CHESTER VALLEY BANCORP INC.
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Downingtown, PA o Nasdaq: CVAL
Donna M. Coughey Joseph T. Crowley, CPA
President & CEO CFO & Treasurer
COHEN BROTHERS & COMPANY
MARCH 18, 2005
[LOGO OMITTED]
FORWARD-LOOKING STATEMENT
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FORWARD LOOKING STATEMENTS. A number of the matters discussed in this message
that are not historical or current facts deal with potential future
circumstances and developments, in particular, information regarding the
combined company, including expected synergies resulting from the merger of
Chester Valley Bancorp and Willow Grove Bancorp, combined operating and
financial data, future banking plans, and whether and when the transactions
contemplated by the merger agreement will be consummated. The discussion of such
matters is qualified by the inherent risks and uncertainties surrounding future
expectations generally, and also may materially differ from actual future
experience involving any one or more of such matters. Such risks and
uncertainties include: the failure to realize anticipated capital, operating
expense and other synergies; the result of the review of the proposed merger by
various regulatory agencies, and any conditions imposed on the combined company
by such regulatory agencies in connection with consummation of the merger;
difficulties in obtaining approval of the merger by the shareholders of Chester
Valley Bancorp and Willow Grove Bancorp and satisfaction of various other
conditions to the closing of the merger contemplated by the merger agreement;
difficulties relating to the completion of the merger or the integration of the
businesses of Willow Grove and Chester Valley; and the risks that are described
from time to time in Chester Valley Bancorp's and Willow Grove Bancorp's
respective reports filed with the SEC, including each company's annual report on
Form 10-K for the year ended June 30, 2004 and quarterly report on Form 10-Q for
the quarter ended September 30, 2004. This message speaks only as of its date,
and Chester Valley Bancorp and Willow Grove Bancorp each disclaims any duty to
update the information herein.
ADDITIONAL INFORMATION AND WHERE TO FIND IT. In connection with the proposed
merger, a registration statement on Form S-4 will be filed with the SEC. CHESTER
VALLEY BANCORP AND WILLOW GROVE BANCORP SHAREHOLDERS ARE ENCOURAGED TO READ THE
REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC,
INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE
REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE MERGER. The final joint proxy statement/prospectus will be mailed to
shareholders of Chester Valley Bancorp and Willow Grove Bancorp. Shareholders
will be able to obtain the documents free of charge at the SEC's website,
www.sec.gov, from Chester Valley Bancorp by calling Joseph T. Crowley, or from
Willow Grove Bancorp by calling Christopher E. Bell.
PARTICIPANTS IN SOLICITATION. Chester Valley Bancorp, Willow Grove Bancorp and
their respective directors and executive officers and other members of
management and employees may be deemed to be participants in the solicitation of
proxies in respect of the merger. Information concerning persons who may be
considered participant's in the solicitation of Chester Valley Bancorp's
shareholders is set forth in the proxy statement dated September 10, 2004, for
Chester Valley Bancorp's 2004 annual meeting of shareholders as filed with the
SEC on Schedule 14A. Information concerning persons who may be considered
participant's in the solicitation of Willow Grove Bancorp's shareholders is set
forth in the proxy statement dated October 8, 2004, for Willow Grove Bancorp's
2004 annual meeting of shareholders as filed with the SEC on Schedule 14A.
Additional information regarding the interests of participants of Chester Valley
Bancorp and Willow Grove Bancorp in the solicitation of proxies in respect of
the merger will be included in the registration statement and joint proxy
statement/prospectus to be filed with the SEC.
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 2
CONTENTS
o Our background
o Key drivers
o Tactics that differentiate us
o Financial highlights
o Acquisition by Willow Grove Bancorp, Inc.
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 3
ORGANIZATION HISTORY
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1922 - Downingtown Building and Loan Founded
1987 - Initial IPO
1998 - Acquired Philadelphia Corporation for Investment Services
2001 - Converted to Commercial Bank Charter
2001 - Approval of Bank Holding Co. and Financial Holding Co.
2002 - Opened a de novo branch in Kennet Square in Chester
County, PA
2003 - Opened a de novo branch in Eagle in Chester County, PA
2004 - Acquired Coatesville branch from PNC National Bank
2004 - Acquiring Exton branch deposits from Firstrust Bank
2004 - Opened wealth management office in West Chester, PA
2004 - Acquired Avondale branch from PNC National Bank
2005 - CVAL & WGBC signed a definitive agreement to combine their companies.
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 4
HOLDING COMPANY STRUCTURE
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CHESTER VALLEY BANCORP INC.
NASDAQ: CVAL
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PHILADELPHIA CORPORATION
FIRST FINANCIAL BANK FOR INVESTMENT SERVICES
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o Commercial Bank o Full Service Broker-Dealer
o 13 Full Service Offices o Registered Investment Advisor
o $669MM in Assets* o 2 Investment Offices
o $435MM in Deposits*
o First Financial Investments, Inc.
* As of 12/31/04
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 5
SEASONED MANAGEMENT TEAM
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YEARS IN PRIOR
NAME FUNCTION AGE FIN. SERV. INSTITUTIONS
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Donna M. Coughey President & CEO 54 33 Mellon, Marine
(CVAL & FFB) Midland
Joseph T. Crowley, CPA CFO & Treasurer 42 20 Crusader Holding Co.,
(CVAL & FFB) KPMG
A. Louis Denton, Esq. PCIS Chairman/CEO 46 22 Hopper Soliday & Co
Mathew D. Kelly PCIS President/COO 40 19 PNC Advisors, Mellon
G. Richard Bertolet EVP - Credit Admin 57 37 Mellon
Colin N. Maropis EVP - Lending 52 29 Sun Life of Canada
William M. Byrne SVP - Lending 49 21 Mellon
Christopher M. Breslin SVP - Retail 43 19 First Union, Chase
Margaret H. Leimkuhler SVP - CAO 39 21 Keystone, Frankford
Thomas A. Varley, Esq. SVP - Trust 53 31 Glenmede, Mellon
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CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 6
CHESTER COUNTY, PENNSYLVANIA
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[CHESTER COUNTY GRAPHIC OMITTED]
o PENNSYLVANIA IS 6TH LARGEST STATE IN POPULATION IN THE UNITED STATES.
o CHESTER COUNTY IS FASTEST GROWING COUNTY IN PENNSYLVANIA
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CHESTER
COUNTY PA US
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Median household income $67,790 $40,106 $41,994
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Median value of housing $182,500 $97,000 $119,600
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Growth in non-farm employment 2.5% .7% .9%
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Retail sales per capita $14,144 $9,150 $9,180
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Source: U.S. Census Bureau Statistics
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 7
KEY DRIVERS OF THE TRANSITION
TO A COMMERCIAL BANK
o Diversify and grow the loan portfolio
o Expand business and retail core deposits
o Maximize non-interest revenue
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 8
DIVERSIFYING THE LOAN MIX
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LOAN PORTFOLIO
(in thousands)
[LOAN PORTFOLIO GRAPHIC OMITTED]
Residential Construction Commercial R.E. Commercial Business Consumer
6/30/2001 149 46 83 28 65
12/31/2004 65 71 146 65 125
SMALL BUSINESS COMMERCIAL
LOAN GROWTH (in thousands)
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06/30/01 12/31/04
Outstandings $3,171 $24,995
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CAGR -- 80.38%
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# of loans 45 369
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CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 9
BUILDING CORE DEPOSITS
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DEPOSITS
(in millions)
[DEPOSITS GRAPHIC OMITTED]
DDA/NOW MMA/SAV CDs
6/30/2001 82 87 244
12/31/2004 148 179 108
CHECKING ACCOUNT GROWTH
(in thousands)
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06/30/01 12/31/04
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Retail $55,958 $97,624
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CAGR% -- 17.23%
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Business $26,803 $50,645
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CAGR% -- 19.94%
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Repo $ 2,428 $15,940
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CAGR% -- 71.20%
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CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 10
DEPOSIT AND LOAN FEES
(in thousands)
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[DEPOSIT AND LOAN FEES GRAPHIC OMITTED]
Jun-01 Jun-02 Jun-03 Jun-04
Deposit Fees 1,723 1,911 2,837 3,073
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 11
TACTICS THAT DIFFERENTIATE CVAL
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o Production oriented branch advisory boards
o Instilling a "service-driven" sales culture
o Comprehensive wealth management approach
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 12
PRODUCTION ORIENTED BRANCH
ADVISORY BOARDS
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NEW BUSINESS - FISCAL 2004:
o $3.0 million in consumer deposits
o $2.6 million in managed trust assets
o $2.5 million in consumer loans
o $0.9 million in commercial loans
o $0.8 million in commercial deposits
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 13
INSTILLING A SALES CULTURE
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Actual Actual Actual Actual
Jun-01 Jun-02 Jun-03 Jun-04
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Consumer loans closed $18,500,000 $51,000,000 $67,000,000 $75,000,000
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Teller referrals 650 1,556 10,713 11,500
Teller close ratio N/A 21% 24% 37%
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Cross-sell ratio 2.0% 2.8% 3.4% 3.8%
Average quarterly
customer surveys (1 to
5, 5 - best) N/A N/A 4.37 4.51*
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*Average
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 14
WEALTH MANAGEMENT
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ASSETS UNDER MANAGEMENT & CUSTODY
(dollars in millions)
[ASSETS UNDER MANAGEMENT & CUSTODY GRAPHIC OMITTED]
Jun-03 Jun-04
PCIS 766 844
Trust 50 60
Uvest 10 23
UVEST PROGRAM
(dollars in thousands)
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Jun 02 Jun 03 Jun 04
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Uvest Investment Sales $2,262 $6,285 $12,600
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Gross revenue $103 $217 $425
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Number of trades 157 400 786
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Average sale per trade $14 $15 $16
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Appointments closed N/A 50% 40%
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Assets under management $3,200 $10,200 $22,600
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CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 15
FINANCIAL HIGHLIGHTS
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[LOGO OMITTED]
FINANCIAL HIGHLIGHTS
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ASSETS
[ASSETS GRAPHIC OMITTED]
Jun-01 Jun-02 Jun-03 Jun-04
East 545 566 585 642
[LOANS GRAPHIC OMITTED]
LOANS (Excluding Residential Loans)
Jun-01 Jun-02 Jun-03 Jun-04
East 201 243 288 328
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 17
FINANCIAL HIGHLIGHTS
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NET INTEREST MARGIN
[NET INTEREST MARGIN GRAPHIC OMITTED]
Jun-01 Jun-02 Jun-03 Jun-04
East 3.19% 3.66% 3.43% 3.46%
NON-INTEREST INCOME
(Excludes security gains (losses))
[NON-INTEREST INCOME GRAPHIC OMITTED]
Jun-01 Jun-02 Jun-03 Jun-04
Actual 5,733 6,010 7,092 8018
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 18
FINANCIAL HIGHLIGHTS
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RESERVES/LOANS
[RESERVES/LOANS GRAPHIC OMITTED]
Jun-01 Jun-02 Jun-03 Jun-04
East 1.23% 1.26% 1.39% 1.60%
NET CHARGE-OFFS/LOANS
[NET CHARGE-OFFS/LOANS GRAPHIC OMITTED]
Jun-01 Jun-02 Jun-03 Jun-04
0.03% 0.10% 0.03% 0.02%
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 19
FINANCIAL HIGHLIGHTS
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NET INCOME
[NET INCOME GRAPHIC OMITTED]
Jun-01 Jun-02 Jun-03 Jun-04
NET INCOME 4003 5575 5262 6310
RETURNS (%)
[RETURNS (%) GRAPHIC OMITTED]
Jun-01 Jun-02 Jun-03 Jun-04
ROE 10.50% 13.24% 11.25% 12.27%
ROA 0.76% 1.02% 0.90% 1.03%
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 20
EFFICIENCY RATIO
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[EFFICIENCY RATIO GRAPHIC OMITTED]
2001 2002 2003 2004
East 72.23% 65.86% 67.45% 65.49%
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 21
ACQUISITION BY
WILLOW GROVE BANCORP, INC.
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[LOGO OMITTED]
TRANSACTION OVERVIEW
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o Alliance of Willow Grove and Chester Valley will create a super community
bank with a retail and commercial franchise in three of the most affluent
and expanding counties in the Southeastern Pennsylvania region. The
combined bank:
o Will operate in three of the most attractive target markets in
Southeast Pennsylvania
o Will create a deep and talented management team with the ability
to complete the transformation of the balance sheet and income
statement to that of a commercial bank
o Is expected to produce cost savings that drive significant
accretion in Year 1
o Will cross-sell an expanded product set to a larger geographic
footprint of affluent customers
o Will be in a position to benefit from customer dissatisfaction
with mega bank mergers and takeovers of community banks during
the past three years
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 23
THE COMBINED FRANCHISE
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A $1.5 billion company with 27 existing branch offices in
Montgomery, Chester, Bucks and Philadelphia counties
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[MAP GRAPHIC OMITTED]
WILLOW GROVE
1 Dresher
2 Hatboro
3 Holland
4 Huntingdon Valley
5 Maple Glen - Main Office
6 North Wales
7 Philadelphia - Bustleton
8 Philadelphia - Rhawnhurst
9 Philadelphia - Somerton
10 Roslyn Valley
11 Southampton
12 Warminster
13 Warminster - Kmart Plaza
14 Willow Grove
CHESTER VALLEY
15 Airport Village
16 Avondale
17 Brandywine Square
18 Coatesville
19 Devon
20 Downingtown - Main Office
21 Eagle
22 Exton - Lionville
23 Frazer - Malvern
24 Kennett Square
25 Oxford - Future
26 Thorndale
27 West Chester
28 Westtown
LOAN PRODUCTION FACILITY
29 Plymouth Meeting
CHESTER VALLEY
ASSET MGMT.
30 Philadelphia
31 Wayne
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 24
TARGET MARKET DEMOGRAPHICS
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MEDIAN HH STATE BACHELOR'S STATE STATE
COUNTY INCOME RANK DEGREE RANK POPULATION RANK
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Montgomery $64,808 2 38.7% 2 770,747 3
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Bucks $61,230 3 31.2% 4 613,110 4
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Chester $67,790 1 42.5% 1 457,393 7
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CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 25
WILLOW GROVE RESULTS
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LOAN GROWTH (Dollars in thousands) 06/30/01 12/31/04
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Residential $198,310 $195,444
CAGR -0.42%
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Construction $ 27,724 $ 69,420
CAGR 29.99%
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Commercial R.E $128,613 $185,789
CAGR 11.08%
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Commercial Business $ 19,925 $ 21,216
CAGR 1.81%
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Consumer $ 84,748 $ 96,096
CAGR 3.66%
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Total Loans $459,320 $567,965
CAGR 6.25%
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CORE DEPOSIT GROWTH
(Dollars in thousands) 06/30/01 12/31/04
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DDA $82,318 $134,428
CAGR 15.04%
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Savings $ 58,566 $ 84,604
CAGR 11.08%
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Money Market $ 34,788 $103,681
CAGR 36.62%
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Total Core Deposits $175,672 $322,713
CAGR 18.98%
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CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 26
SUMMARY BALANCE SHEET IMPACT
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($ in thousands) Willow Grove Chester Valley Pro Forma(1)
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12/31/04 12/31/04 12/31/04
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Assets $993,120 $669,115 $1,553,708
Investment Securities (2) 380,793 192,862 375,812
Net Loans 561,167 423,596 983,670
Deposits 615,639 434,946 1,051,477
Borrowings (3) 263,240 176,568 299,808
(1) Pro Forma includes estimated purchase accounting adjustments and assumes
certain assets are liquidated to retire borrowings or to fund the cash
consideration and upfront costs associated with this transaction.
(2) Excludes interest earning cash.
(3) Includes trust preferred securities.
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 27
COMBINED BANK: DEEP MANAGEMENT TEAM, TRACK RECORD OF SUCCESS
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YEARS IN
CURRENT FINANCIAL
NAME FUNCTION INSTITUTION AGE SERVICES PRIOR INSTITUTIONS
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Donna M. Coughey President & CEO CVAL 54 33 Mellon, Marine Midland
Joseph T. Crowley, CPA CFO CVAL 42 20 Crusader Holding Co., Applied Card, KPMG
Jerome P. Arrison Treasurer WGBC 53 32 Delaware First Financial
Christopher E. Bell Chief Operating Officer WGBC 47 26 Sellersville Savings, Hamilton-Reliance
Matthew D. Kelly Chief Wealth Management Officer PCIS 40 18 PNC Advisors, Mellon
Ammon J. Baus Chief Credit Officer WGBC 55 34 Fleet, PNC, First Fidelity
G. Richard Bertolet Chief Lending and Sales Officer CVAL 57 36 Mellon
John Powers Regional President - Willow WGBC 54 37 Sun East FCU, Western Savings Bank
Grove Bank
Colin N. Maropis Regional President - First CVAL 52 28 Sun Life of Canada
Financial Bank
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CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 28
SUMMARY
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o Application of Willow Grove and Chester Valley's best practices will propel
the combined company's profitability
o Montgomery, Chester, and Bucks County target markets provide strong
foundation for organic growth
o Creation of a deep and talented management team with experience to complete
the transformation of the balance sheet and income statement to that of a
commercial bank
o Increasing need for locally-focused, community based banking in the
Southeast Pennsylvania region
o Combined Company's interest rate sensitivity will be significantly better
CVAL - CBC Presentation March 18, 2005 [LOGO OMITTED] 29