Exhibit 99.1
Greater Bay Bancorp
Investor Presentation
May 2006
1 |
|
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 local, national and international 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 subpoenas from state attorneys 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, 2005. 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.
2 |
|
Company Profile As of March 31, 2006
Total |
| Assets $7.1 billion |
Core |
| Loans (1) $4.5 billion |
Core |
| Deposits (2) $4.5 billion |
Q1 |
| Net Income $25.9 million |
Q1 |
| Diluted EPS $0.46 |
Common |
| Shares Outstanding $0.3 million |
Common |
| Equity $690 million |
Market |
| Capitalization (3) $1.39 billion |
Q1 |
| ROA / ROCE 1.47% / 15.42% |
(1) |
| Excludes purchased loans |
(2) |
| Excludes brokered and wholesale institutional deposits |
(3) |
| As of April 30, 2006 |
3 |
|
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.
4 |
|
Investment Rationale
Strong financial fundamentals and sound credit metrics.
Experienced and proven executive management team.
Leading to long-term record of superior shareholder return.
5 |
|
An Exceptional Regional Market
6 |
|
Greater San Francisco Bay Area
7 |
|
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.
8 |
|
Diversified Financial Services Provider
9
Diversified Financial Services Provider
Greater Bay Bancorp
Regional
Community Banking
Loans of $3.0 billion
Core deposits of $4.4 billion
12 distinct community
bank brands
40 offices
Relationship based
Centralized operations,
international and cash
management support
Regional in scope
Specialty Finance
Assets of $1.6 billion
Commercial finance to
health care businesses
Small ticket leasing
Factoring and asset
based lending
SBA lending
National in scope
Insurance Brokerage
Annual premiums
of $2.2 billion
2005 annual revenues
of $154 million*
Offering P&C and D&O,
employee benefits, risk
management services
No underwriting risk
Western U.S. in scope
Wealth Management
Trust and private
banking
AUM in excess of $650
million
Regional in scope
* |
| Includes Lucini/Parish which was acquired May, 2005. |
10
Regional Community Banking
11
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.
12
Greater Bay Community Banking – Today
13
Community Banking Group Profile
Community
Banking
Group
Peninsula/
San Mateo County
Mid-Peninsula Bank
Peninsula Bank of
Commerce
Bay Area Bank
Santa Clara
County
Cupertino National
Bank
San Jose National
Bank
Bank of Santa Clara
San Francisco/
Marin Counties
Golden Gate Bank
Greater Bay Bank-
Marin
Alameda
County
Bay Bank of
Commerce
Greater Bay Bank-
Fremont
Contra Costa
County
Mt. Diablo National
Bank
Greater Bay Bank-
Walnut Creek
Santa Cruz/
Monterey Counties
Coast Commercial
Bank
Greater Bay Bank-
Carmel
Sonoma
County
Bank of Petaluma
Total Loans: $3.0 billion
Core Deposits: $4.4 billion
Note: Figures shown as of 03/31/06.
14
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
15
Business Development Group Initiatives
Proven executive hired in Q4 2005 to develop and manage group.
Modeling, tracking, and compensation plans completed.
Five proven BDOs recruited to date.
Including top Northern California performers from two major competitors.
And virtually all from large bank sources.
Targeted to grow to 15 by the end of 2006.
Each producer modeled to generate $20MM in annual loan/line commitments.
Commercial and owner-occupied CRE in nature.
Target size of $1-5MM per loan commitment.
16
Core Deposit Balances(1)
($ in Billions)
$4.43
$4.56
$4.81
$4.56
$4.47
$0.00
$2.00
$4.00
$6.00
2002
2003
2004
2005
Q1 ‘06
(1) |
| Core deposits exclude brokered and wholesale institutional deposits. |
17
Community Banking Core Deposits (1) As of March 31, 2006
By Region
By Type
Demand
23%
MMDAs
39%
Savings &
NOW
26%
Other Time
Deposits
3%
Time
Deposits
>$100
9%
Santa Cruz & Monterey 6%
Contra Costa 13%
Alameda 4%
marin 2%
San Francisco 5%
Santa Clara 38%
San Mateo 28%
(1) |
| Core deposits exclude brokered and wholesale institutional deposits. |
18
Cumulative Change in Cost of Interest-Bearing Core Deposits vs. Change in Three-Month Libor
Cumulative
%Change
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
‘12/31/03
‘12/31/04
‘12/31/05
Q1 ‘06
GBBK IB Core
Three-Month Libor
19
Specialty Finance
20
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.
21
Specialty Finance Group Profile
Note: Figures as of 03/31/06.
Total Assets: $1.6 billion
Professional dental
and veterinary term
commercial financing
National in scope
Matsco
Small-ticket leasing
National in scope
Greater Bay
Capital
Factoring and asset-
based lending
National in scope
Greater Bay
Business Funding
504 and 7(A) business
sourced direct and via
community banks
Regional in scope
SBA
Lending
Start-up venture aimed
at brokering or retaining
high quality SFD REL
Regional in scope
Residential
Mortgage Lending
Specialty
Finance
Group
22
Specialty Finance Group Loan Growth By Business Line – 03/31/06 vs. 12/31/05
%
03/31/06 |
| 12/31/05 Change Annualized |
($ |
| in Millions) Growth |
Matsco |
| $ 907 $ 885 $ 22 10% |
Greater |
| Bay Capital(1) 198 180 18 40% |
Greater |
| Bay Business 99 108 —9—33% |
Funding |
|
SBA |
| Lending 254 255 —1 -1% |
Group |
| Total $ 1,458 $ 1,428 $ 30 8% |
(1) Excludes operating lease totals of $60.9 million at 03/31/06 and $65.4 million at 12/31/05.
23
Credit Portfolio Profile
24
Core Loan Portfolio Composition(1) Combined Community Banking and Specialty Finance
($ in Billions)
$ |
| 5 $ 4.51 $ 4.81 $ 4.55 $ 4.47 $ 4.50 $ 4.51 |
11% |
|
14% |
| 10% 9% 9% 8% |
$ |
| 4 |
17% |
|
13% |
| 19% 23% 26% 27% |
$ |
| 3 24% |
23% |
|
26% |
| 22% 20% 19% |
$ |
| 2 15% |
16% |
| 12% 11% 14% 15% |
$ |
| 1 36% |
33% |
| 36% |
31% |
| 31%* 31%* |
$— |
|
2001 |
| 2002 2003 2004 2005 Q1 2006 |
Commercial-Term |
| RE Construction and Land |
Commercial |
| Commercial-Specialty Finance (2) SNC/Residential/All Other |
(1) |
| Gross of Deferred Fees and Discounts and excludes purchased loans. |
(2) |
| Includes Matsco, GBC and GBBF only. |
*Results for 2005 and 2006 reflect reclassification of approximately 3% of portfolio representing SBA loans secured by commercial real estate from the commercial loan to the CRE loan category.
25
Commercial Real Estate – Term Portfolio Composition As of March 31, 2006
By Type
By County
Total—$1.4 Billion
Office
36%
Retail
21%
Industrial
16%
Warehouse
6%
Self Storage
2%
Other
10%
R&D
4%
Hotel/Motel
5%
Monterey 2%
Santa Curz 5%
Marin 6%
Contra Costa 7%
Sonoma 7%
San Francisco 8%
San Mateo 10%
Alameda 14%
Santa Clara 33%
Other 8%
26
Commercial Real Estate Term Loan Outstandings by Vintage
($ in Millions)
Total Outstandings = $1.4 billion
12%
10%
7%
10%
18%
12%
10%
13%
8%
$0
$100
$200
$300
Pre
1998
1999
2000
2001
2002
2003
2004
2005
Q1 ‘06
27
Bay Area Office Market
Rental and Vacancy Trends
Source: BT Commercial
Rent Per SF
Vacancy Rate
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
1999
2000
2001
2002
2003
2004
2005
Q1 ‘06
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Avg Rent
Vacancy
28
Construction Loan Portfolio 2002 vs. 2006
December 31, 2002
March 31, 2006
Total—$557 Million
Total—$560 Million
1-4 SFR
38%
Multifamily
18%
Office
29%
Industrial
1%
Self Storage
3%
Retail
2%
Other
9%
1-4 SFR
48%
Multifamily
32%
Office
7%
Retail
4%
Land
2%
Self Storage
2%
R&D
2%
Other
3%
29
Construction Loan Portfolio Composition As of March 31, 2006
By County
Total—$560 Million
Santa Clara
27%
San
Francisco
15%
San Mateo
14%
Alameda
9%
Santa Cruz
8%
Contra Costa
7%
Sacramento
4%
San Diego
3%
Other
5%
Marin
2%
Solano
2%
Monterey
2%
Sonoma
2%
30
By LTV
By Total Commitment Size
Total—$468 Million
1-4 Family Construction Loan Portfolio Commitments As of 03/31/06
40%
15%
20%
19%
6%
< 60%
60-65%
65-70%
70-75%
75-80%
47%
19%
10%
8%
7%
9%
Under $5MM
$5-10MM
$10-15MM
$15-20MM
$20-25MM
Over $25MM
31
Commercial Insurance Brokerage
32
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 15th largest in the nation.(1)
And 4th 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 |
33
Strategic focus on disciplined expansion (via organic growth and acquisitions) 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.
Commercial Insurance Services Business
34
Commercial Insurance Services Group
2005 Premium Volume: $2.2 billion
2005 Commission & Fee Revenue: $154 million*
*Includes Lucini/Parish which was acquired May, 2005.
Bay Area
Sacramento
Additional Major
Western Regional
Markets
Los Angeles/
Southern CA
Seattle
Reno
ABD Insurance and
Financial Services
35
Increased Non-Interest Revenue 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 $88.5 million.
Non-Interest Income as % of Total Revenue
40%
31%
37%
44%
47%
18%
1 |
|
3%
25%
12%
28%
12%
32%
12%
35%
1 |
|
2 |
|
%
2002
2003
2004
2005
Q1 ‘06
ABD
Other Fee-Based
36
Sound Credit Metrics
37
Net Charge-Offs
($ in Millions)
$54.8
$31.6
$17.7
$11.3
$0.043
$0
$10
$20
$30
$40
$50
$60
$70
2002
2003
2004
2005
Q1 ‘06
38
Net Charge-Offs by Loan Type
($ in millions)
$0
$5
$10
$15
$20
2003
$9.6
$10.3
$5.6
$5.2
$0.9
2004
$6.6
$3.0
$3.0
$4.6
$0.5
2005
$4.6
$0.0
$2.1
$2.7
$1.9
Q1 ‘06
$0.732
$0.00
$0.298
-$0.910
-$0.077
Matsco
SNC
C & I
CRE &
Construction
Consumer
39
Non-Performing Assets by Loan Type
$49
$42
$59
$44
($ in millions)
$53
$88*
$73*
$72*
* |
| Includes single borrowing relationship representing $41.6MM at 6/30/05, $36.6MM at 9/30/05 and $36.8MM 12/31/05. |
$33
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
3/31/04
6/30/04
9/30/04
12/31/04
3/31/05
6/30/05
9/30/05
12/31/05
3/31/06
CRE
Const./Land
Commercial
Corp. Finance
Matsco/GBC
All Other
40
Allowance and Net Charge-Off Levels
0%
1%
1%
2%
2%
3%
3%
‘3/02
‘9/02
‘3/03
‘9/03
‘3/04
‘9/04
‘3/05
‘9/05
‘3/06
% of Loans
GBBK Annualized Net Charge-Off Rate
GBBK Allowance as % of Loans
Peer Allowance as % of Loans
41
Strong Financial Indicators
42
Capital Strength
Capital Ratios Regulatory Well-Capitalized Standard 2004 2005 Q1 ‘06
Tang Common Equity/Tang n/a 6.1% 5.6% 5.9% Assets (1)
Leverage Ratio 5.0% 10.7% 10.4% 10.8%
Tier 1 Risk-Based Capital 6.0% 13.0% 12.0% 12.5%
Total Risk-Based Capital 10.0% 14.3% 13.3% 13.7%
(1) Common equity less intangible assets divided by tangible assets.
43
Net Interest Margin Levels
4.35%
4.36%
5.29%
5.56%
4.86%
4.52%
4.20%
4.36%
7.75%
7.25%
8.50%
9.50%
5.00%
4.25%
4.00%
5.25%
2%
4%
6%
8%
10%
12/99
12/00
12/01
12/02
12/03
12/04
12/05
03/06
GBBK’s Avg. Margin
Prime Rate
44
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.
Yields on $1.8 billion of loans and securities adjust coincident 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.
45
Quality Management
46
Experienced and Committed Management Team
Officer Name Experience
Chief Executive Officer Byron A. Scordelis Wells Fargo, Bank of America, EurekaBank
Chief Financial Officer James S. Westfall Bank of America
Chief Risk Officer Kenneth Shannon Cal Fed, OTS
Human Resources Peggy Hiraoka Stanford University, Bank of America, EurekaBank
Community Banking Colleen M. Anderson Wells Fargo
Specialty Finance Keith Wilton Wells Fargo, ATT Capital
Insurance Brokerage Dan R. Francis ABD, Minet, COMPRO
47
Focus on the Future
48
2006 Accomplishments of Note
Continuation of solid and quality growth realized in specialty finance and commercial insurance brokerage businesses.
Successful strategic insurance acquisition completed.
Expansion of GBC franchise sustained.
Repositioning of community bank asset portfolio proceeding in concert with stated objectives.
Balance migration from CRE to construction.
BDO initiative established and growing.
Key risk and control metrics favorably reflect devotion of focus and resources.
Credit quality trends sustainably strengthening.
SOX compliance efforts consistent with control-based ethic.
49
Key Objectives
Restore and drive top-line revenue growth.
Quality loan and deposit growth in target product types and client profiles.
Focus on C&I, construction, and specialty finance asset areas.
Continued 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.
50
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.
51
Outlook for 2006
Our full year guidance for 2006 is as follows:
Core Loan Growth – based on the current forecast of moderate economic growth in our primary market area coupled with a planned increase in our lending and relationship management staff, we anticipate core loan portfolio growth in the mid to high single digit range, with this growth concentrated in the second half of the year.
Core Deposit Growth – we anticipate core deposit growth 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 15 basis points to 25 basis points of average loans outstanding.
Net Interest Margin – based on the Company’s anticipated core loan and deposit growth and its slightly net asset interest rate sensitivity position, we expect the margin to fluctuate in the 4.20% to 4.40% range.
52
Focus on Shareholder Value
53
GBBK Share Price Performance
Cumulative Appreciation
0%
100%
200%
300%
400%
500%
600%
700%
800%
11/27/1996
1997
1998
1999
2000
2001
2002
2003
2004
Q1 2005
Q2 2005
Q3 2005
Q4 2005
Q1 2006
GBBK
S&P Bank Index
S&P 500
Nasdaq Bank Index
54
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
Whitney Holding Corporation
Firstbank Holding Company of Colorado
Wilmington Trust Corporation
FirstMerit Corporation
55