 2003 2004 Q1 '05 Q2 '05 Q3 '05 ($ in Billions) (1) Core deposits exclude brokered and wholesale institutional deposits. |
19 Core Deposit Composition Core Deposit Composition (1) (1) – – 9/30/05 9/30/05 ($ in Billions) (1) Core deposits exclude brokered and wholesale institutional deposits. By Region By Type Demand 23% Savings & NOW 28% MMDAs 38% Time Deposits >$100 8% Other Time Deposits 3% San Mateo 26% Santa Clara 41% San Francisco 5% Marin 2% 4% Contra Costa 11% Santa Cruz & Monterey 6% Sonoma 5% Core Deposits $4.58 Billion |
20 Specialty Finance Specialty Finance |
21 Specialty Finance Business Specialty Finance Business Collection of discrete businesses focused on acquisition and servicing/sale of value-based assets where execution, efficiency, standardization, and productivity are essential to optimizing profitability. Transaction rather than relationship-based. – Relationships essentially limited to intermediaries who source the business (dealers, distributors, etc.). Mandate to compete at high end of credit quality spectrum. – No deviation from target borrower – very disciplined. Intense focus on perpetual growth of credit risk knowledge and on automation-based underwriting as core strategic elements. |
22 Specialty Finance Group Profile Specialty Finance Group Profile Professional dental and veterinary term commercial financing National in scope Matsco Small-ticket leasing National in scope Greater Bay Capital Factoring and asset- based lending West Coast in scope Greater Bay Funding 504 and 7(A) business sourced direct and via community banks Regional in scope SBA Lending Start-up venture aimed at brokering or retaining high quality SFD REL Regional in scope Residential Mortgage Lending Specialty Finance Group Note: Figures as of 09/30/05. Total Assets: $1.4 billion |
23 $- $1 $2 $3 $4 $5 $6 2001 2002 2003 2004 Q1 2005 Q2 2005 Q3 2005 CRE Construction and Land Commercial/Matsco/GBC All Others/SNC Residential Mortgage Loan Portfolio Composition Loan Portfolio Composition * * Combined Community Banking and Specialty Finance Combined Community Banking and Specialty Finance ($ in Billions) * Gross of Deferred Fees & Discounts $4.51 $4.81 $4.55 $4.49 $4.50 $4.73 $4.68 14% 39% 16% 31% 11% 41% 15% 33% 10% 42% 12% 36% 8% 44% 11% 36% 7% 45% 11% 34% 6% 8% 46% 11% 29% 6 % 8% 46% 13% 27% 2% 3% |
24 Commercial Real Estate Portfolio Commercial Real Estate Portfolio Composition – Composition – 9/30/05 9/30/05 Office 34% Retail 18% Industrial 13% Other 10% Hotel/Motel 7% R&D 4% 1-4SFR 4% Warehouse 4% Self Storage 3% Multifamily 3% Santa Clara 34% San Mateo 13% Alameda 12% San Francisco 8% Santa Cruz 5% Sonoma 6% Other 7% Monterey 2% Marin 5% Contra Costa 6% Sacramento 1% Solano 1% By Type By County Total - $1.5 Billion |
25 Construction Loan Portfolio Construction Loan Portfolio Composition – Composition – 9/30/05 9/30/05 By Type By County 1-4 SFR 49% Multifamily 40% Office 5% Industrial 0% Self Storage 1% Retail 2% Other 3% Santa Clara 26% San Mateo 16% San Francisco 13% Contra Costa 13% Alameda 7% Santa Cruz 10% Sonoma 2% San Bernadino 2% Placer 0% Other 5% Sacramento 5% Marin 1% Total - $472 Million |
26 CRE Loan Outstandings by Vintage – CRE Loan Outstandings by Vintage – Through 9/30/05 Through 9/30/05 $238 $202 $153 $214 $340 $243 $195 $157 $0 $100 $200 $300 $400 $500 Pre 1999 1999 2000 2001 2002 2003 2004 2005 ($ in Millions) Total Outstandings = $1.5 billion |
27 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 1999 2000 2001 2002 2003 2004 Q1'05 Q2'05 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Avg Rent Vacancy Bay Area Office Market Rental and Vacancy Trends Source: BT Commercial |
28 Commercial Insurance Brokerage Commercial Insurance Brokerage |
29 Commercial Insurance Services Business Commercial Insurance Services Business Acquired ABD Insurance and Financial Services in March 2002 – a highly-respected provider of commercial insurance brokerage and risk management services. Largest brokerage firm headquartered on the West Coast and 15 th largest in the nation. (1) – And 4 th largest bank-owned firm in the country. Diversified property and casualty (65%) and employee benefit (35%) revenue streams. Key strengths in technology, biotech, wine, construction, and agribusiness industry sectors. (1) Source: Business Insurance Magazine – July 18, 2005 |
30 Commercial Insurance Services Business Commercial Insurance Services Business Strategic focus on disciplined expansion (via organic growth and acquisition) into key western regional markets. – To leverage existing lines of business expertise – and to develop enhanced “provider-of-choice” branding and pricing positions. – Highly successful expansion into Seattle is indicative of both capabilities and expectations. – Completed acquisition of highly regarded Lucini/Parish firm in Nevada – May 1, 2005 |
31 Commercial Insurance Services Group Commercial Insurance Services Group Bay Area Sacramento Additional Major Western Regional Markets Los Angeles/ Southern CA Seattle Reno ABD Insurance and Financial Services 2004 Premium Volume: $1.9 billion 2004 Commission / Fee Revenue: $130 million |
32 Increased Non-Interest Revenue Increased Non-Interest Revenue Contribution* Contribution* * 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. 17.7% 13.3% 25.0% 11.4% 27.6% 11.7% 32.8% 10.4% 32.8% 12.6% 32.6% 11.9% 2002 2003 2004 Q1 '05 Q2 '05 Q3 '05 ABD 43.2% 45.3% 36.6% 31.2% 39.6% 44.5% |
33 Sound Credit Metrics Sound Credit Metrics |
34 Net Charge-Offs by Loan Type Net Charge-Offs by Loan Type $0 $10 $20 $30 $40 $50 $60 2002 $54.8 $17.5 $13.8 $13.5 $9.5 $0.5 2003 $31.6 $9.6 $10.3 $5.6 $5.2 $0.9 2004 $17.7 $6.6 $3.0 $3.0 $4.6 $0.5 Sept YTD 2005 $10.1 $3.2 $0.0 $1.7 $3.0 $2.2 Total Matsco SNC Other C&I CRE & Construction Consumer ($ in millions) |
35 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% '3/01 '6/01 '9/01 '12/01 '3/02 '6/02 '9/02 '12/02 '3/03 '6/03 '9/03 '12/03 '3/04 '6/04 '9/04 '12/04 '3/05 '6/05 '9/05 GBBK Annualized Net Charge-Off Rate GBBK Allowance as % of Loans Peer Allowance as % of Loans Allowance and Charge-Off Levels Allowance and Charge-Off Levels |
36 Non-Performing Assets by Loan Type Non-Performing Assets by Loan Type ($5) $5 $15 $25 $35 $45 $55 $65 $75 $85 $95 3/31/04 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 CRE Const./Land Commercial Corp. Finance Matsco/GBC All Other $49.2 $42.2 $59.3 $44.3 ($ in millions) $53.4 $88.6 $73.1 |
37 Strong Financial Indicators Strong Financial Indicators |
38 Capital Strength Capital Strength 13.5% 12.3% 10.2% 7.1% Q3 2005 14.3% 14.1% 10.0% Total Risk-Based Capital 13.0% 12.9% 6.0% Tier 1 Risk-Based Capital 10.7% 10.0% 5.0% Leverage Ratio 7.7% 7.1% n/a Tang.Equity/Tang. Assets (1) 2004 2003 Regulatory Well- Capitalized Standard _____ Capital Ratios___ _ __ (1) Common equity plus preferred stock less intangible assets divided by tangible assets. |
39 4.36% 4.36% 4.20% 4.52% 4.86% 5.56% 5.29% 4.45% 4.29% 6.75% 5.25% 4.00% 4.25% 5.00% 9.50% 8.50% 5.75% 6.00% 2% 4% 6% 8% 10% 12/99 12/00 12/01 12/02 12/03 12/04 03/05 06/05 09/05 GBBK's Avg. Margin Prime Rate Net Interest Margin Levels Net Interest Margin Levels |
40 Interest Rate Risk Profile Interest Rate Risk Profile Greater Bay is fundamentally neutral with current slight bias to net asset-sensitive position. Balance sheet actively managed to sustain slightly net asset sensitive position – $1.9 billion of indexed loans that adjust with market rate movements. – Restrained upward deposit pricing. – Wholesale financing duration extensions. Investment portfolio continues to be managed for minimal credit and controlled extension risk. |
41 Recent Developments Recent Developments Insurance Brokerage Contingent Commissions – Greater Bay engaged outside counsel in late 2004 to review ABD’s overall business practices in specific areas of concern. • No evidence found of improper marketing activities. • No systemic compliance related issues identified. – ABD has received and is fully cooperating with requests from various state insurance commissioners as well as a subpoena from the N.Y. Attorney General’s Office requesting information about contingent commissions and marketing practices. • We believe this to be a part of an industry wide review of such practices. |
42 Recent Developments Recent Developments Charter consolidation process. – Completed on target in Q3 2005. – Minimal client impact – seamless transition to date. – Adoption of common deposit product set underway to reduce funding costs and strengthen controls . IRS Notice of Proposed Adjustment (NOPA). – Received in November 2004 – challenged deductibility of merger-related expenses of $34 million taken in 2000 and 2001. – NOPA resolved with IRS during Q3 2005; disallowed deductions reduced to $1.5 million. – No tax expense related to this matter required. |
43 Quality Management Quality Management |
44 Experienced and Committed Experienced and Committed Management Team Management Team Stanford University, Bank of America, EurekaBank Peggy Hiraoka Human Resources Co-Founder – ABD Insurance Frederick J. de Grosz Insurance Brokerage Wells Fargo, ATT Capital Keith Wilton Specialty Finance Wells Fargo Colleen M. Anderson Community Banking Cal Fed, OTS Kenneth Shannon Chief Risk Officer Bank of America James S. Westfall Chief Financial Officer Wells Fargo, Bank of America, EurekaBank Byron A. Scordelis Chief Executive Officer Experience Name Officer |
45 Focus on the Future Focus on the Future |
46 Key Objectives Key Objectives Restore and drive top-line revenue growth. – Quality loan and deposit growth in target product types and client profiles. – Acceleration of insurance and other fee revenue sources. – Redoubled focus on pricing disciplines. Achieve and sustain increased cost efficiency. – Rationalize responsibilities and structures. – Realize growth without added recurring cost. |
47 Key Objectives Key Objectives Pursue expansion of all existing business lines. Be regarded as “best of breed” in all control endeavors. – Regulatory, compliance, accounting, SOX, and enterprise-wide risk management. – Portfolio concentration and credit quality. – Interest-rate risk management. Be an active force for positive change in the communities that we serve. |
48 Outlook for 2005 Outlook for 2005 Our full year guidance for 2005 is as follows: Core Loan Growth – based on the current forecast of moderate economic growth in our primary market area, we anticipate core loan portfolio growth to be flat or in the low single digits. Core Deposit Growth – we anticipate core deposit growth to be flat or in the low single digits, and intend to adjust our use of institutional time deposits and other non-relationship funding sources to meet funding needs not satisfied by core deposit and capital funding sources. Credit Quality – based on our continued aggressive credit risk management and the current economic outlook, we anticipate net charge-offs from 30 basis points to 40 basis points of average loans outstanding. Net Interest Margin – based on the Company ’s anticipated core loan and deposit growth and its slightly asset sensitive interest rate risk position, we expect the margin to fluctuate in the 4.30% to 4.40% range. |
49 Focus on Shareholder Value Focus on Shareholder Value |
50 GBBK Share Price Performance GBBK Share Price Performance 0% 100% 200% 300% 400% 500% 600% 700% 800% 900% 11/27/1996 1997 1998 1999 2000 2001 2002 2003 2004 Q1 2005 Q2 2005 Q3 2006 GBBK S&P Bank Index S&P 500 Nasdaq Bank Index |